Angelo Mozilo, CEO, CountryWide FinancialÂ
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Joined Nov 10, 2007
23,426 Blog Posts
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lol
every time I hear the word CDO, it brings me back to Danny’s video.
No thank you. I already have a CDO squared.
http://www.math.ust.hk/~maykwok/courses/MAFS521_07/CDO-Squared_Nomura.pdf
I’d just like to correct the unwashed masses who put me in power, twice:
The U.S. is not headed for recession.
Thankyou.
You may now go back to shorting USA equities, because this is a democracy, because I say it is … and so does Cheney.
Bad mouth me & I’ll have the real government (CIA) come after you.
GWB 🙂
Fleck shorting bonds as a hedge against short stocks:
“if I’m short stocks and wrong – because the economy recovers….bonds will be destroyed…if bonds rally from here it means we are having a depression and I’ll win on my stock shorts.”
Fleck Rap – 2/29/08
Bombs Away in Alt-A
News on the earnings front last night continued to exhibit squishiness, as a handful of retailers reported problems. Likewise, Dell, where the flailing continues. The company was light on revenues (even given the fact that it was able to fill the channel at Best Buy). In anticipation of that “success,” I was not short DELL — until I looked at the numbers, and then I got short it. One might have expected Dell to easily make the revenue estimate, but that was not the case. Also, per-share earnings were slightly worse than expected (not that I care all that much about the game of beat-the-number). Meanwhile, Dell spent $4 billion to buy back stock.
Much-Needed Aspirin for Mr. Inspiron
Given the environment we’re about to enter, and given that the channel is probably as full as it needs to be, I would expect tougher sledding ahead for Dell. (I have not believed any of the boxscore”turnaround stories,” because the top management never left.) Thus, I expect Dell to ultimately follow Gateway in heading to single digits. After all, Dell’s book value only sports a “one handle” in front of it.
And, on a related note (via Bloomberg): According to an email written by Microsoft general manager John Kalkman: “We lowered the requirements [on Vista] to help Intel make their quarterly earnings, so they could continue to sell motherboards. . . . ” If that allegation proves to be true (which wouldn’t shock me), it would just go to show how the game of beat-the-number has distorted so many businesses.
During the stock bubble, I talked ad nauseam about the insanity of judging companies based on the game of beat-the-number. And, though I haven’t discussed it so much lately, the following point bears repeating: Many businesses have been mismanaged for the long term, to try to be successful in the short run at beat-the-number. Which of course is because of the option-enrichment schemes that so many executives have taken (unfair) advantage of.
Lift a Rock to Find Even More Schlock
Now I’ll get off my soapbox and turn to the bigger problem of the day — the credit sector. As noted yesterday, I believe that the next area of tape bombs is liable to be Alt-A. And, that will help illuminate the fact that our mortgage problems were never just subprime. Rather, they had their roots in one big credit bubble. It’s now impacting Alt-A. And, as folks will eventually realize, prime mortgages are also vulnerable. Because it was a bubble, anyone who could fog a mirror was able to get a mortgage, and most people took on more than they should have. (The fact that some buyers are now walking away from their obligations is the subject of stories in both today’s Journal and New York Times.)
Meanwhile, more problems are starting to pop up in the municipal market. And, since the plain-vanilla money funds have already flirted with trouble, I wouldn’t be shocked to see out-and-out problems in that arena, also. The deleveraging of a massive credit bubble was preordained to be disastrous. Just how bad, no one really knew, thanks to the absurd accounting afforded to financial institutions.
Truth Demands an Audience
As for today’s stock-market action, we opened with a thud. Stocks were probably pressured by AIG’s losses and the fact that there will be no bailout for MBIA and Ambac. (MBIA is indeed in a world of hurt, as its recent 10Q shows.) Also at work: the gnawing realization that the credit landscape I’ve been describing is far closer to reality than the Pollyanna view embraced by Wall Street. Anyway, with that as a backdrop, the market was down about 1% early on, then quickly dropped another, such that an hour into the day saw us down just shy of 2%. In essence, everything was pounded uniformly.
We attempted to stabilize around the morning lows, then spent the next several hours going sideways, before breaking in the early afternoon. With about half an hour to go, which is when I had to leave, the market was plumbing the lows (down about 2.5%, though the Nasdaq was a touch firmer). It was as ugly a day as we’ve seen in a while, with anything mortgage-related hit the worst. I don’t know if the last half hour brought us the late-day jam job we’ve seen so often, or if the market completely fell apart. But I do believe we are getting close to the moment in time when the reality of the problems will cause the tape to simply come undone.
Away from stocks, the yen made a new high for the move, though the xera was higher against many other currencies, and that, after the euro hit a new all-time high today. Treasurys were on fire once again, as the entire structure of the market rallied. Turning to the metals, silver was up 1.5% and gold was up 0.7%.
Positions in stocks mentioned: Short DELL.
Y’all ready for the labor camps?
‘Cause that’s where I’m sendin’ the majority of you stock trading capitalist pigs, if’n you don’t wise up now and go in for social work.
And I’ll pay for it by defunding the military.
“Egregious 10-K”
I have all his albums. Howabout posting a vid?