After it was announced that the Fed gave the big banks a pass on their “stress” test, the TBTFs announced huge dividend and share buyback plans:
If the banks had properly marked to market their Level 3 assets and some of their riskiest non-Level 3 assets, would they have still passed the Fed stress test, which essentially places a stress-test “bar” on the ground and lets the banks step over it? Probably not. This would explain why JPM insiders have been dumping shares en masse over the last three months:
The “buys” are deceptive because those “buys” are the exercising of compensation options. The most aggressive sellers have been CEO/Chairman, Jamie Dimon; General Counsel, Stacey Friedman (hmmm…); and CFO, Marianne Lake (hmmm…).
With JP Morgan’s announced 90% increase in its share buyback program, the shares will have an even bigger bid in the market from shareholders into which insiders can dump.
The question is – rhetorical, of course – why would these insiders be dumping shares if the outlook for the Company’s earnings, stock price and financial condition was positive?
This commentary is from a subscriber to my Short Seller’s Journal:
The 3% down loans seem to have brought in a lot of first time buyers into the market. I live in the east bay area of California, which is more affordable than San Francisco, or the South Bay area but still painfully expensive nonetheless. Rents are now the same as a mortgage payment on a home in the exurbs. So a lot of people seem to be buying for this reason. They only look at the monthly payments but overlook the fact that when financial markets seize up and the music stops, you could be left holding the bag on a hugely upside down mortgage and can’t get out of a 30 year commitment by selling.
A friend of mine, who is a borderline novice in financial matters, just bought a home. He has meager savings and has jumped on the 3% down bandwagon. This is the guy who until I told him to pay off his credit card balances because of the usurious interest rate, had no clue the damage they were doing to his finances. He was making minimum payments on them because he wanted to build up his savings – I explained to him how by earning 0.01% interest and paying out 18-24%, his savings were getting depleted every month.
The Bottom line is people who are not too financially savvy are being lured into the housing market by the banks. I don’t know how long this 3% crap has been going on, but it seems that Banks are desperate and looking for newer segments of people to swindle.
Everyone has probably seen the report on NYC high end real estate posted in Zerohedge – LINK. While the suburbs in Denver are still hot because of the huge influx of people moving here from California, I’m seeing the same price cuts and inventory build-up in Denver that is described in the ZH piece. I get listings on just one central Denver zip code. Yesterday alone i received two price changes of 5% on listings over $850k.The inventory in that price segment is bulging. Over the weekend I was hit with more than 20 new listings and price cuts all across the price spectrum. I have received six more today – 1 new listing and five price reductions.
Now that the NAR is begging the Government to give debt-bloated college graduates even more debt to buy a crappy starter home, I can smell the desperation to keep the housing market’s “gerbil” running on the wheel. But the gerbil is like a meth-addict that has been overdosed for too long with near-zero interest rates and recklessly lascivious Government mortgage subsidies. Like the gerbil, the housing market is about to seize up and re-collapse. It will be an event that is much more horrific than what occurred in 2008.
The mining stocks are one economic convulsion away from from more than doubling in value. – “Hal,” long-time friend/colleague
The stock I feature in the latest issue of the Short Seller’s Journal was down 3.5% today. The company’s revenues are highly correlated with the GDP, which is going negative rather quickly. This stock easily has another $20 of downside by the middle of the summer, which would be another 33% from here.
Icahn has always been one of the shrewdest investors out there. I doubt he’s betting on anything less than a 35-50%% decline. The SPX could drop 50% tomorrow and still be overvalued. Based on historic GAAP accounting and historical valuation metrics, the S&P 500 is intrinsically worth 500-800.
I am working to determine whether TSLA or AMZN is the biggest stock fraud in the history of our markets. Both companies aggressively implement the same business model: charge the end-user (buyer) a price below the all-in cost of getting the product from the factory floor to the customer’s possession for the sake of generating revenues.
AMZN stock has run up $72 to $673 (Friday’s close) since its earnings were reported last Thursday. The Company continued with the same highly misleading accounting in Q1 2016 and the misleading presentation of its numbers that I layout in Amazon.con. AMZN burned through OVER $3 billion in cash during Q1 2016 despite making the claim that it generated $5 billion of free cash flow.
Of all propaganda-promoting publications, the Wall Street Journal featured a story last week which outlined the ways in which Elon Musk (TSLA founder) moves around cash among TSLA, Space-X and Solar City, depending on which entity recently raised money and which entity needs money. Pure Ponzi scheme.
TSLA is now down over 6% from when I originally recommended shorting it on March 27, despite the fact that SPX is slightly higher. I reiterated the recommendation in last week’s Short Seller’s Journal issue – it’s down 17% since then.
The S&P 500 is getting ready to roll over again and edge off the cliff. It’s not a question of “IF” but a matter of “WHEN.” In the latest Short Seller’s Journal I present three great short ideas, including a not well known company who’s revenues are highly tied to GDP activity. This stock could easily shed $30 over the next 3-6 months. Subscribers to the SSJ gain access to the Mining Stock Journal for half-price (and vice-versa). You can access the SSJ by clicking here: Short Seller’s Journal.
It’s the collapse of that structure that was built in the 1940s that is behind all of these problems that are popping up in financial markets and economies around the world. – Richard Maybury, publisher of U.S. & World Early Warning Report for Investors.
In a conversation with Henry Bonner of Sprott’s Thought’s, Richard Maybury lays out the framework of the existing World Order that was set up after WW2, which left the west – and primarily the U.S. – at the center of the world power structure. That power structure is collapsing. Maybury discusses the how the acceleration of the many chaotic events which have developed in connection with this ongoing and accelerating collapse:
Who knows what’s coming. I don’t. I just know that if you have a whole lot of cash of any kind, in any currency, you ought to be really nervous about it and you ought to be into raw materials and precious metals, at least to some extent (Sprott’s Thoughts)
What’s interesting about this is that most “alternative thought process” analysts – and the armies of people who follow them – believe that the Rockefeller/Rothschild Bilderberg Group will emerge as the dominant NWO entity. I have been skeptical of this view for well over a decade.
The truth is, once the existing power infrastructure collapses, all bets are off. History tells us that anything can happen and that something entirely unexpected by almost everyone is what will emerge.
Unfortunately, my view has been and remains that global nuclear chaos will occur. If you want to see how that ends up, please read “The Road” by Cormac McCarthy. I hope I’m wrong but I doubt that I am…