I could not get my mind around this deal. Why would a sovereign fund invest in CitiGroup? Why catch a falling knife? There had to be something else going on, and I kept wondering. So I did my research on the Internet attempting to get all of the possible perspectives out of this deal. I have a picture now, and one article sums things up nicely.
At Housing Panic there was a blog entry that talked about how bad the situation is, and how Goldman-Sachs is saying things are bad. I don’t trust Goldman Sachs further than I drop a ball without throwing. I have seen too many times when things that seemed biased (eg rating changes, etc). What bothers me are comments like the following:
In a grim assessment of the U.S. economy’s health, the investment bank said the Federal Reserve will have to cut its lending rate to banks by 1-1/2 percentage points to 3 percent in the next six to nine months to avert a recession.
Today’s German IFO was out and it was not as bad as was thought. And right now it would seem that the Germans don’t mind the higher Euro. It galls me that the German commentator said the reason why the Germans don’t mind is because they hedged properly, and others did not. The German CNBC commentator said the problem with AirBus is that they hedged incorrectly at 1.35, and thus their fault.
I invest using a combination of basic investor analysis, and technical analysis. Though my technical analysis library is nothing like you have seen before (don’t ask I am not sharing). Though I thought since Steve was talking about buying or selling I would share with you what my system is telling me.
What concerns me and why I am ultra bearish with bull jacket is that there is a disconnect. Disconnects is when you see one thing, and experience another. Let me illustrate some disconnects:
Marc Faber was on CNBC yesterday. You might not know him, but as I live in Switzerland he is the Warren Buffett of Switzerland. What I like about Marc is that he is both a speculator, investor and very much a realist.
Yesterday he said the real problem was the financial industry that is in a massive bubble that needs to be deflated. Squawkbox looked at him and thought, Huh? Marc is actually quite right because there is an investing bubble like the dot.COM bubble.
You hear the news in the industry that you should buy global companies! Global companies with a weak dollar means more earnings! Folks, wrong, wrong, wrong! If you do the numbers quickly sure this argument sticks, but if you look a bit deeper then you will see the problems. The canary in the mine is Canada.
“Shopping is so much better here,” said Sam Theriault of Hartland, N.B., as she headed into the Wal-Mart in Houlton, Maine – just across the border from Woodstock, N.B.
Barry said something about inflation and how Bernanke is not measuring it correctly. Then another blogger jumped on it and replied that Barry does not get it. The problem with this discussion is that it is a discussion of concepts and no illustrations.
Whenever I look at stats, and numbers I like to compare it to the little things. I find the little things usually make all the difference. HP has an update from Casey, and I advise you to read it. In particular the following made me take a close look.
Not sure what I’m gonna do about the approx 500K of debt still in my
name. That figure includes both credit cards, deficiencies on
mortgages and a private loan. Its just an estimate as I won’t know
until all my bank-owned properties get sold.
What does this tell you? Before I tell you what I think let’s look at Casey’s track record and see how the numbers add up. On his Wikipedia page I calculated he took on debt of 2.419 million, and has a valuation of 1.6 million. This leaves a net debt of 773,000. If Casey says he has about 500K including credit card, etc I think we could safely say that mortgage debt is about 400K
Whenever I am way off the mark I take a step back, watch and think. It is hard for me to be this way off the mark with respect to the Fed. I was wrong, and I mean WAY wrong on Bernanke’s and the Fed’s decision on how their decision (1,2,3).
When I am this way off I figure that I must have missed something. I must have not considered a certain factor. Thus I need to see how things play out. And what I privately feared with the 50 basis cut is coming true. I thought that they would not cut 50 basis points due to the ramifications of a weak dollar.
