Friday, July 31, 2009

More On "The Less Bad Is Good" Mantra.......

The perfect fit to yesterdays post But Still Better Than Expected........ ....

Paßt wie die Faust aufs Auge zum gestrigen Post But Still Better Than Expected........


Refining, the weakest link in the recovery Stephen Schork via FT Alphaville

Demand, not only for gasoline, but for other major products markets as well, is going the wrong way, i.e. from the top left to the bottom right on the charts. Thus, Big Oil is straining under the weight of poor margins.

It is now hard to reconcile these earnings reports, demand was lousy in the second quarter (and it not any better today). Yet, this market was being fed a fantastic lie back then… the less bad is good mantra.

Thus, whereas spot crude oil on the NYMEX finished the first quarter just below $50 a barrel (49.66) it finished the second quarter just below $70 (69.89). Crude oil rallied 40 percent as profits at the world’s largest oil companies were tumbling.


Because this market wanted to ignore the obvious and lull itself to sleep with silly pseudo-intellectual catchphrases… green shoots, crocuses, mustard seeds and this season’s rookie of the year… the second derivative.

Thus, while we were led to believe that demand for oil was rising in the second quarter, hence the justification for that 40 percent surge on the NYMEX, we now have the balance sheets from Exxon, Shell et al. that prove it was a lie.

Look at the screenshot of headlines we pasted on the top of today’s report. Profits for Big Oil are down as demand is at generational lows.

However, look at the very first headline, the NYMEX was higher esterday because “… corporate earnings boost confidence…”


According to this one article, demand for oil and therefore profits for oil companies are down, but the NYMEX rallied yesterday because Motorola (mobile phone maker) had a smaller than projected loss and Calphalon (cookware) and Paper Mate (writing instruments) had better than expected profits

. Bloomberg screenshot headlines

You really cannot make this up......

Das ist so absurd das man sich unweigerlich fragt ob wir schon wieder den 1. April haben.... :-)

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Thursday, July 30, 2009

The 'Heads I Win, Tails You Lose' Bank Bonus Culture

Still no riots...... ;-) I highly recommend to read From A Former Goldman Managing Director: How You Finance Goldman Sachs’ Profits via Zero Hedge. Doesn´t make you feel better..... And keep in mind "BASE COMPENSATION ISN`T COUNTED IN THE NUMBERS" and that "greater than $ 3 Mio" can also mean $ 10 Mio ( see Bonus Breakdown ) ......

Schon erstaunlich das die Amis das noch alles so hinnehmen.... Denke spätestens nachdem man From A Former Goldman Managing Director: How You Finance Goldman Sachs’ Profits via Zero Hedge gelesen hat dürften einige mehr als nur die Faust in der Tasche ballen...... Die "Chuzpe" ist schon fast wieder bewundernswert..... Nur zur Erinnerung "DIE GRUNDVERGÜTUNG IST IN DEN U.G. ZAHLEN NICHT ENTHALTEN UND KOMMT ON TOP".... Zudem bedeutet die Formulierung Bonuszahlung größer als 3 Mio $ gleichzeitig das etliche locker 10 Mio $ "verdient" haben ( siehe Bonus Breakdown )

Deal Journal

Andrew Cuomo, New York’s Attorney General, just released a report breaking down compensation at the nine original TARP recipients.
Bank Greater Than $3 Million Greater Than $2 Million Greater Than $1 Million
Bank of America 28 65 172
Bank of New York Mellon 12 22 74
Citigroup 124 176 738
Goldman Sachs 212 391 953
J.P. Morgan Chase 200* - 1626
Merrill Lynch 149 - 696
Morgan Stanley 101 189 428
State Street 3 8 44
Wells Fargo 7 22 62

The following graph is even more "impressive" and puts the bonus pool into perspective to the earnings/losses..... Taken from Cuomo releases ugly details on bank bonuses via R. Winkler

Denke das die nächste Übersicht noch mehr "Freude" verbreitet.... Hier werden die Bonuszahlungen ins Verhältnis zu den erzielten Gewinnnen oder besser gesagt erzielten Verlusten gesetzt...... Dank an R. Winkler ( siehe Cuomo releases ugly details on bank bonuses )

larger version / vergrößerte Version

More via the WSJ

The Millionaire´s Club / Interactive Graph

NYT & Dealbook

All told, the bonus pools at the nine banks that received bailout money was $32.6 billion, while those banks lost $81 billion.

In Thursday’s report, Mr. Cuomo described how Merrill and Citigroup — also the recipient of a big federal bailout — both lost more than $27 billion in 2008, but nonetheless paid a total of nearly $9 billion in bonuses to workers for that year.

Other banks, like Goldman Sachs, Morgan Stanley and JPMorgan Chase, paid out 2008 bonuses that were substantially greater than their profits for the year.

In general, the report said, compensation at major banks “has become unmoored from the banks’ financial performance.”

Mr. Cuomo wrote:
Thus, when the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well.

Bonus Report

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Wednesday, July 29, 2009

But Still Better Than Expected........

Thank god that real earnings don´t matter...until they matter.....It will be interesting to see how long the new mantra "Less Bad Is the New Good" can keep this market "elevated"( see Dow Sends Buy Signal That’s Worked Since 1921: Chart of the Day via Bloomberg , needless to say that i think this CHART OF THE DAY: Shades Of 1929is more realistic) ... This cartoon sums it up..... ;-)

Gottseidank wird ja den realen Gewinnen momentan keinerlei Bedeutung beigemessen und das alle Schätzungen auf den berühmt berüchtigten EBITDA bzw Proformabasis ( ex dieses, ex jenes, usw.) basieren......Ansonsten wäre das KGV ( wenn es denn überhaupt vorhanden wäre ) auch zu schockierend...... Dieses Beispiel ist leider keine Ausnahme..... Bin gespannt wie lange der Markt auf Basis "Less Bad Is the New Good" die Party am laufen halten kann ( hier eine weitere atemberaubende Einschätzung via Bloomberg Dow Sends Buy Signal That’s Worked Since 1921: Chart of the Day , ich tippe mal das diese Variante CHART OF THE DAY: Shades Of 1929 wahrscheinlicher ist) ....Denke dieser Cartoon trifft es ziemlich gut...... ;-)

Chart Of The Day
Today's chart provides some perspective on the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart llustrates how earnings are expected (38% of S&P 500 companies have reported for Q2 2009) to have declined over 98% since peaking in Q3 2007, making this by far the largest decline on record (the data goes back to 1936).

In fact, real earnings have dropped to a record low and if current estimates hold, Q3 2009 will see the first 12-month period during which S&P 500 earnings are negative.

Some still call the market "cheap"...... No problem with the right pro forma ( What are pro forma earnings? ) model/formular.... Havn´t heard the word GAAP for a long time....;-)

Gut zu wissen das einige der Experten den Markt immer noch als "billig" betiteln..... Wenn man die richtige "Proformakalkulation" (siehe What are pro forma earnings? ) zugrunde legt sicher kein Problem.... Ich jedenfalls wundere mich schon lange nicht mehr das ich den Gewinnausweis nach der einheitlichen Bilanzierungsvorschrift GAAP nur nach lagem suchen im Kleingedruckten der Quartalsberichte finden kann..... Vor alternativen Analysten und Unternehmenskreationen wie EBITDA ( oftmal noch versüßt durch andere "außerordentliche" Belastungen ) usw. kann man sich in der tagtäglichen Berichterstattung hingegen kaum retten.....;-)

The new equity market consensus FT Alphaville

Another day, another big house predicting further gains for stock markets.

Joining Goldman Squid, Credit Suisse and HSBC, Nomura sees a further upside of 13% for global equities in the second half of the year

In fact this is fast becoming the new equity market consensus. Goldman, for example, is now targeting 1,060 on the S&P 500 by the year-end, on account of better-than-expected results, particularly from the financial sector, while Credit Suisse is looking for 1,050 citing earnings revisions and cash balances and HSBC expects 1,020 because the earnings downgrade cycle is coming to an end.

Here’s how the argument goes, according to a note fired off by Nomura’s Ian Scott to clients on Monday.

second quarter results beat expectations by a wide margin......

the market remains cheap and should have rallied further......

Secondly, we would argue that the market is valued for downgrades to analysts’ forecasts, not upgrades.

With a 12-month forward multiple of 14.1, 17% below the 20-year average multiple.

> I especially like "should have rallied further"...... I highly recommend the "rant" from Michael Panzner on another uber bullish "expert"......

> Finde besonders den Hinweis großartig das die Aktien bisher kaum auf die tollen Ergebnisse reagiert haben und hätten eigentlich viel weiter laufen müssen...... Empfehle in diesem Zusammenhang den weniger euphorischen Blick von Michael Panzner......

> via Zero Hedge

And here is the projected earnings growth rate over the next two quarters, needed to justify the rosy perspective on the economy: the bottom line: over 110% in projected EPS growth in 6 months. A jobless, revenueless doubling in earnings!

> As i´ve said before "with the right pro-forma model".......

> Wie bereits gesagt, wenn man nur genügend "außerordentliche" Posten herausrechnet ist ne Menge "möglich"..... Ein paar Beispiele folgen dank des zeitlich hervorragend passenden nachfolgenden Link.... Analog genügt natürlich ein Blick in jede xbeliebige AD-HOC.... ;-)

Wall Street Analysts Keep Telling Big Earnings Lie David Pauly

July 30 (Bloomberg) -- At a time when the financial industry’s credibility is at an all-time low, you would think Wall Street’s finest would break their necks providing transparency.

Not so. Stock analysts continue to promote corporate earnings lies, insisting that net income isn’t really what investors need to know.

Instead, their earnings estimates ignore often huge expenditures that can’t help but affect a company’s health.

In analystspeak, Intel Corp. wasn’t hit with a $1.45 billion fine from the European Union in the second quarter for anticompetitive practices.

After setting aside funds to cover the fine, which Intel is appealing, the semiconductor-maker had a quarterly loss of $398 million, or 7 cents a share. Disregarding the fine altogether, analysts maintain the company earned 18 cents a share, beating their average estimate of 8 cents.

As Wall Street tells it, the employee stock options Google Inc. granted in the second quarter didn’t cost its shareholders $293 million.

Google, according to generally accepted accounting principles, earned $1.48 billion, or $4.66 a share, in the period. Not enough for Wall Street, which prefers to say the company earned $5.36 a share, leaving out the cost of stock options.

Business journalists know what’s going on ( jmf: really? I have some serious doubts ....?) and in their stories emphasize net income -- which accounting authorities say is where the focus should be. Still, if reporters want to show how the latest report compares with earnings estimates, they are stuck using analysts’ predictions. ...

Viacom Inc., an entertainment company, this week reported second-quarter net income of $277 million, or 46 cents a share. Analysts had estimated profit as if money Viacom paid out in severance in the period wasn’t the real thing. On that basis, Viacom earned 49 cents a share, beating the average estimate by 1 cent.

Time Warner Inc, a rival of Viacom for entertainment dollars, said it earned $519 million, or 43 cents a share, in the quarter. Analysts insist Time Warner earned 45 cents, excluding, according to Bloomberg data, costs related to litigation and asset sales. Lawyers must work for nothing.

By similar Wall Street reckoning, the expense of cutting jobs and selling an asset that reduced McGraw-Hill Cos. second quarter earnings per share by 10 percent was immaterial.

Analysts also say investors should ignore $129 million that Textron Inc., maker of small airplanes, helicopters and golf carts, charged against net income in the latest quarter. Included was the cost of shutting a plant for an eight-seat jet Textron decided not to build.

General Electric Co., which makes jet engines and electric power equipment and has a financial services arm, had a second- quarter profit of 24 cents a share. GE and the analysts emphasized earnings from continuing operations, which at 26 cents a share, exceeded their estimate by 2 cents. A $194 million loss from discarded businesses was discarded.

Wall Street’s big earnings lies must exasperate investors. They already have lost faith in the reported earnings of banks that are the center of the financial system.

The argument is that “adjusted” earnings make for a smoother picture of company performance.

Cooking the books to smooth out earnings from quarter to quarter is what hoodwinked shareholders of Fannie Mae and Freddie Mac several years ago.

Update: Earnings Beat Rate Off The Charts & BIZARRO MARKET

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China Stocks Plunge Most In Eight Months On Tightening Concern

Stocks closed down 5 percent at 3.266 and were down almost 7 percent intraday....Probably no coincidence that just today the Chinese leadership has finally put a lid on some lending targets..... Will be interesting to see how the market can "bubble" along ( see Chart Chinese SSE Index ) without the main driver ( Loans worth about an estimated 1.16 trillion yuan were invested in the stock market in the first five months of this year via Bloomberg)..... Here ( see China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis ) is an earlier post on this topic .......

Der Markt in Shanghai ist binnen einer Handelsstunde mal eben um knapp 7% eingebrochen und hat sich auf einen Tagesverlust von 5% auf 3.266 retten können. Nach dem fantastischen Lauf von knapp 80% ( siehe Chart Chinese SSE Index ) sicher nicht weiter interessant. Wäre da nicht zeitgleich die Meldung über die Ticker gelaufen das die chinesische Führung den wichtigsten Banken verordnet hat Ihre explosionsartige Kreditvergabe drastisch einzuschränken. Bin mal gespannt wie sich der Markt ohne seinen wichtigsten Treibstoff schlagen kann ( Loans worth about an estimated 1.16 trillion yuan were invested in the stock market in the first five months of this year via Bloomberg ). Meine Meinung zum Thema dürfte bekannt sein ( siehe China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis ) ........

BEIJING, July 29 (Thomson Reuters)

China's two biggest state-owned commercial banks have put a lid on their 2009 lending targets, according to domestic media reports, in a move that will significantly slow overall Chinese credit growth in the second half

Industrial and Commercial Bank of China (ICBC) is aiming to issue full-year new oans of 1 trillion yuan ($146.4 billion), while China Construction Bank (CCB) has set a goal of 900 billion yuan, Caijing magazine reported.

The two banks, China's largest by market value, granted new loans of 825.5 billion yuan and 709 billion yuan, respectively, in the first half.

If they stick to their reported targets, this would imply that ICBC would have already issued 83 percent of its full-year lending total, while CCB would have already issued 79 percent.

Overall, Chinese banks issued a record 7.37 trillion yuan in new loans in the first six months, easily topping the full-year figure of 4.91 trillion yuan in 2008 and igniting concern that excess liquidity was leading to stock and property bubbles.

Chinese regulators have left banks largely unhindered in their rampant lending in the belief that the economy needs ample money to recover, but in recent weeks they have warned of mounting credit risks to the banks themselves and demanded that loans be put to use for productive purposes.

> Here one interesting anecdotal evidence from a fund manager via M.Pettis

> Hier eine recht interessante Einschätzung eines Fondsmanagers via M.Pettis

Notes on a real estate trip in China

I don’t know how much you travel around China. T and I do a fair bit, and most recently we were in Guiyang. I thought I’d seen insane excess in the past – 200 thousand square meter malls completely empty next to apartment complexes with 40 thousand units and 30% occupancy rates, etc. etc.

But what we saw over there is rather hard to fathom. It seems the Guiyang city mayor had the same idea as the Shenzhen mayor – to move the old downtown to a piece of undeveloped land.

Of course Guiyang has a quarter the population and probably a quarter the per capita income of Shenzhen. They built sprawling new government buildings about a 20-minute drive north of town. And then the residential high rise projects started going up. From driving around the area, we figured well over 100 20+ storey buildings.

What was most distressing was that the development has been totally uncoordinated – a project with 15 buildings here, in another field two miles away a project with one building, another mile in another direction three buildings, sprawled over what was easily over 30 square kms. of farmland well north of town. Every building we got close enough to see was either incomplete/under construction, or empty. Our tone gradually went from “Haha, another one!” to “Oh my God, another one.” We conservatively guesstimated that we saw US$10bn of NPLs in one afternoon.

The only buildings that were occupied were six-storey towers built to accommodate the peasants who had been displaced by the construction.

Back in the city proper, every neighborhood we saw was a convulsing mess of buildings being torn down, new ones being built, and unfinished high rises starting to crumble

> Another comment from a friend of M.Pettis

> Hier eine weiterere "amüsante" Beobachtung....

"By the way almost no one I know trusts the official vacancy rates.

A friend of mine who works in the financial service industry in Shanghai took advantage of the recent total solar eclipse to do his own vacancy rate analysis.

His message to me: “Today’s eclipse provided a perfect opportunity for keen-eyed observers on the ground to see how many floors of the nternational Financial Center (aka The Bottle Opener) are actually lit and ready for use: 25% at most.

Hope that’s of use the next time you comment on speculative office building.”

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Tuesday, July 21, 2009

No Kidding.... AAA to BBB- And Back To AAA Within One Week

Looks my rare one and only cheer of the rating agencies ( see No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ) was as feared premature..... You really cannot make this up..... This is definitely a new low ( even for S&P ).... Let´s hope Bloomberg is right that the change is only related to three 2007 CMBS tranches......UPDATE: S&P Commits Professional Suicide With Ratings Round Trip, Underlying CRE Remains Toxic Garbage via Zero Hedge & .July 22nd, 2009S&P upgrades CMBS to AAA week after downgrading to BBB- R. Winkler....

Sieht ganz so aus als mein erster positiver Gefühlsausbruch in Sachen Rating Agenturen ( siehe No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ) ad absurdum geführt worden ist. Was da gerade abgeht kann man getrost als neues Allzeittief in Scahen Unabhängigkeit & Glaubwürdigkeit von S&P betrachtenbetrachten. Wer da wohl "interveniert" hat....... Bleibt hier zumindest zu hoffen das Bloomberg Recht hat das vorerst nur 3 CMBS aus dem Jahr 2007 die Wiederauferstehung feiern durften.....UPDATE: S&P Commits Professional Suicide With Ratings Round Trip, Underlying CRE Remains Toxic Garbage via Zero Hedge & July 22nd, 2009S&P upgrades CMBS to AAA week after downgrading to BBB- R. Winkler

S&P Reverses Ratings After Downgrades
In a reversal in its evaluation of a clutch of mortgage bonds backed by commercial property, Standard & Poor's on Tuesday raised the ratings on several securities it had downgraded a week ago.
The move came the same day the Obama administration detailed a plan to overhaul regulation of credit-ratings firms by requiring increased disclosure and stronger oversight, and curbing the practice of "ratings shopping."

In the S&P action, among the bonds returned to the top-notch triple-A category from the triple-B minus category are securities that make up the benchmark GG-10 deal.
The ratings firm said it raised the ratings following the implementation of its "recently updated criteria."

S&P spokesman Adam Tempkin said in an email that the firm had received inquiries from market participants on how it applies losses in the AAA category "that prompted us to clarify our approach. In doing so, we are also introducing refinements to the approach."

The upgrade means that these bonds are now eligible for a Federal Reserve program that offers investors cheap loans to buy them.

S&P Restores Top-Ratings to Commercial-Mortgage Bonds

July 21 (Bloomberg) -- Standard & Poor’s backtracked on ratings cuts issued last week and raised the ranking on commercial mortgage-backed debt from three bonds sold in 2007.

The securities, restored to top-ranked status, had been downgraded as recently as last week, making them ineligible for the Federal Reserve’s Term Asset-Backed Securities Loan Facility to jumpstart lending.

S&P lowered the ratings on a class of a commercial mortgage-backed bond offering from AAA to BBB-, the lowest investment-grade ranking, on July 14.

The New York-based rating company reversed the cut today, S&P said in a statement. In a related report, S&P said it adjusted assumptions on the timing of projected losses on the mortgages.

Debt rated below AAA isn’t eligible for the Federal Reserve’s TALF. Investors sought $668.9 million in loans from the Fed to purchase so-called legacy commercial mortgage-backed bonds on July 16, the first monthly deadline to finance the purchase of the securities.

S&P’s CMBS flip-flop FT Alphaville

Let’s be very clear here: one week ago, according to S&P’s “independent judgment, testing and analysis” a clutch of Goldman’s CMBS ransactions were deemed sufficiently troubled to merit deep downgrades.

One week and some “refinements” later, and “class A-2, A-3, and A-AB commercial mortgage pass-through certificates from GS Mortgage Securities Trust 2007-GG10″ are back to triple-A.

CMBS-saga, cause and correlation
FT Alphaville presents the following CMBS-saga timeline:

- May 19 - Fed announces that it will expand the Talf to include certain legacy CMBS.

- May 28 - S&P warns it will likely downgrade tens of billions of AAA-rated CMBS after tweaking its ratings methodology, including CMBS owned by Goldman Sachs, Credit Suisse, JP Morgan and Morgan Stanley, among others.

- May/June - Investors slowly cotton on to the fact that Talf-eligible CMBS needs at least two triple-A ratings.

- June 16 - The initial subscription for Talf loans for new CMBS fails. No one applies.

- Early July - S&P is reportedly “crushed with client calls” about the proposed new ratings.

- July 16 - Investors ask for a paltry $668.9m at the second Talf legacy CMBS offering. (By way of contrast, an estimated $300bn to $500bn of CMBS is scheduled to mature this year).

- July 21 - S&P reverses its decision to tweak its CMBS rating methodology.
We’re not suggesting these events are related, but you have to wonder …

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Monday, July 20, 2009

A Closer Look At Volvo´s Customer Finance Arm......

Underneath the headline ( Volvo swings to loss as deliveries slump ) another trend is emerging..... With a credit reserve under 2 percent ( close to 400 percent increase YOY )it looks like their credit book will be a significant headwind for quarters to come..... This kind of "vendor financing" is widespread and i´m pretty sure we will more of this kind of problems on a regular basis ( see BMW & Harley Davidson )

Hinter der ernüchternden Schlagzeile Lkw-Bauer Volvo im 2. Quartal schlechter als erwartet verbirgt sich ein anderer Trend der bald wohl desöfteren nachzulesen sein wird. Da bei Volvo die Reserven für mögliche Kreditausfälle momentan bei nur 2% ( und das nach fast 400% Anstieg auf Jahressicht ) liegen dürfte deren Kreditbuch die nächsten Quartale sicher nicht zum Ergebnis beitragen......Diese Art der "Absatzfördeung" ist über etliche Branchen weit verbreitet und dürfte zukünftig regelmäßig für wenig erfreuliche Nachrichten sorgen ( siehe BMW & Harley Davidson ).


Operating income was negatively affected by SEK 3.2 billion in increased provisions for credit losses and residual value commitments, lay-off related costs and write-downs on inventories as well as costs associated with an agreement with UAW regarding healthcare benefits for retirees

Within the customer-financing operations of Volvo Financial Services, provisions increased for credit losses, primarily in Western Europe, which resulted in a loss for the quarter. This development is to be against the backdrop of our customers having lower freight volumes as a result of the weak economic trend throughout the world. We are working actively with the customers and have an established process for managing customers who have difficulty in paying back their loans.

In Western Europe customers are challenged by the substantial reduction in economic activity leading to an increasing level of delinquency and repossessions.

Continuing to be affected are segments directly associated with the production of motor vehicles, which, despite stimulus programs, remain under pressure. In markets such as Spain the widespread economic slowdown has impacted portfolio performance. In Eastern Europe, there has been little or no improvement since the first quarter as many countries continue to experience a steep decline in economic activity. This means that customers in many segments struggle to meet their obligations and require long term assistance in the form of restructured financing to continue operations.

The operating loss in the second quarter, as a result of higher credit provisions, amounted to SEK 296 M, compared to an operating income of SEK 387 M in the previous year.

VFS has increased the credit provisions primarily in Western Europe during the second quarter of 2009. Total credit provision expenses amounted to SEK 663 M (59) which was higher than the write-off level of SEK 563 M (103).

This resulted in an increase in the credit reserve from 1.72% at March 31, 2009 to 1.88% of the credit portfolio at June 30, 2009.

The annualized write-off ratio through June 30, 2009 was 1.77% (0.37).

At June 30, 2009 total assets amounted to SEK 109.7 billion (99.2). The credit portfolio decreased by 3.6% net over the last twelve months, adjusted for exchange-rate movements.

> Add higher financing cost & this as another kind of vendor financing to the mix and the picture isn´t getting any better..... Needless to say that the stock is up close to 4%....... Probably because the time of negative orders is now over...... ;-)

> Wenn man jetzt noch höhere Finanzierungskosten & diese Form der Absatzförderung hinzunimmt dürften die Riskien für Firmenbilanzen nicht gerade weniger werden...... Überflüssig zu erwähnen das die Aktie mit 4% im Plus notiert...... Liegt wohl daran das endlich die Zeit der negativen Orders vorbei ist......;-)

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Friday, July 17, 2009

No Wonder GE Changed The Reporting Pattern.....

New equipment orders down over 40 percent........No problem with bad numbers, especially when they have to compete with a very high 2008 comparison.....But it is not transparent when after several years "celebrating" one of the most important components of the operating business in the headlines you suddenly choose to bury it in the conference call presentation.... I´m pretty sure that when there is an uptick they will once again switch back to the old pattern..... ;-)

Neue Investotionsgüteraufträge für GE mal eben über 40% eingebrochen..... Da diese aber im Verhältnis zu einem sehr starken Vorjahresquartal zu sehen sind relativiert sich dieser Absturz zum Glück um einiges..... Was mich hier am meisten stört ist das GE diese wohl wichtigste Kennziffer des operativen Geschäfts im Gegensatz zu all den Vorjahren, als noch jede winzige Veränderung in der Überschrift bejubelt worden ist, mit keinem Wort in der Ergebnisveröffentlichung erwähnt und man sich erst die Mühe machen muß die Analystenpräsentation zu durchforsten..... Denke wir wissen alle was passiert wenn die Zahlen wieder etwas erfreulicher aussehen........ ;-)

> As CNBC puts it best.... "Nothing troubling in the press release......"

> Besser als CNBC kann man es nicht formulieren.... "Nichts besorgniserregendes in der Presseveröffentlichung".......

GE Press Release / Fineprint press release.....

Highlights for the quarter included sustained strength in high-margin services where orders grew 2% and contractual services backlog reached an all-time high of $122 billion.

A highlight for the quarter was a record $8 billion in wins by GE and its two aircraft engine joint ventures at the Paris Air Show

> Nice to see how they pump up the 2% growth in services but fail to mention brutal slump in equipment orders.......

> Schon bemerkenswer wir man den 2% Anstieg im Servicesegment immerhin im Kleingedruckten findet aber den wohl historisch einmaligen Einbruch nicht einmal in der Fußnote der Presseveröffentlichung auffindbar ist...

GE Presentation ( Slide 6 )

GE 1st Quarter 2009 / Headline Press Release

Total equipment and services backlog steady at $171 billion; 1Q
Infrastructure orders totaled $19 billion, down 10%

GE 4th Quarter 2008 Headline Press Release

Infrastructure 4Q orders declined 6%; Total equipment and services backlog grew to $172 billion, up 9%

GE 3rd Quarter 2008 Headline Press Release
GE 3rd Quarter 2008 Total orders backlog of $170 billion; equipment backlog up 19%; service backlog up 22%

GE 2nd Quarter 2008 Headline Press Release

Services orders of $9.5 billion, up 19%; major equipment orders of $13.7 billion, up 4%, outpacing shipments 1.3x; total orders of $26.9 billion, up 8% Major equipment backlog of $55 billion, up 25%; customer service agreements (CSA) backlog of $113 billion, up 17%

GE 1st Quarter 2008 Headline Press Release

Total orders of $24 billion, up 8%; major equipment orders of $12 billion, up 11%; services orders of $8.3 billion, up 5% Major equipment backlog of $52 billion, up 41%; customer service agreement (CSA) backlog of $110 billion, up 16%

> The "old" style of reporting goes back at least to the the first quarter of 2006 ( see Earnings Reports 2006, 2007 )......Siemens, ABB & Alstom ( all with orders down up to 30 percent (Alstom) , all reporting the slump within the top of the first page / see links) havn´t switched to a more "favourable" reporting system.....Thank god GE´s financial arm has such a "Strong Asset Quality" ...... Some thanks to the $46 billion Temporary Liquidity Guarantee Program ( more than anybody else ) issuance some are already calling GE "Guaranteed Electric" / see also TLPG Issuance Table via Winkler......;-)

> Die "alte" jetzt unerwünschte Weise der Berichterstattung ist mindestens seit dem Jahr 2006 Standart gewesen ( sieheEarnings Reports 2006, 2007 ) .....Siemens, ABB & Alstom haben übrigens trotz ebefalls happiger Einbrüche ( bis zu 30% , bei allen auf den ersten Blick zu erkennen / siehe Links ) Ihre Methodik nicht verändert....... Zum Glück hat der Finanzarm von GE ja eine extrem "Starke Asset Qualität" ..... Und dank der 4 Mrd $ die GE unter dem TLGP Programm mit staatlicher Garantie emitieren konnte ( mehr als jeder andere ) nennen einige GE nicht ganz zu unrecht "Guaranteed Electric" / siehe auch TLPG Issuance Table via Winkler ......;-)

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Thursday, July 09, 2009

That´s What Is Happening When You Outbid A SWF......Hapag-Lloyd Said To Seek As Much As $2.4 Billion In Capital

No problem with overbidding NOL ( Temasek ) but when your consortium is in part backed by the taxpayer ( City Hamburg & HSH Nordbank ) it is getting "annoying"....Especially when the taxpayer had already to bail out HSH Nordbank with well over € 10 billion ( and counting / see States agree €13bn HSH bail-out ).... Will be interesting to see how long the public will tolerate this form of "patriotism" or should i better say "protectionism"....

Maybe some of the officials were blinded with the success in former interventions (Beiersdorf/Procter&Gamble and Norddeutsche Affinerie/A-Tec).... France must be jealous.......... :-)

Grundsätzlich sind Übernahmen die massivst überbezahlt sind nicht weiter verwerflich...... Anders sieht es da aus wenn das Konsortium das den "Mondpreis" bezahlt hat zu nicht unwesentlichen Teilen der öffentlichen Hand ( Stadt Hamburg & HSH Nordbank ) zuzuordnen ist...... Ganz abgesehen davon das die HSH Nordbank bereits mit etlichen Mrd € ( siehe States agree €13bn HSH bail-out ) von den Steuerzahlern gestützt werden mußte....... Hier eine mehr als gelungene extra3 - Chronologie HSH Nordbank GENIAL :-)

Denke das diese Art des Patriotismus und der Standortpolitik ( evtl. sind die Erinnerungen an früher erfolgreich geschlagene "Schlachten" wie Beiersdorf/Procter&Gamble bzw. Norddeutsche Affinierie/A-Tec noch zu gut in Erinnerung) doch gewaltig aus dem Ruder gelaufen ist...... Böse Zungen könnten hier auch von Protektionismus sprechen...... Da könnte sogar Frankreich neidisch werden... :-)

Flashback October 2008

Rückblende Oktober 2008

TUI Sells Hapag-Lloyd Unit in 4.45 Billion-Euro Deal

Oct. 12 (Bloomberg) -- TUI AG, the German owner of Europe's largest travel company, agreed to sell Hapag-Lloyd to a Hamburg- based investor group in a deal that values the shipping company at 4.45 billion euros ($6 billion).

The Hamburg group, led by the city's government and logistics billionaire Klaus-Michael Kuehne, was the sole remaining bidder after Neptune Orient Lines Ltd. ( Temasek Holdings - the investment arm of the Singapore Government - is the largest single shareholder with a 68% holding ) dropped out on Oct. 10. TUI initiated the sale in March, giving in to investor pressure to focus on tourism.

The investor group, called Albert Ballin KG after a famous Hamburg ship owner, bid for the company to secure jobs and an important part of the city's maritime history. The group consists of the city of Hamburg (Hamburg alone has a holding of about 23 percent), Kuehne, private investment bank M.M. Warburg & Co., regional bank HSH Nordbank AG, and insurers Signal Iduna and Hanse Merkur.
Fast forward to today........

Nun zu der heutigen Schlagzeile.......

Hapag-Lloyd Said to Seek Up to $2.4 Billion Capital

July 9 (Bloomberg) -- Hapag-Lloyd AG, Germany’s largest container shipping line, is seeking as much as 1.75 billion euros ($2.4 billion) in capital from lenders and shareholders including TUI AG, two people familiar with the matter said

German banks will be asked to provide a 1 billion-euro loan backed by the federal government, one of the people said. TUI would shoulder 325 million euros and Albert Ballin 425 million euros, the person said. The Hamburg city, part of Albert Ballin, would pay 170 million euros, according to the person.

Doubling down.......Another interesting part is that TUI is still owning over 40 percent and has given Hapag-Lloyd significant credit lines.....The FTD has an estimate of only € 400 Million. According to Manager Magazin & TUI Deal Presentation ( Page 11) it is closer to € 1.4 Billion......

Hört sich für mich ganz nach "verbilligen" an......Interessant ist zudem das TUI immer noch über 40% an der Reederei hält und Hapag-Lloyd zudem nach der FDT mit 400 Mio € an Kreditlinien versorgt hat ( siehe auch Hapag-Lloyd braucht Milliardenhilfe ).Gemäß dem Manager Magazin ( siehe Hapag-Lloyd in schwerer See ) und der TUI Deal Präsentation ( Seite 11 ) vom Februar sind es sogar 1,4 Mrd €. Hier mehr vom Handelsblatt Notruf in stürmischer See

Needless to say that TUI is already rated at JUNK...... I´ll bet that they already regret that they haven´t sold to Temasek......

Brauche wohl nicht weiter erwähnen das TUI selbstredend seit Jahren mit JUNK geratet wird....... Bin mir sicher das die es bereits bitter bereuen nicht an Temasek verkauft zu haben.....

Corporate Rating

Corporate Rating


Standard & Poor´s






Here is more on on the outlook for the shipping and container business...........

Hier mehr zum trüben Ausblick für die Containerbranche.........

Trade Update: Container Shipping "A Black Hole of Losses" Naked Capitalism

Cargo ships will carry 27 million fewer containers by year's end than they did in 2008 -- a reduction roughly equivalent to all of the cargo containers handled by the five busiest U.S. seaports in a typical year, according to London-based Drewry Shipping Consultants' Container Forecaster Report.

"There has never been a decline like this before. We have never seen numbers like these," said Neil Dekker, editor of the Drewry report. "The container industry is looking at a $20-billion black hole of losses. We can expect a lot of casualties."...

FT Alphaville

Market imbalances are in our view aggravated by the large newbuilding orderbook across most segments. These vessels will be delivered during difficult market conditions with most having been ordered at high rices. All shipping sectors will likely be affected by the high prices paid for newbuildings in recent years.

By our reckoning, these vessels will, on average, have to earn high freight rates to cover their purchase price and operating costs. With freight rates now very low in some segments, vessel operators look likely to incur substantial losses.

Consequently, we expect that the downturn for shipping will be severe and prolonged. We expect some relief on supply-side pressure, however, to come from widespread newbuilding cancellations or deferrals, and subsequent bankruptcies at weaker shipyards or cancellation of new ‘greenfield’ shipyard projects, primarily in China. We believe this is most likely to affect deliveries in 2011 and 2012

A sudden ratcheting upwards of the risk profile of these portfolios, which is what S&P expects, could mean a quadrupling in demand for regulatory capital under Basel II - quite a significant increase, particularly in these strained times.

The orderbook/current fleet ratio is indeed "stunning"......

Das Verhältnis Orderbuch im Verhältnis zur aktuellen Flotte ist in der Tat "atemberaubend"......

S&P Table of Current fleet and orderbook

I´ll finish with one HSH Nordbank figure ......

Abschließend eine wenig beruhigende HSH Nordbank Zahl

Shipping lending represents 7.4x HSH Nordbank’s equity at end 2007

There is a good chance that large party of the shipping financing arm will be "outsorced" to a Bad Bank.....

Bin mir sicher das große Teile der Schiffsfinanzierungen demnächst in einer eigens dafür gegründeden Bad Bank landen werden.....

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Wednesday, July 08, 2009

This Can´t Be Good News For The Cash Flow.........

Maybe i´m reading too much into the "Accounts Receivable to Sales Ratio" but the following number is sounding at least to me a bit "elevated". Unfortunately i have no historical or geographical comparisons to put the latest number into perspective. But in the face of a long and very deep recession/depression & spiking bankruptcies my comon sense tells me this is worrisome and i assume that this isn´t a German "phenomenon".....

Für mich erschenit diese Nummer beunruhigend hoch. Leider habe ich keinerlei historischen bzw. geographischen Vergleichswert um die Zahl ins Verhältnis zu setzen. Mein gesunder Menschenverstand sagt mir aber das dies im Angesicht einer langen Rezession/Depression und explodierenden Insolvenzen Grund zur Besorgnis ist. Bin mir ebenfalls zeimlich sicher das diese Thematik kein rein deutsches Phänomen ist..... Erneut dickes Kompliment an das Handelsblatt

One fith of the top listed German companies have receivables outstanding greater than 20 percent of their revenue

Click here to see the details

Konzerne steuern auf gefährliche Engpässe zu Handelsblatt

Akuter Auftragsmangel, immer schwächere Mittelzuflüsse aus dem operativen Geschäft und wachsende Refinanzierungsnöte stellen die führenden deutschen Konzerne vor wachsende Herausforderungen

Bereits ein Fünftel der untersuchten Unternehmen hatte Ende 2008 mehr als 20 Prozent ausstehende Forderungen, gemessen am Gesamtumsatz
> Für zum Teil recht überraschende Details hier der Handelsblatt Bilanzcheck

Darunter waren der Pharmakonzern Merck, der Energieversorger RWE und der Lkw-Hersteller MAN - Unternehmen, die ihren Kunden in normalen Zeiten keine Zahlungsziele einräumen. Und in der Rezession wächst die Gefahr, dass Forderungen komplett ausfallen

Die meisten Konzerne sind finanziell gut gepolstert ins Krisenjahr 2009 gestartet. Nur 60 Prozent betrug im Schnitt die Fremdkapitalquote. Laut Bundesbank war die deutsche Industrie Mitte der neunziger Jahre mit 84 Prozent Fremdkapital erheblich höher verschuldet

> Denke das Argument zieht besonders nach Betrachtung der bisherigen Goodwillhandhabung nicht mehr sonderlich.....

Auch Oliver-Wyman-Experte Kautzsch identifiziert weitere Risikopotenziale: "Möglicherweise haben einige Unternehmen ihren Kunden sehr lange Zahlungsziele gewährt in der Hoffnung, das Geschäft am Laufen zu halten. Das könne sich jetzt in der Krise rächen."

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Sunday, July 05, 2009

Number Of The Day " Goodwill On Top 133 Listed German Companies Balance Sheets...."

I have written about this in the past ( see Thank God There is No Stress Test On Goodwill Assets Propping Up Bank Balance Sheets......... ) and i think this topic is indeed a ticking time bomb that will "wreck" numerous balance sheets. I´m pretty sure that this issue is similar around the globe and will pop up on a weekly basis.... Except there will be an accounting change not to mark these assets "mark-to market"..... Wouldn´t be the first time ....... :-)

Ich habe über diese Thematik bereits vorher ( siehe Thank God There is No Stress Test On Goodwill Assets Propping Up Bank Balance Sheets.........) geschrieben und ich bleibe dabei, das es sich hier um eine tickende Zeitbombe handelt die schon bald etliche Firmenbilanzen "ruinieren" wird. Da diese Problematik weltweit dieselbe ist dürften hier demnächst Meldungen im Wochenrhythmus Schlagzeilen machen.... Es sei denn es wird eine neue Bilanzierungsvorschrift aus dem Hut gezaubert die diese "Mark to Market" Bewertung aussetzt..... Wäre ja nicht das erste Mal........ :-)

Was waren das noch für Zeiten als es bis vor kurzem noch Vorschrift war die Übernahmen über mehrere Jahre konsequent abzuschreiben....... Da dies aber die kurzfristigen Gewinne belastet hat wurde nur allzu gern die erstbeste Möglichkeit ( Umstellung auf US GAAP/IFRS ) genutzt um diese "Belastung" zu vermeiden.... Wie sich jetzt zeigt hat dies die Bilanzen nicht gerade "wetterfester" gemacht und die Ergebnisse der letzten Jahre künstlich aufgebläht ( siehe aus dem Jahr 2004 WiWo Neuregelung der Goodwill-Abschreibung bewirkt Kurssprünge bei Dax-Werten )... .Argument war seinerzeit die bessere Vergleichbarkeit mit den internationalen Wettbewerbern...... Großes Kompliment an das Handelsblatt !

The 133 leading German listed companies have ( thanks to the M&A madenss during the past few years ) accumulated $ 265 Billion in Goodwill. This equals 44 percent of their capital.

In the worst case scenario this would half the equity ratio from 40 to just over 20 percent.

For all the details on the 133 companies involved in the study see Handelsblatt Goodwill Checklist May 2009

Firmenbilanzen bergen immense Risiken Handelsblatt

Die führenden deutschen Konzerne ( 133 analysierte Firmen aus Dax, MDax, TecDax und SDAX durch eine Untersuchung des Handelsblatts in Zusammenarbeit mit dem Institut für Wirtschaftsprüfung (IWP) in Saarbrücken und der Unternehmensberatung Oliver Wyman ) haben nach der Übernahmewelle der vergangenen Jahren 189 Milliarden Euro an Firmenwert in den Büchern. Das entspricht fast der Hälfte ihres Eigenkapitals. Wegen der Rezession drohen nun massive Abschreibungen. Bei einem Dutzend Unternehmen ist die Situation brenzlig.

In den Bilanzen der führenden deutschen Konzerne standen Ende des vergangenen Geschäftsjahres noch 189 Mrd. Euro an Goodwill. Dieser Betrag entspricht knapp 44 Prozent des bilanzierten Eigenkapitals.

Das verdeutlicht, welch gefährliche Zeitbombe in den Zahlenwerken tickt: Nach Abzug des Firmenwerts würde sich die aktuelle Eigenkapitalquote von gut 40 Prozent annähernd halbieren.

> Wer mehr zu den Einzelfällen ( z.B. Telekom ) wissen möchte sollte sich den Link sowie Firmen können nicht mehr wegschauen & Firmen nutzen Frühwarnsystem nicht ( beide Handelsblatt ) zu Gemüte führen und zudem einen Blick in die Handelsblatt Goodwill Checklist Mai 2009 ( enthält alle 133 Unternehmen aus DAX,MDAX, TECDAX & SDAX) werfen.

I´m pretty sure "Frankfurt, London & Wall Street Finest" have already "considered" the bullet proof balance sheets into their as usual conservative forecasts ( see Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner & CNBC´s Dennis Kneale: "The Great Recession Is Over")....... ;-)

Bin mir sicher das die Experten aus Frankfurt, London & New Yorks all dies in Ihren wie gewohnt "konservativen" Prognosen berücksichtigt haben (siehe Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner & CNBC´s Dennis Kneale: "The Great Recession Is Over")......... ;-)

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Saturday, July 04, 2009

Hussman "High Loan-to-Value + Trigger Event (Unemployment) = Default"

As predicted..... The comeback of the retail investor has marked the top..... Time for Abby Joseph Cohen to adjust her S&P 500 target of 1050 ( Quote Cohen "Fair value based on recession earnings" ). Wouldn´t surprise me if she will revise it upwards.....Maybe this time her model is based on some Goldman insights of the very strange "Robotrading" ( see also a very disturbing "Robotrading" Chart / WSJ ) accounting for well over 50% percent of overall US equity trading volume lately...... This would be as credible as her/Goldman recession proof earnings call.....;-)

For a "slightly" less optimistic ( aka realitic ) view use your common sense, read a link on my blogroll or just take a look at Doomsville via FT Alphaville..... For a daily dose of excellent "ANTI SPIN" i highly recommend to subsribe to the free daily update from David Rosenberg!!! ( Here are some examplesvia Zero Hedge ). I´m taking a much needed break. So posting on this blog will be very light during the next few weeks.

Wie bereits befürchtet hat zumindets in den USA die Rückkehr der Kleinanleger erneut das Top markiert. Wenn man über Wochen halt jeden Tag vermeintliche "Green Shoots" , lächerliche "Stresstest", astronomisch hohen S&P 500 Ziele, aberwitzige Gewinnausweise die mit GAAP nichts zu tun haben, ein Markt der zu über 50% durch computergestützes Handelssysteme kontrolliert wird ( siehe "Robotrading" bzw. einen wenig vertrauenserweckenden "Robotrading" Chart / WSJ ) usw. vorgesetzt bekommt fällt es einigen Anlegern oftmals schwer den gesunden Menschenverstand walten zu lassen bzw den Überblick zu behalten...... Freue mich jetzt schon auf die Revision von Abby Joseph Cohen und Ihrem S&P 500 Ziel von 1050..... Nur gut das bereits dieses Ziel den Fair Value anhand von Rezessionsgewinnen ermittelt hat. ( Zitat Cohen "Fair value based on recession earnings" ) .

Für einen etwas weniger optimistischen ( andere würden auch sagen realistischeren ) Ausblick empfehle ich wahlweise mehr auf den gesunden Menschenverstand zu hören, einen der Links auf meiner Blogroll oder Doomsville via Ft Alphaville. Wer die momentan wohl beste tagtägliche Analyse frei Haus geliefert haben möchte der sollte sich hier registrieren lassen!!!! David Rosenberg unterscheided sich nicht erst seit seinem Wechsel von Merrill Lynch zu Gluskin Sheff wohltuend von den üblichen Verdächtigen ( siehe Cohen ). Hier einige Beispiele via Zero Hedge. Ich werde mir die nächsten Wochen eine dringend benötigte Auszeit nehmen. Die Postingfrequenz wird also stark zurückgehen.


It is very important to recognize that the increasing unemployment rate is likely to exert a different dynamic in this economic downturn than it has in prior downturns, because of the high ratio of household debt-to-income, and the high ratio of mortgage loan-to-value at present.

In normal downturns, unemployment does trigger a certain amount of loan losses, but the general tendency is for unemployment to behave as a lagging indicator.

In the current cycle, high debt-to-income and loan-to-value ratios create a situation where unemployment can easily be the trigger event for further defaults, and could therefore create a tendency for job losses to lead economic weakness (rather than just lagging it).
> Especially when this time the job picture is looking like this.... And lets not forget these already ugly numbers are based on the (Black Box ) BLS numbers.....

> Besonders dann nicht wenn der Arbeitsmarkt im Vergleich zu anderen Rezessionen so aussieht...... Möchte nur noch darauf hinweisen das slebst dieser Blick noch geschönt ist ( da diese Daten auf den teilweise aberwitzigen Statistiken des BLS basieren )......

bigger / größere Version H/T Calculated Risk

I don't think that the feedback will be strong enough to lead to a self-reinforcing collapse, but I do think that it is naïve to expect that the economy will just “shake off the blues” and roar ahead.

At the same time, bank chargeoffs continue to lag the deterioration in credit. The FDIC notes “The high level of chargeoffs ($37.8 billion) did not stem the growth in noncurrent loans in the first quarter. On the contrary, noncurrent loans and leases increased by $59.2 billion (25.5 percent).
The percentage of loans and leases that were noncurrent rose from 2.95% to 3.76% during the quarter. The noncurrent rate is now at the highest level since the second quarter of 1991. The rise in noncurrent loans was led by real-estate loans, which accounted for 84 percent of the overall increase.”

> Click through some of the charts/tables from T2 Partners or just take a look at this chart showing the crash in CRE and it should be clear that the entire US banking system is insolvent. Very frustrating to see that after 12-18 month into the crisis & trillions of taxpayers money wasted that still no progress ( outside of Goldman Sachs...... ) has been made. But with Bernanke, Geithner & Summers in charge...... Unfortunately the situation in Germany & others parts like China, Europe / Emerging Europe, Dubai / Middle East, Japan etc of the world isn´t much better....... Wouldn´t surprise me if the Depression Index will be quite popular in the coming years...

> Klickt Euch wahllos durch die nachfolgende exzellente Präsentation von T2 Partners oder schaut Euch diesen Chart zum Thema gewerbliche Immobilien an und es dürfte klar sein das trotz aller PR, Spinversuche & Bilanzierungsverrenkungen das gesamte US Bankensystem noch immer heftigst insolvent ist. Das mit Billionen von Steuergeldern bisher nicht mehr erreicht worden ist haben wir in erster Linie Bernanke, Geithner und Summers zu verdanken. Leider spielt Obama ebenfalls eine wesentliche Rolle in diesem Drama. Wer trotz desaströser Vergangenheit dieser Leute weiterhin Vertrauen in die Mitarchitekten der Misere setzt macht sich "strafbar".... Da besonders wir hier in Deutschland aber im Glashaus sitzen und es in anderen Teilen der Welt wie z.B. China Europa / Osteuropa , Dubai / Mittlerer Osten , Japan usw. nicht viel besser aussieht dürfte das Wort der "Depression" früher oder später in starker Konkurrenz zur "Rezession" stehen......Unglücklicherweise besteht dieses Mal eine recht große Chance das der Depression Index zukünftig längere Zeit stark erhöht sein wird......T2 July 3 Whitney Tilson: Why There Is More Pain To Come

> Back to Hussman

Now, note that the $59.2 billion figure is the increase, not the total value, of noncurrent loans for the first quarter alone. In a banking system where total capital only represents 10% of total assets (and even that level only thanks to TARP infusions), 3.76% of total loans in the noncurrent category is not a small figure.
> Time for another accounting change......

> Höchste Zeit für eine neue Bilanzierungsregel......

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Friday, July 03, 2009

Iceland "The Dark Side Of Green Energy"

I stumbled across the follwing map via Paul Kedrosky and i think it makes up for an interesting weekend reading. More on this topic from Saving Iceland & Renewable energy in Iceland Wikipedia

Ich bin kürzlich beim tagtäglichen Besuch von Paul Kedrosky´s Blog auf die nachfolgende Karte gestoßen und denke das dies einen nachdenklichen Blick wert sein sollte. Mehr zu diesem Thema gibt es auf Saving Iceland & Renewable energy in Iceland Wikipedia

So keep the following maps in mind when you here Alcoa & Co praising their lowered cost base or news like this....

Man sollte die nachfolgenden Karten im Hinterkopf behalten wenn man vermeintliche Jubelmeldungen wie die folgende oder Hinweise von Alcoa & Co auf die deutlich verbesserten Kostenbasis Ihrer Aluschmelzen vorgesetzt bekommt....
Iceland is the first country in the world to create an economy generated through industries fueled by renewable energy, and there is still a large amount of untapped hydroelectric energy in Iceland.
The Energy Master Plan For Iceland via Saving Iceland

Gigantic Version

Map of current and planned power dams in Iceland via Saving Iceland

Gigantic Version

But with news like Landsvirkjun’s Credit Rating in the ‘Trash’ – The Company Owes 250 Million Dollars ( Landsvirkjun is the national electricity company of the Republic of Iceland and runs eleven power plants, mostly hydro-power plants and steam-powe plants ) there is a good chance that the financial crises that hit Iceland brutally will lead to much less environmental damage..... This all on top of the fact that the world is already awash in excess aluminium capacity.......

Dank solcher Nachrichten ( siehe Landsvirkjun’s Credit Rating in the ‘Trash’ – The Company Owes 250 Million Dollars / Landsvirkjun ist der staatliche Enerhieversorger der fast alle Wasser und Geothermekraftwerke betreibt ) darf Island das ja wie kein zweites Land brutal von der Finanzkrise erwischt worden ist darauf hoffen das die Finanzkrise hier zumindest Ihr Gutes hat...... Zudem bleibt zu hoffen das auch Alcoa & Co eingeshene haben das dank massivster Überkapazitäten neue Investitionen auf Sicht wenig Sinn machen......

Dreamland Homepage

Dreamland is a film about exploitation of natural resources and as Icelanders have learned clean energy does not come without consequence. Iceland is a country blessed with an abundance of clean, renewable, hydro-electric and geothermal energy. Clean energy brings in polluting industry and international corporations.

Dreamland tells the story of a nation with abundance of choices gradually becoming caught up in a plan to turn its wilderness and beautiful nature into a massive system of hydro-electric and geothermal power plants with dams and reservoirs, built to power the increasing heavy industry that will soon make Iceland the largest aluminum smelter in the world.

Dreamland Trailer

Related to this topic i want to link to my former post Yann Arthus-Bertrand - HOME for probably one of the best movies abouth our planet earth & the environmental effects caused from mankind...

Passend zum Thema nochmal der Hinweis auf Yann Arthus-Bertrand - HOME. Meiner Meinung nach die beste Ansammlung von Aufnahmen in Sachen Erde und dem wenig erfreulichen Einfluß den wir auf die Umwelt ausüben.....

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Wednesday, July 01, 2009

China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis

I wrote in February ( see Number Of The Day "Credit Explosion In China" ) "This almost surreal number is signalling a real panic among the leaders..." & "I wonder what percentage of the loans will default".... There is nothing to add ( except the percentage will be sky high UPDATE: See link about the Beijing housing frenzy)........ ........ The level of panic might explain why protectionism is on the rise.....Good luck to all the investors/experts ( probably 90 percent.... ) that still think China will lead the rest of the world out of the dark....The first link from Michael Pettis is a must read! He provides the best insight on China......

Ich schrieb im Februar ( siehe Number Of The Day "Credit Explosion In China" ) "Diese unheimliche Zahl signalisiert ne echte Panik der chinesischen Führung...." & "Möchte nicht wissen welcher Prozentsatz dieser Ausleihungen in 24 Monaten als notleidend deklariert werden muß......" Nach aktueller Datenlage ist dem wenig hinzuzufügen.... Höchstens die Gewissheit das die Panik noch zugenommen hat und das eine gigantische Zahl dieser Kredite implodieren wird ( Update : Bitte den Link zum Immomarkt in Bepinkg lesen )...Wie groß die Panik zu sein scheint kann man auch am zunehmenden Protektionismus erkennen......Wer noch immer auf China als große Hoffnung der Weltkonjunktur setzen möchte dem wünsche ich viel Glück......Sieht fast so aus als wenn China demnächst einen nicht geringen Teil der $ Reserven für das eigene Bankensystem & die Provinzen benötigt...... Empfehle einmal mehr den Link von Michael Pettis. Habe bisher keinen gefunden der einen besseren Einblick in das chinesische "Innenleben" offenbart. Und das i.d.R Monate bevor andere darüber berichten......

China’s loan growth isn’t boosting my confidence in China’s “green shoots” Michael Pettis!

New loans





















Half year

















China Bank Lending Funneled Into Stocks, News Says Bloomberg
Chinese new bank loans worth about an estimated 1.16 trillion yuan ($170 billion) were invested in the stock market in the first five months of this year, China Business News reported, citing a government economist.

That’s 20 percent of the 5.8 trillion yuan loans banks extended in the period, the Shanghai-based newspaper said.

Shanghai composite

> By the way the index has now bubbled higher to 3.050....... Update:Bawang International IPO, a Chinese herbal shampoo maker, was 446 times subscribed & Coal trader China Qinfa Group IPO 96 Times Oversubscribed

> Der Index steht aktuell bei 3.050....... Update :Bawang International IPO, a Chinese herbal shampoo maker, was 446 times subscribed & Kohlehändler China Qinfa Group IPO 98-fach überzeichnet

Chinese Banks: "An Accident Waiting to Happen"
Naked Capitalism
Note the phrase "able to bear". Fitch's "macro-prudential risk" indicator for China threatens to jump from category 1 (safe) to category 3 (Iceland, et al).
This is a surprise to me but Michael Pettis from Beijing University says China's public debt may be as high as 50pc-70pc of GDP when "correctly counted".

The regime is so hellbent on meeting its growth target of 8pc that it has given banks an implicit guarantee for what Fitch calls a "massive lending spree".
Bank exposure to corporate debt has reached $4,200bn. It is rising at a 30pc rate, even as profits contract at a 35pc rate...
Roll-over risk is rocketing.
China's monetary stimulus since November is arguably more extreme than the post-Lehman printing of the US Federal Reserve, though less obvious to the untrained eye....

Beijing housing bubble growing, says state media Marketwatch

Beijing's property prices are climbing at an unsustainable rate, with residential property in the city center leaping 6.5% in the past week alone, according to a report Friday in the state-run China Daily newspaper.
The report, which cited data from property broker Homelink, said some neighborhoods have seen demand for apartments at four times the number of units available.

"We used to talk about monthly price growth, but recently, it's more about daily change," the report quoted a Homelink broker as saying.
"The bidders have gone irrational. A bubble in Beijing's property market is definitely there," the report quoted Soho founder and Chief Executive Pan Shiyi as saying.

The report said other large cities across China were seeing a similar phenomenon, with industry leaders now worried that the market is priming for a big drop at some point in the future.
> I´ve written earlier about the CRE in Beijing ( see Beijing's Olympic Building Boom Becomes A Bust )....

> Hier ein paar Fakten zum Zustand des gewerblichen Immobiliensektors in Peking ( siehe Beijing's Olympic Building Boom Becomes A Bust )

By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government.

He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.

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