Can you trust O8's stress test result

n748

To avoid MHP, I'd like to say something before hand, concerning the hyped stress test.

People always looking for something to talk about, with earnings from banks almost out of favor (basically, good earning expectation has been priced in thanks to those CEO's comments, and early release of information), people are trying to turn to stress test result.

The first thing I'd like to say is: I don't trust whatever result they are going to release. The reason include: 1. I'm working in a big company, and management is always keen on collecting all kind of numbers, from hours spend on specific tasks, to the savings due to efficiency improvement, etc.  I wuold say, those numbers are always looking very good. Seems we are making progress each day, but they are quite far from the reality to say the least. With such a high level test, and some banks may not necessary cooporate 100%, I really doubt about the numbers.

So the validity of the test results are actually very doubtful. However, to make it worse, GOV/Banks will selectively make the result available to the public. I'm surprised by the media control in US, GOV CAN easily choose not to disclose any information they don't like. First by Bush administration, now with O8 gov.

Therefore, what's the value left for those numbers which will be release some time later?
Other than to make people believe what they want you to believe?

I can even imagine what picture they will try to draw. With all the effort around loosening M2M, and this coordinated rally, the test result will probably serve the same purpose here, to make people feel more comfortable by paying less attention to the reality.


Make no mistake though, I'm not saying that those numbers will not have any impact on the market. Actually I'm trying to warn some bears around here, don't bet against gov and black Laodas too quickly. Let it run its course, and wait for the reality kicks in, then fight hard back.

Remember, those guys are very powerful, and americans are mostly naive.

Don't try to be the hero to stand in their way. This is probably another bullet in bull MM's pocket which I forgot about earlier.

ppteam

do you have to ask? of course not.

wolfdoctor

1# n748


应该这样问和想比较好：Will market accept O8's stress test result?

wmi2009

也别小看这玩意儿。 它不出来，俺是不敢大仓位烧的。虽然俺一直是熊。俺看它是短期政府手中的最大的牌了，如果股市还行，银行的增发也差不多了，结果可能够呛，会比较真实；如果股市不行，增发不顺，结果会很好。俺看这次WFC和GS抢跑了，打乱了计划，才会有提前公布一部分的行动。

Cobra

Thanks! 顶！

n748

5# Cobra


Thanks, Laoda. I'm thrilled.

sniffer

After losing on FAZ, I was ponding my mistake was to fight against market... I should always remember that following market is the key to success!

Herakles

re

CoolMax

Great thoughts。

H_T

yes, most people are too "simple, naive" to understand they are being robbed by the gov policies

seabiscuit

喜欢你的分析。  Very rational  and calm.  

n748

I am glad to see that I said something before it's published in New York times.

http://www.nytimes.com/2009/04/21/business/21sorkin.html?_r=1

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But maybe now the banks are simply following the lead of Washington, which keeps trotting out the latest idea for shoring up the financial system.

The latest big idea is the so-called stress test that is being applied to the banks, with results expected at the end of this month.

This is playing to a tough crowd that long ago decided to stop suspending disbelief. If the stress test is done honestly, it is impossible to believe that some banks won’t fail. If no bank fails, then what’s the value of the stress test? To tell us everything is fine, when people know it’s not?

“I can’t think of a single, positive thing to say about the stress test concept — the process by which it will be carried out, or outcome it will produce, no matter what the outcome is,” Thomas K. Brown, an analyst at

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n748

more from the same article:

But in each case, investors spotted the attempts at sleight of hand, and didn’t buy it for a second.

With Goldman Sachs, the disappearing month of December didn’t quite disappear (it changed its reporting calendar, effectively erasing the impact of a $1.5 billion loss that month); JPMorgan Chase reported a dazzling profit partly because the price of its bonds dropped (theoretically, they could retire them and buy them back at a cheaper price; that’s sort of like saying you’re richer because the value of your home has dropped); Citigroup pulled the same trick.

Bank of America sold its shares in China Construction Bank to book a big one-time profit, but Ken Lewis heralded the results as “a testament to the value and breadth of the franchise.”

Steven Roth, professor of management at the Tuck School of Business at Dartmouth College, also pointed out that Bank of America booked a $2.2 billion gain by increasing the value of Merrill Lynch’s assets it acquired last quarter to prices that were higher than Merrill kept them.

“Although perfectly legal, this move is also perfectly delusional, because some day soon these assets will be written down to their fair value, and it won’t be pretty,” he said.

kkc

dara

Does it really matter?

All depend on economics, if people see recover signal in the second half, stock market will fly from this level, that is it.

frank3

市场就是由谎言和欺骗编制的一部连续剧，在谎言被揭穿之前，它就是真的。

n748

It seems that stress test is just a joke.

http://finance.yahoo.com/news/AP ... p;asset=&ccode=

Wondering how can GOV do something like this.  It's unfair to those regional banks. Who give them power to do this.

There is no fair play at all. 实在太黑了。

n748

16# frank3


"市场就是由谎言和欺骗编制的一部连续剧，在谎言被揭穿之前，它就是真的"。

深刻

sunrise

good