Thursday, April 03, 2008

What a strange person!

I'm getting some weird messages over my Bloomberg. There are words and phrases I cannot translate like, "I have buyers of corporate bonds" and "Broker paper on fire." What is this "rally" you speak of?

Don't get me wrong, one week does not a bottom make. But as evidenced by the relatively attractive terms Lehman was able to get on their convertible preferred, things do seem like they are thawing. There are real money buyers of credit starting to emerge.

Anyway, as much as I'd like to believe in a bottom in credits, we need to get through mid April with some strength. April is going to be a key month for bank/finance earnings (translation, writedowns) Here are some earnings dates to mark on your calendar. Remember that these firms are reporting for the quarter ending 3/31, which includes the ugliness of January and March, but not November.

April 15: Washington Mutual. The weakest of the big retail banks. I think they need to post a reasonable increase in their loss reserve or the market is going to punish them. They obviously have a weak portfolio of loans, and they need to convince us that they are being proactive about it. A small increase in loss reserve would come off like they're trying to fake their way through. Clearly not what the market wants to see.

Edit 4/8: WaMu basically pre-announced their earnings along with their new capital plan on 4/8.

April 17: Merrill Lynch. With 3 of their biggest competitors posting relatively strong earnings, the bar is set a little higher for MER. There are whispers that MER has more writedowns to post.

April 18: Citigroup, Bank of America, Wachovia. This should give us some interesting information on how prime loans are performing. It may also shed some light on the CFC/BAC deal.

Edit 4/8: BAC will announce 4/21

April 22: National City, SLM Corp. NCC is kind of like a smaller Washington Mutual. The difference is that WaMu is mostly west coast, where unemployment is low but the housing market bubble burst is hitting hardest. Nat City is more rust belt, where unemployment is high, but the housing market never got as hot. If WaMu's numbers impress the market, it might not matter much what Nat City does, at least from a bigger picture perspective.

Edit 4/8: SLM will announce 4/16 after market.

April 24: iStar Financial. Not a company on many people's radar, but its one of the biggest monoline commercial real estate lenders. They have a very large portfolio of condo developments, so their performance will be a good indicator as to how far the contagion has spread into commercial real estate.

Edit 4/8: SFI will report 5/2.

This is going to be a critical month.


hedgewatching said...

Very useful. I know what to keep an on now. Thanks

Anonymous said...

I am reminded of Joe Frazier's strategy against Ali:

Kill the body and the head will die

In this case, the body is employment, and the head is all the things that market players play with every day...things like the Dow, etc.

Bush et al are taking very good care of the head. Unfortunately, the body is dying.

Earnings reports from financial institutions will be more massaged than Eliot Spitzer.

Accrued Interest said...

BTW SLM just moved up their earnings date to 4/16 after market.

Anonymous said...

iStar reports on May 2, not April 24th.

Accrued Interest said...

That's right. I had an "unoffical" date.

Lillian said...

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