Thursday, 9 April 2009

Falling in love with banks again!

Tyler Durden, the author of the Zero Hedge blog, and one of the most prolific commentators on the financial sector, is someone whose articles I follow closely. A number of his recent pieces have been extremely insightful and thoroughly original pieces of investigative reporting.

What is rather interesting is that the negative comments being appended to his posts are getting noticeably more hostile.

Some of those commenting on his postings are tiring of his sarcasm and what they view as overly negative judgments regarding specific banks. For example here are just a couple of excerpts from comments to a posting he made today at his own blog site and which can also be found at SeekingAlpha which discusses Bank of America (BAC) and its likely need (from his perspective) for a major capital injection.

So Mr. Durden has identified a $150 billion capital deficiency at BofA, about 4 times the mere $36.6 billion deficiency identified by Mr. Kotowski. My, what big numbers you use, Mr. Durden! Maybe you could supply us with the spreadsheet analysis, or envelope back, on which you quantified this shocking capital deficiency

And these two quips (which I have tidied up for spelling errors)

As usual, the author is long on sarcasm and short on facts....Rather than writing a critical, insightful article about Bank of America (I mean geeze there's so much to pick on them about) the author makes some bold statements, not supported by any facts...

And there are a couple of others which are too offensive (and grammatically ungraceful) to want to repeat.

A few thoughts on this:

1. I suspect that a growing number of American readers especially are becoming irritated by too much overt criticism and sarcasm about the US financial landscape. The difference now is that with signs of a real rally beginning in the sector they are no longer timid in expressing more upbeat views about the banking sector and taking a swipe at people like Tyler Durden who had been getting things pretty much their own way during the "dog days" for the sector.

2. There is also a rather discomforting notion that the renewed enthusiasm for the sector, as evidenced by today's huge opening gap on the shares of nearly all of the financials, fuelled by the news from Wells Fargo, could easily get too frothy and ahead of itself as serious problems remain for several critically exposed banks.

3. In browsing through my own archived material I came across this posting from January 29th which now seems remarkably prescient in terms of calling a momentum bottom for the sector. Indeed the language I used was somewhat tentative and the capacity to rally, and the eventual magnitude, was greater than I realized at the time.

4. Even if it is expedient to lighten up on the sarcasm about the banks, if one is looking to remain popular in the blogosphere, it may be quite expedient to be lightening up steadily on exposure to the long side across the financial sector as this new love affair for the banks unfolds.

1 comment:

  1. Good time to be selling the banks - Wells Fargo has hyped the market before