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Congress wagged a finger at FASB and said, “You shall change the mark to market rules.”
FASB may say yes to Congress tomorrow (April 2) and help banks “boost” their profits by 20% out of thin air.
Stock bulls got the memo and are partying like there is no tomorrow. Either credit markets didn’t get that memo or it has been completely ignored. If you look at the spike in CMBX indices in the last one week as a proxy for pricing banks’ toxic assets, you may conclude that bond market is dissing this idea already.
To quote the bond expert, John Jansen, “it is Lipstick on a Pig” (emphasis mine):
FASB will attempt to do that later in the week when they crumble in front of the pressure to change the rules on mark to market accounting. I believe they meet on April 2 to resolve the issue.
The market is not the issue nor should it be. The market exposed this junk before regulators and rules makers. To change the rules is to obscure the problem and delay a solution.
My dear honorable members of the Congress, may your arrogance, sheer ignorance and utter stupidity be met with the right reaction from the market where stock prices are marked to their true market value!
Yes, it is good to be back. Sorry if I disappointed some of you. 
welcome back my friend
Does anyone know what time the markt to market news is supposed to be announced?
April 1st, 2009 at 11:23 pm
Forget it. I just saw the answer in the video update posting. 8am.
April 1st, 2009 at 11:26 pm
I believe M2M is 8:00 a.m., and jobs are at 8:30 a.m.
Welcome back Mohan!
Okay let me get this straight.
The bank can mark assets they own at any value they deem “fair” instead of marking them at the current supply vs demand price?
Well yippi ka yay! this is great news. When can I do that on my account?
Oh I can’t do it on my account?
Only banks will be allowed to write up any value they want.
Well that’s not fair….
in short:
Just nationalize the country and turn us to comunist already and get it over with.
idiots…
There should be a new ETF stock in the market representing the level of capalism left in the US.
And another one representing the stupitidy of congress.
Then we would all be rich
Welcome back, Mohan. Hopefully you kept your APOL short on.
Talk about Mexico being corrupt, yet our “representatives” have been taking millions in contributions(bribes) from these same banks. They definitely do not have our best interests in mind.
April 2nd, 2009 at 9:26 am
bt310,
With respect to my portfolio, my trip was ill timed. Since I was not able to monitor the markets on a regular basis, I placed some open orders (some at the bid) and they never got executed. It cost me dearly (to the tune of over 150k). Unlike the Nov rout I faced which I didn’t anticipate, this time I was ready and still lost.
I turned multiple baggers in my APOL puts into expiring worthless. Oh, well. I at least have the academic bragging rights that I nailed the top for that pig.
Don’t forget the specific members of Congress who brought us this latest revisionist financial insanity. Specifically, the same grotesesque pervert central to the Fannie Mae and Freddie Mac disaster, that blobular, frog-faced, Jabba The Hutt-looking worm Barney The Frank.
April 2nd, 2009 at 12:55 am
you forgot “B-HUMPER”
April 2nd, 2009 at 6:39 am
Regardless of their party affiliation, most of the politicians are pieces of the same cloth. I despise (most of) them equally.
Anyone watching what is happening in the hkse right now!
April 2nd, 2009 at 12:53 am
+5% lol FAZ to $15 im glad i only have a measly 100 shares 400 is the goal…im cancelling my $17 fill and buying at end of day….. insanity!
For those still up on the West Coast, the decision is after 8 AM. They have 5 items to discuss, so I believe it is later in the PM
We are going up boys, Daneric has it right, except no sign of a top this week, bears are going to be crushed, maybe a sell-off but not until next week. The Thursday “turn date” is a turn up a steeper slope…
April 2nd, 2009 at 1:28 am
I bet you are wrong. Once RIFIN hits 530, we will retrace.
I weep not my for FAZ shares , but instead for the country as a whole as our gov in all it’s pathetic wisdom decides since banks being forced to tell the truth about their assets isn’t working that we give back the seal of approval to outright lie about valuations.
Tell me now how the hell the private public partnership is supposed to work when banks can suddenly go
*Banker to PP investor: “no no , it really is worth 90c on the dollar honest. We just wrote it up 10c on the dollar from the inflated 80c on the dollar no one believed before. So if you want to buy this toxic assets thats where you should start your bidding”
Residential Real Estate prices may not bottom until late 2010, with a 30% drop to go. Commercial real estate may drop for 5 more years.
As for M2M – I do believe they can only change valuations on NEW assets, not ones they already own though. But of course they will sell the property to themselves and call it a new asset. Wall Street is as crooked as my dick.
Any POP will likely be erased quickly just like every TREASURY and FED action to date.
Congress and Obama should come out flat against changing the rules in the middle of the game. Oh — you went out of bounds on the 5-yard line, close enough – TOUCHDOWN!!!
This solves nothing. The market is still gonna get murdered and the Dems wont be able to wipe their prints off the gun.
Boy CNBC is really pumping up the banks and bank stocks today. I hate to do it but I think I’m going to have to dump my FAZ at the open for a huge loss. I have no idea how low FAZ can go but it is making me sick watching it drop while all these cheerleaders jump up and down with joy for all these bankrupt banks. Interesting video here on FAZ;
http://thechartpatterntrader.com/
This guy still holds FAZ and thinks theres going to be a reversal soon (however its already below his stoploss number prelarket). I don’t think theres anyway the bank stocks will drop today, not with all this hoopala going on. All I know for sure is that as soon as I sell it its going to double.
April 2nd, 2009 at 7:08 am
There’s definetely blood on the streets on the short side.. 830 is bound to be resistance though.. Are you dumping pre market or waiting till the open?
April 2nd, 2009 at 7:11 am
My Ameritrade account won’t let me sell pre market, I’ll have to wait for the open.
April 2nd, 2009 at 7:23 am
Question for the board. If FAZ pops (or I should say drops) hard at the open and breaks the support level of $18-$17.50 is that it? regardless of whether it goes higher or not? I think what i’m trying to say is that it is highly likely that it will drop hard at the open from what I can see with the futures. Even though thats being created by bank hype have the technicals been broken..period? Is anything like that taken into consideration?
April 2nd, 2009 at 7:33 am
What do you mean by “is that it?” It is currently trading at a new low. It will fall until it catches a bid and then we’ll have a new support level. The old low will be R1.
My perspective is that M2M is priced in at this point. There is nothing to propel the banks further and there is every reason for the longs to take profits at this point. As others have posted, M2M fixes nothing. We’ll see what today gives us but I’m not in any rush to unload. My basis is just over $20. Take a deep breath FAZers. This too shall pass.
April 2nd, 2009 at 8:26 am
That cannot be right. All Ameritrade accounts allow for pre-market trading. You just have to specify (Day+ext.) in the expiration field.
April 2nd, 2009 at 9:30 am
You were right and you saved me a lot of money. I played around with it and realized that you can’t buy premarket with a market order but only with a limit order. The price was dropping like a rock so I put a limit in @ $17.00 and got filled @ $17.21 (lost 12G)
April 2nd, 2009 at 7:39 am
Good move to unload FAZ, market could run straight to 940’s, FAZ to single digits.
I am a little more optimistic with SRS, think the market upswing will pull it down, its a great buy in the high 30’s, low 40’s for a triple next month.
Idan’s rally got started early. By May we will be in full decline again.
http://www.fasb.org/board_handouts/04-02-09.pdf
Board agenda for today. It’s a long read and I’m going through it and listening to the webcast.
M2M isn’t going away. It looks like they are just trying to clarify what the correct market value is in a illiquid market..
April 2nd, 2009 at 8:27 am
I think FASB just clearly defined what a distressed asset.
a. The seller is in or near bankruptcy or receivership or the seller was required to sell
to meet regulatory requirements.
b. There was a usual and customary marketing period, but the seller marketed the
asset to a single market participant.
c. The transaction price is an outlier relative to other similar transactions.
They do not want people to use the midpoint of quoted prices. They want them to still use the last quoted price in a transaction provided that the price isn’t distressed as defined above.
M2M is not going away..
Waiting on the next major topic which is whether you can backdate the results to Q1 or earlier.
April 2nd, 2009 at 8:42 am
FASB wants banks to open up their Level 3 hidden asset books and break down what’s in them by asset types and how they are estimating values.
All investors indicated that the FSP should require additional disclosures, especially for Level 3 fair value measurements. They indicated that the current level of detail required by Statement 157 is insufficient. That is, they would like disclosures about the inputs and valuation techniques in more detail and in interim periods.
April 2nd, 2009 at 9:04 am
Only debt securities can be temporarily impaired for market to market purposes.
They are debating heavily now to recognize losses in debt securities.
You do not have to mark to market down debt securities only if you have no “intent” to sell, have the “ability” to hold to maturity and you expect to recover 100% regardless of the agency rating.
If you cannot recover the cost of the debt security or recover cash flow you have to mark it down.
They may be backtracking on this statement now because they are worried that businesses will not record as many mark to market impairments now. They believe that there are a lot of securities out there which are impaired and are not being marked down enough and this will make the situation worse.
I can trade pre-market, FAZ is at $17.20, jobless report is in 14mins, FAZ will rise a little at that point I think. Sell? Buy back later?
why are you in a rush to buy back?
faz is going to 14$ today.
I think we open and selloff today, once this News posts. 828-832 gap might fill at the open,,,, I think we drop from that point. BUT,,,that is just an opinion. Ya gotta have skill to get in and out. Anything less, you are at the mercy of people like ME et al who really, truly have nothing ELSE but an opinion!!
Draw trendlines, lose 7-10% at most (IBD/investors business daily ‘conventional wisdom on a losing trade). And that is on the ‘underlying issue’. Trading a 2x or 3x and not paying attention to this fine IBD rule, will get you poorer,,,quickly.
Got yur dik in the zipper? Tit in the wringer? Well,,,ain’t that too damned bad.
I’m tired of hearing we are ‘going to 940’s, etc, etc. How do you KNOW we don’t selloff when today’s gap up/News driven gap up/open occurs??? You don’t!!!
I think I go all in short, once the News hits. The last gap will probably have filled, and by next Wednesday I might make a buck. Who knows.
April 2nd, 2009 at 8:55 am
IT SEEMS like everythings going in the bulls hands thats why.
Why would we sell-off?