Shares of Bank of America collapsed from almost 20 bucks to 13 in four months on so called “double dip” worries. Now, are trading at 6,5 of projected 2012 P/E. Deutsche Bank at $65 has a P/E of 6. Since April there has been a growing “douple dip” fear in the worldwide media. First, we heard about collapse of euro. When Germany came out of the recession with robust growth of 2,2%, media told us that this at PIIGS expense. So, we need to worry that Spain, Greece and Portugal will be in trouble. In my opinion this is a twisted logic. Europe is not and never was a homogenic economic area. There are areas that produce wealth (northern Europe) and peripheric countries that has little impact on the overall euro zone performance. It sounds like a primary school theorem. Obviously, not for everyone. Media will tell you something different. We also hear that US corporations are sitting on cash - they show almost $2 trillion in their balance sheets. Again, they do not hire because there is a “double dip” fear. Why? because there is no job growth. Why? Because the corporations are not hiring. Why? Because there are “double dip” concerns. Welcome to the vicious circle. There is a conspiracy theory. The rally will start in November after mid-term elections. It looks like Wall Street dislike Mr President Barack Obama. He was better than McCain two years ago because the republican candidate had been supporting Elliott Spitzer sometime in the past. Spitzer was a real bad guy because he held some influential people accountable for their wrongdoings. FBI hunted him down in a banana republic style. Wall Street is safe, Goldman paid a 550 million fine but noone is in prison. So, there is time for Mr President to remain silent. The best way to undermine his position is to replace some Democrats with Republicans in mid-term elections. So, the gloom must prevail in media for at least another 2 months. Voters must be scared that the double dip monster is really on its way. If this theory is true smart people can make loads of cash in a relatively short time. We see a lot of M&A activities. Sounds like a suicide taking into account those gloomy prospects for the world economy By the way, CEO of Bank of America bought 30 000 of BAC stock for an average price of $13.02. He must be crazy, really crazy. The most important thing however is how the Americans themselves destroy their capital markets and transform them into a corrupted casino. Hundreds of billions of dollars simply disappeared and noone is guilty. This is very sad.
nobody trades the banks on pe…
i wouldn’t call it a great conspiracy. i’d call it an expected response to the collapse of 2008. people are still scared. many were overexposed to equities in '08. now many are underexposed to equities. i think i’m bullish but my stance changes often. i’m encouraged by the fact that although the market is valuing a company like 3PAR at $604M, Dell and HP seem to think its worth well north of $1.6 Billion and are willing to put money where their mouth is. some goes for McAfee. market valued it at $4.46B but Intel, who has little to gain from synergies, is willing to put up $7.3 B to use some of their cash instead of accepting a 0.48%/yr 2 year return in govie bonds. we’ll see what happens with Potash, but near record prices for copper and iron ore should continue to drive interest and mergers in the materials space. this is part of what bernanke is hoping for when it comes to low rates. if deal movement gets going, confidence is sure to grow as well.
In America, Wall Street bets on the winners of presidential elections–Wall Street doesn’t “support” candidates (with money) based on whether or not they like the candidate (by and large). The smart money picked Obama to win just like the smart money bet on Bush twice. I don’t think there’s a conspiracy at all. Elections rise and fall on the unemployment rate–just as James Carville once brilliantly opined in 1992: “it’s the economy, stupid.” The rally may, indeed, start in November after the mid-term elections, however. Americans are notorious for their support of split government, which is generally why the sitting president will usually lose seats in his first mid-term election. Frankly, even as a conservative, I do see the wisdom in split government. Investors don’t act on conspiracies–they just want to make money. In my small business, frankly, I couldn’t care less if Satan were president so long as I turn a buck.
Can someone come up with a better name than double dip? I don’t know if its just me, but hearing DD everywhere is driving me crazy.
I don’t like salsa, so double dipping has never been an issue for me.
higgmond Wrote: ------------------------------------------------------- > I don’t like salsa, so double dipping has never been an issue for me. Plus they invented ‘Scoops’ - double dipping is dead, myth busted.
kkent Wrote: ------------------------------------------------------- > In America, Wall Street bets on the winners of > presidential elections–Wall Street doesn’t > “support” candidates (with money) based on whether > or not they like the candidate (by and large). The > smart money picked Obama to win just like the > smart money bet on Bush twice. I don’t think > there’s a conspiracy at all. Elections rise and > fall on the unemployment rate–just as James > Carville once brilliantly opined in 1992: “it’s > the economy, stupid.” > > The rally may, indeed, start in November after the > mid-term elections, however. Americans are > notorious for their support of split government, > which is generally why the sitting president will > usually lose seats in his first mid-term election. > Frankly, even as a conservative, I do see the > wisdom in split government. Investors don’t act on > conspiracies–they just want to make money. In my > small business, frankly, I couldn’t care less if > Satan were president so long as I turn a buck. You hit the nail on the head. For all the talk about “American’s want their politicians to DO SOMETHING” (a talking point of political activists)…America is an incremental society, and gridlock is by design and built into our political system. It creates a stable and predictable business climate that enables businesses to put capital to work w/ a reasonable expectation of what it’s return might be. In the absence of information, the market, and capitalists that drive it tend to factor in the worst case scenario…hence the reason businesses are paralyzed in their hiring. If the Republican’s trounce the Dems in the midterms, it’ll suppress the worst inclinations of people like Pelosi, and allow businesses to invest w/out having to worry about additional regulatory/political risks.
packattack4 Wrote: ------------------------------------------------------- > Can someone come up with a better name than double > dip? I don’t know if its just me, but hearing DD > everywhere is driving me crazy. Dead cat bounce?
The DoubleDip is no myth! 
Muddahudda Wrote: ------------------------------------------------------- > packattack4 Wrote: > -------------------------------------------------- > ----- > > Can someone come up with a better name than > double > > dip? I don’t know if its just me, but hearing > DD > > everywhere is driving me crazy. > > > Dead cat bounce? I love this term.
DoubleDip Wrote: ------------------------------------------------------- > The DoubleDip is no myth! You’re a little early…do you mind coming back after bonus season?
DoubleDip Wrote: ------------------------------------------------------- > The DoubleDip is no myth! Are you working for Nassim Taleb?
packattack4 Wrote: ------------------------------------------------------- > Can someone come up with a better name than double > dip? I don’t know if its just me, but hearing DD > everywhere is driving me crazy. I like DoubleDipression (stolen from Zerohedge). Not sure any version of DD is accurate as we probably never actually got out of the first dip. m
mep_cfa’10 Wrote: ------------------------------------------------------- > we > probably never actually got out of the first dip. > > m Sad but true!