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Alliancebernstein Income Fund Message Board

  • phage1998_992002 phage1998_992002 Mar 15, 2008 10:48 AM Flag

    Hrisct: VZ and GE

    First, let me preface this by
    mentioning the large scale technical
    background. Despite the
    daily bad news, expressions of
    anguish, and so forth, technical
    improvements are still being seen
    of a nature usually associated with
    cycle bottoms.

    The assumption would be that
    investment capital believes that
    the financial system will survive
    and the norms will reassert
    themselves. Again, there can be
    no assurance that this perception
    is either correct or incorrect.

    VZ is showing another apparent
    cycle top, somewhat less conventional than the similar
    formation seen in T.

    To the extent that a measuring
    implication can be derived, it's been met and the stock is presently
    sitting on the very important support of it's huge base.

    So, what we have here again is
    a primary bear trend, but this
    time in a good technical position
    to reverse and trend upwards
    towards the lower boundaries of
    the cycle top ~40. To do so,
    it will first have to get
    past supply left overhead by
    the last consolidation, beginning
    at about 36.

    In the case of both VZ and T, the
    base from which the bull trend
    developed was really huge; so
    one might have expected a more
    enduring and higher-value bull
    market. Even so, that's a technical
    assumption that can't be made
    until the highest high seen on
    this chart is exceeded.

    In other words, you now focus
    on the support, whether it
    holds, and how minor or
    intermediate bull trends
    handle next resistance. One
    test at a time.


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    • Killjoy!

    • Here's a little aside on JPM: they were the last lender still doing 95% LTV sub-prime mortgages, finally stopping in August of last year. Says something about their judgment.

    • You shouldn't take it personally,
      as it wasn't intended that way at

      Maybe it would help to state the
      thing in a different way. This
      deal--whatever the actual terms--
      is clearly a time value proposition
      for Morgan.

      Fine. I've been using time-value
      for a long time and do a problem or
      two most days. Even learned how
      to pose the simple problems from
      a very competent banker.

      But the problem here is far from
      simple. In fact I have no idea
      at all about the inputs used by
      the Fed and Morgan financial people
      and less idea still about Morgan's
      thinking relative to their already
      colossal derivatives exposure.

      (For instance, the smart trade
      might be to sell JPM short on the
      assumption that they may have
      made an error even larger than
      BSC's--assuming, of course, that
      assumption has any basis in fact.
      Likewise the market, because if
      Morgan's wrong, the Feds are
      probably wrong, as well.)

      But in actual fact, the thing is
      way, way over my head. The only
      thing I can see is that no
      intelligible rationale for the
      deal had been reported last I
      looked; and, once it is, it
      will already have been capitalized
      by more qualified market participants.

      I'm not at all sure that this
      deal is like anything in my
      experience, so all I know is
      that I know essentially nothing.
      (Based on the Captain's response
      re securities values with negative
      sign, I'd have to wonder whether
      Marty Whitman isn't correct that
      current GAAP is distorting
      the economic realities in question.
      Even so, if everybody sells the
      misconception, prices still go

      Under such conditions, we're
      extremely careful to act only on
      the most specific and concrete
      information known to us and to
      avoid any actions based on
      anything else.

      Those who know more can do more.

    • Mea culpa!! My simple (in my mind) little analogy about BSC being the equiv a Sub-Primer had nothing to do with the value, location, elevator operation, or color scheme of their offices!

    • I agree about the implication that the value of Bear's mid-town Manhattan HQ is more than the value of the buyout, viz. that their security holdings are net negative. Given the mark-to-market situation for Level 3 assets, I believe that to be possible under a distress sale scenario, which they are effectively in.

    • My thoughts, exactly, and why I think
      that widely-disseminated report is
      probably in error, as would be
      anyone making investment decisions
      on it.

    • Bear ownership of the office building is quite surprising. Most outfits do a leaseback.

    • BSC-PF BEAR ST 5.72 PFD F 35.70 10:24AM ET 2.70 (+8.18%) 10,400
      BSC-PE BEAR ST 6.15 PFD E 36.57 10:25AM ET 4.47 (+13.93%) 9,300
      BSC-PG BEAR ST 5.49 PFD G 34.00 10:24AM ET 4.00 (+13.33%) 16,100

      and, of course,
      BCH BANCO DE CHILE ADS 57.25 10:14AM ET 7.996 (+16.23%) 5,400
      JPM JP MORGAN CHASE CO 40.26 10:27AM ET 3.72 (+10.18%) 38,574,606

      please realize, none of this makes a damn bit of sense to me.

    • Yes, I thought so, too. In fact, it
      does seem that Government is now
      the market maker, per our previous
      discussions on the subject.

      Do have a look at my remarks of
      last night and this am on the
      BSC/JPM deal. I'm nearly certain
      that we're seeing some incorrect
      reporting, either on the BSC
      asset picture or the real terms.

      Don't know how or even whether
      this would affect the most
      recent Fed initiatives.

      These are the things one thinks
      about after the session.

    • Again, I'd be careful about any
      financial involvements with this

      I don't have time to look at a
      more detailed balance sheet for
      BSC, but David Faber, of CNBC,
      says that BSC owns their midtown
      office building and that the deal
      totals about 1/2 its value.

      Leaving aside the implication--
      namely that Morgan/Fed analysts
      would then be attributing a
      NEGATIVE value to the Bear
      securities portfolio--the idea
      simply doesn't make any sense
      from a few points of view.
      So, I'm assuming that the
      current information is incorrect
      in as-yet unknown respects.

      Faber also pointed out
      stockholder approval is
      required, which seems unlikely
      under the circumstances now
      being reported.

      I'm only commenting on the
      seemingly nonsensical information
      now out there, and the inadvisability
      of acting on same, not suggesting
      anything about the investment
      quality of BSC, JPM, or the
      credibility of the Fed at this

      In other words, when you don't
      know what to do, don't do it.

      BTW, we covered a short sale, carried
      over from Friday, this morning when
      the inverse stalled briefly at
      its second range of overhead
      resistance. Could go further,
      certainly, but we don't like to
      be guessing about anything in
      a problematic informational

      FWIW. Now, back to it.

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