Thursday 24 May 2007

Blog tidbits

Herb Greenberg is a fairly annoying character to listen to so that's why I read his blog instead of listening to his webcasts. Yesterday Herb came up with some interesting little tidbits on his blog I thought were worth sharing. The first one takes a look at the all time high level of US margin debt.

Margin and Bubbles -- Not that Anybody Cares

Nifty report today from Portales Partners on brokerage margin debt, which at $318 billion is 14% above its highest level reached in March 2000 -- the year the dot.com bubble burst.

In a note to clients, Portales says one viewpoint is that by retracing 127% of its fall between the market's March 2000 peak and the September 2002 trough in conjunction with a rally in the border indexes, "the worst has been seen."

The report goes on to say, however: "We don't share this sentiment. Instead, we see the rise in margin debt as sign of a revival of animal spirits (i.e., renewed speculation) and desperation on the part of the consumer to maintain their newly found (higher) standard of living. Both represent living on borrowed time (and money)."

The report adds: "The direction of margin debt has been a coincident (not leading) indicator for market direction, but we suspect the current levels may indicate excessive optimism and thus a potential top in the market.)"

For what it's worth....


The second piece may or may not be true but regardless Paulson's comments struck me as very amusing anyway.


Builders Laugh at Paulson?

Recent comments by Treasury Secretary Hank Paulson that the housing slump is largely contained apparently didn't get lost on builders. As the story goes, CSFB analyst Ivy Zelman told her company's sales force today that builders attending the Builder 100 Conference in San Diego laughed when the comments were mentioned as if Paulson didn't know what he was talking about. How did I hear? From a legitimate and well-regarded trader who heard it directly from his Credit Suisse broker after Zelman reportedly broadcast the story on the Credit Suisse Squawk Box. Zelman hasn't returned my call.

0 Comments: