Elmer-DeWitt reports, “This one was a classic slingshot, described succinctly by Jason Schwarz in his seminal Apple: Seven Reasons Shorts Love It: ‘If you can keep a good stock down,’ he wrote, ‘then you are able to load up for the ride back up. It’s like a slingshot — the harder you pull, the more propulsion you generate.’
MacDailyNews Take: “[Hedge funds and other investors] target strong companies like Apple with lies and rumors. In fact, it works better with a strong company like Apple, because after being artificially sunk, it then bobs right back up and the shorts can have their way with it all over again.” – MacDailyNews Take, April 8, 2009
Elmer-DeWitt continues, “This slingshot was timed to bring Apple’s shares down in advance of the company’s first quarter earnings report on Monday. The action started at 9:12 a.m. Friday when theflyonthewall.com reported, without explanation, that Deutsche Bank had removed Apple from its short-term buy list — a report that was immediately picked up by the talking heads at CNBC, who mischaracterized it as a ‘downgrade'”
“What actually happened, as the folks at Deutsche surely knew but didn’t bother to report, was that Apple’s six months on their short-term list had expired that morning, triggering a computer instruction that removed it from the buy list automatically,” Elmer-DeWitt reports. “No matter. The boys were looking for a reason to take a whack at Apple, and this news fit the bill. They set the wheels in motion, and by the close of trading the stock had fallen 10.32 points (3.55%), shaving $9.3 billion off the company’s market cap.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “James W.” for the heads up.]
@F.Maxwell – please do more to understand the topic before your next post
From the Wall Street Journal, Nov. 9, 2009
By EDWARD PINTO
All agree that the bursting of the housing bubble caused the financial collapse of 2008. Most agree that the housing bubble started in 1997. Less well understood is that this bubble was the result of government policies that lowered mortgage-lending standards to increase home ownership. One of the key players was the controversial liberal advocacy group, Acorn (Association of Community Organizations for Reform Now).
The watershed moment was the 1992 Federal Housing Enterprises Financial Safety and Soundness Act, also known as the GSE Act. To comply with that law’s “affordable housing” requirements, Fannie Mae and Freddie Mac would acquire more than $6 trillion of single-family loans over the next 16 years.
Congress’s goal was to force these two government-sponsored enterprises (GSEs) to purchase loans that had been originated by banks—loans that were made under the pressure of another federal law, the 1977 Community Reinvestment Act (CRA), to increase lending in low- and moderate-income communities.
From 1977 to 1991, $9 billion in local CRA lending commitments had been announced. CRA lending by large banks increased dramatically after the affordable housing mandate was in place in 1993, growing to $6 trillion today. As Ellen Seidman, director of the federal Office of Thrift Supervision, said in a speech before the Greenlining Institute on Oct. 2, 2001, “Our record home ownership rate [increasing from 64.2% in 1994 to 68% in 2001], I’m convinced, would not have been reached without CRA and its close relative, the Fannie/Freddie requirements.”
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Associated Press
The 1992 GSE Act was the fuse, and the trillions of dollars in subsequent CRA and GSE affordable-housing loans would fuel the greatest housing bubble our nation has ever seen. But who lit the fuse?
The previous year, as Allen Fishbein, currently an adviser for consumer policy at the Federal Reserve, has noted, Acorn and other community groups were informally deputized by then House Banking Chairman Henry Gonzalez to draft statutory language setting the law’s affordable-housing mandates. Interim goals were set at 30% of the single-family mortgages purchased by Fannie and Freddie, and the Department of Housing and Urban Development has increased that percentage over time. The goal of the community groups was to force Fannie and Freddie to loosen their underwriting standards, in order to facilitate the purchase of loans made under the CRA.
Thus a provision was inserted into the law whereby Congress signaled to the GSEs that they should accept down payments of 5% or less, ignore impaired credit if the blot was over one year old, and otherwise loosen their lending guidelines.
The proposals of Acorn and other affordable-housing advocacy groups were acceptable to Fannie. Fannie had been planning to use the carrot of affordable-housing lending to maintain its hold over Congress and stave off its efforts to impose a strong safety and soundness regulator to oversee the company. (It was not until 2008 that a strong regulator was created for Fannie and Freddie. A little over a month later both GSEs were placed into conservatorship; they have requested a combined $112 billion in assistance from the federal government, and much more will be needed over the next few years.)
PART 2 for F.Maxwell
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from WSJ, Nov. 9, 2009
The result of loosened credit standards and a mandate to facilitate affordable-housing loans was a tsunami of high risk lending that sank the GSEs, overwhelmed the housing finance system, and caused an expected $1 trillion in mortgage loan losses by the GSEs, banks, and other investors and guarantors, and most tragically an expected 10 million or more home foreclosures.
As a result of congressional and regulatory actions, the percentage of conventional first mortgages (not guaranteed by the Federal Housing Administration or the Veteran’s Administration) used to purchase a home with the borrower putting 5% or less down tripled from 9% in 1991 to 27% in 1995, eventually reaching 29% in 2007.
Fannie and Freddie acquired $1.2 trillion of loans from banks and other lenders from 1993 to 2007. This amounted to 62% of all such conventional home purchase loans with a down payment of 5% or less that were originated nationwide over the same period.
Fannie and Freddie also acquired $2.2 trillion in subprime loans and private securities backed by subprime loans from 1997 to 2007. Acorn and the other advocacy groups succeeded at getting Congress to mandate “innovative and flexible” lending practices such as higher debt ratios and creative definitions of income. And the serious delinquency rate on Fannie and Freddie’s $1.5 trillion in high-risk loans was 10.3% as of Sept. 30, 2009.
This is about seven times the delinquency rate on the GSEs’ traditional loans. Fifty percent of the high-risk loans are estimated to be CRA loans, with much of the remainder useful to the GSEs in meeting their affordable-housing goals.
The flood of CRA and affordable-housing loans with loosened underwriting standards, combined with declining mortgage interest rates—to 5% in 2003 from 10% in early 1991—resulted in a massive increase in borrowing capacity and fueled a house price bubble of unprecedented magnitude over the period 1997-2006.
Now this history may repeat itself as many of the same community groups are pushing Congress to expand CRA to cover all mortgage lenders, credit unions, insurance companies and others financial industry segments. Are we about to set the stage for another catastrophe?
Mr. Pinto was the chief credit officer at Fannie Mae from 1987 to 1989. He is currently a consultant to the mortgage-finance industry.
Yes – he happens to know a lot more about the topic than a bonehead reporter. You did not indicate what facts that he presented about the massive government mandated subprime loans was inaccurate. You don’t deal in facts – they are over your head.
What is that i hear in the distance? The cry of the right-wing-o-tard! Threatened it will puff up and tell numerous lies in an attempt to distract the predator. It is a curious defense. Many biologists are rather confused as to how the species has survived so long….
Let see – F. Maxwell’s “sources” are like the “settled science” of Global Warming, where just this past weekend the IPCC had to admit that its assertion that the Himalayan glaciers would be gone in a few decades, was just conjecture, not “fact” or science as they had previously indicated. Settled science for liberals is what the rational world recognizes as bullcrap. Same with its economic understanding. This is not a surprise. Liberals are now interpreting Scott Brown’s victory in Massachussetts as an indication of support for Obama and his Health Care takeover. That actually makes sense – to a liberal. I bet F. Maxwell even believes it. Let’s make the Libs happy and elect 150 more Scott Browns in November.
@Kent
I took the red pill……
Oh and here is an observation……regardless of your political leanings, from a Canadian’s point of view….When Regan was in Power, our PM, Brian Mulroney, a conservative came into power. Both economies went into the toilet and created massive deficits. Clinton and Chretien came into power, both liberals, they fixed the economy and, Chretien anyway, eliminated the deficit and created surpluses. Then Bush and Harper came into power, both conservatives and guess what…yep…that flushing noise of our respective economies circling the bowl.
My point is to not blame anyone here…just stating a trend.
Reagan ended the Carter recession and ushered in a decade of huge economic growth. Clinton had good economic results after the Republicans took control of Congress in 1994 and prevented his socialization of health care. You really don’t have a clue about the US.
Too much gravity.
Most people don’t know that Buster’s last name is Hymen.
Don’t fuck with Buster.
To kent:
Regardless of your politics, I appreciate the fact that you’re a serious douche bag. Now, seal the deal by being a birther.
AMPAR
Let me guess – you voted for the Chicago thug for President? The one who thinks there are 57 states. You probably think Huey Long was a good governor. You probably wear a Che tshirt. What a dickhead.
AMPAR – are you the boyfriend of Barney Frank who used to run the male prostitution racket in his lower level – and Barney didn’t know about it?
Actually, kent with a little k,
I’ve been here for years. MDN knows me. I respect freedom of speech..
Your bizaree assumption that you have the right to post any crap is laughable. You’re an idiot. And free speech isn’t really free.
I think it’s especially funny that you accuse me of being gay.
@Ampar….with regards to kent, some village is missing their idiot….so kent has adopted MDN as his halfway house until he figures out where he can go….hopefully that will be soon.
I’m still laughing at the hymen joke….lol
Kent (you should really put that other vowel back in your name), don’t fuck with Ampar. He doesn’t like to enter into a battle of wits with an unarmed man.
AMPAR
You are scary. I will never say a word again, as you are so obviously superior, known by the people at MDN, and you knowing how to make superior arguments, like “douchebag”. That is brilliance. And you uttered the word “birther”. And your friend Buster likes to say “kunt”/. It does not surprise me you are well known at MDN. I bet everyone likes to steer clear of the guy who spends most of his time in the bus station rest room scrawling things on the walls. Why don’t you get outside of the stall and outdoors into the fresh air. You would make better friends than Buster.
Hey kent….the ignoring starts now.
@buster
Being ignored by someone whose main focus is female hygiene is not a threat – its a reward unto itself. Please ignore away.
Obama uses teleprompter during speech at elementary school:
http://news.yahoo.com/nphotos/slideshow/photo//100119/480/9131bc77c7534185bdbf267bb4ab8497/
Boy, did you Obama voters get duped!
@kent
This is basic stuff, but it’s obvious that we’re expecting too much from you:
1. Posting one or two examples of discredited climate research does not invalidate all climate research that you disagree with. It’s like me posting a story about one example of a corrupt GOP politician and gloating that it proves that all GOP politicians are corrupt.
2. When I post an article, if you believe it to be factually or logically flawed, you’re supposed to say why, not post something from an extremely biased source and then tell me it’s my job to discredit it. I posted Aaron Pressman’s article. Given your inability to find flaw with it, I’ll assume that you’ve conceded that point.
@Buster
You wrote: “Reagan ended the Carter recession and ushered in a decade of huge economic growth.”
You’re honestly gloating about Reagan tripling the national debt and taking us from being the world’s largest lender nation to being the world’s largest borrower nation? Seriously? Do you think that the money faeries are going to pay off that debt and pay the interest on it?
Applauding the results of Reagon’s borrow-and-spend policies is like congratulating yourself for loading up your house with stuff bought on credit cards.
F. Maxwell
Since you rip the minor deficits (relatively) that the Democrat Congress under Reagan created (Congress’s create deficits, F.Maxwell, not President’s) I am sure you are horrified by the quadrupling of the budget in the last 12 months under the combined wisdom of a Democrat Congress and Democrat President. The Democrats just in the past week requested a $1.9 trillion INCREASE in the spending ceiling. Please tell me how you have expressed your outrage over this, given your hostility to deficits. By the way, during Reagan’s term, since he proposed, and got passed, large across the board tax cuts, tax revenue increased every year as the economy grew. Since the current administration despises the Private Sector (except that part that is involved in government subsidized “green jobs” which would not exist without government support) tax revenues are shrinking in every area – Federal, State and local. Not unexpected when the government is hostile to all business activity and penalizes accomplishment.
So, are you for the current plan to reduce revenues through destruction of the private sector and also huge deficits through Congressional profligacy? I assume you are anxious to get rid of the current President and Congress.
FMaxwell
By the way, on the Housing Bubble, a question for you. Since we know Bankers are greedy, and since we know the mortgage industry over a period of about 100 years created an extremely scientific method of granting credit that produced very low rates of defaults, what changed in the last 20 years that caused the mortgage industry to lose this knowledge and to begin to book loans that would not have been approved in the past? What was the motivation for the Banking Industry to create bad loans, when they already knew how to make money without bad loans? Please explain that.
@ F.Maxwell
If it is not over your head. (I am pretty sure it will be)
So you, F.Maxwell are asserting that Obama is totally destroying our economy these incredible deficits. So FMAXWELL is telling Obama and Congress to cut spending immediately, including entitlements, quit talking about Health Care which will impose huge added costs, stop the Cap and Trade talk, because all this will increase the Deficits, which you assert are the dragon to be slayed. You, FMaxwell, are telling everyone that Obama & Pelosi’s increased deficits means they are unfit for office, just like Reagan. Right?