Economics of Credit Card Comp's

[chickenhead]

I know Val had mentioned awhile back he might go short CC's, I assume he meant issuers and not V or MA.

I mentioned awhile back I've been getting into AXP. I thought this presentation was interesting specifically in the breakdown on the different focus of AXP to the other issuers, especially slide 6 and 34 for comparison purposes.

http://ir.americanexpress.com/phoenix.zhtml?p=irol-eventDetails&c=64467&eventID=1857876

[Valuist]

I've been short Capital One (COF) for awhile. I shorted around 53, saw it come down to 45, then it ramped back up to around 53 but it is now falling again. I would expect further write downs at COF.

[ddog]

no one escapes, this is trend down for 18 months at least even with avg write offs .... IMO.

Not going to play in this sandbox though.

good fortune to all.

[chickenhead]

AXP is much closer to V and MA, so far as operations go than any of the issuers, is my mainline, cept they trade at less than half the valuation.

The business plan is built for just this, just this exactly. What little revolving they have is prime, 9% spread, writeoffs could DOUBLE and their lending would be breakeven....40% of their market cap is in cash...plus a secular trend, that's rational, of people moving purchases over to plastic to capture the rebate. Expect more of that as people get pinched...

The fact they get dragged down along with everyone else...is a very good thing. Don't sleep in AXP...they's "medicine free".

[ddog]

thx, i had that going in, i just don't see it that way, but i wish you a good return.

I suspect only their top line customers will be making any purchases and that the destruction of a lot of folks credit will not allow them to move over.

I am getting a little more pessimistic that we will ride flat the rest of this year.
I am leaning to a worse 2009. hope not, but it's 50-50 now.


interesting , thanks for the heads-up.

[chickenhead]

it's all about time horizons I think. they get hit hard, all to the good. Bad times to own are good times to buy it seems to me.

[bigmack]

it's all about time horizons I think. they get hit hard, all to the good. Bad times to own are good times to buy it seems to me.
You ain't hangin with BAC no mo, is you?

[chickenhead]

You ain't hangin with BAC no mo, is you?

Dumping more in soon as they break 28.

These guys blow up every decade...if you did nothing but buy BAC and AXP on every 50% blowup...you'd be beating the market by an insane amount.

Yeah I know, this time its different. It always is.

[bigmack]

Yeah I know, this time its different. It always is.
Could be, but I doubt it.

Resilient, beyond belief, this stock. Given their far reaching need for infusions of cold hard cash, they always manage to "cough it up" and all is copacetic. Until further notice...

[ddog]

Countrywide?
I am convinced no one still knows the extent of the downside, even now.
It could be at least as large as what's come before.

they got to take a hit, the div ??

have not followed this real close, but I am not sure this time is exactly "mcsame"....

although i think one will have plenty of time to get in on the (near) bottom.

[Valuist]

I think the only financial company worth owning right now is Goldman Sachs, and it probably will come down a bit more. Supposedly they were shorting the other investment banks and have been long oil. But I can't believe they come away totally unscathed.

[ddog]

I think the only financial company worth owning right now is Goldman Sachs, and it probably will come down a bit more. Supposedly they were shorting the other investment banks and have been long oil. But I can't believe they come away totally unscathed.


I hear some really weird things on GS in this whole oil deal.
They are REALLY REALLY long and of course they popped the 200.00bl forecast. Wonder WHY????

I hear ,and I can't prove this, that they are actually hoarding/storing oil waiting for the time to dump at close to that 200.00.

Could be some hell to pay of a backlash if they get caught with a hand in the barrell so to speak down the road.

[chickenhead]

I'm not smart enough to begin to think I can have any kind of idea of what GS is worth. BAC is complicated and opaque enough. AMEX, very simple.

[KMS]

Any thoughts on JP Morgan Chase?

[Valuist]

Any thoughts on JP Morgan Chase?

It was considered almost as solid as GS, but it appears they have more writedowns to come. The Bear thing was so toxic......

[Valuist]

I hear some really weird things on GS in this whole oil deal.
They are REALLY REALLY long and of course they popped the 200.00bl forecast. Wonder WHY????

I hear ,and I can't prove this, that they are actually hoarding/storing oil waiting for the time to dump at close to that 200.00.

Could be some hell to pay of a backlash if they get caught with a hand in the barrell so to speak down the road.

This week's Barrons had an interview with the GS analyst who made the ultra high prediction. It should be pointed out, that his long-term prediction is for crude to fall back to $75/barrel.

[chickenhead]

Countrywide?
I am convinced no one still knows the extent of the downside, even now.
It could be at least as large as what's come before.

that deal can be structured any # of ways. It's kind of interesting...BAC has not acknowledged that they plan on taking on CFCs bondholder debt. I would not be surprised to find it jettisoned, maybe into a nice shiny new Fed credit facility.

[Valuist]

Any thoughts on JP Morgan Chase?

Probably the second best of the investment banks but they did take on a lot of bad debt when they got Bear Stearns. But the rally we saw that lasted about a week and a half until this past Wednesday or so really looked like a short covering bear market rally. Now that appears over and more pain for the banks, at least those with subprime exposure.