Andrew Abraham

andy-0101 My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.

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If you are interested in contacting for speaking engagements. Please email me at Andrabr9@gmail.com or call 954 903 0638.

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Futures and commodity trading involve substantial risk. The evaluations of futures and commodities may fluctuate and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by, that you will profit, or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible, where projections of future conditions are attempted.

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Stressing over the Bank Stress Tests

bomb

It isn’t like we have gone through enough stress last year, now we need to worry if our Bank will pass the Govt’s stress tests. For the last 2 months 200 federal examiners have worked/audited the nationג€™s biggest banks to determine how these banks would hold up if the recession deepened.

The Stress tests are based around a series of ג€œwhat-ifג€ projections if the economy worsens or deteriorates. For example “what -if” unemployment rising to 10.3 percent next year, “what if” home prices fall an additional 22 percent, and “what-if” the economy contracts by 3 percent or even greater. The U.S. Treasury has said that the tests are not pass/fail. However it seems that the institutions that require more capital….they have failed.

It is really a crazy scenario. In order for the Stress test to be credible,not all of the banks will pass the test. What happens when your bank is announced that it failed this test. Will this cause a run on the bank? What about the share price? I would bet it would implode? Who would want to own shares of a bank that the govt has deemed is weak after this massive move in stock prices. Another great scenario could be despite all of the recent bailouts, is there a need for more banks to be bailed out again. Oh,by the way who is suppose to pay for that? After receiving billions of taxpayer dollars can the banks still need more bailout money?

Lets be realistic. I find it very hard to believe all is wonderful in Banking land. One has not even seen the next potential down draft of credit card defaults. There are commercial loans that are defaulting in ever increasing numbers. There are derivative products that no one knows how to value or more so or more importantly there is no longer a counter party. Besides the fact of a tremendous supply of foreclosed homes sitting on the books of major banks. Add on to this the next wave of foreclosures coming with more adjustable mortgages. Really what has changed with the fundamentals. Even with the sale of a toxic asset. How can something worth close to nothing be worth more than that?

With all the above mentioned it seems that the term “Stress Test” might not be the best term. It might just be Banking Time Bomb Test.
What do you think?

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