Bank steps up

Cascade has decided to bite the bullet and write off/down some of its assets.

Cascade Financial expects big 1Q loss as it sheds 2 land-development assets

In particular, "Cascade said it agreed to sell 263 residential lots in Marysville on which it foreclosed last month. It will record a $5.6 million charge on the $13 million loan that went bad." Not quite sure why there is 263 lots in Marysville, but if the loan was underwritten at an LTV of 75% the value was about $17,333,000. A $5,600,000 write off on the note indicates a selling price around $7,400,000, approximately 43% the value when the loan was done. Seems a little rich, but certainly a better deal than it was in 2007.

Hope Springs Eternal

Optimistic article in the Seattle Times today:

Seattle's office towers stop getting emptier

Here's the money quote: " the total office-vacancy rate in greater downtown rose only fractionally during the first three months of 2010". I suppose that's a good thing unless you own a building. If you do, wouldn't you think it's the worst of times? The noose is about as tight as you can stand. From a valuation standpoint, vacancies need to stop increasing for values to stabilize. Hopefully, that's what's happening.

Oil Update

Nice backtest of the breakout.
Stops go below the trendline currently at 40. Should target 44 short term.

Frontier Financial

Interesting trading in FTBK 4/9 with 10x's the daily volume pushing the stock up 15%. What's particularly interesting is that D-Day is fast approaching as their Prompt Corrective Action deadline is 4/15.

Perhaps it's the FDIC's lackadaisical attitude toward enforcement of PCAs that gave it a lift, as fellow troubled bank AmericanWest of Spokane recently got a stay of execution: http://seattle.bizjournals.com/seattle/stories/2010/03/22/daily39.html?ana=yfcpc
Seems like old news to be affecting trading yesterday.

It certainly doesn't appear that there is a white knight swooping in to save the Bank, or, why else would the President insist on taking Spring Vacation at this critical time:
http://industry.bnet.com/financial-services/10008275/good-to-godawful-10-things-ceos-should-never-do-in-a-crisis/
Is the market anticipating a takeover? If it was a good time to take a vacation because a deal is imminent, why hasn't it been announced?

I suspect the FDIC has been unable to locate a buyer for the $3,700,000,000 bank even after requiring apaltry additional 1% writedown:
http://seattletimes.nwsource.com/html/businesstechnology/2011361135_frontier17.html
No local bank has the resources to step up to this one. It's going to need to be a regional that scoops this one up. How big a hit will the FDIC need to take on this? The earliest failures (Westsound, Venture & Horizon) in Washington averaged hits of about 33%. These were clearly bad banks and quickly put out of their misery. More recent failures (American Marine, Evergreen & Rainier) cost regulators about 15%. I'm putting the over/under on Frontier at 20% and I'm taking the over. I believe their size is going to require a bigger than average discount.

In the meantime, interesting trading for a near bankrupt bank.

China 4/2010

China is getting ready to breakout.

It may take one more pullback, but the breakout point is currently 3250. Buying the breakout would put the stops just below. With a tight triangle like this the 4250 target could be quickly attained. On a pullback, there is great support at 2985. Stops would be placed directly below that.

Gold 4/2010

Gold is making the move to 1350.

Nice breakout move the last 2 weeks. The indicators are very supportive of this move.

Oil 4/10

Uh oh. Oil is on breakout. Gas price ought to surpass $4.oo/gal this Summer.

Looking for a backtest at 84 with stops below the breakout point. Target should be near $100.

10 Yr Notes

Interest rates are on the rise. Looks like the Fed's grip on the market is slipping. Good entry point at 3.8%, with a stop at 3.71%.