Solar’s TAN Starting to Fade

The remarkable run in solar stocks earlier this year was typical of previous bubbles we have seen...and valuations had expanded to levels that left very little room for error.

But the group has been savaged, as a glance at the Claymore Global Solar Energy ETF (TAN-AMEX) illustrates. And it might still be too early to buy, but picking through the wreckage of this market will keep you occupied.

But at least one SellSide shop thinks more pain is ahead for solar bulls as multiples continue to contract:

Solar PV: New Era Of Uncertainty, Will Global Delevering Push Multiples Lower?

If the bloom is off solar valuations, where will solar PV shares trade—in line with semiconductors, IT hardware, contract manufacturers, chemical companies or power generators? Whatever the "comp" group, it appears likely that shares of solar PV stocks will experience further multiple compression as investors discount both the existing uncertainty surrounding global solar PV demand and now factor in a de-levering of global credit markets. That said, it is still early days, and we believe energy generated from solar PV is just scratching the surface and stands to see significant unit growth when system prices drop. ThinkPanmure Note

The Next Treasury Secretary?

Eugene Ludwig seems to be one of the front runners to take over for Hank Paulson if Obama wins. The founder of Promontory Financial Group was formerly head of the Office of the Comptroller of the Currency and served as deputy to the director of the Resolution Trust Corporation and worked closely with members of the Clinton administration.

His current firm, Promontory Financial Group, provides advice and assistance to many of the world’s largest financial services firms, with a particular focus on enhancing their control mechanisms, including risk management, compliance, and internal audit.



Safe & Sound
Ludwig Profile

VIX Gone Wild

The VIX has been getting a great deal of attention as everyone tries to game a bottom. The panic is subsiding, as the pro's at OptionMonster are noting.

They are also explaining the difference between VIX cash and the futures-check it out.

Wall Street’s Manhattan Project

The quants from JP Morgan work all over Wall Street now; I was unfortunate enough to run headfirst into one in 2004. His rollout of half a dozen "enhanced index" equity mutual funds has been a flop; perhaps fixed income experts should stay away from the equity markets. But he is not yet taking the heat that a few of his past associates are beginning to feel, although they all seem to have held onto their jobs, no small feat.

Warren Buffett called derivatives financial weapons of mass destruction years ago, but Blythe Masters and the remaining quants at JP Morgan just don't see it that way...

"I do believe CDSs [credit default swaps] have been miscast, much as poor workmen tend to blame their tools."

In 1997, she and a team developed many of the credit derivatives that were intended to remove risk from companies' balance sheets. The idea was to separate the default risk on loans from the loans themselves.

The risk would be moved into an off-balance sheet vehicle. The product was called Bistro, otherwise known as broad index secured trust offering. Guardian

JP Morgan feasted on the fees from the Bistro, but the rest of us are gagging on the lethal stew they created. The days of designing complex products a select few understand might well be over, but the original Masters of the Universe is not apologizing:

The Blame Game: BuySide vs SellSide vs Main Street

The Bronx cheers raining down on Hank Paulson are tough to ignore; Main Street wants blood, but ain't gonna get it given Wall Street has turned into a turnip. Hank Paulson could probably care less; he is above the law, and polls indicating as few as 7% of the public approve of his plan are not likely to stop this soldier from moving onward.

Blaming hedge funds for the recent debacle has become the national sport but at least one longtime Wall Street professional is putting his foot down when it comes to blaming the BuySide for all that ails us:

One of the great ironies of the current crisis is that the problem emanated to a large extant from a consortium of constituents who are now trying to affix blame, particularly on hedge funds.

The crisis originated in investment banks who took advantage of lax regulation and low interest rates to lever their balance sheets;

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