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This is officially my first track day but hopefully won't be the last. I learn the line mostly from onboard videos I found in YouTube lol ...

Daniel Loeb's Third Point 1st Quarter Investor Letter

Review and Outlook

A benign and extended period of low market volatility ended abruptly in the first quarter of 2018. The S&P’s 12% peak-to-trough drawdown during the quarter was the sharpest since Q1 2016 and the index’s overall quarterly losses of 0.8% marked its weakest annual start since 2009. Third Point’s performance was less volatile but the end result was similar with the Offshore Fund losing 0.6% through the end of March. Losses during the quarter were driven primarily by long equity investments in cyclical sectors while gains came from the short book and credit strategies. The fund was profitable in April, bringing performance to roughly flat for the year.

A shift in markets occurred in Q1. After a two-year period where growth surprised positively and inflation was benign, we began to see volatility in each of these areas. While earnings growth remains strong, investors now have to contend with increased uncertainty around appropriate multiples. One cause of this uncertainty is that, after many years of very low rates, there is finally an alternative to equities in the form of relatively riskless two-year money. We have seen the impact of this new option in money market flows where $400 billion has flooded in so far this year versus a total $80 billion of inflows in 2017. Also, as manufacturing indices (PMI’s) cool from elevated levels, there is a real question about just which inning of the late cycle we are in. While we don’t believe a recession is close, there is definitely a concern that it is getting closer. Each of these considerations is weighing on multiples. For investors, this means the S&P is effectively range-bound and so, to generate profits, investors will need to adjust exposures more aggressively and successfully choose winners and losers across sectors.

Compass Point Lowers BofI (BOFI) to Neutral

From a buy rating to a neutral rating in a research note issued to investors on Monday morning, Marketbeat reports. They currently have $44.00 target price on the financial services provider’s stock, down from their previous target price of $47.00.

Other research analysts also recently issued research reports about the company. Stephens reissued a buy rating and set a $39.00 target price on shares of BofI in a research note on Thursday, February 1st. Sandler O’Neill restated a buy rating and set a $38.00 price target on shares of BofI in a report on Wednesday, January 31st. DA Davidson boosted their price target on BofI to $48.00 and gave the stock a buy rating in a report on Thursday, April 5th. Zacks Investment Research cut BofI from a buy rating to a hold rating in a report on Wednesday, April 4th. Finally, BidaskClub cut BofI from a strong-buy rating to a buy rating in a report on Saturday, April 28th. Three research analysts have rated the stock with a hold rating, eight have given a buy rating and one has assigned a strong buy rating to the stock. The company currently has a consensus rating of Buy and a consensus price target of $41.00.

At what point will China stop lending the U.S. money?

At present, the U.S debt to the Chinese government is quickly approaching $1 trillion in treasury bills. At what point will China decide that the U.S. cannot pay them back in full, and stop buying treasury bills?


When they start buy more of the stuff the make themselves and no longer need a trade surplus to make their economy grow so do not need to fiddle with the exchange rate to keep their stuff cheap when priced in $. The time may be coming soon.