Meet Mr. Bond

Mon, 2009/06/15 - 3:42pm | Your editor

  This message is being composed in a new mechanism developed by our ever inventive webmaster to try to combine the benefits of MS Word (like accents) without picking up html codes which drive the newsletter writing site crazy. You will see how good the results are if it works. For the record I do not see any way to insert accents in this system. And again the font size seems to change without warning. So I suspect it will need work.

  We are having lots of deep and annoying discussions as I prepare for my long summer safari.

  Here is another dialog with the webmaster who wrote: What is the real value of knowing what the bonds you own are really worth if you do not want to sell them? What is the rationale of not looking at the broker's or market's real ask/bid prices if you want to sell them? Read more »

Beating S&P yields

Fri, 2009/06/12 - 3:34pm | Your editor

 

 Here’s a new theory I’m embarrassed about. Living and working about three miles southeast of Wall Street, I am depressed by the rotten wet foggy muggy sunless days we’ve had all week. Can that be why the stock market rise has stalled?

 Today I produce for all readers, including pre-subscribers, a report on a high-yield instrument that you can add, in moderation, to your portfolios. As is always the case with interest-bearing securities, a high pay-out is related to risk. (The editor of Dick Davis Income Digest, Denise Saari, asked me for an article they will publish and I am sharing it with all.)

 Her readers want to earn more return than the 4.22% currently being paid by the S&P 500. You may want to note that the payout ratio on U.S. common shares index is now below what it was last summer before the Lehman bankruptcy spooked the market. Read more »

Carping about Un-TARPing

Wed, 2009/06/10 - 3:42pm | Your editor

       They are now carping over the terms of un-TARPing.  I've been wrestling with Bloomberg and tallies by Nouriel Roubini to try to find out whether Uncle Sam will make any money on the repaid TARP funds. It is unclear. The Fed lent money which cost it nothing and got $1.8 bn in interest from TARP recipients. That, against U.S. budget deficits, is bupkas (Yiddish: nothing much).

          The real money is how much the banks pay to buy back the preferred shares they were brow-beaten by Hank Paulson into selling last year. The valuation based on that sales price will be modest indeed.

          But if the U.S. Treasury can justify auctioning off the preferred shares rather than cancelling them, there can be a bit of profit in it. Credit Suisse has figured that the value of the preferreds from the ten exiting banks and investment banks is $5.7 bn. Read more »

Moral TARPitude

Tue, 2009/06/09 - 5:11pm | Your editor

        There will be only minimal news for pre-subs today because I was busy with four of my U.S. stocks which have paid back TARP money: JPMorgan-Chase; State St. Bank; BBT; and American Express.

        As a shareholder, getting rid of the preferred stock in the hands of Uncle means my eps will rise and I expect dividends will follow.

        Repayment also cuts down on heavy-breathing oversight of the banks’ management over everything from executive pay to whom to lend to. And it cuts down on moral TARPitude. Read more »

The Curse of W

Mon, 2009/06/08 - 2:45pm | Your editor

      As a New Yorker, I do not like the term double-dip to refer to a possible second stock price drop during the summer. A double-dip in my city is a second scoop of ice cream, hardly something to worry about. But there are four reasons I am cautious now.

        I have to accept the term “W-shaped” recovery and a “W-shaped” stock market trend. This has nothing to do with George W. Bush.

        Are those real risks? This is not a trivial matter given our huge gains since the market got out of its March funk. And my going off to foreign climes in mid-June means that if the green shoots to date shrivel up and die, we will be hurt.

        There are some clear risks from doing nothing. First of all the yields on U.S. Treasury notes has inched upward during recent auctions. The impact on mortgage rates linked to Treasuries will further hamper the recovery of the U.S. real estate market. Read more »

Illuminata

Fri, 2009/06/05 - 6:24pm | Your editor

      An old buddy, John Germinario, has created a new venture called Global Securities and Services in Spring Valley, up the Hudson from here, with offices in Mexico and Hong Kong. John was present at the beginning of the boom in American Depositary Receipts at Citi and BNY.

      John is interviewed in the current issue of Global Finance magazine. He says “mass creation of unsponsored ADR programs by the banks brings the evolution of depositary receipt products back 24 years, when unsponsored ADR programs were voluntary consolidated to sponsored programs.”

      The rise in the number of  “grey market" ADRs without a market maker or a designated single depositary has taken off since the SEC changed its rules last Nov.. John thinks the proliferation of unsponsored ADRs is creating “disorderly markets” for trading "potentially damaging renegade ADRs.” Read more »

Another ATM Machine

Thu, 2009/06/04 - 7:09pm | Your editor

     My office is still in darkness so I am writing on the website from my husband's computer in our flat. So no accents; excusez-moi. Despite being Canadian, the webhosting company is very English language oriented. There will be no blog tomorrow unless the overhead fluorescent light is repaired in the office.

     Piqued by the trio of ATM issues by one of our recommended companies, I joined a "Webinar" at which Bank of America Merrill Lynch discussed the newly propular method of raising money by issuing new shares. Note that the mechanism is not new; just its use. ATM stands for At The Market. Merrill or whatever you call it a big peddler of this fund-raising technique, and today's presentation was intended for shipping companies, which have been a big user of this system. In fact, the shipping industry is the major non-U.S. issuer of ATM stock.

Read more »

Brit Sterotypes

Wed, 2009/06/03 - 5:01pm | Your editor

     There are two stereotypical British stock characters. One is the aristocratic incompetent, Bertie Wooster, the chinless wonder, created by P. G Wodehouse, who relies on his valet to keep him functioning. Or a posh laird in his castle obsessed with noblesse oblige and the beauty of his pig, the Empress of Blandings.

     The other is the Angry Young Man (AYM), smart kids of lower-class background marching against nuclear weapons, the monarchy, or apartheid.

     Both stock characters have become cartoonish. Most posh Brits have normal IQ even if they do hunt, fish, and shoot. They do not believe in hanging and flogging. Most AYM are not part of the loonie left supporting a Communist Britain or Londonistan.

     Yet Members of Parliament from both groups have been caught fiddling their expenses. One Labourite had to resign because she charged for X-rated films for her husband. One Tory used government money to clean his castle’s moat. Read more »

The No-Mo and Bill Show

Tue, 2009/06/02 - 2:00pm | Your editor

     Is it over yet? Two views. The first is from Asia Pulse:
     Software major Infosys today said the economy will recover by the end of the year or early next year going by clients' feedback suggesting that the worst is behind them. "When we talk to clients, they say that it looked like the worst for them is behind and they might have hit the bottom," Infosys Technologies CEO Kris Gopalakrishnan told reporters here today on the sidelines of a function here. That’s the upbeat view.
     Bill Gross, co-chief investment officer of bond mutual-fund giant Pimco, is more downbeat on the market outlook, forecasting lower returns, decreased U.S. growth, and our dollar’s losing its status as the world’s reserve currency.
     Some of this came last week at the Morningstar Investment Conference, Gross outlined what his Pimco colleague Mohamed El-Erian called the “New Normal.” Read more »

Straphanger Memories

Mon, 2009/06/01 - 3:09pm | Your editor

 An early memory. When I was a little New York City girl, just after World War II, I rode in the streetcar with my mother up Broadway. The streetcar tracks were removed around 1950 to make room for more cars. As Manhattanites, we did not have a car; my parents only got motorized in the 1970s when I was no longer at home. I only passed my driving test at the ripe age of 28.

 In 1953, appointed by Pres. Eisenhower as Secretary of Defense, Charlie Wilson, former head of General Motors, denied there would be any conflict of interest: "what's good for General Motors is good for the country, and visa versa."

 By 1973, during the first oil price crunch, that was no longer true. My then-boss, Sen. Clifford P. Case, minority leader of the Senate Foreign Relations Committee, while not a NYC straphanger, was close. (Before becoming a legislator he had commuted to the city by rail from New Jersey.) He said the only solution to the energy crisis was to raise taxes on gasoline to European levels and (because he was a liberal Republican, a now extinct species), to subsidize those for whom high priced gas was a necessity. Read more »