(A brief update)

Lately, I have been lurking around just two places on the web: twitter (username: blueblooded) and Paul Kedrosky’s blog (paul.kedrosky.com). Twitter has unexpectedly been… entertaining. It’s perhaps one of the easiest ways of receiving various information from various people about various subjects. Not to forget it’s the quickest way to blog.  Quite a convenience for people like me who tend to be lazy bloggers most of the time.

Paul Kedrosky is a regular on CNBC. A very smart man who enthusiastically gives me and thousands more our daily dose of interesting readings. He is a research consultant for Ten Asset Management and a senior fellow at Ewing Marion Kauffman Foundation.

I’ve also been busy reviewing for the CFA (just about to move to the 5th book, just after 2 months and 3 more left for the 2 remaining books and review), but the pace at which I’m going, fast as it may be, is enough to scare me. I may be reaching the 250-hour minimum suggested review time but it doesn’t quite bode well for me that I’m finishing a book, on average, in less than 2 weeks when each should at least take three. The current book I’m on, I began reading just exactly a week ago.  And now I’m down to reviewing the last chapter and I’m ready to move on.  It’s one thing to understand the concepts, it’s another to retain them along with the eerie collection of formulae that are slapped to everyone studying for the exam. Somehow. I take comfort knowing that I did understand pretty much everything I’ve read and I have enough time to review and master everything. I hope to be very well prepared come June. Let that be my gift to myself.

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Things are not yet fixed. Far from it should I say.  Left to right, there are debates about nationalization, the role of economists, how to fix the recession, the bailing out of central and eastern Europe, just to name some.  Each of them has their own points of contention. For now, let me focus on nationalization.  I am probably oversimplifying, but I am simply not very welcoming of the idea of the government playing a role managing private institutions.  There’s definitely a reason why the markets are, until recently, best left to themselves.  Let’s go back to Reagan: government is the problem.  Even with the best intent (or not), it becomes simply a cause of inefficiency.  Taxes? Subsidies? Ceilings and floors? If you understand basic economics, then you would understand that those are the simplest illustrations of the kind of inefficiency the government creates.  (If you want more examples, read James Bovard’s Lost Rights and you’ll understand why I hold this position.)  And I’m sorry to include this, but with a Democratic administration in place for the next four years, this isn’t something you want to allow to happen so easily.  Seen how many times Pelosi hopped from her seat during Obummer’s state of the union address? That could only scare me. (It actually also annoyed me.) BTW, I’m neither a fan of Limbaugh nor Jindal.

I am not claiming that government regulation is completely unnecessary, but their involvement cannot go beyond a certain extent. There has to be limits.  I still believe in the forces of the demand and supply at work, and in survival and market failure. If strings had to be attached to the bailouts of certain institutions, then I believe there similarly has to be strings attached for the government.  So nationalization? Maybe. But if it enters the picture, it does so only to do what it has to do. And that is not to control the institutions and instruct them what to do.  Protect taxpayer money and check that it’s used appropriately? Remember the housing plan? I wonder how that protects taxpayers’ money. You’ve probably heard of Rick Santelli.

As we grow up, our definition of what heroes are or who they are in our lives is modified.  Some look up to their dads, some to their partners, and some even to political and socially-figures in their countries as life heroes.  Meanwhile, there are those who take a more social definition of it and look at firefighters, at times the cops, and more importantly the soldiers fighting in wars to be members of the same group.  But have a trip down memory lane, from 10-15 years ago and none of what has been said above would apply.

As kids, our world revolved around skilled, powerful, and masked men- ginormous or regular-sized, who wore jumpsuits of different colors.  Thanks to the Japanese, we managed to find more than a simple pasttime but more reasons to shout out loud at home as our favorite characters transformed from being humans just like us.  And thanks to my friend Niq’s post on her blog about MMPR, nostalgia got me digging up the past and scouring all over the net for photos most familiar to us and would easily remind us how much we loved these shows.

BIOMAN

Originally aired from February 4 ‘84 to January 26 ‘85 in Japan through TV Asahai, Choudenshi Bioman became known to many of us as simply Bioman.  The story’s five heroes are identified by the color of their armor:

Red 1, a pilot

Bioman Ability: Choudenshi Radar

Weapons and Attacks: Fire Sword and Spark Sword; Diving Attack and Sky Punch

Green 2, a race car driver

Bioman Ability: Choudenshi Scope

Weapons and Attacks: Hurricane Sword and Green Boomerang; Break Action

Blue 3, a swimmer and the one I identified with

Bioman Ability: Choudenshi Ear

Weapons and Attacks: Electric Sword; Super sky Diving

Yellow 4, a photographer

Bioman Ability: Choudenshi Holograph

Weapons and Attacks: Thunder Sword and Bio Arrow

Pink 5, a flutist

Bioman Ability: Choudenshi Barrier

Weapons and Attacks: Laser Sword and Pink Flash; Spin Chop

Together, we shout:  Bio Team Fight! Bioman!

And what are superheroes without the villains? Remember Dr. Man, Farra and the rest of the gang?

MASKMAN

Then there was Maskman.  I’m having a hard time remembering if this was shown the same time as Bioman. But memory serves that this came after.  Even if it aired between 1987 and 1988, I’m not sure I saw it during those two years. I was only 3 then.  Called in Japan as Hikari Sentai Maskman, it was the eleventh installment in Toei’s Super Sentai series (Bioman was eighth).  The plot apparently does not hold a stark difference from Bioman. Only the way the heroes are called as well as the way they turn into heroes.  Similr to Bioman, I pretended to be Blue Mask. The Filipino counterpart of Blue Mask being called Adrian (but he was called Heydrian) certainly helped.

I have less recollection of this series except that they use their hands to transform into Maskmen.  I can hardly remember the villains, even how their robot looked.  All I know is I had a toy of their fighter jet, before it turns into a humongous robot.  As they transform (below), there’s still fascination in seeing the fiery background as the blower blew on their faces and let their hair flutter, as if a strong force of wind just blew past them.

See the Maskmen utilizing their Shot Bomber (left) and the Jet Cannon where Red Mask is standing on (right) is one of my favorite toys in my childhood.

SHAIDER

Pulis Pangkalawakan. Belonging to a gang of three, he usually fulfills his mission with Annie, with the aid of Commander Com.  Headquartered at the giant spaceship Vavilos, capable of firing Vavilos Beam from its wings, Uchuu Keiji Shaider as known in Japan also fights for world peace through his motorcycle and Shaider Cutter (heard on TV as Kata)

Along with Maskman’s Jet Cannon, I head the immense pleasure of owning a miniature Vavilos, which transforms into a gun called the Big Magnum.

For additional nostalgiic pleasure, don’t forget Ultraman and Mask Rider Black.

A quick note about Ultraman: I was highly fascinated by the sheer number of Ultraman robots.  Without any recollection of their names, all I could remember was being amazed at how human they were.  Although with powers, it was a break for me from robots. Their enemies, however, remained fugly.

If I remember it right, this creature gave Ultraman one of his toughest battles.

Lastly, the black-bee looking hero.

Even after what seemed like an eternal childhood, it comes surprising for me to know that Bioman and Maskman only had 51 episides each and Shaider, even less- 48.  Just look at that. As a kid, your day was never complete without seeing any of those series and the sheer entertainment we got was enough for us (or me at least) to not care or even recognize that that entertainment emanated from years of recycled episodes.

How about singing along, at the very least watching again, each of their opening songs?

Bioman

Maskman

Shaider

I’m sure it’s not just me.

As I watched the millions of people in Times Square count down the remaining moments of 2008 on New Year’s Eve, I felt a sense of excitement just like they did too.  Just like I did last year. And the year before…and the year before that. It wouldn’t be insane to think that it is innate for people to feel a sense of new hope as one year draws to a close, every single year.  Whether it is with fireworks or in a bar with friends or just staying home being accompanied by Carson Daly as the world counts down with New York, we choose to be optimistic. Of course it is no guarantee that the optimism would come realized, but between being positive and negative it just makes perfect sense to choose the former.  Whatever our hopes are, we always look forward to a better year or even just a good one particularly when what we just had revolved around broken dreams, shattered hearts, and quiet and uneventful moments.  It is human nature to seek for more. More money, more friends, more luck in love; better job, better relationships, better life.  I’m sure there were so much more hopes and prayers sent out to the winds with the departing 2008.

I did not have a 401(k) whose value was cut in half by the crisis, nor did I have investments with Bernie Madoff.  But I am as hopeful for 2009 as perhaps every single Madoff investor, retiree, trader, and investor who threw in the towel after such a horrendous and historic 2008.  I did finish graduate school on a very positive note but what ensued was not quite positive. After more than five months of job search, I am still one of the unemployed.  No, it is not a consolation that many more are becoming just like me. With so much time on my hand for TV, I recently decided to register for CFA’s 1st level exam to be taken in June.

Living in the suburbs could only emphasize that quiet as I may seem to people, I am far from wanting to live a peaceful and slow life. For me, there is much to be desired from the frequently irritating car horns blowing one after the after, the noise made by chattering people and the tapping of women’s high-heeled shoes, the loud music resounding from the nearby coffee shop, or the chats, laughs, and screams made by partying people as if the loud 80s playing on their stereos weren’t enough.  I long for the busy, fast lifestyle of being in a city. Having so much spare time, being where I am, also doesn’t help when thoughts- unnecessary and rather confusing, cross my mind several times every single day.  Considering how much of a fool I could be, perhaps I am better of listening to a friend. Kellda, a college friend and barkada, said several times it’s not a good idea. Not her direct words, it’s stupid. When I am all the way here, it doesn’t make sense to be thinking about things that are all the way at the other of the world. She even warned about slapping and punching me when she sees me for even thinking about it.

With so many things that got me worried in 2008, I am ready for 2009. I choose to be more hopeful about landing a job.  Sleep all day? Done with that. Friends have been very supportive and that certainly helped making me feel that good things are about to come.  They’ve provided additional confidence I suppose I needed just when I decided to step aside and almost waved the white flag.  I could only hope that with good feelings about how things are going, my hopes won’t simply turn to dust and just vanish.

Having spent so much time as a bum, I am ready to hit the books scary as they may be and just think about the bigger picture.  Keeping in mind the ultimate goal, I will yet again attempt to find the discipline I had in grad school to bring this to a success.  Three years might be a long time but only by remembering the reasons- big and small- why I am doing this could I find the motivation to keep pushing.  I believe.

So far, the past 5 months may be the considered the most unproductive, unaccomplished I’ve been. Break are good but perhaps the next time I get another break, 2-3 weeks at the most are sufficient.  Five months is much too much; I could only be excited about breaking the monotony.

And Kellda would no longer need to slap and punch.  I am sending the thoughts away. At least try. Even my 2009 forecast agrees: steer away from those thoughts.  I’ve spent so much time thinking about it it isn’t funny anymore.  I’ve reduced myself to something I shouldn’t have. Allowing time to be the decider might simply be the best solution.  And… well, let it be. For now there won’t be the greatest story ever told or four seasons of loneliness. Only good riddance. And the motivation to win. So please, don’t stop the music.

Obama made me not want to hear or say the word “change” anymore… I’d rather just take some lines from a song. Quite not the context of the song but it works on its own.

Ain’t it funny how you think you’re gonna be OK till you remember things ain’t never gonna be the same again?

Aint’ it crazy how you think you’ve got your whole life planned just to find that it was never ever in your hand?

Change…

You don’t see it coming when the future comes knocking.

It can make you or break you too.

You’d just have to make it through.

This issue with General Motors has been ongoing for weeks now and seemingly the most obvious solution is similar to what banks and non-bank financial institutions received- a bailout. Today, the US Senate agreed on a $25billion loan to GM to save the company. The loudest argument against non-bailout is the spiral effect bankruptcy/failure has not only to GM but also to thousands of its suppliers who run the risk of similarly filing for bankruptcy if GM is allowed to fail. Following the huuuge job cuts pending the failure are the big sums of money that would certainly be needed to support the families of people who lose their jobs and to meet benefit obligations- health care, pensions, etc.

While I do admit and agree that GM’s, perhaps including Ford’s and Chrysler’s failures, pose some level of systemic risk, bailing them out (in the meantime) does not relieve them of the inefficiencies that currently exist in their systems. Receiving the bailout funds would only permit them to continuously fund their insanely quick cash burnout rate. For the 3rd quarter, GM used a whopping $6.9bn or $2.3bn a month while Ford reported the figure $7.2bn.

Furthermore, bailing these companies out run opposed to the concept of free markets where market forces freely determine the survival of companies- those well-run strive while the inefficient ones fail. Some may bring up the bailout that was provided to the financial institutions, raising the issue of fairness. Fair enough. However, financial institutions ARE financial institutions. They are the ones that lend out, in effect, fueling economic growth from both the supply and demand side. These institutions are the ones that allow producers to acquire inputs to create outputs and they are the ones that fund consumer expenditures. Moreover, financial institutions serve as the source of credit lines to purchase cars and car parts, and fund the expenditures of automakers. In that sense, the latter only fall second to the former in terms of relevance.

If not bankruptcy of the three and the demise of its suppliers, other options exist for everyone: use the government money to support the SUPPLIERS/makers of car parts as well as their people. While an equivalent of a bailout, they remain more deserving of help than the automakers themselves; they are not the root of the problems. If not that, just let one of the companies fail (note: GM) and follow the Darwinian theory of survival of the fittest. At the moment, GM is the one facing the most danger and with so much changes that need to happen, a (short-term) bailout just won’t let them become better. A government bailout is simply an equivalent of throwing taxpayers’ money down the drain. Oh yeah, the $25 billiion agreed upon by the Senate today, I believe, does not come with strings attached. How’s that for a plan?

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An excellent editorial written by Michael Levine, an NYU School of Law professorwas published on the Wall Street journal today. Entitled “Why Bankruptcy Is the Best Option for GM”, he argued that well, bankruptcy for the ailing General Motors is the best option for the automaker. Take note of the many interesting facts he cited with regard to GM’s inefficiencies and corporate contractual blunders.

General Motors is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.

Consider the costs of tackling GM’s problems with some kind of bailout plan. After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of “change,” GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota’s.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM’s. But their expenses for benefits are a fraction of GM’s. GM is contractually required to support thousands of workers in the UAW’s “Jobs Bank” program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it’s not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month. Moreover, GM supports myriad suppliers and supports a huge infrastructure of firms and localities that depend on it. Many of them have contractual claims; they all have moral claims. They all want GM to be more or less what it is.

And therein lies the problem: The cost of terminating dealers is only a fraction of what it would cost to rebuild GM to become a company sized and marketed appropriately for its market share. Contracts would have to be bought out. The company would have to shed many of its fixed obligations. Some obligations will be impossible to cut by voluntary agreement. GM will run out of cash and out of time.

GM’s solution is to ask the federal government for the cash that will allow it to do all of this piece by piece. But much of the cash will be thrown at unproductive commitments. And the sense of urgency that would enable GM to make choices painful to its management, its workers, its retirees, its suppliers and its localities will simply not be there if federal money is available. Like AIG, it will be back for more, and at the same time it will be telling us that it’s doing a great job under difficult circumstances.

Federal law provides a way out of the web: reorganization under Chapter 11 of the bankruptcy code. If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM’s viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn’t be easy but, unlike trying to bail out GM as it is, it wouldn’t be impossible.

The social and political costs would be very large, but if GM fails after getting $50 billion or $100 billion in bailout money, it’ll be just as large and there will be less money to soften the blow and even more blame to go around. The PBGC will probably need money to guarantee GM’s pensions for its white- and blue-collar workers (pension support is capped at around $40,000 per year, so that won’t help executives much). Unemployment insurance will have to be extended and offered to many people, perhaps millions if you include dealers, suppliers and communities dependent on GM as it exists now. A GM bankruptcy will make addressing health-care coverage more urgent, which is probably a good thing. It would require job-retraining money and community assistance to affected localities.

But unless we are willing to support GM as it is indefinitely, the downsizing and asset-shedding will have to come anyway. Even if it builds cars as attractive and environmentally responsible as those Honda and Toyota will be building, they won’t be able to carry the weight of GM’s past.

GM CEO Rick Wagoner says “bankruptcy is not an option.” Critics of a bankruptcy say that GM won’t be able to get the loans it will need to guarantee warranties, pay its operating losses while it restructures, and preserve customers’ ability to finance purchases. While consumers buy tickets from bankrupt airlines, electronics from bankrupt retailers, and apartments from bankrupt builders, they say consumers won’t buy cars from a bankrupt auto maker. But bankruptcy no longer means “liquidation” or “out of business” to a generation of consumers used to buying from firms in reorganization.

GM would guarantee warranty support with a segregated fund if necessary. And debtor-in-possession (DIP) financing — loans that provide the near-term cash for reorganizing companies — is very safe, because the DIP lender has priority over all other claimants. In normal markets, it would certainly be available to a GM that has assets to sell, including a viable overseas business. Such financing is probably available even now.

In any event, it would be lined up before a filing, not after, so any problems wouldn’t be a surprise. As a last resort, we could at least consider a public DIP loan to support a reorganizing GM with a good chance to survive — as opposed to subsidizing a GM slowly deflating.

The fate of Daewoo — the Korean auto maker that collapsed in 2000 after filing for bankruptcy, leaving about 500 dealers stranded in the U.S. — is often cited as “proof” that a GM bankruptcy won’t work. But Daewoo was headquartered in a part of the world where bankruptcy still carries a major stigma and usually means liquidation. Daewoo’s experience is largely irrelevant to a major U.S. company undergoing a well-publicized positive transformation, almost certainly under new management.

GM as it is cannot survive without long-term government life support. If it gets that support, it can’t change enough and won’t change fast enough. Contrary to Mr. Wagoner’s brave declaration, bankruptcy is an option. In fact, it’s the only option that merits public support and actually has a chance at succeeding.

I am not a big fan of wines but a feature on the CNBC website roused my interest and I thought I’d copy its contents here. Just for keeps.

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“Since Thanksgiving is an American holiday, I’m going with American wines for the most part. And even at Thanksgiving, there’s no predicting exactly what will be on the table, so we need versatile, light- to medium-textured wines that will match with the 10,000 mains and sides they’re likely to encounter.

First, a Pinot Gris from Washington State or California, like the Willamette Valley Vineyards 2007 Pinot Gris ($16). A bit tart, a bit spicy, very fruity and crisp. And then, shoot me for being predictable: Pinot Noir. Let’s pull J Vineyards & Winery 2005 Nicole’s Vineyard from Russian River Valley ($42). Again, a touch of spice – the Thanksgiving meal can be so “same-old, same-old” from year to year, you need to wake it up – but mostly great cherry fruit on the silkiest pillow imaginable.”

“On special occasions, some people like to drink sparkling wine, before, during and after the meal. For that, I recommend we stray outside American shores, but first, you must ask yourself: just how special is Thanksgiving to you? If we’re talking really, really special, you can spring for a Louis Roederer 2002 Cristal Champagne ($250). Biscuity, fruity, with all the depth, balance, intrigue and long finish you can ask for. Taittinger, Moet & Chandon, Bollinger and Krug are some other top producers, and recent quality vintages that are drinking well are 2000 and 2002.

At the other end of the scale, price wise, I recommend Prosecco, a sparkling wine from Italy. Refreshing, light, inexpensive bubbly — you can even serve this to Aunt Hattie while you sip the Cristal in the kitchen. Mionetto is a dependable Prosecco producer; these are largely nonvintage wines.

“If you want to top the meal off with a dessert wine, I recommend you don’t skimp. There is artful, delightful sweetness and then there are those that just make your teeth ache and your head throb. I recommend an ice wine. Just like it sounds: the grapes are allowed to freeze, concentrating the sugars, and in the right hands, the resulting wines are exquisite. Quite reasonable, and utterly dependable, are the ice wines from Inniskillin in Canada’s Niagara Peninsula. Try the 2003 ($75).”"
“Champagne is my first choice. I think a crisp, clean blanc de blancs champagne such as Dom Ruinart 1996 ($150) or Pierre Gimmonet’s Cuvee Gastronome ($50) is very festive, pairs well with a number of foods, and has a light freshness that is a great counterpoint to rich holiday fare.”

“Among still wines, I have to admit I’m torn. One would want a red, certainly, and here red Burgundy would be my pick. A wine with a rich, developed fruit aroma and an undercurrent of earthy complexity is also very versatile, and stands up well to the heartiest fare. Recent releases such as the 2006 Morey-St.-Denis from Domaine Dujac ($90) provide good value. One would find many of the same virtues in the 2005 Evenstad Reserve Pinot Noir ($55) from Domaine Serene in Oregon.”

“It is difficult to rule out Riesling, however, since this is almost the best of both worlds: light, crisp, and fresh like champagne, but showing great depth of flavor and complexity like a red Burgundy. Here I would prefer a drier example, from Alsace or the Pfalz, or perhaps from Austria. The 2005 Riesling Smaragd “Terrassen” from F.X. Pichler ($44) would be stunning.”

“A roasted turkey will accommodate a wide range of wines, so the first rule of pairing applies: drink what you like!

Wine lovers may look at holidays as an opportunity to share some of their better bottles with family and friends. In that case, we recommend keeping the side dishes simple, and not too sweet (no marshmallows on the sweet potatoes, for example).

I find the subtle flavors of simply roasted turkey complement the elegance and complexity of fine Burgundies, both red and white. The 2005 vintage is excellent for reds, while 2006 shines for whites.”

Splurge: Grand Crus, the most exalted vineyards in Burgundy

Red: G. ROUMIER Bonnes Mares 2005
Dense with ripe black fruit: plum, blackberry and black currant, along with mineral and spice, this starts out lush and silky. The tannins are there, but discreet and supportive, letting the fruit take center stage. It shows great freshness and length, as the complex fruit washes over the palate. Best from 2015 through 2040. 110 cases imported. –BS
Score: 97
Release Price: $220

White: BOUCHARD PÈRE & FILS Chevalier-Montrachet 2006
Entices with its floral and citronella aromas, then follows through with macaroon, lime and mineral flavors. These are set against a refined structure and a creamy texture that lends a lighter-than-air feel. The finish goes on and on. Best from 2010 through 2025. 70 cases imported. –BS
Score: 96
Release Price: $399

Moderate: Fine village wines with great pedigree

Red: LOUIS LATOUR Beaune Vignes Franches 2005
Silky and complex, this red shows succulent cherry, red currant and bilberry flavors matched to a firm structure. Great character and depth, with an old-vine intensity. Long, sweet fruit finish. Best from 2013 through 2025. 1,200 cases made. –BS
Score: 92
Release Price: $50

White: LOUIS JADOT Meursault 2006
A focused style, with a creamy texture wrapped around hazelnut, butterscotch and spice notes. This is lush enough to approach now, yet firm enough to develop. Drink now through 2014. –BS
Score: 90
Release Price: $50

Value: Lesser-known appellations that deliver excellent quality

Red:JOSEPH DROUHIN Chorey-lès-Beaune 2005
Very pretty cherry and spice aromas and flavors highlight this light-bodied, juicy red. It shows balance and a vibrant structure, with well-integrated tannins. Drink now through 2016. 500 cases imported. –BS
Score: 90
Release Price: $25

White: DOMAINE GILLES NOBLET St.-Véran 2006
Clean, round and succulent, this white evokes peach, apricot and vanilla cream flavors. Open and accessible, with a good underlying structure keeping it focused. Drink now through 2010. 500 cases made. –BS
Score: 88
Release Price: $24

“This holiday I’ll be bringing some super-classic bottles. Thanksgiving, with its root vegetables and holiday spices, always leads me to wines that feel a bit older. For the red, traditional style Rioja is this year’s approach. The 1989 vintage of La Rioja Alta’s Gran Reserva 904 ($85) has the perfect flavor set for the meal. The pretty red fruit is starting to show some stewed qualities along with the classic spice and leather aromas that old-style Rioja is so well known for. You get the complexity and elegance of an old Burgundy for a fraction of the price.”

Restauranteurs Lidia and Joe Bastianich recommended a menu paired with wines:

Aperitif:
Monte Rosso Franciacorta Cabochon Brut 2001 ($45)

Passed hors d’oeuvres:
Black truffle butter bruschetta
Sliced speck and apple
Beet and goat cheese salad in a spoon

Primo:
Crespelle al forno con funghi
Castello dei Rampolla 2000 Sammarco ($75)

Main course:
Balsamic glazed roasted turkey
Cranberry and quince chutney
Braised brocoli di rape garlic and oil
Roasted winter squash
Skillet brussels sprouts
Caprai Sagrantino di Montefalco 2000 Riserva ($95)

Dessert:
Apple walnut strudel with vanilla cinnamon ice cream
Roberto Anselmi Recioto di Soave I Capitelli 1989 ($35)

Espresso
Nonino Ue Decennale Grappa ($50)

November 12 marks my third month of finding my luck in landing a job in the financial industry. While there are million others going through the same experience as me, it’s utterly difficult to take consolation in that while I see others continuously leave their marks one firm after another. It has been more than two years since I graduated with my undergraduate degree. Since then, I’ve made a lot of decisions, which at times I doubt were the best ones I’ve made. Certainly there are perks one could take out of those experiences. I’ve also believed for some time that things happen for a reason. However, it is particularly difficult to dig deep for reasons when one deals with frustrations.

When you’re in that very moment of disappointment, of frustration, of questioning, you very well know that answers could only arrive in time. That no matter how much you seek for them, it is the unfolding of events that help you figure things out. Piece by piece, the events let you understand why so and so happened. But in the meantime, you are stuck. You could try to make sense of things but comfort is never completed unless they are matched with often unanticipated events and experiences that help you confirm your initial beliefs.

When I look at things, my only take-aways are first, that I finally know what I want or at least I’m 95% there. No doubts as to law, medicine, or whatnot is what is for me. Second (this just coming fresh off of my friend’s thoughtful brain), perhaps I wouldn’t have developed this level of interest in finance had I stayed in the Philippines. When once an interviewer asked me if the risks I took in studying public policy paid off, I immediately thought and said they did. I probably wouldn’t have had so much time to devote to learning about the stuff I know now if I were back home- simply because there would have been many others distracting me. I used to have deep interest; now I have passion and that’s one of the biggest I could take away from this.

Third, I did realize that finding out what one really wants could indeed be a pain-in-the-ass, long, and tedious process. Maybe it is admirable that for many people, they get their answers early on, without having to go through nine long months of working where the heart isn’t present, followed by more than 15 months of further education and socializing that could only confuse one further. For many, the answer lies right there and then. Yet I also realized that regrets are not when we convince ourselves we made the wrong decisions, but when we choose not to look at the upsides of those decisions.

It has been almost three months now since I began the bloody process of writing, re-writing, editing, revising, submitting, and re-submitting cover letters and resumes. I cannot say how many more months I am willing to wait and stay in the land of dreams for my OWN dreams to come true. At the moment, I am just one of those people who constantly try and wait for their own big breaks. Wherever I find myself two, six , twelve months from now, I can only guarantee I’ll always carry with me the dream of living my passion and the hopes of living that dream. Just like the artist who travels with his guitar from one town to another, hoping and waiting for that moment when it’s time for him to hit the spotlight and play for the rest of the world.

So what’s new in the market this week? Not much on the overall state of the economy but some can be picked up from the specifics relating to it. Yesterday, the Federal Reserve cut its rates by 50 basis points to 1%- simply what the market expected. If this was of any use, it simply prevented a bigger drop in the stock market that could have followed if the Fed refused to follow expectations. From a credit market standpoint, there’s not much to be gained from such a cut. Yes, perhaps it widens earnings potential for banks or prevents a deflationary environment. But it still does not quite solve the problem of liquidity. On the contrary, it potentially reduces it. As people find higher earnings from investing in bonds and stocks, particularly that a lot of the latter have been beaten heavily lately, they tend to move in that direction. That doesn’t include those who remain fearful, and thus keep their cash under their beds. I might be missing the point in not seeing the value of a rate cut, if any; so please let me know if I did.

Tuesday saw the second biggest point gain ever. The Dow quickly picked up from an average of about 200 points up north to as much as 905 points just minutes before the closing bell. The index ended at 9065, up 889 points. The market would have seen the biggest 2-day gain (ever?) had the rally persisted yesterday. It saw more than thousand-point travel to the north, up as much as 230 points, only to wipe it out within the last few minutes when it closed 17 points lower. (Nasdaq however was alone in closing on a positive note.) That could be yet again hedge fund redemptions, the Fed’s rate cut or people selling the rally. Tuesday’s gain saw my portfolio ALL green. Pretty. These are not positions I own; I just simply follow them.

All green!

I thought Morgan Stanley was going to disappoint me. For some time, it was the only one on the red.

Today was another good day. The market closed up 189.73 points. The market was kinda quiet; not much volatility going on. If I remember it right, the time it spent on the negative was negligible. All throughout, it was hovering around 50-150 points up. Given how the market played the last few minutes prior to market close, I was fearful there would be another massive selling. I wasn’t really expecting for another big rally, even half of what we saw on Tuesday. But 189 points, not bad. Not at all. Tomorrow’s Friday and what better way to end the week than to see the third rally for the week? I believe the government releases unemployment figures tomorrow. Similar to the rate cut, there are hovering expectations. Despite that, it could potentially destroy the confidence somewhat gained the past 3 days. The government reported GDP “growth” today. With a decline of 0.30%, better than expected, the market apparently just shrugged it off.

Two transactions worth pointing out: the planned merger between Delta Airlines (DAL) and Northwest Airlines (UAUA) finally comes to fruition and the one between General Motors (GM) and Chrysler is still cooking. (It might be better for me to create a separate entry about my 2-cents on the GM-Chrysler merger.)

Some more news tidibits:

• South Korea also cut its rates by 75 basis points on Tuesday.
• The Fed provided a $120bn swap line to Brazil, Mexico, Singapore and South Korea.
• Commercial banks borrowed $110bn while investment banks took $80bn from the government discount window last week.
• 3-month LIBOR fell to 3.19%. Remember it was up as much as 4.9% just several weeks ago.
• A town in Alaska is still paying more than $4 per gallon for gas; in Texas, price goes as low as $1.79.
• Big wigs of Merrill Lynch still fighting over positions. Thain, McCann, Montag and company.
• Oil at 65.30 per barrel.
• The government has bought more than $130bn worth of commercial paper since Monday.

So whether we’ll see a 3rd rally for the week or not is unknown. Let’s all be hopeful.

Monday marked the 2nd time that the week began on a positive note, after last week’s record rally of 936.42. And yesterday and today also marked the 2nd time that the rallies were followed by plunges. It was another 514-point decline to the Dow, bringing the index to its 5-year low. Intraday trading even saw the Dow fall as much as 698 points just moments before the closing. Only shows you that last week’s high was indeed a simple bear rally. The bottoming is not yet over.

Everyone’s fearsome right now of the looming recession or one that’s already begun. Demand for commodities have declined, even from China, which reported a GDP growth of just 9.0, way below the 9.7 expected. And that’s a single digit growth rate for you. BHP Billiton, Australian-based steel company, reported negative outlook on the demand from China. Germany, as the world’s biggest exporter, also softens its growth forecast for 2009. The country’s exports account for as much as 41% of its GDP and such an outlook for the coming year is indeed a sign of what is to come. This is particularly risky for emerging markets, which are less stable. Latin American countries in particular are facing tough times. Argentina’s government decision to nationalize its pension funds may be looked at in two ways. The government claims it is to protect the funds for future generations while some say it is to fund its spending and public works. Some fear that the country is at the brink of defaulting.

With the economic slow down comes weakening currencies. As the investing public becomes more and more fearful, where do they run for safety? To the US and its currency- the main reason behind the dollar’s big appreciation against major currencies including the Euro and Sterling. So what trading options does one have?

Since everyone’s bullish on the dollar, how’s Powershares DB US Dollar Index Bullish (UUP)? One warning: it has been appreciating so much the past several days, it might not see so much growth anymore. Just how much has it grown? Euro to dollar used to be at 1.50-1.60. Now, it’s at 1.2858- a low from early 2007. Remember when the pound stood at twice the value of dollar? Now it’s at 1.6268. People are still bullish on Yen so that might be a good trade; dollar to yen is at 97.865. And of course, emerging market currencies are also another opportunity. Short.

The Dow has gone down a lot and we might see a little rally soon. But if indeed the bottoming is not yet over, there’s DXD, an ETF that shorts on the Dow30 and a way for one to hedge. Its S&P component is SDS.

If you’re following the major countries tumble and want to make money, one can short EWG- an ETF for Germany, EWY for South Korea, and EWZ for Brazil.

I am glad that ratings agencies are finally under fire. The hearing today at the Congress sure did give them what has long been due. While regulations might have begun the crisis, the works of rating agencies undeniably exacerbated things rating assets as if they were safe to own.

Earnings continue to be laid in front of us. Amgen, Amazon, Northwest Airlines, ConocoPhillips, Merck, and McDonald’s all beat analyst’s expectation while Boeing, AT&T, and Wachovia disappointed. Apple and Yahoo released their earnings yesterday and AAPL earned 15 cents higher than expected while YHOO was in line. Others to report tomorrow are Bristol-Myers, Burlington Northern, Credit Suisse, Eli Lilly, Iberdrola and Microsoft.

Recently, a big range of movements on the Dow has become typical. Last week saw the Dow move within a 1200-point range after the worst week ended lower by as much as 21%. Monday’s rally was easily wiped out by the two days that followed after hedge fund redemptions, lower economic figures reported and fear continue to surround the markets.

Today was another busy day. The Dow played within an 800-point range- from being down by as much as 400 points early in the day only to rally in the last hours of trading to finally settle higher by 401 points. S&P and Nasdaq expectedly followed suit with 4.25 and 5.50 percent increase, respectively. Interestingly enough, the VIX recorded another all-time high when it peaked at 81 points before settling at 67.61. It has a lot to do with the puts and calls that are being traded, and the contracts expiring within the next few days. It’s something I still have to educate myself a lot with.

The big move to the north today may be attributed to several things: poor economic reports on Philadelphia’s Fed report, Morgan Stanley’s John Mack’s first appearance since the crisis broke out, some better than expected earnings released today (details below), and the YHOO-MSFT deal’s emergence.

In an interview by CNBC’s David Faber, Mack admitted that: yes, banks indeed have been overly leveraged; yes, there is the need for a central clearing market for the derivatives that thrive on opacity; and yes, some of the money the US government will be injecting to their system will be used to deleverage. It was a rather comprehensive interview. He also went on to say that the ongoing crisis is something he had never seen before because of its global nature alongside the fact that credit markets have dried up. Watch more of it here.

The markets also faced earnings reports from various financial and non-financial institutions. As expected, banks released negative figures, although some of them beat market expectations.

Merrill Lynch reported a third-quarter net loss of $7.5 billion on Thursday resulting from write-downs and credit losses on complex debt securities. Loss of 5.56 per share is much lower than the 5.22 The sale of its 20% stake at Bloomberg earned the firm $4.3 billion of pretax gains and that definitely helped the slightly higher than expected earnings.

Citigroup similarly posted Q3 net loss of $2.82 billion, or 60 cents per share, compared with a profit of $2.21 billion, or 44 cents, a year earlier. It slightly beat analysts’ expectations of 70 to the red on revenue of $19.42bn. Actual number fell 23 percent to $16.68 billion.

Citigroup became the second US bank by assets, after JP Morgan which has assets worth $2.25 trillion compared to Citi’s $2.05 trillion.

Other numbers: JP Morgan Chase’s quarterly profit fell 84 percent to end at 6 cent per share vs 29 cents forecast. Wells Fargo reported net income of $1.64 billion, or 49 cents per share, from last year’s $2.17 billion, or 64 cents; an EPS of 34 cents PS was expected.

A couple of tech stocks also came out with reports. IBM released an EPS of $2.05, 2 cents higher than expected. The higher revenue, which stood at $25.3bn was partly a result of 8% increase in the global tech and business services arm of the firm. Google, on the other hand, had a much higher earnings of $4.92 vs. 4.76 forecast. This is in lieu of more than 80% share on web searches and increased earnings from its online advertising business AdSense.

An interesting piece of information I got today relates to the Fed’s balance sheet. It rose to $1.80 trillion by as much as $882bn. Commercial banks borrowing moved up by $3.8b to $101.9bn while investment banks has so far taken $133.9bn in the latest week, up by $11bn. A big chunk of all the borrowings apparently came from the last several weeks since the bail out plan was released. The more detailed break down of the $882bn increase is as follows:

• Term Auction Facilities- $263bn

• Investment Banks- $133.9bn

• Money Market- $122bn

• Discount Window To Banks- $101.8bn

• AIG- $82.8bn

• Bear Sterns- $29.5bn

And this is how things work: The Treasury issues securities to the public, in effect collecting cash, which is then passed on to the Fed. Now the Fed loans this to the banks in exchange of mortgage-backed securities and other troubled assets with collateral. When banks lend out, voila, the money is back to the public.

And it’s another down day today. Surprise. Monday’s big rally, rising by 936.42- the biggest ever- almost got wiped out after yesterday’s drop of 76 points and today’s tenfold drop of 733.08 to 8,577.91. NASDAQ fell by 150.48 to settle at 1,628.33 and S&P also headed south by 9% to close at 907.84. Some facts: Monday’s rally is the biggest since the spring of 33 and last week’s more than 2000 point drop was the biggest since the summer of the same year. The volatility index, VIX, which basically reflects people’s fear of the market shoots up again to 69.25 after two days of hovering under 60.

People attribute the drop to two main things: hedge fund liquidation as well as the negative retails figured taken from the Fed’s Beige Book released earlier today. In this crisis, hedge funds are some of the biggest casualties and more of them are expected to go out of business in the coming days. As investors seek to get their money back, hedge fund managers scramble to take their positions out, in effect, creating an oversold market. Monday’s historic rise, people say, is still not the beginning of another bullish market. It was simply a bear rally.

With an oversold market, people saw the opportunity to buy again. Add to that the positive result that came out of the meeting of European leaders over the weekend- plans guaranteeing bank liquidity and interbank lending. People were also expecting a $250bn plan of the US government focusing on recapitalization and bank debt guarantees to be unveiled. Serving as the first tranche of TARP’s $700bn value, beneficiaries are: BofA, JP Morgan, Citi, Merill Lynch, Morgan Stanley, Goldman Sachs, State Street, Bank of New York Mellon and Wells Fargo.

Then there’s the report indicating that retail businesses have gone down in all 12 districts covered by the Fed report. Traders refer to the retail figures for September as a big killer of today’s market.

From the time I last blogged, Wall Street has witnessed a tremendous change. That time, just a week after Lehman’s bankruptcy, AIG’s government bailout and BoA’s acquisition of ML, things have gone worse and within the last 2 weeks alone, so much more have changed particularly in Europe, which is arguably bearing the brunt of this crisis heavier than the US. Here’s a quick list of what has been done by governments in and outside the US:

• $700bn bailout plan by the US
• Morgan Stanley and Goldman Sachs become bank-holding companies
• Mitsubishi UFJ’s $9bn capital injection in Morgan Stanley. $7.8bn for convertible preferred at $25.25 and $1.2bn non-convertible. Both yield 10% dividend
• Wells Fargo-Wachovia-Citi love triangle. WFC won. Citi decided stopped hoping getting the deal or part of it ($40bn worth of Wachovia’s deposits) but insists it will pursue legal charges for breach of contract.
• JPM saves WaMu for a $1.9bn deal acquiring branches and deposits. This gives JPM access to a huge deposit base.
• Days after LEH’s fall, Barclays acquires the bank’s North American operations including investment banking, fixed income and equities sales, trading and research operations. Nomura Holdings, Japan’s biggest brokerage buys both of the bank’s Asian and European businesses- in a span of 24 hours.
• Gordon Brown takes the lead in presenting a comprehensive plan to help solve the crisis. The plan involves £400bn- £250bn for guarantees, £150bn for liquidity, and £50bn for direct injection to its biggest banks- Lloyd’s TSB/HBOS, Royal Bank of Scotland and Barclays.
• Nationalization of Iceland’s three biggest banks: Landsbanki, Kaupthing, and Glitnir
• France’s €360bn- €320bn for bank guarantees, €40bn for bank equity stakes
• Germany presents €500bn- up to €400bn for bank guarantees and €100bn for additional support
• Spain then pledges €100bn for bank guarantees while Italy will be issuing €40bn worth of treasuries for temporary funding.
• And I’m sure there are more I missed.

After plans have been unveiled and days have passed, we are yet to see confidence come back to where it was before the financial crisis struck. Just a little over a year ago, the Dow hit its all-time high of 14,164. A year later, it hit its lowest in decades. It saw the biggest drop ever, even beating those that happened during the Great Depression. The guarantees are designed to thaw the frozen credit markets but there is still no guarantee that whatever banks receive from the government will be passed on for interbank lending. In tonight’s interview with Paulson, he dodged the question when asked how the government can guarantee that the money will be used for lending and not retiring the debts they are unable to meet due to liquidity problems.

While the plans so far unveiled do sound positive, a lot of people are still confused as to how these things would work. Specifically, there are still questions as to how the purchase of toxic assets will be done. The biggest issue, the pricing, remains unsolved. I believe that the Treasury’s shift from purchasing the assets to guaranteeing lending is partly a result of the urgency of things. Direct injections provide instant liquidity to banks, which is perhaps the biggest problem at the moment. However, the urgency to get rid of toxic assets remains intact and the Fed/Treasury would have to come up with a pricing mechanism as fast as they did with the bailout plan and the details of the first tranche involving $250bn.

Set aside the notion that this bailout creates the biggest hedge fund in the world or turns the US into a socialist state. It would be ideal if the government do not take stakes in these financial institutions, even as passive investors. Agreements have been reached and at the moment, what’s most important is for decisions to be made even when they’re not the most effective. Waiting a longer time would trigger far worse negative consequences in the markets. We don’t even know when “the most effective” solution would be reached. There will always be people who would play the devil’s advocate. I am against the principle that government’s intervene; I am for free markets and the invisible hand. But in dire circumstances like this, perhaps only the government has the power to do something about it. Because the very markets that I and many other rely on are just too weak and fearful to do anything.