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Archive for the ‘Headlines’ Category

3/2 News Roundup

In Headlines, Size: Grande on March 3, 2009 at 9:23 am

Yesterday, AIG reported the biggest loss in America’s corporate history (just a few days after RBS similarly reported the UK’s biggest corporate history- a staggering, but nevertheless still smaller £24.1bn).  With a loss of $61bn, the insurance firm again ran to the government to seek for more aid, which they got in the amount of $30bn in exchange of majority ownership in two of their money-makers: American Insurance Association (AIA), its business in Asia and American Life Insurance Corporation (ALICO).  Remember that the firm entered this pit after they decided to issue billions of dollars worth of credit default swaps, the instrument which had it share of the spotlight after other firms, notably Lehmann Brothers, fell victim to the failure to manage risks associated with CDS. The trouble of the firm is further compounded by the news that former CEO Hank Greenberg will be filing a lawsuit against the company for allegedly being misled to buy inflated prices of the AIG stock.  As the firm’s biggest shareholder, Greenberg’s wealth is without a doubt wiped out by what has happened.

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Nationalization? Maybe.

In Headlines, Size: Venti on March 2, 2009 at 3:23 am

(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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My two-cent on the billion-dollar compensation debacle

In Headlines on February 5, 2009 at 8:56 am

I don’t have a problem with big bonuses. Excessive as the bankers’ bonuses may be, a management that runs a rather profitable business has the right to have its share of financial reward. The way businesses run is this: labor is compensated on a generally fixed rate and any outstanding result is typically greeted by bonuses.  These bonuses are apparently contingent on how profitable the firm has been for a period.  The clamour for a cut on the compensation of bank executives who dared take excessive risk on derivatives, only for those actions to backfire and drag their firms, the global economy, and the populace down a deep abyss is completely understandable.  When they see executives spend million of dollars renovating their offices, which are probably more than conducive for work to begin with,  while they get laid off and lose their source of income just triggers an emotional outburst.  Read the rest of this entry »

GM: B for Bankruptcy, not Bailout.

In Headlines, Size: Venti on November 18, 2008 at 8:42 am

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.

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Two Men, Two Speeches

In Headlines, Size: Grande on November 5, 2008 at 11:09 pm

Two senators: a Democrat, a Republican.

One a victor, another a fighter.

After two years of campaigning, a day of voting and hours of waiting, one finally wins as the new president.

—–

John McCain’s speech last night, as he conceded the presidency to Barack Obama (D-Il.), was no doubt the best he has given since eternity. Despite the occasional boos from the crowd, there was nothing but nobility, sincerity, and elegance in his speech. Coming to the election, most expected an Obama victory, and quite appropriately so. McCain’s defeat, or the GOP’s for that matter, may be attributed to a lot of different factors that worked to Obama’s advantage. The economy, the much loathed Iraq war, and more importantly, the way the campaign was run. Even I got sick of his Joe the Plumber tactic… and Palin, boy oh boy. Yes, she is charming, articulate, and even hot. But there was just so much about her actions that completely killed those complements. It might be better not to list them down.

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Rally, rally, rally?

In Headlines, Size: Venti on October 30, 2008 at 11:15 pm

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.

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Market Trading: Currencies, ETFs, and then some.

In Headlines, Size: Venti on October 22, 2008 at 10:19 pm

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. Read the rest of this entry »

Market Watch: 10/16

In Headlines, Size: Venti on October 16, 2008 at 11:44 pm

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.

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Divorcing marriage

In Headlines, Life Matters, Size: Grande on June 10, 2008 at 11:01 pm

Having had lunch at one cafe in school allowed me to catch a glimpse of some news on TV. It was interesting enough to have caught a report about marriage in the United States for 2 consecutive days. Yesterday, it was reported that in a span of 7 years (?), the number of couples getting married declined by 20% and co-habitation is now at a rate of 80%. In today’s news, viewers sent their opinions and the following were just some of them:

  • It is becoming socially acceptable to have children out of wedlock. So why get married when there’s no need?
  • One guy, after going through 3 divorces, already thinks marriage is not worth it (SURPRISE!)
  • Marriage is merely a glorified and expensive pinky-promise.
  • (If I understood it right…) Filing your ITR individually, rather than as a couple, actually increases your rebate and this allegedly makes for good (economic) argument against marriage.
  • A guy said his grandparents celebrated their 50th and his parents are about to celebrate their 25th. Thus, he would want to have his own wedding and break some records. (Glad to hear!)

Three of the views above only prove the gravity of are and how rare is it for you to see people who still believe in the value of marriage. One guest in the show yesterday said that people now have more fears of getting married due to the growing statistics of people getting divorced. As a result, they just resort to co-habitation, where they don’t get tied down. There’s no commitment.

I don’t know what else to make of this. As someone who was brought up as a Catholic with my own view of the sacrament of matrimony, its value and sacredness, it is difficult to be impartial hearing things like this. It is not fair to blame the country and say it is not a good place to settle down and start your own family. Rather it is in the people who are involved and the society itself that creates pressure among everyone else, giving the impression that marriage is almost sure to fail. I hope I don’t see that day when marriage becomes a societal taboo because the society dictated it to be so. Legalization of gay marriage, departure from heterosexual marriage, co-habitation, and either children out of wedlock or abortion… Something must be terribly wrong with this country.