A lighter start, for a grave end..
"From a commenter on the FT website: If you had purchased £1000 of Northern Rock shares one year ago they would now be worth £4.95; with HBOS, earlier this week your £1000 would have been worth £16.50; £1000 invested in XL Leisure would now be worth less than £5; but if you bought £1000 worth of Tennents Lager one year ago, drank it all, then took the empty cans to an aluminium re-cycling plant, you would get £214."
And.. another funny snippet.. An Ibanker who lost his job on WallStreet has started to offer "Physical Services" to make money.. These vulture Ibankers would market anything to make money!! :)
Bill's comment when Harish said 'we should pack our bags and head back to India' - "there are no jobs there either.. You should stay in a place where you are less poor!!"
--------
Anyways, the market has been pretty ruthless today, ganied negative traction from huge losses in the world markets. The hope that the bailout would actually "bailout" has waned, and the fears that the global slowdown (global recession) have started to feed the investors panic.
At one point during the day the head lines were - GE hit a new 11 year low, F hit a 5 year low, ATT hit a new two year low, VZ hit a three year low, AAPL, YHOO, GOOG, CSCO, EMC, JAVA, BA hit a new 52 week low. Well, with all this shit happening, I guess bad or worse woule be an understatement.
BofA reportes the earnigs today. disappointing.. . and here are the comments by the CEO Ken Lewis - "These are the most difficult times for financial institutions that I have experienced in my 39 years in banking"
The Fed has certainly provided hundreds of billions of dollars at its emergency window and Paulson has his $700 billion. But I dont think this owuld be enough to avert the BIG disaster that is ahead. Companies, cities, and states would have to run to raise capital to keep themselves operating. GM darwn down its credit lines, F raising another 10 Bn through common stock, GE had to raise 15 Bn(Oh,, it was interesting to see the CP yield of GE.. last week the yield on a 1-7day maturity paper was 0.5%, but today it is 1.5%, suggesting taht there is no one to buy the paper at three times the yield!! ), GCI accessed its credit line, CA state needs a 7Bn short term funding .. and this is just from what I have known or read.. On the enterprise side, SAP warned about its 3Q earnings today.. SAP being the second largest enterprise software compnay, this warning is a signal that the companies are cutting back on their capex, technological updragdes, software purchases... Not a good sign about the general "corporate sector".
An Article from Nouriel Roubini presents a better picture of what is happening in the markets and what is ought to happen.
Problems the economy facing:
- a silent run on the huge mass of uninsured deposits of the banking system and even a run on some insured deposits are small depositors are scared; - a run on most of the shadow banking system: over 300 non bank mortgage lenders are now bust; the SIVs and conduits are now all bust; the five major brokers dealers are now bust (Bear and Lehman) or still under severe stress even after they have been converted into banks (Merrill, Morgan, Goldman); a run on money market funds restrained only by a blanket government guarantee; a serious run on hedge funds; a looming refinancing crisis for private equity firms and LBOs); - a run on the short term liabilities of the corporate sector as the commercial paper market has totally frozen (and experiencing a roll-off) while access to medium terms and long term financings for corporations is frozen at a time when hundreds of billions of dollars of maturing debts need to be rolled over; - a total seizure of the interbank and money markets.
and the probable solutions:
- blanket guarantees of all deposits followed by triage between solvent and insolvent banks; and if a guarantee requires delayed legislative action the Fed could announce that it will provide unlimited and unconditional liquidity support to any bank that experiences a run on its uninsured deposits; - drect extension of the Fed’s PDCF liquidity support to other member of the shadow banking system as the small number of broker dealers accessing the PDCF are not relending the liquidity to the rest of the shadow banking system; finance companies, leasing companies and other non-bank financial institutions lending to the corporate sector and real economy should have access to the PDCF and TSLF; - drect Fed lending to the corporate sector via Fed buying the commercial paper that corporates are not able to roll over; and possibly even lending to state and local governments that are a now also facing a roll-off of their maturing short-term liabilities. - a coordinated 100bps reduction in policy rates by all major advanced economies central bank and, possibly, even some emerging market economies central banks;
A carry trade blood bath:
Carry trade: well,, its a simple investing (arbitrage) strategy.. Borrow the monay from a low interest nation ( japan - where the interest rate has been near zero, and invest in currencies/countries with a higher interest rate (say developing/developed nation.. AUY/EURO or in a investment witha higher return.. In a perfect world, this strategy should make money.. But as the local investment (say AUD) loses money/value, the investor has to sell the asset and buy the YEN to pay the interest.. So demand for YEN rises and it gets strong.. Lately, with the markets worldwide taking a beating, YEN is getting stronger, and that does not mean that Japanese economy is doing better than the rest of the world.
*again incomlpete post*.. should start writing early from tomw!!
"From a commenter on the FT website: If you had purchased £1000 of Northern Rock shares one year ago they would now be worth £4.95; with HBOS, earlier this week your £1000 would have been worth £16.50; £1000 invested in XL Leisure would now be worth less than £5; but if you bought £1000 worth of Tennents Lager one year ago, drank it all, then took the empty cans to an aluminium re-cycling plant, you would get £214."
And.. another funny snippet.. An Ibanker who lost his job on WallStreet has started to offer "Physical Services" to make money.. These vulture Ibankers would market anything to make money!! :)
Bill's comment when Harish said 'we should pack our bags and head back to India' - "there are no jobs there either.. You should stay in a place where you are less poor!!"
--------
Anyways, the market has been pretty ruthless today, ganied negative traction from huge losses in the world markets. The hope that the bailout would actually "bailout" has waned, and the fears that the global slowdown (global recession) have started to feed the investors panic.
At one point during the day the head lines were - GE hit a new 11 year low, F hit a 5 year low, ATT hit a new two year low, VZ hit a three year low, AAPL, YHOO, GOOG, CSCO, EMC, JAVA, BA hit a new 52 week low. Well, with all this shit happening, I guess bad or worse woule be an understatement.
BofA reportes the earnigs today. disappointing.. . and here are the comments by the CEO Ken Lewis - "These are the most difficult times for financial institutions that I have experienced in my 39 years in banking"
The Fed has certainly provided hundreds of billions of dollars at its emergency window and Paulson has his $700 billion. But I dont think this owuld be enough to avert the BIG disaster that is ahead. Companies, cities, and states would have to run to raise capital to keep themselves operating. GM darwn down its credit lines, F raising another 10 Bn through common stock, GE had to raise 15 Bn(Oh,, it was interesting to see the CP yield of GE.. last week the yield on a 1-7day maturity paper was 0.5%, but today it is 1.5%, suggesting taht there is no one to buy the paper at three times the yield!! ), GCI accessed its credit line, CA state needs a 7Bn short term funding .. and this is just from what I have known or read.. On the enterprise side, SAP warned about its 3Q earnings today.. SAP being the second largest enterprise software compnay, this warning is a signal that the companies are cutting back on their capex, technological updragdes, software purchases... Not a good sign about the general "corporate sector".
An Article from Nouriel Roubini presents a better picture of what is happening in the markets and what is ought to happen.
Problems the economy facing:
- a silent run on the huge mass of uninsured deposits of the banking system and even a run on some insured deposits are small depositors are scared; - a run on most of the shadow banking system: over 300 non bank mortgage lenders are now bust; the SIVs and conduits are now all bust; the five major brokers dealers are now bust (Bear and Lehman) or still under severe stress even after they have been converted into banks (Merrill, Morgan, Goldman); a run on money market funds restrained only by a blanket government guarantee; a serious run on hedge funds; a looming refinancing crisis for private equity firms and LBOs); - a run on the short term liabilities of the corporate sector as the commercial paper market has totally frozen (and experiencing a roll-off) while access to medium terms and long term financings for corporations is frozen at a time when hundreds of billions of dollars of maturing debts need to be rolled over; - a total seizure of the interbank and money markets.
and the probable solutions:
- blanket guarantees of all deposits followed by triage between solvent and insolvent banks; and if a guarantee requires delayed legislative action the Fed could announce that it will provide unlimited and unconditional liquidity support to any bank that experiences a run on its uninsured deposits; - drect extension of the Fed’s PDCF liquidity support to other member of the shadow banking system as the small number of broker dealers accessing the PDCF are not relending the liquidity to the rest of the shadow banking system; finance companies, leasing companies and other non-bank financial institutions lending to the corporate sector and real economy should have access to the PDCF and TSLF; - drect Fed lending to the corporate sector via Fed buying the commercial paper that corporates are not able to roll over; and possibly even lending to state and local governments that are a now also facing a roll-off of their maturing short-term liabilities. - a coordinated 100bps reduction in policy rates by all major advanced economies central bank and, possibly, even some emerging market economies central banks;
A carry trade blood bath:
Carry trade: well,, its a simple investing (arbitrage) strategy.. Borrow the monay from a low interest nation ( japan - where the interest rate has been near zero, and invest in currencies/countries with a higher interest rate (say developing/developed nation.. AUY/EURO or in a investment witha higher return.. In a perfect world, this strategy should make money.. But as the local investment (say AUD) loses money/value, the investor has to sell the asset and buy the YEN to pay the interest.. So demand for YEN rises and it gets strong.. Lately, with the markets worldwide taking a beating, YEN is getting stronger, and that does not mean that Japanese economy is doing better than the rest of the world.
*again incomlpete post*.. should start writing early from tomw!!
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