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TranceAddict Investors Club @ Marketocracy (pg. 116)
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| Krypton |
| quote: | Originally posted by verndogs
Morgan Stanley made me a happy man :) |
I bet it did. Just glancing at their quote. They've got a debt/equity ratio of 6.37. That means, they have 6 times more debt than the amount investors have bought in stock. That's pretty scary.. |
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| Trancer-X |
I found this next article more than interesting especially given the reference to the Panic of 1907
| quote: | $700 Billion Was a Drop in the Bucket
By Christopher Barker
October 9, 2008
Comment (11)
Recommended (43)
I remember when $29 billion sounded like a lot of money.
That was the sum of financing the Federal Reserve provided to JPMorgan Chase (NYSE: JPM) to facilitate the Bear Stearns acquisition back in March. The move may have felt unprecedented, but a century earlier it was J.P. Morgan himself who spearheaded a bailout of the financial system to bring the Panic of 1907 to a close. History is repeating itself lately, so it seems only natural that this company would be called upon again.
From the millions of U.S. dollars tossed about in 1907, to the $700 billion bailout authorized last week, it's clear we're operating on a different scale this time around. Don't get too cozy here in the billions though, Fools, because we've already leapt straight into the trillions. Yes, just a week after the palpable outrage over a $700 billion price tag has begun to erode, my comprehensive tally of total existing and announced outlays from the U.S. Treasury and the Federal Reserve relating to this financial crisis is approaching the $4 trillion mark!
While we let that sink in for a moment, let's be clear on two points. First, virtually all of these outlays are considered temporary in nature. Through its Term Auction Facility, for example, the Federal Reserve has scheduled auctions for loans with maturities extending only as far as March 2009. On the other hand, we have no way of knowing just how temporary these measures will be. We're told the $700 billion bailout will purchase assets that will be sold once a market reemerges, but we've been given no timeline for how long that could take. Meanwhile, I maintain that the longer those dollars remain in circulation, the greater their ability to debase the value of the dollars sitting in your wallet.
Second, not all of these outlays have occurred quite yet. The Fed's newest facility to support the market for commercial paper was just announced on Tuesday, and the press release did not specify what portion of the $1.3 trillion market from eligible issuers this new facility would represent. For now, I have used a conservative estimate of $100 billion. Also, a doubling of the Term Auction Facility total from $450 billion to $900 billion was just announced on Monday, but the dollars haven't been printed yet. Around mid-September it became clear that further outlays from the Federal Reserve would necessitate fresh money.
Who's going to pay for all this?
At some point, we must concede that the scale of these outlays calls into question the collective ability of the borrowers to repay these loans. How long will it take for a struggling global economy to repay $3.89 trillion? Clearly, we just don't know. We do know that both the Federal Reserve and the Treasury are amassing debt securities as collateral that no private entity will touch with a ten foot pole right now.
The indications from Washington that dollars will be hurled at this crisis in totally unprecedented quantities raises legitimate concerns about the future purchasing power of the dollars in your wallet, your CDs, Treasury bonds, or other dollar-denominated instruments. Occurring in a vacuum, a deleveraging event like this one would be decidedly deflationary. In the context of these outlays, however, I believe stagflation and hyperinflation will instead be among the words used by historians to describe this period.
In an environment where financials like Citigroup (NYSE: C) and Bank of America (NYSE: BAC) are slashing or canceling dividends, treasury yields are below even the official CPI, and money market funds are struggling not to "break the buck", finding an attractive place to park one's dollars through this sell-off is a challenge of its own. My advice: keep your funds liquid, Fool. I believe opportunities to outperform higher rates of inflation within select equity sectors will soon abound.
http://www.fool.com/investing/gener...the-bucket.aspx |
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| Trancer-X |
| quote: | Merrill Lynch Gets Bullish--On Gold
Merrill Lynch analyst Francisco Blanch believes global plans to rescue the financial industry are set to increase inflation pressures and will raise Gold prices to the $1,500 level. The analyst is also quoted as saying, "The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets."
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http://www.forbes.com/2008/10/14/pe...vidend_inl.html |
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| mndeg |
| quote: | | John Mack yesterday in a CNBC interview said that the capital deployed by Treasury into the banks was going to rebuild their capital ratios - not be lent out. In other words, they intend to hoard it. |
!!!!
http://market-ticker.denninger.net/ |
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| DrUg_Tit0 |
Hopefully you're right :) |
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| Krypton |
I don't expect gold to hit $1500 in this business cycle. The Federal Reserve has inflated the currency in response to massive deflation of the economy. Houses, stocks, oil...all of these prices are plummeting. Commodities prices have been declining rapidly in the last 3 months, gold included. I think Merrill Lynch is wrong.
In fact, Merrill Lynch is second only to Citigroup in the amount of write downs their have had to do because of they complete failure at predicting the current mess. In fact, with $54.6 billion written off of their balance sheet, they've lost my trust in their analysts. They were at the head of pack when it came to sub-prime mortgages, and we're supposed to trust their judgment NOW? Gold at $1500. That's laughable. They wish gold was $1500, so maybe they could get some of the $54.6 billion back. |
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| Capitalizt |
I plan on buying big on the gold and silver ETFs next week if the prices stay down. The amount of money being printed is completely insane. Last I heard, the total global amount of stimulus/bailout plans is around $4 trillion. There are deflationary forces at work that have suppressed the metals, but I think we will really start to feel the inflation from all of this new money kick in around March 09.
People are worried about deflation but completely ignoring the inevitable REFLATION that will take place next year. Now is a great buying opportunity for GLD and SLV. |
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| mndeg |
| i think physical is the way to go |
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| jerZ07002 |
with the abudance of ty news about the economy I thought this article with slightly good news would be a nice divergence.
| quote: |
Leading indicators rise 0.3% in September. First increase since April; further weakness expected
By Ruth Mantell, MarketWatch
Last update: 11:40 a.m. EDT Oct. 20, 2008Comments: 38WASHINGTON
(MarketWatch) -- The nation's economy isn't in "free fall," though its recovery may still be a year away and further weakness is expected, a Conference Board economist said Monday.
The index of leading economic indicators rose 0.3% in September, marking the first gain since April, after having dropped a revised 0.9% in August, the Conference Board reported. Economists surveyed by MarketWatch had been looking for a 0.3% gain for last month.
"The extreme volatility in the financial market, and the near freeze-up of credit, will no doubt weaken the economy further," said Ken Goldstein, labor economist at the private research group. "But latest data suggest that conditions in the non-financial economy are not falling apart."
Indeed, six of the 10 indicators that make up the leading index, which is designed to forecast turning points in the economy six to nine months ahead, gained in September. The largest positive contribution came from the real money supply, while the largest negative contribution came from building permits.
From March to September, the leading index fell 1.3%, compared with a decrease of 1.7% in the prior six-month period. However, the Conference Board noted that weakness among the indicators has remained "widespread" in recent months.
The Conference Board's coincident index fell 0.5% in September, while the lagging index dropped 0.2%.
Sales trend
Consumers are deeply concerned about the economy: The most recent reading on sentiment registered a record decline. See full story.
With the holidays approaching, low confidence levels don't bode well for retail spending. Poor sales coupled with ongoing job losses spell persistent troubles for the economy.
In a rare admission from the central bank that monetary policy alone can't fix the economy, Federal Reserve Chairman Ben Bernanke told lawmakers Monday that another shot of fiscal stimulus may be needed now to help the U.S. economy recover.
"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke said in an appearance before the House Budget Committee. See full story. |
http://www.marketwatch.com/news/sto...7%7D&dist=msr_4 |
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| occrider |
Blah. I just sat through a very depressing call with the chief economist of the American Bankers Association. To put it bluntly, his analysis was that things are looking grim. Virtually every sector of the economy in every region was contracting. It covered non-trade related GDP growth, the ISM manufacturing index, Job growth, consumption growth, consumer credit deliquincies, housing starts, the Case Schiller house price change, loan forclosure rates, CRE deliquincies, etc., etc., etc. Virtually everything across the board was deteriorating. What most concerned me was this slide however:
http://i2.photobucket.com/albums/y1...apImage2bmp.jpg
Alt-A mortgages are going to supplant subprime woes as those interest rates reset.
The fact that Bernanke outright states that an additional fiscal stimulus package is warranted is more depressing than reassuring given the fact that the fed is traditionally an "opaque" instution where disguised language is the norm. |
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| Krypton |
Should've sold when they had the chance. I don't see the CEO being there much longer.
| quote: | Yahoo firing 1,500 workers; 3Q profit falls 64 pct (AP)
SAN FRANCISCO - Mired in a deep slump, Yahoo Inc. will fire at least 1,500 workers to cope with a crumbling economy that dented its third-quarter profit and turned up the heat on the Internet company's management as investors stew over a missed opportunity to sell to Microsoft Corp. for $47.5 billion.
The purge outlined Tuesday represents a 10 percent reduction in Yahoo's payroll of about 15,000 employees. It's the second time in nine months that Yahoo has resorted to mass layoffs in what so far has been an ineffectual effort to rebound from a financial funk that has left its stock price near a 5 1/2-year low.
Things got worse in the third quarter as Yahoo earned $54.3 million, or 4 cents per share. That was a plunge of 64 percent from $151.3 million, or 11 cents per share, at the same time last year. |
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