The idea was that a downturn in the U.S. wouldn't slow the global economy since new powerhouses like China and India had matured to a point where they weren't as dependent on U.S. demand for growth.
Zubin Jelveh submits:
There once was a popular theory on Wall St. which predicted economic fluctuations in the U.S. had become "decoupled" from the rest of the world.
The idea was that a downturn in the U.S. wouldn't slow the global economy since new powerhouses like China and India had matured to a point where they weren't as dependent on U.S. demand for growth.
Complete Story »
Tim Hortons: Will Price Increases Stimulate Sales Growth?
read moreTim Hortons Inc. (THI) has confirmed that has increased prices in Ontario as of April 7 as a result of higher overall operating costs at its stores.
The price increase mostly applies to beverages and coffee in particular, a company spokesperson said, but customers have been notified with signs for more than a week.
FP Trading Desk submits:
Tim Hortons Inc. (THI) has confirmed that has increased prices in Ontario as of April 7 as a result of higher overall operating costs at its stores.
The price increase mostly applies to beverages and coffee in particular, a company spokesperson said, but customers have been notified with signs for more than a week.
Complete Story »
Alcoa Reports: What to Expect from Today's Trading
read moreOne of the noteworthy trends for Alcoa (AA) is its trading pattern from the open to the close on the day following an evening report (it reported last night after the close).
Regardless of the direction that Alcoa opens in the morning following earnings, the stock typically trades lower from open to close. So if the stock gaps up after its report, history shows that it sells off from the open to the close the next day. If it gaps down (as it did last night), traders typically continue to sell the stock during regular trading hours the following day.
Hickey and Walters (Bespoke) submit:
One of the noteworthy trends for Alcoa (AA) is its trading pattern from the open to the close on the day following an evening report (it reported last night after the close).
Regardless of the direction that Alcoa opens in the morning following earnings, the stock typically trades lower from open to close. So if the stock gaps up after its report, history shows that it sells off from the open to the close the next day. If it gaps down (as it did last night), traders typically continue to sell the stock during regular trading hours the following day.
Complete Story »
Japanese Tech Stock Weekly Summary
read moreThe following is excerpted from IRG's weekly stock report:
Hardware
• Sony (SNE) replaced the head of its loss making television unit in its latest move to shore up the business, which has been buffeted by tumbling prices of flat-panel televisions. Takashi Fukuda will step down as president of its TV business group after only a year in the job. He will be replaced by Hiroshi Yoshioka, head of the company’s audio unit, effective April 1. Deep price falls for flat-panel TVs have outpaced Sony’s ability to cut manufacturing costs. The television unit incurred a 60 billion yen (US$590.4 million) loss in the six months up to the end of September, and is expected to post a loss for the full fiscal year to the end of March.
The following is excerpted from IRG's weekly stock report:
Hardware
• Sony (SNE) replaced the head of its loss making television unit in its latest move to shore up the business, which has been buffeted by tumbling prices of flat-panel televisions. Takashi Fukuda will step down as president of its TV business group after only a year in the job. He will be replaced by Hiroshi Yoshioka, head of the company’s audio unit, effective April 1. Deep price falls for flat-panel TVs have outpaced Sony’s ability to cut manufacturing costs. The television unit incurred a 60 billion yen (US$590.4 million) loss in the six months up to the end of September, and is expected to post a loss for the full fiscal year to the end of March.Complete Story »
Securitization Market Q1 Report: Dramatic Pullback
read moreInvestors bought only $131 billion of new asset-backed
securities, residential and commercial mortgage bonds and CDOs - down
81% from $701 billion a year earlier.
To put things
in perspective, the shutdown of the securitization market is equivalent
to closing down a large bank like Citigroup (C) [annualized basis].
CDOs are in the midst of a dramatic pullback, falling from 21.1% of the new-issue market a year ago to 10.7% today. Subprime-mortgage deals, likewise, represented 12.4% of securitization activity at this point in 2007. Now they come in at a miniscule 1.7%. Home equity loans have dipped from 1.4% to zero.
J.C. Kommer submits:
Investors bought only $131 billion of new asset-backed
securities, residential and commercial mortgage bonds and CDOs - down
81% from $701 billion a year earlier.
To put things
in perspective, the shutdown of the securitization market is equivalent
to closing down a large bank like Citigroup (C) [annualized basis].
CDOs are in the midst of a dramatic pullback, falling from 21.1% of the new-issue market a year ago to 10.7% today. Subprime-mortgage deals, likewise, represented 12.4% of securitization activity at this point in 2007. Now they come in at a miniscule 1.7%. Home equity loans have dipped from 1.4% to zero.
Complete Story »C JPM BAC DB MER Jean-Claude Kommer
MBIA: Fallout From Loss of Fitch AAA Rating
read moreHere we go. It is amazing that the investment banks have rallied, particularly considering that most of them rely heavily on MBIA (MBI) and Ambac (ABK) as counterparties. Here is nearly all of the MBIA holdings of Morgan Stanley (MS) (many billions of dollars worth) recently downgraded . A comprehensive forensic deep dive, economic analysis and update of Morgan Stanely will be following shortly. Stay tuned...
- Fitch Ratings cut MBIA Inc.'s insurance rating to AA from AAA: Bond insurer short of $3.8bn capital to warrant the top ranking. Outlook negative.
- BIS: Monoliners have written roughly $450bn of super-senior protection on CDOs in the form of CDS contracts. About $125bn of these reference ABS CDOs. Counterparties to these trades are large banks, securities firms or off-balance sheet vehicles like ABCP conduits/SIVs.
- Fitch: As of July 2007: Industry gross insured portfolio = $2.5trillion; industry shareholder equity = $24.5bn (=leverage ratio of 100x)
- The industry guarantees $1.2trillion municipal bonds and around $800-900bn in structured finance products. CDS portfolio is $463bn (net seller). $287bn (or 61%) of CDS written on corporate bonds; 14% on RMBs.S&P: Banks hedge about $125bn of CDOs with monoliners (senior, super-senior tranches)
- FT Alphaville: Fitch downgrades SCA monoline bond guarantor rating from AAA to junk--> needs around $5bn to regain AAA rating. FGIC downgraded again also by S&P--> April 3: FGIC given 30 days by regulator to raise new capital to avoid worst-case scenario.
- Tett: Some Federal Home Loan Bank [FHLB] member banks want to offer their AAA rating to municipal infrastructure projects. However, FHLB role is already being expanded for mortgage purchases and their capital is stretched already.
- Fahey/Scott: Exposures to financial guarantors arise from:
- CDS counterparty exposure associated with CDO, CMBS, RMBS, other ABS and corporate bond hedges;
- Trading inventories of equity or debt of guarantors;
- 'Wrapped' securities held in trading or investment portfolios;
- Muni bonds wrapped in association with Tender Option Bonds [TOB] and Variable Rate Demand Obligations [VRDO] programs [i.e. off-balance sheet entitites with liquidity backstop lines]
- Loss protection for conduits;
- Potential support for money funds containing enhanced securities. - Davies: Additional risk: unwinding of negative basis trades: difference between higher bond yield and lower cost to insure (with monoliners) that same bond (usually due to oversupply of CDS)--> buying both gives positive and risk-free return usually above Treasuries.
- Oppenheimer: Banks may write down $70bn if major monolines lose AAA
- Egan Jones: Bond Insurers Need $200 Billion to Retain AAA
For anybody who is interested, I am making available info on several other institutions with downgraded MBIA insured inventory. This is no trivial occurrence, and in my opinion it was long overdue (for those of you who don't remember, reference my Super Scary Halloween Tale of 104 Basis Points). Below are the results of my proprietary research on broker/bank direct Ambac and MBIA counterparty exposure. This is the link to Fitch's analysis of the same (requires free registration).
Reggie Middleton submits:
Here we go. It is amazing that the investment banks have rallied, particularly considering that most of them rely heavily on MBIA (MBI) and Ambac (ABK) as counterparties. Here is nearly all of the MBIA holdings of Morgan Stanley (MS) (many billions of dollars worth) recently downgraded . A comprehensive forensic deep dive, economic analysis and update of Morgan Stanely will be following shortly. Stay tuned...
- Fitch Ratings cut MBIA Inc.'s insurance rating to AA from AAA: Bond insurer short of $3.8bn capital to warrant the top ranking. Outlook negative.
- BIS: Monoliners have written roughly $450bn of super-senior protection on CDOs in the form of CDS contracts. About $125bn of these reference ABS CDOs. Counterparties to these trades are large banks, securities firms or off-balance sheet vehicles like ABCP conduits/SIVs.
- Fitch: As of July 2007: Industry gross insured portfolio = $2.5trillion; industry shareholder equity = $24.5bn (=leverage ratio of 100x)
- The industry guarantees $1.2trillion municipal bonds and around $800-900bn in structured finance products. CDS portfolio is $463bn (net seller). $287bn (or 61%) of CDS written on corporate bonds; 14% on RMBs.S&P: Banks hedge about $125bn of CDOs with monoliners (senior, super-senior tranches)
- FT Alphaville: Fitch downgrades SCA monoline
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