Moral TARPitude

Tue, 2009/06/09 - 5:11pm | Your editor

        There will be only minimal news for pre-subs today because I was busy with four of my U.S. stocks which have paid back TARP money: JPMorgan-Chase; State St. Bank; BBT; and American Express.

        As a shareholder, getting rid of the preferred stock in the hands of Uncle means my eps will rise and I expect dividends will follow.

        Repayment also cuts down on heavy-breathing oversight of the banks’ management over everything from executive pay to whom to lend to. And it cuts down on moral TARPitude. Read more »

The Curse of W

Mon, 2009/06/08 - 2:45pm | Your editor

      As a New Yorker, I do not like the term double-dip to refer to a possible second stock price drop during the summer. A double-dip in my city is a second scoop of ice cream, hardly something to worry about. But there are four reasons I am cautious now.

        I have to accept the term “W-shaped” recovery and a “W-shaped” stock market trend. This has nothing to do with George W. Bush.

        Are those real risks? This is not a trivial matter given our huge gains since the market got out of its March funk. And my going off to foreign climes in mid-June means that if the green shoots to date shrivel up and die, we will be hurt.

        There are some clear risks from doing nothing. First of all the yields on U.S. Treasury notes has inched upward during recent auctions. The impact on mortgage rates linked to Treasuries will further hamper the recovery of the U.S. real estate market. Read more »


Fri, 2009/06/05 - 6:24pm | Your editor

      An old buddy, John Germinario, has created a new venture called Global Securities and Services in Spring Valley, up the Hudson from here, with offices in Mexico and Hong Kong. John was present at the beginning of the boom in American Depositary Receipts at Citi and BNY.

      John is interviewed in the current issue of Global Finance magazine. He says “mass creation of unsponsored ADR programs by the banks brings the evolution of depositary receipt products back 24 years, when unsponsored ADR programs were voluntary consolidated to sponsored programs.”

      The rise in the number of  “grey market" ADRs without a market maker or a designated single depositary has taken off since the SEC changed its rules last Nov.. John thinks the proliferation of unsponsored ADRs is creating “disorderly markets” for trading "potentially damaging renegade ADRs.” Read more »

Another ATM Machine

Thu, 2009/06/04 - 7:09pm | Your editor

     My office is still in darkness so I am writing on the website from my husband's computer in our flat. So no accents; excusez-moi. Despite being Canadian, the webhosting company is very English language oriented. There will be no blog tomorrow unless the overhead fluorescent light is repaired in the office.

     Piqued by the trio of ATM issues by one of our recommended companies, I joined a "Webinar" at which Bank of America Merrill Lynch discussed the newly propular method of raising money by issuing new shares. Note that the mechanism is not new; just its use. ATM stands for At The Market. Merrill or whatever you call it a big peddler of this fund-raising technique, and today's presentation was intended for shipping companies, which have been a big user of this system. In fact, the shipping industry is the major non-U.S. issuer of ATM stock.

Read more »

Brit Sterotypes

Wed, 2009/06/03 - 5:01pm | Your editor

     There are two stereotypical British stock characters. One is the aristocratic incompetent, Bertie Wooster, the chinless wonder, created by P. G Wodehouse, who relies on his valet to keep him functioning. Or a posh laird in his castle obsessed with noblesse oblige and the beauty of his pig, the Empress of Blandings.

     The other is the Angry Young Man (AYM), smart kids of lower-class background marching against nuclear weapons, the monarchy, or apartheid.

     Both stock characters have become cartoonish. Most posh Brits have normal IQ even if they do hunt, fish, and shoot. They do not believe in hanging and flogging. Most AYM are not part of the loonie left supporting a Communist Britain or Londonistan.

     Yet Members of Parliament from both groups have been caught fiddling their expenses. One Labourite had to resign because she charged for X-rated films for her husband. One Tory used government money to clean his castle’s moat. Read more »

The No-Mo and Bill Show

Tue, 2009/06/02 - 2:00pm | Your editor

     Is it over yet? Two views. The first is from Asia Pulse:
     Software major Infosys today said the economy will recover by the end of the year or early next year going by clients' feedback suggesting that the worst is behind them. "When we talk to clients, they say that it looked like the worst for them is behind and they might have hit the bottom," Infosys Technologies CEO Kris Gopalakrishnan told reporters here today on the sidelines of a function here. That’s the upbeat view.
     Bill Gross, co-chief investment officer of bond mutual-fund giant Pimco, is more downbeat on the market outlook, forecasting lower returns, decreased U.S. growth, and our dollar’s losing its status as the world’s reserve currency.
     Some of this came last week at the Morningstar Investment Conference, Gross outlined what his Pimco colleague Mohamed El-Erian called the “New Normal.” Read more »

Straphanger Memories

Mon, 2009/06/01 - 3:09pm | Your editor

 An early memory. When I was a little New York City girl, just after World War II, I rode in the streetcar with my mother up Broadway. The streetcar tracks were removed around 1950 to make room for more cars. As Manhattanites, we did not have a car; my parents only got motorized in the 1970s when I was no longer at home. I only passed my driving test at the ripe age of 28.

 In 1953, appointed by Pres. Eisenhower as Secretary of Defense, Charlie Wilson, former head of General Motors, denied there would be any conflict of interest: "what's good for General Motors is good for the country, and visa versa."

 By 1973, during the first oil price crunch, that was no longer true. My then-boss, Sen. Clifford P. Case, minority leader of the Senate Foreign Relations Committee, while not a NYC straphanger, was close. (Before becoming a legislator he had commuted to the city by rail from New Jersey.) He said the only solution to the energy crisis was to raise taxes on gasoline to European levels and (because he was a liberal Republican, a now extinct species), to subsidize those for whom high priced gas was a necessity. Read more »

Pentecost Question

Thu, 2009/05/28 - 4:34pm | Your editor


     It was over 30 years ago that I was part of a herd of Paris journalists who interviewed the Ayatollah Khomeini, a Shia theologian, in Neuflé-le-Château. Like all my female colleagues I wore a scarf over my head. The exiled Iranian spoke softly in Persian for about 10 minutes. What did he say?

      “He is in favor of Jeffersonian democracy” we were told by his spokesman, Zadegh Ghotbzadegh. And we all duly wrote this down in our notebooks. A few months later, the Shah fell and the Ayatollah returned home to Iran in triumph.

      And then they put Zadegh against a wall and shot him. Maybe it wasn't Jeffersonian democracy the Ayatollah preached after all.

      I have always had problems with Islam. I do not understand the theology, the ethics, the rules, the history. So today I have a question for my readers like Pam and Carol and anyone else who has studied the religion closely. Read more »

RMB: Reserve or Reservation Currency?

Wed, 2009/05/27 - 6:21pm | Your editor

     For paid subscribers I wrote yesterday about a sale by one of our recommended shares of $1.019 bn in assets to Petrochina. And I noted that PTR is buying supply security and not interested in profits. At reader request I am following up.

      PTR parent China National Petroleum Co. has a 14% rate of return on capital, compared to 36% for Exxon, XON. Its mission is gathering crude for China. Thus it operates in many rogue states. Last month PTR bought a Kazahkstan oilfield, also paying over the odds.

      I concluded: I would rather sell to Petrochina than own it. One reason is that I do not want to own stock in companies which pump oil in outlaw states like Sudan and Myanmar (Burma). But my main reason is not ethics but economics. 

      Chinese big corporations have a mission only tangentially linked to earning profits. It is to serve the regime. The deformed banking system allocates money to large-cap state and supposedly private companies to achieve Beijing’s goals.  Read more »

Eats Shoots and Leaves

Tue, 2009/05/26 - 3:19pm | Your editor

       Eats, shoots and leaves. Before the North Korean nuclear test shots which spooked the market, we got the following from Stephen Taub of BondsonLine

       *Credit Suisse Securities points to five pieces of good economic news: the degree of inventory build-up; China is recovering, with 8% GDP growth this year achievable; US housing is clearly cheap; bank lending conditions are improving; the economic surprise index is at its highest level for seven months; and the best lead indicators in the US are consistent with only a 1% fall in GDP year-over-year. It is maintaining its year-end target of 920 on the S&P 500.

       *Citi Global Markets recently told clients it remains buyers of small/mid cap (SMID) stocks on weakness despite the swine flu scare as it believes that the mid-recession stock market bottom was likely found in early March 2009, and that the recovery trade should resume. Read more »