Category — Europe
Fed Bailout Continues for Barclays, RBS
This was buried as a small story on Yahoo but it should be a much bigger story. Some of the questions that this article doesn’t answer: Why is the Fed bailing out ANY individual banks customers? Why is the Fed bailing out US customers who held their money overseas, in effect subsidizing foreign financial firms, with US tax dollars?
Barclays and Royal Bank of Scotland have lined up emergency funds of up to $30 billion from the U.S. Federal Reserve to bail out American clients caught up in the global credit crunch, a paper said.
Barclays has been given permission to borrow up to $20 billion through the facility, while RBS can borrow up to $10 billion, the Sunday Telegraph quoted banking sources as saying.
October 22, 2007 No Comments
Sell Half to Drink Half – FT on Wine Investing
If you have no intention of drinking the wines its probably not worth the trouble:
There are just 75 investment-grade wines, each selling at several hundred dollars a case…Nonetheless, it is telling that after a couple of years of strong buying by Asian investors, wine prices fell off a cliff in 1997 when Hong Kong’s Hang Seng index dropped. Wine investors who bought at the peak are still nursing 25 per cent losses.
…
“The trading costs are very high. There is at least a 10 per cent bid-offer spread. As an investment market it is very narrow.”There are further costs, too, including the costs of insurance, storage, duty and no dividends.
And only when investors uncork the bottle can they be sure it hasn’t turned to vinegar or someone has not slipped in a fake.
October 4, 2007 No Comments
UK Deposit Scheme Underfunded
“There is the government and there is the market. There is no third option.” – Mises
Sounds like they are taking lessons from the pension managers here. They should have let Northern Rock collapse:
Analysts said reports that the UK’s deposit protection scheme might not be enough to pay for the government’s plan to guarantee consumers’ deposits up to £100,000 pounds weighed on the currency.
The UK’s Financial Services Compensation Scheme’s resources were estimated at only £4.4m – compared with a comparable fund of $49bn in the US.
September 25, 2007 No Comments
Northern Rock Bailout – Real Estate Troubles Are Not Just US Phenomenon
Many pictures of old folks in queues in the UK due to the BOE bailout of this dicey mortgage lender. FT’s Alphaville had the best summary:
Well, Northern is the victim of exceptional market conditions. But that doesn’t let Northern’s management off the hook.
Banks have to expect the unexpected in the way they manage their balance sheets.
But perhaps the biggest criticism to be made of this bank is it massively increased its mortgage lending at the beginning of this year, when most economists were forecasting a slowdown in the housing market and when interest rates were already rising in a way that squeezed its profit margins.
” Exceptional market conditions”?! I thought only hedge funds got to use that excuse for their own poor performance.
September 14, 2007 No Comments
Perez Hilton.com for CEOs? – How Chiefs Personal Life Affects Stock Performance
This WSJ article describes some unconventional stock indicators: how a death in the family affects the CEO’s company stock. The article also describes some other unconventional indicators like house size. I give it less than a week before a company is formed to sell this information to hedge funds:
Should shareholders in a company care if the chief executive’s child dies? What if the mother-in-law passes away?
Such things don’t normally figure in investment decisions. But maybe they should, according to a recent study by three finance professors. Mining a trove of Danish government data on thousands of businesses, they were able to track links between CEO-family deaths and the companies’ profitability over a decade.
September 5, 2007 No Comments
Stocks Down Worldwide
Bloomberg
Stocks tumbled around the world and U.S. Treasuries rallied on concern higher borrowing costs will slow takeovers, spur debt defaults and curb earnings, prompting investors to flee riskier assets. The Standard & Poor’s 500 Index fell to its lowest in three months, while Europe’s Dow Jones Stoxx 600 Index dropped 2.7 percent, its biggest retreat since March. Benchmark stock indexes in Brazil, Mexico, Argentina, Korea, Poland, Russia and Turkey slid more than 2 percent.
July 26, 2007 No Comments
Equities in Slovenia on a sprint
Move over, Shanghai?
Bloomberg has the goods on a surprise star of 2007′s second quarter: Slovenian equities.
The Slovene Stock Exchange Index, known as the SBI20, was the best-performing equity benchmark in the world last quarter, jumping 39 percent in dollar terms, according to data compiled by Bloomberg. It has more than quadrupled since the end of 2002, paced by Petrol d.d., Slovenia’s largest refiner and retailer of petroleum products, and Intereuropa d.d., a logistics company.
Companies in the index trade at an average of 38.9 times estimated earnings, more than twice as much as their average for the past year. The price-earnings ratio is also more than double that of the Morgan Stanley Capital International Emerging Markets Index, a global gauge for developing economies. Members of China’s CSI 300 Index trade at 32.9 times earnings.
July 5, 2007 No Comments
2007 Currency Highlights
EUR/JPY all time highs
EUR/CHF all time highs
GBP/JPY 15 year highs (1992)
USD/JPY 4.5 year highs (Dec 2002)
AUD/USD 18 year highs (1989)
NZD/USD 25 year highs (1982)
NZD – first RBNZ intervention since 1985.
June 20, 2007 No Comments
Long Sarkozy? – Buy France
If the 2nd round of parliamentary elections go his way you can expect a quick jump in the ETF. Barring an overall decline in Euro equities
June 15, 2007 No Comments
Using Your House To Carry Trade – Rookies Playing the Currency Market Using Thier Homes
From the WSJ:
Tamas Bencze got a rude surprise when he ripped open his mortgage statement last summer. In just two months, the payment on his three-bedroom home here had jumped 10%.
“My wife looked at our mortgage and asked me, ‘What’s happening?’” he says.
Mr. Bencze got burned playing a risky game: He had taken out a mortgage in a foreign currency, lured by lower interest rates abroad. Everything was fine until exchange rates suddenly shifted, causing his monthly payment to rise.
May 29, 2007 No Comments
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