This year the Indian and US equity markets tracked tick for tick until May. Since then US markets have declined by 5% while Indian market are up by 15%. Foreign investors are buying in India while domestic investors (insurance companies, banks, mutual funds) are selling. The RBI is raising interest rates and is concerned about assets prices with unusual certainty. Government owned companies are lined up at the trough to sell shares so the Government can balance the books without quietly asking the World Bank for more money.
The animation will not suspend indefinitely
Tuesday, August 24, 2010
Ratings
The Chinese have ceremoniously downgraded US government debt from AAA to AA something. It is not clear which credit rating matrix was employed but at the very least consideration of the dollar as the reserve currency and medium for oil purchases seemed irrelevant to the calculation.
The Chinese, though, have increased the purchase of US agency debt (fannie and freddie) to keep the US homeowners in their homes, leveraged, and willing to buy cheap Chinese stuff at Walmart. The Chinese had to because the Fed is rolling over maturing Agency payouts into Treasuries.
The Chinese downgrade, though viscerally pleasing, has no practical effect on global capital markets in 2010 but foreshadows say 2030 when the Chinese exchange dollar reserves for Martian development rights
The Chinese, though, have increased the purchase of US agency debt (fannie and freddie) to keep the US homeowners in their homes, leveraged, and willing to buy cheap Chinese stuff at Walmart. The Chinese had to because the Fed is rolling over maturing Agency payouts into Treasuries.
The Chinese downgrade, though viscerally pleasing, has no practical effect on global capital markets in 2010 but foreshadows say 2030 when the Chinese exchange dollar reserves for Martian development rights
Paper Mache
The belief that FBP converts would trace above the .72 conversion price and on merits above 1.00 to meet nyse listing requirements was windswept yesterday in Miami.
The Board voted to crush the par value of common shares from 1.00 to .10, expand common shares from 750 mm to 2 billion, and restate the corporate articles to effect a reverse stock split to meet the 1.00 nyse requirement
USG remains the majority shareholder and entry at .5 is 40% underwater at .3. Double up?
First BanCorp Announces Results of Special Stockholder’s Meeting - Business Wire - SunHerald.com
The Board voted to crush the par value of common shares from 1.00 to .10, expand common shares from 750 mm to 2 billion, and restate the corporate articles to effect a reverse stock split to meet the 1.00 nyse requirement
USG remains the majority shareholder and entry at .5 is 40% underwater at .3. Double up?
First BanCorp Announces Results of Special Stockholder’s Meeting - Business Wire - SunHerald.com
In the Still of the Night
It appears that money center banks crept away in broad daylight with the public trust and the Federal Reserve refuses to identify who got what.
A delectable tale continues
Tuesday, August 10, 2010
Unusually Uncertain
The Fed Chairman indicated that the pace of economic growth was "unusually uncertain."
But with decided certainty the Fed has made permanent a floor of $2.33 trillion in its balance sheet up from $878 billion at the end of 2007.
This freshly printed $1.5 trillion will be rolled over into US Treasury Bonds by reinvesting the principal received from US agency (fannie mae, freddie mac) bonds.
Rollover
Federal Open Market Committee's Aug. 10 Statement on Economy: Full Text - Bloomberg
Measures of underlying inflation have trended lower in recent quarters and, with substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at the current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. (1) The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.
No Money In the Hills
Your Money - The Coming Class War Over Public Pensions - NYTimes.com
Public pension funds need to achieve a return of at least 8.25% per annum to meet obligations.
Sunday, August 8, 2010
Fannie at 40 cents?
Fair Game - Freddie, Fannie and the Third Rail of Housing Policy - NYTimes.com
Buy it at 40 cents on the dollar with the USG as 80% shareholding partner?
$435 million market cap
Saturday, August 7, 2010
Run on the Fed
Alan Greenspan is perched on the edge of his keyboard advising that budget deficits are bad but budget surpluses are worse because they render the Fed impotent.
The Chairman fears a run on US Government Bonds when the medicare bill comes due on a low tax base. Raising taxes, repealing old accommodations, in a recession seems questionable.
But these taxes would be borne by those who can afford them: the taxpayers who own $3 trillion worth of US real estate without a mortgage.
The Chairman may have struck an efficient solution to funding future deficits without having to declare the Yuan a reserve currency
Monday, August 2, 2010
Slippery
So ADAG (Anil Ambani) borrowed money in London (External Commercial Borrowing, ECB) through UBS. The money made its way into Pluri London accounts, presumably legally.
Hythe buys a basket of Indian stocks including RNRL and Reliance Infra through a Participatory Note (PN). Hythe does not own the shares but is credited the increase or decrease in value of the shares through the PN in London. Barclays buys the shares in India to create the PN for Hythe.
Hythe sells the PN to Pluri
The RBI wants to know what happened to the proceeds of the ECB which, pray tell, certainly did not return to India illegally. Barclays, UBS, and SocGen (yes, the French) have been admonished by the RBI for aiding the goose.
SEBI, the Indian regulator, has summoned all who ignored the June 7 show cause notices
Lack of subsidy hits oil marketing firms | TradingMarkets.com
India imports capital to pay the oil bill. The numbers are about even with oil under 80. Otherwise the RBI will be long lots of oil IOU's
SC asks HCs not to interfere with debt recovery proceedings-Finance-Economy-News-The Economic Times
SC asks HCs not to interfere with debt recovery proceedings-Finance-Economy-News-The Economic Times
A guarantor of a loan invoked Article 226 of the Indian Constitution to avoid having pledged property seized after default under the loan and stayed the proceedings with a socialist argument. The Supreme Court gently suggested that High Courts should respect the rights of secured creditors and not interfere with recovery proceedings until complete.
In this case, the Union Bank had extended a term loan of `22,50,000 to Pawan Color Lab in November 2004. Satyawati Tondon had furnished a guarantee for repayment of the loan and mortgaged her property situated in Allahabad in UP by deposit of title deeds. After one year and six months, the bank sent a letter to the company and the guarantor pointing out that repayment of loan was highly irregular. It issued notices to both the borrower and the guarantor under section 13(4) of the SARFAESI Act.
Faced with the imminent threat of losing her mortgaged property, Ms Tondon challenged the decision of the bank.
Turning down the plea of the bank that the alternative remedy was available to the petitioner under section 17 of the SARFAESI Act, the high court passed the order restraining the lender from taking action. The order was challenged by the bank in the Supreme Court.
Ruling in favour of the bank’s plea, the apex court said the high court order had the effect of defeating the very object of the legislation enacted by Parliament for ensuring that there are no unwarranted impediments in the recovery of the debts due to banks, financial institutions and secured creditors.
Faced with the imminent threat of losing her mortgaged property, Ms Tondon challenged the decision of the bank.
Turning down the plea of the bank that the alternative remedy was available to the petitioner under section 17 of the SARFAESI Act, the high court passed the order restraining the lender from taking action. The order was challenged by the bank in the Supreme Court.
Ruling in favour of the bank’s plea, the apex court said the high court order had the effect of defeating the very object of the legislation enacted by Parliament for ensuring that there are no unwarranted impediments in the recovery of the debts due to banks, financial institutions and secured creditors.
Subscribe to:
Posts (Atom)