|A compilation of this board's financial/economic posts From 41369 to 41425
|Post 41369 by ttalknet2 OT: Massive Sterling Silver Jewelry Fraud?|
Post 41370 by lkorrow Reply
I was away and missed the webcast, but found on their investor relations page that it will be rerun 9/5-11.
Home page reference:
OT: pdowd, Iran is going to back Iraq? After all t
OT: Table ON TOPIC SUMMARY Sep 3, 2002
Post 41373 by Decomposed Reply
If I'm reading this right, yesterday's big downturn was on featherlight volume. That's bad... as it suggests sharply falling stock prices still weren't enticing the buyers. Investor.com says 267 million shares traded on the Dow. Compare that with the run from 8/5 to 8/29 without one day under a billion and you get the picture.
Don't be too quick to buy. There are a lot of bargains right now, but the time to buy is when volume increases dramatically.
Just a hunch, but I wouldn't be surprised if a lengthy downturn is in the works. 9/11 was nearly a year ago, after all, and I'd expect market jitters to increase as the anniversary approaches. Something you can count on: There'll be a rally once 9/11/2002 is behind us.
Post 41375 by spirare Reply
September 3, 2002, Spot gold in New York settled higher at $313.60 an ounce, up $1.60 from Friday?s
Gold is supported on a weaker global stock market and a weakening U.S. dollar relative to other world
currencies. The dollar was down .0118 against the euro at 1.0039, the dollar was 0.98 lower against
the Japanese yen at 117.11 and the British pound was up .0152 at 1.5639 against the greenback.
"It's still not a very impressive performance.
The metals are doing a little bit better, but you would think there'd be a little more upward momentum
considering how much the dollar's off," said David Rinehimer, futures research director at Salomon
Smith Barney in New York.
A sharply lower stock market and a falling dollar have been supportive for gold, sources said.
The New Orders Index fell to 49.7%, from 50.4 in July - a sign that demand is weakening.
In addition, Challenger, Gray & Christmas said Tuesday that job cuts by U.S. corporations were up
46% from July at 118,067 compared with 80,966 in July.
The dreaded ?double-dip recession? appears to have arrived. People are beginning to look for capital
preservation and precious metals are expected to benefit.
Also, it should be noted that season gold buying will soon get started.
Brokerage house Spectrum Commodities said demand for the yellow metal is greatest going into the
fourth quarter, as "gift-giving peaks beginning with Indian harvest and wedding festivals in autumn and
carrying through U.S. religious holidays and Chinese new year."
Also, "Gold is a buck higher, driven by the buck itself, which is on the decline against both the euro
and, more importantly, the yen as the U.S. returns from holiday and is smacked across the face by
the reality emanating from the Japanese liquidity black hole," wrote analyst Greg Weldon, editor of the
Morning Metal Monitor.
London gold was fixed this afternoon at $313.50 an ounce, unchanged from $313.50 an ounce at the
"With economic uncertainties and U.S.-Iraq war speculation at the forefront, I think gold will continue
to see pockets of 'safe haven' buying," James Moore of TheBullionDesk.com in London said in a note
Preliminary indications were that it was going to be a bad day for equities around the globe.
The U.S. dollar tanked against other world currencies that left some investors seeking safety in gold.
Spot gold recovered losses from earlier lows triggered by demand from players in Singapore and Hong
Kong, a Sydney-based trader said.
Earlier selling by Australian banks led gold to fall to the session's low of US$311.30 an ounce, but
bargain hunters subsequently pushed it up to US$311.95 an ounce.
Spot gold rose Tuesday in Asia, as buying by participants in Hong Kong, Singapore and Japan helped
erase some of the losses from the selling out of Australia, traders said.
Gold buying emerged on U.S. dollar weakness and concerns that the U.S. dollar could face more
selling pressure, particularly as the first anniversary of the Sept. 11 terrorist attacks approaches and
the market remains jittery ahead of key economic data to be issued this week, traders said.
Gold prices were buoyed as the Asian stock markets collapsed with the Nikkei 225 falling to 19-year
lows on renewed concerns of Japanese bank failures.
The U.S. dollar fell through support levels in Europe this morning.
The dollar fell to a five-week low against the euro and dropped against the yen on expectations U.S.
stocks will decline, damping demand for the currency needed to buy them. ``Demand for U.S equities
is falling, driven by reluctance of foreign investors to buy,'' said Ian Douglas head of global fixed-
income strategy at UBS Warburg.
``The U.S. need inflows to service its current-account deficit -- it's not getting them.''
"We're back to work from a not-so-good August," said Arthur Hogan, chief market analyst at Jefferies
"We came in with a couple of downgrades and just a general sense the economy hasn't picked up the
way we would like to see it."
The Institute for Supply Management said its index of business activity remained steady at 50.5 in
August, below analysts' expectations of 51.8.
An index above 50 signifies growth.
Analysts say investors were intently watching the release of several economic reports this week,
including the ISM report, as they seek evidence that the recovery is continuing now that accounting
scandals appear to be fading. Next week's anniversary of the Sept. 11 attacks and concerns about a
possible war with Iraq also are encouraging some nervous investors to lock in profits now, analysts
say. "It's a series of smaller things looming up in the face of 9/11 and the fact that September is
historically the worst month of the market.
It's getting us off to a lousy beginning," said Tony Cecin, director of institutional trading at US Bancorp
Piper Jaffray in Minneapolis.
It was a very ugly day in the equities markets as the New Orders index, poor sales reports from
retailers, and a crashing U.S. dollar are taking a toll on nervous investors.
The much-feared ?double-dip? recession appears to have arrived with a vengeance.
Several investors are taking refuge in precious metals.
Of significance for stock investors is that banking powerhouse Citigroup has been downgraded to a
?sell? rating by Prudential Securities.
Concerns over bad international and domestic loans as well as involvement with the Enron scandals
have convinced many that there are many more hidden warts yet to be revealed.
Also, a major trucking firm, 73 year old Consolidated Freightways filed for bankruptcy and shutdown
This is significant as this company is one of the largest trucking companies in North America and now
15,500 employees are out of work.
Another concern is that earnings estimates are ?too high? and that there will be many ?pre-warnings?
or ?pre-announcements? on corporate earnings.
TrimTabs.com reports that outflows are on pace to reach $56 billion this month, compared to a
previous record of $29.9 billion in September 2001.
In addition, according to recent statistics from the Investment Company Institute, the average mutual
fund is sitting on only 5.1% cash.
Therefore, as mutual fund managers face redemptions, they must sell stocks to raise cash.
It appears that the markets could suffer greater losses going forward as economic data deteriorates
and we approach the first anniversary of September 11.
Precious metals will continue to experience increased interest as the equities markets suffer under a
steady stream of negative reports and economic data.
***In fact the precious metals sector was the only winner in today?s market action.***
It's the best game in town and will continue to be so into the foreseeable future...
Gold 27 Year Seasonal (1974 - 2000)
Gold Stocks Update, 321gold.com/ editor
Caledonia Mining Corporation
CA:CAL on TSX
CALVF Risning from oversold conditions - bullish
Current Price of Gold
Interview With: S.E. Hayden
President and CEO
Click here if you don't hear audio...
Imo. TIA. Pass It Along>>>>>>>>>>>
(Voluntary Disclosure: Position- Long; ST Rating- Strong Buy; LT Rating- Strong Buy)
OT: Brain Teaser
OT: maniati... brain teasers are mean at this hour
OT:Families of Freedom Scholarship Fund(R) Reaches
Post 41379 by clo Reply
POLL-Nikkei's bottom seen between 8,400-9,000-analysts
By Nathan Layne and Koichi Kawaguchi
TOKYO, Sept 4 (Reuters) - Japan's tumbling Nikkei 225 share
average will likely be humbled further below Wednesday's
19-year low, but analysts say a bottom for the benchmark index
should form somewhere between the 8,400 and 9,000 marks.
A Reuters poll of eight analysts on Wednesday produced an
average downside target for the Nikkei of 8,750. That would be a
drop of 3.6 percent from Wednesday's close of 9,075.09, which was
the Nikkei's worst finish since August 1983.
Behind the Nikkei's recent dive is growing pessimism over the
outlook for the U.S. and Japanese economies and the consequent
slide by U.S. and European shares. The United States is Japan's
largest trading partner and the most important market for Toyota
Motor Corp and many other blue-chip firms.
But the unwinding of cross-held shares and other factors
specific to Japan have helped fuel the slump. Falling stocks have
reignited concerns about the nation's banks, which hold huge
stock portfolios and face valuation losses when books close for
the first half on September 30.
"Japan's top banks will fall short of globally accepted
capital adequacy ratios if the Nikkei slips to around 8,500,"
said Tsuyoshi Segawa, equity strategist at Shinko Securities.
"That said, when the Nikkei approaches this level the
potential for some type of policy response grows," Segawa added,
reflecting expectations for political action such as an injection
of public funds into banks if stocks remain depressed.
An unfavourable supply and demand balance has also been a
negative pull on trade. Individual investors bought large amounts
of shares on margin in March through May when the Nikkei rallied
and many of those positions are being unwound this month.
Banks and corporations are also keen to sell shares held
mutually in each other, or cross-held shares, ahead of the end of
the first half. Banks especially want to decrease their exposure
to market swings.
"This week is probably as bad as it gets in terms of supply
and demand," said Takaaki Yoshino, chief quantitative analyst at
Daiwa Institute of Research. "Next week will also be critical,
but once that hurdle is cleared supply should tighten through the
end of the month," he said.
TECHNICALS SUGGEST BOTTOM NEAR
Hajime Kitano, chief strategist at Mitsubishi Securities, did
not give a specific number for the poll but said the Nikkei's
bottom was near.
"Wall Street and Europe took out their post-September 11 lows
in July. We are just tracking those markets at a two-month
delay." Kitano said. "I think Wall Street bottomed out in July
and is in a recovery phase. If U.S. stocks test new lows the
scenario changes but I don't think that is likely," he said.
From a technical perspective, Hidenobu Sasaki, director of
research at Nikko Salomon Smith Barney, sees 8,400 as critical.
This is based on the presumption that history will repeat
itself with a re-run of the Nikkei's 18,700-point fall from
record peak of 38,915.87 in 1989 to a low in October 1990.
From October 1990, the Nikkei rose to a high of 27,146 in
March 1991. A 18,700-point fall from there would bring the Nikkei
to 8,400, Sasaki notes.
((Nathan Layne, Tokyo Equities Desk +81-3 3432-8231
*** end of story ***
Post 41380 by uponroof Reply
Jay Taylor...US Markets and gold
Sept 2, 2002
"...Stocks are hugely over valued but like the used car salesmen that can't help himself, Abby Joseph Cohen and her peers keep on pumping and dumping. This kind of irresponsible action on the part of Wall Street has resulted in the following two statistics, which your editor finds astounding:
*At the end of the first quarter of 2000, there were 4,000 mutual funds -- today there re 4,800 mutual funds
*Shareholder accounts numbered 154 million at the top in 2000, but have actually increased to 169 million today
FOLKS, THIS IS NOT CAPITUATION!
When markets reach their bottom, you can expect to see people running as fast as possible away from stocks and also a return P/E ratios under 5 or certainly 10 times, and dividend yields for strong companies in the 6% to 10% range. In fact, we agree with Richard Russell that current valuations, like the 37 P/E ratio for the S&P 500 is more akin to historical bull market tops than bear market bottoms! This suggests to your editor that this bear market has a long, long way to travel.
"...While I was in London I spoke to a very talented man who works with Frank Veneroso. He told me it was his speculative view that the central banks have already granted the bullion banks (named as defendants in Reggie Howe's lawsuit) the right to repay them not in gold but in paper money. This would then provide more time before "the fecal matter hits the rotary oscillator" in the gold markets.
Unfair as that would be to Americans and citizens of other countries that may have lent gold out, it would be consistent with the dishonest handling of our national gold treasury by our policy makers..."
uponroof- if true we have by illegal unilateral CB action compounded the ongoing theft of what might be the last bit of safe haven wealth. Wealth which might hold global economic hope together during major crisis...such as war in the Middle East or a collapsing Japanese economy.
Post 41381 by Culmus Reply
I have no problem at all with incentives to motivate people so you get the best out of them. I also have no problem with incentives for managers and I have no problem with huge pay packages if they are deserved. Maybe that is my German roots, in the US you say people "make money", in the UK people "gain money" and over here in Germany people "deserve money", all of these terms describing the return for work, compensation. It might be that to "make money" makes people lose sight of the fact that it is in return for something rather than it is an invitation just to make it any way you can (including at the disadvantage of others).
I much prefer the German term for it, people have to deserve their pay. That means getting the equivalent of what you deliver in relative terms, many times that is not the case with these option packages. The calculations can be debated to some extent (that is actually what should be discussed and put in perspective), but some of these calculations show companies making a loss if options are "kind of expensed". It simply can't be that a manager of a company makes shareholders believe that "pro-forma" earnings are rather high and then the "expense" for employees (managers, members of the board and all other employees) exceeds the company's entire profit.
Actually, just what are publicly listed companies? Are they a way for every man and woman to become an entrepreneur and get a share in the prosperity of any company, industry or country they select or are they a self-service shop for greedy managers to become rich quick? In your permanent defense of these outsized amounts you contradict your own claim of being, I quote (your post # 41082): "pro-capitalism, pro-freedom and pro-pay for work rendered". It always was the case that able managers made far more money than the "ordinary guy" or someone less educated, less motivated and less knowledgeable and capable, sometimes less gifted. It is entirely fair that they make more money. More money, but not amounts that exceed the company's profit! The foremost responsibility of a company is the one towards its owners, not the employees.
Throughout we should have done that discussion along the distinction maniati made, positive and normative, because these two positions have been repeatedly confused by everybody, except maniati:-) You said: I take it from your statements that you now agree that options should not be listed as an expense on the income statement. Am I correct in assuming this to be true? If not, why? I believe I made my position clear already. Once more, I think that it is misleading investors if the cost to run the company is shown lower than it actually is (with all its implications, like overpriced stocks) since a good part of compensation expense currently is "off-income statement". I think compensation expense should be reflected in the income statement, but with options it technically simply can't. Not only that, but with "expensing options" the way it is currently proposed (which I disagree to) you actually shift the compensation cost from the company to the shareholder. That is even worse (and without legal basis IMO since owners have rights against the company, no obligations, at least not for compensation expense) and in effect it is enriching insiders at the cost of shareholders, let's call it what it is. To make it absolutely clear, "I think that options should not be listed as an expense on the income statement", not because they shouldn't (IMO they should) but because they can't. Do you take that as an agreement or a disagreement? The equivalent value of these options should be reflected on the income statement, since options themselves can't be expensed compensation can't be by way of options (cash, for instance, can be expensed and then undoubtedly out of the company's pocket, not the shareholders'). Follow me, if options in return for compensation can't be expensed according to accounting rules then they have no right to be at all and hence they have no legal basis. I'm not saying options are illegal, but if given out in return for compensation they are coming from the wrong party, shareholders instead from the company.
Please excuse me for taking sides with shareholders, that is not only because I am one but also because IMO the average investor is not aware of being "cheated". Along this line you are right, I have a problem with options as a form of compensation. You still haven't got it, there is no way of "properly accounting for options". Nobody cares at present, but one day a group of shareholders or one large shareholder (I wished it was CALPERS :-)) will come up and calculate what this has cost the shareholder, then we will see class action lawsuits IMO. That will lead to another hair cut for investors and to foreign money leaving the US market, with all implications that will cause.
Look, corporations are separate from the owners all over the world, not just in the US. How you can seriously think it could be another way puzzles me. I actually print out your post and it is almost 6 pages, six pages of splitting hairs and missing the point. I don't have the time to address all the points you make there. All the detail you are going into shows that you either haven't gotten my point or else you are not pro-capitalism. Pro-capitalism is if an investor is taking an entrepreneurial risk and gets a return for that which exceeds the risk-free rate of return. The way things are running now shareholders only carry the risk and the return goes to insiders as the value of the option packages exceeds the profit of many companies. Defending that practice actually is contra-capitalism, get real. Being the motherland of capitalism this abuse taking place at present is a shame for America.
Don't tell me that institutional investors fully understand how this option scheme is working. I have been advising institutional investors for some years and I can tell for sure that a lot of money is not smart in and of itself. Money is not smart, people are. If institutions represented "smart money" then why do 95% of them fail to even achieve a market return?
No, I am not jealous about able managers making a killing but do you really think that the CSCO board reserves 2 billion shares for insiders and then doesn't use them? So that includes ordinary employees, not only directors and executives. Your hair splitting is costing me too much time. I have explained already that the (unduly large) dilution comes from the long time period that the options are valid and not from setting the strike price. The re-setting of strike prices once a stock plunged is also not for the same options, the ones hopelessly out of the money are being canceled and new ones are issued with a lower strike price. I thought you knew that, therefore I didn't go into details.
For time reasons I'll not go over your details about specific companies now. That you accuse me of "attacking DELL and ORCL as well" just shows once more that you have not understood my points. I'm not attacking specific companies at all, I'm attacking option abuse of America Inc., which CSCO, DELL and ORCL (and LLTC if you insist) happen to be part of.
Post 41382 by uponroof Reply
Japanese Banking woes...
ANALYSIS-Stocks just one of time bombs ticking at Japan banks
Reuters, 09.04.02, 6:39 AM ET
"...If the Nikkei average falls towards 8,000, capital adequacy ratios at top banks could breach eight percent, the minimum required for globally operating banks, analysts said..."
"..."Banks can't afford to put up loan loss provisions the size of last year, so the situation is getting worse," said Koyo Ozeki, an analyst at Merrill Lynch.
Despite their aggressive write-downs last year, problem loans at the top banks rose nearly 50 percent on the year to 26.7 trillion yen at the end of March..."
uponroof- In other words the 'averted crisis' last March has only compounded itself 50% higher this year as underlying fundamentals go unchanged....a trend becomming more and more prevalent in the ever expanding, increasingly difficult to engineer, posponment of global economic reckoning.
Post 41383 by uponroof Reply
from the forbes link:
"...To beef up capital, the banks are issuing subordinated bonds or preferred securities that cannot be converted into shares.
This brings its own risks.
Most of the buyers are life insurance firms, and the banks in return have given them subordinated loans to help their finances.
Under existing guidelines, loans to life insurers are categorised as healthy, so banks do not need to set aside provisions, regardless of an insurer's financial condition -- and many of them are in difficulty..."
uponroof- I was just watching on television the other night a report on how Japan is due for another major earthquake. It seems we are well past the average span between them (110yrs?) Imagine what a catastrophic earthquake would do to Japan in terms of loss of life...through that ruin it's life insurance industry...now we see through the above, also ruin the banking sector. By being unstable the Japanese banking sector puts at risk the entire global economy if Japan suffers a major calamity.
Post 41384 by pacemakernj Reply
Roof, thanks for the updates. I still don't see how the economy will grow at 3% for this quarter. We only have 26 days left. Things have been lousy this quarter. I look for a retest of the July lows around the 16th to the 20th of this month coinciding with triple witch. As for gold I truly believe they are keeping the price suppressed. That said, I simply don't know how we'll be able to break those clamps. We need something dramatic to happen, imo to break out. All we hear from these guys for months is how the market is fixed. We all agree, but how can we break out is the conundrum, imo. I am not giving up I think gold stocks off some of the best trading opportunities in the market. It is just so frustrating to see gold be stuck in this range in the face of such overwhelming negative sentiment.
ot: Brain Teaser response
ot: brain teaser... pmcw,
Post 41389 by jeffbas Reply
pmcw, isn't the third quarter the normally seasonally slow one for semiconductor manufacturers?
Post 41390 by jeffbas Reply
sr, I suspect that most consumers refinancing first mortgages are taking fixed rate mortgages. Nothing else makes any sense. Of course, home equity lines are often variable rate mortgages. However, wouldn't you be delighted to see interest rates rise due to a very strong economy? Who would care then if it pressured the housing market by subtracting demand at higher rates. As it is, these economists seem to overlook the logical consequence of their glum outlooks - long term interest rates another point lower, and even less pressure on consumers.
By the way, I must get at least one credit card offer a week with a 0% teaser rate, for even up to a year!!
Post 41391 by pmcw Reply
jeff, From the early 1980's through the latter half of the mid-1990's, the PC was the dominant user of semis. When it peaked (back to school and Christmas) the market peaked.
However, the PC is no longer the leader. As a matter of a fact, there probably isn't a real leader today. Networking, telecom, hand held and PC's are all viable leaders. When we come out of this sour economy we'll see if one takes the lead or if we get a more healthy mix than in decades past. Automotive also has the potential to increase its importance in the TAM mix as on board displays become more common.
The summer months (mid June through mid August) are traditionally slow. In a perfect world (flat economy) this will produce a soft third quarter. The fact that volumes are up and Q3 appears to be forecasted to be a sequential improvement for most semi companies is a very good sign.
Post 41392 by pmcw Reply
jeff, It's a very mixed bag and it provides no clear answers for those holding an objective line. Of course, it's easy prey for those with a point to prove, but that's always the case.
According to the Federal reserve, the percentage of disposable income needed to cover household debt is not at an alarming percentage. These figures are easily distorted to prove a point, but that doesn't change the truth. The percentage is towards the high end of the historic scale, but certainly not exploring new territory.
Checkable and Demand deposits are down slightly since the beginning of the year, but again, not enough to cause concern. (these are deposit accounts include in M1)
Savings, Small Deposit and Large Deposit accounts show the most confusing data. Savings are up significantly, but I feel this is a sign people are not spending on non-durable goods and rather saving their money thinking that more rain is in the forecast. Small Deposit accounts are down over 20%, but I see this as people making deposits on new housing and buying durable goods. Durable goods sales have skyrocketed this year. Durable goods sales for household stuff is up by over 42% from 2001. This contrasts to a drop in non-durable of roughly 5%. In some of my previous posts I pointed out that when this ratio starts to balance it will be s sign that people are feeling more secure. Also covered in previous posts is the fact that we need to see corporate cap/ex kick in before we can believe in any light at the end of the tunnel.
Rounding out M2 is the category of Large Deposits. These are up very slightly, but not enough to be a sign of any kind.
I like to set the Euro deposits aside when looking at M3. They make little difference and basically tell me more about what Europe thinks of dollar denominated deposits that the course of our economy. For the record, Euro deposits are up.
The other two components of M3 are Money Market Funds and Repurchase Agreements. The latter is something companies use to obtain a better interest rate on their checkable deposits. Neither of these categories show any change that one should consider alarming. In total, the savings components of M1, M2 and M3 have changed little this year and those individual components that have shown enough change to merit further examination can be explained when looking at where the money is being spent (GDP details).
Therefore, I'll let those who feel they have all the answers keep talking. At least one of them will be right when it's all over. Those who are right will certainly be proclaimed to be genius and write several books, but when they're honest with themselves they will admit nothing was cast in stone.
Post 41393 by oldCADuser Reply
An item from this same area:
Americans View Homes as Safer Than Stocks
Wednesday September 4, 11:38 am ET
NEW YORK (Reuters) - Faced with a shaky economic outlook, more Americans say buying a home is a safer investment than putting money in the stock market, according to a survey released Wednesday by Fannie Mae, the No. 1 U.S. mortgage finance company.
The findings of Fannie Mae's annual housing survey reflect the underlying strength in the U.S. housing market, which analysts say is on pace to eclipse last year's sales records thanks to rising home prices and mortgage interest rates hovering at 32-year lows.
Overall, 70 percent of the 1,864 Americans polled see buying a home a "safe and smart" investment. This compared with 38 percent of respondents who said a retirement program like an IRA and a 401K plan was a "safe investment with a lot of potential" and just 10 percent who felt that way about stocks, Fannie Mae said.
"Encouraged by the lowest interest rates in at least a generation, the highest percentage of Americans since 1994 say now is a very good time to buy a home and a quarter of Americans plan to do so in the next three years, according to this year's survey," Fannie Mae chief executive officer Franklin Raines said in a statement.
In Fannie Mae's 2002 National Housing Survey, two in five Americans say they follow the housing market "very or fairly closely." Among this group, three-quarters say buying a home is a safe investment with a lot of potential and 78 percent say that it is a somewhat or very good time to buy a home.
Of the homeowners surveyed, 85 percent said the value of their home has increased at least a little since they owned them and 61 percent said the value of their home has increased a lot.
Although home appreciation has slowed sharply from its peak in early 2001, home prices managed to increase at a healthy annualized rate of 7.6 percent in the second quarter, Fannie Mae's sibling Freddie Mac said on Wednesday.
Baby Boomers, minorities and immigrants will be important groups in the housing market in the coming years, according to the Fannie Mae survey.
Nearly a third of Baby Boomers said they are very or fairly likely to buy a home in the next three years, as did 42 percent of black Americans, 37 percent of all Hispanic Americans and 34 percent of Hispanic immigrants, Fannie Mae said.
For the original item, go to:
Post 41394 by srudek Reply
jeff: re variable rate loans. You'd be surprised. In my experience, banks vastly prefer to sell adjustables as it puts the risk on the consumer and tends to be much more profitable. Motivated salesmen can make a lot of difference for naive (or greedy) buyers. I did a quick google search and found the following rates quoted:
Fixed: 6.2%APR 0.625%pts
3Yr ARM: 4.7% 1% pts
Now, on a 250K house, that difference translates into mortgage payments of $1296 vs. $1531. Pretty substantial. Even more substantial when you consider that the payment difference, for too many people, becomes the difference between qualifying for a home or not. More importantly, using the 4.7% rate qualifies you for a $300K home at $1556/mo. You can't GET a home in much of California for under $300K. And, of course, when more people CAN buy a more expensive home, it tends to feed escalating prices on new homes.
What "makes sense" to you, with your actuarial background, isn't the standard used by the typical consumer. Not by a mile.
Would I "be delighted to see interest rates rise due to a very strong economy"? Maybe, maybe not. In this economy, probably not. Interest rates would probably rise well in advance of pay, so you could expect to see: (1) foreclosures zoom and (2) housing prices tumble as the "interest rate miracle" runs in reverse and buyers dry up. This would feed back into (1).
What concerns me even more is that interest rates, at this point, seem far more likely to rise due to problems/weaknesses in the economy than to strength. The dollar falling further could quickly translate into the Japanese pulling their money, which would dry up loan funds, which would shoot interest rates to the moon even as people are getting laid off. There are LOTS of other scenarios I consider plausible which would lead to a similar outcome.
The Fed controls short term interest rates but the long term rates are determined by the market. Any perceived risk increase will make long term rates jump. And many ARMs are tied to the LIBOR which is out of Fed control. LIBOR is increasingly becoming the standard and the 11th district cost of funds is fading. LIBOR interest can change very quickly.
Anyway, hopefully I've given you a few things to think about. This business of the Fed artificially lowering interest, leading to people pigging out on debt could lead to horrible consequences via any of a number of paths.
This is a market distortion at least comparable to to the distortions which fed the stock Bubble. Consider that nobody complained about the Fed liquidity in 95-99, either. In retrospect, the artificial liquidity was far, far from harmless. Expecting good long-term things to come from artificial and temporary distortions is a big mistake, imo, pretty much every time.
OT: L, The Cape Cod whales where pilot whales. Unf
Post 41396 by oldCADuser Reply
Our experience here in SoCal...
"In my experience, banks vastly prefer to sell adjustables as it puts the risk on the consumer and tends to be much more profitable."
...15 years ago when we purchased our first home here (we had owned 2 homes in Michigan) the company we went to, Home Savings of American, only wrote ARM's. We got a 30 year amortized, 1 year ARM. What this meant was that the initial monthly payment was based on a 30 year pay-back, but the payment amount was adjusted every 12 months based on the current fed funds rate (actually the 11th District Cost of Funds rate). Note that the actual interest on the loan went up and down each month but the payment remained fixed for 12 months, which meant that you may be gaining or losing ground on the actual pay-off depending on the monthly change in rates. Note that the adjustments each year did NOT try and make up that difference since the bank was limited in the amount that it could raise your payment each year (however, there was no limit on how much they could drop it). To keep you from going into long-term negative amortizment, every 5 years they re-amortized the loan. So at the end of 5 years the loan payment would be adjusted based on the actual outstanding balance amortized over a 25 year period. At 10 years, it would be amortized over a 20 year period, etc.
Anyway, 4 years ago we started a series of extensive remodeling projects and a year later decided to refinance our mortgage and use our enhanced equity to pay the bills and to replenish the savings accounts that we had been using to cover the costs up until that point. Along the way our "bank" got acquired by Washington Mutual and while they had left our existing loan in place, we were informed when we inquired about refinancing that they no longer wrote 1 year ARM's, so we got a 30 year "conventional" (from their point of view) loan which has a fixed interest rate and fixed payment for 5 years, at which time it will be adjusted, up or down, using the prevailing rates at that time. Note that if we do not remove any equity during that transaction there will be no fees or cost to us. So I guess, from the banks point of view, we are all just gambling on what the rates will be, in our case, approximately 24 months from now and if the rates are lower then they were 3 years ago (which they currently are) we will get a FREE interest rate reducing, 25 year refinancing.
Post 41397 by srudek Reply
Oldcad: houses ARE safer than stocks. Right now, certainly, but pretty much always. The existence of the Fed, relentlessly inflating the currency, guarantees that long term even the worst real estate will be a big winner. Even if you just look at the house as a "savings account" which pays you 6% to pay off principal it makes more sense than putting cash in a bank. Plus you can write off the interest. Plus, plus, plus.
It's the short term, which worries me. We have a Fed that is increasingly displaying incompetence and impotence -- horribly distorting the marketplace for real estate. And most people with recent loans are heavily leveraged.
Quoting from your article, "home prices managed to increase at a healthy annualized rate of 7.6 percent in the second quarter, Fannie Mae's sibling Freddie Mac said on Wednesday." This is "healthy"? THIS IS FREAKING INSANE! At 5% down, this translates into MORE than a 100% return per year, for -- what? -- about the 5th straight year? For pretty much EVERYONE who "invests" in a house?
What sort of whackos do we have representing us who think this is "healthy"?
PMCW asked earlier if I was saying that residential real estate has been a "ten bagger" since 1970. I might have been a little high on the simple inflation, but in the markets I am familiar with (west and some east coast), houses which cost approximately $20K in 1970 are now selling for $200K-$300K. Some of that price increase is due to local market popularity; so lets say the increase due to pure currency inflation is 8X (not that I accept currency inflation as "pure", in any sense).
Assuming, basically, everyone leverages 95% (usually VERY safely, given the relentless, deliberate currency inflation/debasement), you're REALLY talking about (20 x 8) a 160 "bagger". Considering tax and other advantages, the rate of return is actually much, much higher.
BTW, that is the right way to measure the rate of return on residential real estate. Some would argue that you can comparably lever stocks, also, to increase the rate of return, but that's false. If you lever stocks, your risks get magnified enormously. If you could get 20:1 leverage on stocks, you'd certainly go bankrupt. I'm continually amazed at the obvious drivel which passes for "truth" regarding stock "investing" -- starting with the fact that non-dividend paying stocks are called "investments" at all. All non-dividend paying stocks should be called "speculations". The most irritating drivel, however, is the statement that "stocks outperform all other investments in the long term". Not even close. Now you know better.
The really cool thing is, the Fed obviously intends to continue the deliberate currency inflation FOREVER. You've got doubts? Do YOU think a plan to deflate houses back to 1972 prices would fly? It would leave most people 8X over-encumbered. As I said, that's the plan -- deliberate inflation forever. Whether that was the plan in 1972, I don't know; but according to history, endless inflation ALWAYS becomes the plan under fiat currency.
This means, that the above rate of return can be expected to go on FOREVER for EVERY piece of property. This is a sure thing. Provided that you believe in The Plan being endlessly sustainable. I've got my doubts, but my doubts won't keep me from levering real estate for long.
In the short term, we are overdue for a major residential correction, and the overall instability / Fed interest rate distortion, makes me nervous that it could become much worse than that. In the long term, load up on real estate -- a "Federally Guaranteed" way to become a millionaire. Forget stocks.
Post 41398 by jeffbas Reply
OCU, I also had a thought on that same point. I am not a banker, but think banks would generally prefer fixed rate mortgages. They package and resell them anyway I believe. If that is generally the case, I would think they would want the loan type that has less foreclosure risk (because the payment is not affected by rising rates).
pmcw, I think it is tough to know what is going on with funds on deposit. People are facing very low deposit rates. For example, I just updated my checking account to Wachovia when First Union was taken over. I have an interest bearing checking account yielding a whopping 0.25% PER YEAR on balances up to about $10,000, and not a lot more for higher balances. Vanguard MM accounts yield about 1.75%. People do not know what to do with their money to get a reasonable return, which makes funds more volatile in my opinion. Of course, I now have a child in college - and the college has an account for all my cash :-)
OT: Iran, according to the New York Times.
OT: Ikorrow !
OT: to the ones who still maintain that Bush's Ene
GOLD SPOT MARKET IS Change +$1.40 High $316.10/oz
OT kduff, thanks, an awful shame. They even freed
Post 41404 by srudek Reply
re options. I really deserve a whacking for continuing to post on this topic:-Q. Maybe the options issue irritates me so much because it seems so obvious to me -- sort of like the developing stock bubble -- but not to most. That makes me question if I'm the one who is out of touch with reality.
Anyway, about a week ago I read that CEO compensation during the 90s rose 40 TIMES faster than the pay of average workers. 40 TIMES? The end argument for those opposed to stopping stock options seems to be: the "brilliant" CEOs will refuse to work if they aren't given a shot at becoming billionaires. Or they won't work as hard. This is one of those arguments which, I think, has been well tested in the real world (like Communism) and is, clearly, false. First, does anyone really think that prior to 1990 CEOs didn't work at least as hard as they did after? Come off it. Second, what do you really think these brilliant CEOs would do if they couldn't get stock options worth hundreds of millions of dollars? Quit? And do WHAT? Get a job at the post office? No. MAYBE some fo them would start their own business and attempt to RETAIN complete ownership (as is their right). That's fine. But most of them would do what they already do: they want to be management leaders of an established company, usually in the same field they are already employed in. Ultimately, they will work for what they are able to get. Period. If you make it easy for them to get billions, they will ask for that. If everyone laughs at them, they will work for a thousand times less. Just as hard. If they don't work just as hard, fire them.
Another poor excuse for keeping options I've read is that if we take away options, dishonest CEOs will just find another way to steal. Maybe. But they will be a lot easier to catch -- options make theivery easy; heck, they actually make it "legal". According to this logic, you shouldn't outlaw drinking alcohol while driving, because the alcoholics will just drink before they drive or switch to smoking grass. Options CORRUPT managers who would otherwise stay basically honest. I won't say that accounts for all the corruption, but that is exactly how temptation leads to greater and greater corruption.
Once options end for, effectively, ALL employees, they will cease to be a factor in a manager leaving one job for another. End of problem.
Post 41405 by spirare Reply
ot. US Navy Ships Heavy Armor to Gulf-Shipping Sources
September 04, 2002 06:34 AM ET
By Stefano Ambrogi
LONDON (Reuters) - The U.S. Navy has booked a
large ship to carry tanks and heavy armor to the
Gulf this month as the Pentagon presses home a
case for ousting Iraqi President Saddam Hussein,
shipping sources said on Wednesday.
The U.S. Military Sealift Command chartered a U.S.
flagged general cargo ship to sail from the
southeast U.S. coast to an unspecified Middle
Eastern port in the Gulf for discharge in late
September, they said.
This is the third shipment of arms and military
hardware in a month using commercial shipping, which military analysts say shows the U.S. Navy has
probably exhausted the capacity of its own fleet and resorted to the open market.
The formal tender document, seen by Reuters, shows the ship will carry 67 separate pieces of "track
general cargo, containerized cargo and rolling stock" measuring 56,000 square feet, slightly larger than a
Military experts say the dimensions and weight of the pieces specified in the document match almost
exactly those of the standard U.S. Abrams battle tank.
"This ship can easily carry tanks," said a shipping industry source familiar with the U.S. military
Military analysts say that the movement of heavy armor from the U.S. southeast coast to the Gulf
mirrors similar movements ahead of the 1991 Gulf War and is a key signal that the superpower is
building up fire power in the region ahead of a possible military strike.
In mid-August Reuters reported that the Navy booked a large ship to carry helicopters, ammunition and
assorted "rolling stock" to the Red Sea.
The story was initially denied by the U.S. Navy, but a Military Sealift Command spokeswoman later
retracted the denial when confronted with documentary evidence.
The Pentagon has said the shipments of military hardware in August were to support exercises in Jordan
that have been planned for two years.
Shipping sources doubted it.
"Why jump into the commercial market in August when you knew the exercises were planned -- it just
doesn't make sense," one shipping source said.
President Bush was set to meet congressional leaders on Wednesday to discuss the case for
OT: PDowd, That is unfortunate. I didn't realize t
Post 41407 by lkorrow Reply
News on CALVF
TORONTO, Sep 4, 2002 (BUSINESS WIRE) -- Caledonia Mining Corporation ("Caledonia") of Toronto (CALVF, Trade)(CAL.TO) announced today that Stefan Hayden, Chairman, President and CEO would make a presentation to The Richmond Club's membership of brokers, fund managers, analysts and members of the media at The National Club, on Bay Street, in Toronto on 5 September 2002.
The presentation will be videotaped and synchronized with a PowerPoint presentation, which will then be digitized for transmission to Caledonia's shareholders and 4,250 members of The Richmond Club. A link to the presentation will be available on Caledonia's website and on the Caledonia Mining Corporation profile page on The Richmond Club website. Caledonia has recently been selected by The Richmond Club to be showcased to an audience of 625,000 investors through its broker/ analyst luncheon and exposure to institutional investors and national media.
OT: ljpit, GWB's energy policy, per Cheney's recom
OT: And this...
OT: Yes, but it will go a long way...
OT: OCU, a good point. I wonder if Rudi Gulliani w
OT: Somebody better check to see if there has been
Post 41414 by spirare Reply
Caledonia Mining Corporation President And CEO Addresses
The Richmond Club Broker Luncheon Event
TORONTO, Sep 4, 2002 (BUSINESS WIRE) --
Caledonia Mining Corporation
("Caledonia") of Toronto (OTC BB: CALVF)(TSX:CAL.TO) announced today that
Stefan Hayden, Chairman, President and CEO
would make a presentation to The Richmond
Club's membership of brokers, fund managers, analysts and members of the media
The National Club,
on Bay Street, in Toronto on 5 September 2002.
The presentation will be videotaped and synchronized with a PowerPoint
presentation, which will then be digitized for transmission to Caledonia's
shareholders and 4,250 members of The Richmond Club.
A link to the presentation
will be available on Caledonia's website and on
the Caledonia Mining Corporation
profile page on The Richmond Club website.
Caledonia has recently been selected
by The Richmond Club to be showcased to an audience of
625,000 investors through its broker / analyst
luncheon and exposure to institutional investors
and national media.
About Caledonia Mining Corporation:
Caledonia's corporate philosophy is to
identify mineral properties and projects early in their development cycle, and
then add value by developing, and/or operating and/or disposing of the asset, in
whole or in part, at the most opportune time thereby adding shareholder value.
Caledonia's predominant focus is on its Canadian,
Zambian and South African properties,
a number of which are operated in terms of joint ventures with major mining companies.
Caledonia is virtually debt free and has a portfolio of
carefully selected and exciting precious metals,
diamond and base metal properties.
About The Richmond Club: The Richmond Club
is a media portal to 2.2 million investors through TV,
Radio, Magazine, Newsletter and broker luncheon events.
It has a membership of over 4,250 brokers, fund
managers, analysts and members of the media in Canada,
USA and UK.
The Richmond Club selects and showcases companies with good management and an excellent prospect of outperforming the market in the next 12-18 months.
Further information regarding Caledonia's exploration activities and operations along with its latest financials may be found on
the Corporation's website
Caledonia Mining Corporation, South Africa
S. E. Hayden, 011-27-11/ 447-2499
011-27-11/ 447-2554 (FAX)
Caledonia Mining Corporation, Canada
James Johnstone, 905/607-7543
Caledonia Mining Corporation, Canada
Chris Harvey, 905/607-7543
The Richmond Club/ The Richmond Club Report
Sufia Lodhi, 416/644-0644
SOUTH AFRICA INTERNATIONAL CANADA AFRICA/MIDDLE EAST
INDUSTRY KEYWORD: MINING/METALS
+ + + + +
CALVF Risning from oversold conditions - bullish
Current Price of Gold
Interview With: S.E. Hayden
President and CEO
Click here if you don't hear audio...
Imo. TIA. Pass It Along>>>>>>>>>>>
(Voluntary Disclosure: Position- Long; ST Rating- Strong Buy; LT Rating- Strong Buy)
Post 41415 by pmcw Reply
Intersil Affirms Its Third Quarter 2002 Revenue and Earnings Guidance
Company Expects Another Solid Quarter
Wednesday September 4, 5:02 pm ET
IRVINE, Calif.--(BUSINESS WIRE)--Sept. 4, 2002--Intersil Corporation (Nasdaq:ISIL - News), a world leader in the design and manufacture of high performance analog and wireless networking solutions, announced today that it is affirming its revenue and earnings guidance for the third quarter of 2002.
At the SG Cowen conference in Boston, Intersil's Chief Financial Officer, Dan Heneghan said, "We are having another solid quarter. Previously, we guided for 6 to 8 percent sequential revenue growth in the September quarter, and it now looks like we will achieve 8 percent growth. My bet (reaffirmed today with yet another buy) is 8% MINIMUM! Our Power Management and Wireless Networking product groups are driving the majority of the growth this quarter. As our costs are also in line with previous expectations, we anticipate meeting our adjusted earnings per share goal of $0.18." Intersil expects to report its third quarter financial results on October 23, 2002.
Intersil + Elantec Means More for Our Customers
Intersil Corporation is a global semiconductor leader in the design and manufacture of high performance analog and wireless networking solutions. The acquisition of Elantec Semiconductor, Inc., expanded Intersil's product portfolios to address four fast growing markets - flat panel displays, optical storage (CD and DVD recordable), power management, and wireless networking. Intersil brings added customer value in providing complete silicon, software and reference design solutions to new products that enhance the computing experience for people wherever they live, work or travel. For more information about Intersil or to find out how to become a member of our winning team, visit the company's web site and career page at www.intersil.com
OT: Good point, but...
OT: OCU: Timing of Iraq
Post 41418 by oldCADuser Reply
Here's a rather interesting development for all you "chip-heads" out there. Anyone got an opinion as to whether this will really have an impact on the PC marketplace or not?
Computing On The Cheap
Arik Hesseldahl, 09.04.02, 10:00 AM ET
NEW YORK - A few years back, there was a craze surrounding cheap PCs. Manufacturers slashed their prices to previously unheard of levels--and consumers responded, buying almost any package of features and pricing that came to market.
Now the PC industry is looking to inspire consumers again. In some quarters, they're offering expensive, feature-heavy machines aimed at people with money to spend and a serious lust for computing power.
But there's new life at the low end and, oddly, it's likely to attract a higher-end buyer than initially expected.
Microtel Computer Systems, a relative unknown in the PC industry, is selling a PC it calls the SYSMAR 710. Its features are notable not for how impressively powerful they are but for how little they cost.
Instead of a Pentium 4 processor chip from Intel or an Athlon XP from Advanced Micro Devices, the machine has a chip from a vendor you may have never heard of. It's an 800-megahertz C3 processor from VIA Technologies, a Taiwanese company that first got into the PC processor business in 1999.
Before that year, VIA was best known as a producer of PC chipsets, which is a collection of chips that helps the main processor connect with the PC's main memory and other systems. When National Semiconductor decided to bail out of the PC processor business after its Cyrix PC processor failed to gain much traction, VIA swooped in and bought it.
Later that year another PC processor vendor, IDT, decided that it too wanted to stop fighting Intel and AMD--putting its Centaur chip design unit up for sale, which VIA happily bought. Its purchases of both Cyrix and Centaur amounted to a combined total of $218 million. Its chips have generally been sold to PC vendors in Asia, the occasional white-box PC vendor and elsewhere on the PC industry's fringes.
Microtel's SYSMAR 710 machine is also notable for what one version of the machine doesn't ship with: Windows. Instead of Microsoft Windows XP, the machine runs Lindows, a variant of the Linux operating system that can run a few key Windows programs.
To a certain type of geek, Linux is a magic word. It's often seen as a desktop alternative to Windows, and is steadily gaining favor among users who would rather not bow to the software altar in Redmond, Wash.
But Linux is not for everyone. Nor is Lindows. Forbes reviewer Stephen Manes had little good to say about Lindows in his recent review.
Still, there is a segment of the computing world that will gladly pay $198.86 for a machine running Lindows that they can experiment with. It's available only from Walmart.com, the online retail outlet owned by Wal-Mart.
Interestingly, a similar machine from Microtel running Windows XP Home Edition is selling for $299, while a third comes with Windows XP and a monitor for $399. Though the "cheap PC" fad is over, computing can still be cheap.
For the original item, go to:
OT: pdowd, I didn't need to hear that whales were
OT: OCU, I saw him on ABC a few minutes ago saying
Post 41421 by jeffbas Reply
OCU, I completely share your sentiments on Hatfill. I historically have not been able to vote for a Democrat unless really provoked. However, this administration is getting entirely too authoritarian for my taste.
OT: kduff, here's the story
OT: Hatfill got shafted and it's clear to me why t
Post 41424 by uponroof Reply
Post 41425 by uponroof Reply
However, my sources, who are very good, say we are very, very close, yet again. At these levels, it is probably worth the speculation to re-enter if you exited when the stock went to $3.79(C). The stock has formed a very strong base above $2 for a long time now and barring a drop in the price of gold, I can't see it falling below $2 in the near term.
If KRY does get awarded the Las Cristinas yet again, as we expect, the value to the market could be quite explosive. Las Cristinas 4 & 6 has nearly 15 million ounces of gold and KRY has plans in place to start recovering that gold at under $150/tonne. Quick math says that deposit could be worth $4.5 billion USD, with profit of $2.25 billion USD.
With a current market capitalization of $128 million USD, you can see how something of this size could affect this small cap gold mining company.
Paradigm Trader continues to hold
(replace 3 'a's in link with 'o's)
OK already!...I'm prepared for "quite explosive". Let it happen NOW! I could use another good explosion! Just bought a 1969 1/2 lift off hood Road Runner w/ 440 six pack, hemi 18 spline four speed, and Dana 410 rear. Hoo baby...would like to explode some KRY LC 4 and 6 money into the note I'm holding on this car before my wife figures out what I really spent!