Aidis Zunde

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    • Tue Jul 29th 21:15 PM | Rating: 0 0
      Commented on:
      Time To Look at Valero?
      Rover, you are quite correct -- my crack spread numbers represent the spread on three barrels and so should be divided by three to provide the standard "one barrel" spread. (I should have caught that immediately, just by looking at the amount of the spread!) Therefore, for one barrel, this spread actually runs from $9.41 for September crude to $16.22 for March, before dropping somewhat to $14.18 for August, 2009. Similarly, the refining margin should rise from 7.6% for September to 13.0% for March, then ease back to 11.4% for August. Finally, the profit spread on the cost of goods sold should improve from 7.1% to 11.5%. Thank you for catching that.
      However, most importantly, this recalculation does not impact the trend I have discussed.
      View article »
    • Mon Jan 14th 21:17 PM | Rating: 0 0
      Commented on:
      Book Value Can Be Deceiving for Financials
      In response to the first comment, Manifestor is correct, I was referring primarily to the subprime mortgage resets, which are estimated to peak this year (though quite a few will not reset until 2009). The government-sponsored, but voluntary, "bail out" plan may postpone the bad news on some of these, but that will only be a drop in the bucket (and may only serve to distribute that bad news over a longer timeframe).

      Having said this, some will then argue that all this information should already be priced into the derivative instruments built upon these mortgage loans and, consequently, into the share prices of the firms holding those derivatives. However, if the crisis of recent months has shown us anything, it is that even the "experts" do not have a handle on the full financial impacts of impending defaults.

      This, in turn, will continue to affect overall willingness to extend credit, with all the associated second level effects on the business environment. Though I am not at all predicting the end of the financial world (far from it!), this is enough of a crisis for me.

      Therefore, I agree with the second comment that this has gone beyond subprime; the "bursting" of the housing bubble, coupled with concerns about the quality of other credit sectors, will continue to exert a bearish influence for a while. I agree that the market has further to go before reaching a bottom...

      For more of my perspectives, I encourage you to visit my blog at vestopia.com at your convenience.
      View article »
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