ignorant

Why the Muni Bond Market Is in Decline

Look at closed end municipal funds that are leveraged. They sell at discounts to net asset value in the range of 20-30 %. So the underlying municipals are market distressed and then discounted again by 20% because the closed end fund is leveraged. Many of the closed end funds are partially funded using auction rate securities. Considering the rate uncertainty of using this funding mechanism perhaps some discount is appropriate but how does 20-30% make sense.


On Dec 15 11:48 PM BondMan wrote:

> I must say I agree with BondGuy, if this were a risk averision story
> we would see money flowing into high grade muncipals which we have
> not. The buyer of last resort, once large institutions, has been
> replaced with the retail investors which cannot bear so much supply.
> Too make matters worse large insititutions refuse to buy munis right
> now with yields so high in fears of devaluing their portfolios.
>
>
> Not giving states and municipalities a piece of the TARP pie makes
> absolutely no sense to me. You wanna increase jobs? Invest in states'
> infrastructure and such.
>
> I am staying away from the stock market but refuse to park my money
> in Treasuries when I can buy tax-free treasuries, pre-re's, which
> are yielding about 170% of treasuries on a nominal basis. On a taxable
> equivalent basis this is about 300%!.....

In Search of the Next Reserve Currency

There will be a new international currency within the next ten years. While many countries in the world suffer a devastating economic decline the U.S. prints money with no immediate penalty to its credit rating or financing cost. The economic community outside the U.S will not tolerate this preferential treatment forever when the result is a disproportinate distribution of the pain outside the U.S. The Asian economic region will be the first to break the dollar monopoly. Common sense and history dictates that any country that runs large balance of payments/ fiscal deficits and has a casino, overleveraged financial system should not function as a reserve currency country.

Country Default Risk

Canada is #1 ahead of all other countries. Canada is ahead of all other countries because the banking system and housing market are in much better shape than other countries. Perhaps someone should inform the author that Canada is a country. My information for Canada credit default swaps comes from the chief economist of TD Securities. Maybe we should follow Canada as a model for our financial regulatory policies.

Chevron's Share Price Looks Most Compelling

Regarding the comment about BP's reserves. BP has reserves in equity accounted entities of 3.9 billion barrels of liquids and 3.8 billion feet cubic feet of natural gas. The equity interests need to be added into the 5.5 and 41.1 to arrive at total reserves. See page 180 and 181 of the 20-F.

Chevron's Share Price Looks Most Compelling

BP's total proved reserves are substantially higher than CVX and the market value of BP is about the same as CVX.

Top Foreign Dividend Stocks Traded in New York

It is not true that XOM is not on the list because they invest most of the income in growth initiatives. They invest most of the income in stock buybacks.

Exxon Shareholders Suffer a Windfall Loss of 13.7%

XOM's share price is declining because production is declining and reserves are not growing. Oil and gas companies are valued based on reserves and production.

Has Exxon Topped?

I agree that XOM's dividend payout should be increased to a competitive level with the other majors. The decline in production ( 8% last quarter) is killing the stock. Investors will pay a premium for energy companies that increase production and reserves. The stock will only recover if XOM is able to start increasing production and reserrves. Buying back stock does nothing to make the exploration business a success.

Wells Fargo Lays Bear Trap on Wall Street

The change in the 120 to 180 write-off period did not change the expense to earninngs. The $265 was charged against earnings although it was not charged against the reserve (balance sheet) as a write-off. I suggest that all the readers of this article read the WFC earnings release to understand this distinction. Either the author of this article does not understand this or is attempting to distort the facts.

I also suggest that readers understand the difference between the terms: charge-off, provision of credit losses (income statement), and allowance for loan losses (balance sheet). WFC hit the income statement with the $265 million in the provision for credit losses expense. It will not charge the $265 million against the reserve until the end of the 180 day period.

Wells Fargo Leaves Much Uncertainty in Wake of Latest Earnings

There is a common misconception in the market that the change in non-performing loans from 120 to180 days distorted earnings. The impact of this change is $265 million and WFC included the hit to earnings for the 120 day period. WFC did not write-off ( charge-off) the $265 against the balance sheet reserve but this has no impact on earnings. When the $265 million is charged off it will hit the reserve (not earnings). This is explained in the earnings release.

If the author is interested in what type of mortgage backed securiities have unrealized losses why doesn't he ask WFC.

Was That a Bottom? Should We Even Care?

I though it was pigs get rich and hogs get slaughtered. In any event, CNBC and the rest of the financial media would not be in business if they did not pretend that their guests could predict the future. Well let's see, to predict the future we need to predict terrorist events, energy prices, financial bubbles, political events, climate changes- on and on for the rest of the one million variables in the equation. My only prediction is that mankind will somehow muddle through to solve problems and make some small advances.

Exxon's Hoard

The statement that XOM will not invest unless the rate of return on capital is 35% is incorrect. XOM's internal hurdle rate on capital projects is no more than 15%. The 35% return on capital is the current rate of return on previous capital investments which may have been made many years ago.

Energy Stocks: Which Horse To Ride for Income?

Good Call on BP. At around $62 share BP's market cap was around 200 billion while XOM's market cap was $450 Billion. BP's proven reserves are about 90% of XOM's so on a reserve basis BP looked cheap. XOM should be given some additional value for larger refinery and chemical capacity but no where near the difference in market value between the two companies. BP also had serious management problems which are being corrected

Another Home Run for Leukadia?

LUK's investment in Fortesque is worth far more than $1.8 billion. LUK is entitled to a 4% fee on the iron ore sold by Fort. from certain iron ore deposits. Fort. has set up a liability on its balance sheet for the present value of this obligation ( about $2 billion). This makes LUK's investment worth about $4.0 billion.

How Much Are Goldman's Level 3 Assets Worth?

The article and reader comments reflect the problem with the financial system. We don't know how Level 3 assets are valued since there is no disclosure of the assumptions used in the valuation models. Even if this information was disclosed, I doubt if most investors could make a sound judgment since the models are based on complex mathematical formulas that may not reflect current market conditions. My best position is to avoid these stocks because I have no way of making a judgment about what these assets are worth. If you have confidence in the character of the people that run these firms then you may choose to invest.