Andrew

Sprint's Upcoming Phone Lineup: It Has to Do Better than That

Sprint, under Hesse, is definitely turning the ship around. The problem is that the wireless industry is deteriorating as a whole, which limits Sprint

Citigroup: Hoping for a Thaw

Essentially C upgraded the $12B from junk to BB by selling directly to the top tier PE firms. Of course, they're paying a hefty price to reposition themselves???

freakdog, I don't think the LBO debt or new IOU's from the PE's would qualify at the Fed discount window, at least I hope not.

Could Citi's Deal Signal a Turnaround?

It's probably true that C is financing the deal for the PE's to sell back the PE's own LBO debt. As many have done so here already, one can argue whether this is just more financial engineering to dress up City's balance sheet, and how much they had to pay for the privilege.

The flip side of the argument is that the PE's aren't obligated to do anything they don't want. They have now willingly taken on direct risk to these loans, where as the previous LBO loans were tied to the buyout with no recourse to the PE's.

To me, it seems like C paid 15-20% of face value (including loss of future interest) to upgrade from junk bond to BB on the $12B debt. Is it a smart deal for C?? We will have to see what the actual terms and which bonds? If PE's are just cherry picking off the top, then C will really be exposed with the LBO debt remaining in their portfolio.

Schering-Plough: The Vytorin-Zetia Backstory

Thanks Mike...really like your concise reporting on CNBC.

With regard to "the last resort" comment from ACC, are the panelist refering to the cost of Vytorin vs. other statins or treatments? They compared the plaque removal of Vytorin vs. generic statin. But, what about Lipitor or Crestor????

The alternative would be that the ACC panelist were actually challenging the current NCEP dislipidemia guidelines....lower LDL = better.

This controversy illustrates a couple of things to me:

- medicine is still some art and not all science.
- With pharmas' contracting p/e and increasing stock volatility, maybe they should be owned by private shareholder who would have longer term visions. There seem to be a conflict of duty between providing the best drugs and managing a stock for the short term.

Haven't We Heard this Market Song Before?

TMA: Although the senior debt has doubled in value since the new financing went through, it's still probably the better investment over common and preferred. I sold my preferred and am looking elsewhere.

BSC: ARE you kidding on increasing valuation from here!!!
--JPM has already started absorbing the BSC mgmt team and letting go some employees. BTW, the BSC people that JPM is hiring get more JPM stocks to cover for the loss in value of their BSC stocks (not to mention a job when Wall Street is chopping everywhere).
-- Who do you think bought Jimmy Cayne's shares??? JPM owns over 42% of the outstanding stocks now. In the case of any future litigation, you don't need to hold the stock to qualify because the event has already happened.

-- Most of BSC's institutional clients, namely the hedge funds, have left. It's sad in a way.....BSC's coveted hedge fund clients turning against their own primary broker by pulling their money while shorting BSC's stock. May not be collusion, but definitely a lesson for other investment banks.

As for the argument about BSC's book value, my analogy is this:

A guy who makes $100,000/yr buys a $2,000,000 with $20,000 down payment (alarms bell should be ringing). The house is fantastic and in a great neighborhood. The guy loses his job, and misses payment on his house for a few months. The house may still be worth $2,000,000, but how much of it belongs to the guy? The answer is less than zero, because even if he sells his house for $2,000,000, he doesn't have enough equity to pay for the selling costs. His best option is to take the $1,000 cash from the mortgage holder and vacate the home without trashing it.

The cruel joke here is the eery similarity between Wall Street and Main Street with regard of debt leverage.....one of the basic lessons in Econ 101.

Money Center Banks - The Greater Fool

Good comments. To me, it's still too early to tell how deep the ultimate value of a lot of these debt securities are worth. Much of it still depend on overall housing value. If home prices continue to drop then expect another step down on these security values due to higher default risks. At this point though, its safe to say that CDO's based on 2nd and 3rd mortgages are basically worthless.

At least two other things would worry me if I was a bank (money center and shadow):

- as Mr. Hill stated, all the buyers have left the market. U.S. debt security market has suffered significant and wide spread damage. Even the most cash rich investors such as Chinese and Middle Eastern oil countries will not buy these securities, and they will take much lower stakes in future secuities created (i.e. a shift in total demand). In turn this will hurt the ability of banks to generate new credit, which will then hinder the recovery of the real estate market. Remember, most people buy based on net payments not overall price. Next to the broad exportation of these securities, the lead-paint toys that China has exported to the U.S. pales in comparison.

- Threat of inflation: most of these 04-07 vintage securities are at pretty low interest because there was very little risk premium built in (most were sold as AAA securities). As the reality of how much inflation U.S. is facing due to commodity inflation and weakening $ due to stretched balance sheets (both government and consumers) hits the market, the entire yield curve is going to shift upwards. This is going to shrink the nominal value of the 04-07 vintaged securities, which is a double whammy from write-down of their intrinsic values.

I guess this is why analysts are saying C and MER need to raise more capital.

Merck, Schering-Plough: Confessions of a Vytorin Patient

Learned a lot from the discussions above. Most importantly, I now know why I always have to wait 10-20 minutes in the examination rooms to see the Dr..........because he/she is posting on investment websites during office hours! LOL!

Just for reference, can anyone give treatment cost for a branded monotherapy statin, such as Lipitor? (actual question)

Thornburg Mortgage Must Sell Its Soul to Stay Afloat

If one is really believe TMA as a going concern and good operator, then you may want to take a look at their callable sr. debt, which is $.39 on the dollar with 8% yield.

The question: is TMA a sinking ship even with new capital?

Thornburg Mortgage Must Sell Its Soul to Stay Afloat

if anyone is interested in new investments in TMA, then they should look at NLY.....much less distressed.

TMA i believe will survive as an entity, but investing in it is kind of like living along the Gulf Coast.....don't live in the basement apartment.

Sunyata, I see your point now.

Thornburg Mortgage Must Sell Its Soul to Stay Afloat

I don't believe reverse stock splits or buybacks will increase the value to the common stock any time soon.

TMA's earnings available to common share holders will be limited for years (if at all) because:
- They have to pay 12% for the $1B, which will eat into the mortgages they are buying/generating.
- They will no longer be able to leverage 20x in the post credit bubble world, which again eats into the future growth potential of mortgage reits.

The only way I see current shareholders make out is if the value of current assets increase in value. With the housing market still going down, i don't see this happening for at least a year.

full disclosure: I am long tma preferred.

So Much for That Mortgage REIT Bull Market

Thanks for sharing Mark, I also hold NLY and bought some TMA.pr.f last week at the "bargain price" of $7.

The only thing that will help mortgage reit unit prices now is government intervention.....Fed start buying mortgages.

Beyond the short term panic, these reits will face a tough recovery over the next few years because of a credit contraction in US financial system.

Despite of recent criticism of the Fed, I believe it is doing the right thing for long term economic growth by deflating the credit bubble. I believe they will: let the weakest players die; severely wound the average, and scar the strongest (at least enough to keep them in check for another 10 yrs). However, I do believe we are getting close to the end of the lesson at this point. Afterall, this is an election year. I believe NLY will be a survivor, although I'm not sure if it will break $20 any time soon. I'm going to be content in collecting my 5%ish yield. As for TMA, we'll find out over the next couple of weeks whether they are one of the survivors in the financial jungle or merely one of the weak.

Hey, here's a hot tip......try getting into commodities, oil and gold.....it's really working well.......no way will they go down from here because they are finite resources.

What Do Brittany Spears, Snow White and MBIA Have in Common?

Why do you assume Ambac will write less insurance in the next 5 years? It seems like to me that monoline insurance will continue to grow, once we get past current short term freeze because:

1. Global economic growth will mean greater participation in all financial markets including debt instruments. Greater number of participants will mean greater volatility, which increases demand for insurance hedging.

2. With recent central banks' moves to increase the backing on global credit liquidity, sub-prime and derivative defaults will slow down in absolute terms or at least be pushed back. If so, this makes your analysis overly aggressive.

3. Moody's confirmation of Ambac's AAA rating with stable outlook will ease potential customers' concerns (at least for Ambac).

Although the providers of monoline insurance may change and the industry may consolidate from current problems, the monoline business will only grow with the global economy.

BlueStar: What’s in a Name? Probably a Hint

Correlating an actual stock to a movie may be humorous but not really useful for anyone.

Maybe a more substantive piece with Bluestar's business profile would be more useful.

During Stormy Days For Apple, Remember The Fundamentals

Apple's fundamental performance is going to be dependent on how well it can continue to introduce new products or versions of produts. As a luxury consumer electronics brand, apple need to continue to satisfy the top 10-15% of the highest income households (11.5MM-18MM households respectively).

The biggest risk to Apple's growth is maintaining talent and keeping them motivated. The execution of Apple's product development and marketing strategies have been unparalleled for the past 5 years, and the task only becomes more challenging as competition catches on.

Having said that, Apple's pricing power has become as strong as it's brand. Their margins are 2 to 3 times greater than competitors.

Apple stocks can rebound to all time highs by Christmas if:
- 1mm iphone sales in US by end of q3 (ahead of aapl schedule, but lower than crazy expectations)
-initiate sales in europe with good reception and buzz
-USD continues to be weak against Euro ($1.35 usd/Euro or higher)
-no global financial crisis.

The ramp up of iphone sales is critical to Apples future, as ipod sales are surely going to start declining by next year at the latest. While amortizing iphone sales over 2 yrs will be beneficial in leveling out earnings in the longer term, it may mean a slowdown in revenue growth next year.

Market Observations On A Difficult Day

Very insightful re-cap.
I believe hedge funds aren't the only ones selling. I'm noticing sell off in widely held, dividend paying stocks as well (i.e. big pharma, energy). I believe income funds and insurance companies are getting ready to buy debt on the cheap.

Anyway, this can be a good opportunity for invstors with strong cash position.

Financial institions and hedge funds that want to qualify for liquidity bail outs by the Fed should make all mgmt (director level on up) give back bonuses from the past 3 years. The thought that "professionals" have made their money and left investors to hold the bag is revolting.