1. Strategies for investors facing …. JON D. MARKMAN COLUMNIST, MSN MONEY ADVISOR, TRADERS ADVANTAGE & STRATEGIC ADVANTAGE
2. “ This is the most difficult environment we have ever faced.” -- Robert Hull, GMAC’s chief financial officer.
3. Bank loans are the most senior level of companies’ capital structure, above bonds, creditors, commercial paper and equity. This chart implies ZERO equity values for the companies involved. It implies many bankruptcies and much bondholder distress ahead. “ The popular perception in the media is that credit has thawed. We wish that the people who write this would consult this chart first. -- Brian Reynolds, WJB Capital
4. Traditional money market funds sank into dire straits after Lehman bankruptcy. They fund commercial paper, so that’s a problem. Money still flowing strongly into Treasury money market funds despite government guarantee. Hard to fund growth companies at time of total risk aversion . “ Inflows into Treasury money market funds, after all the government guarantees, are sickening .” -- Brian Reynolds, WJB Capital
5. You’ve heard that commercial paper market is “thawing” out and improving. But is that really true? Last week, $50B of CP sold; this week, $100B CP sold. But to whom? The Fed bought $99B last week and $145B this week. So Fed now owns 15% of CP market and EVERYONE ELSE IS A SELLER! Fed purchases are propping up the market, but now it must increase its commitment every week until buyers return. GM, a gigantic CP issuer, reported massive loss today. In October 1929, GM leader Alfred Sloan said “the end of expansion is at hand.”
6.
7.
8. U.S. has had 46 recessions since 1790 – 1 per president. Of the 35 recessions until 1930, half were depressions. Most depressions are associated with financial crises. Longest depression was 1815-1821 following eruption of Mt. Tambora. Ash killed crops worldwide; tsunamis, earthquakes, acid rain caused famine & migration.
9.
10.
11.
12.
13.
14. Credit is available for cars, but it’s more expensive and there’s less demand.
15. Midwest state tax official: “Retail sales receipts aren’t stabilizing – they’re picking up speed on the down slope.”
16.
17.
18. Brazil, Russia, India, China down combined 67% from May through October amid leverage crash.