Discussion Topic for 10/17/2011 (Mon)

As we do every Monday, Wednesday, and Friday mornings at 7:30AM, today we discussed the following articles:

December Deadline Won't Mark End of US Debt Fight
http://www.cnbc.com/id/44925287 

Volcker Rule Divides Regulators
http://dealbook.nytimes.com/2011/10/16/volcker-rule-divides-regulators/ 

For both of the above articles we will discuss the implications of these actions on the monetary system in the global economy and how it will impact the unemployment situation.

Discussion Topic for 10/14/2011 (Fri)

As we do every Monday, Wednesday, and Friday mornings at 7:30AM, on the 14th of October we discussed the following articles:


Occupy Wall Street (Wall St. Protests, 2011)

http://topics.nytimes.com/top/reference/timestopics/organizations/o/occupy_wall_street/index.html?inline=nyt-org


Why Occupy Wall Street Doesn’t Have A List of Demands
http://www.cnbc.com/id/44862763
 “I don’t think we should issue a list of demands at all. That’s not what this is about,” “It’s about creating a new kind of community, of showing people a new way of relating to one another.” 
“We’re never going away.”
“What do they really want?” your opinions. 
 “How long will this go on?” your opinions.
What do you think of the answers given in this article?
What is your opinion/attitude regarding “Occupy Wall Street” as a whole?


JPMorgan Chase's Earnings Decline Slightly In Third Quarter
 http://www.huffingtonpost.com/2011/10/13/jp-morgan-chases-q3-earninings_n_1008543.html


JPMorgan Earnings: Dire Signs for Morgan Stanley and Goldman Sachs
http://www.cnbc.com/id/44888984
What is your opinion/comment about the JPMorgan third-quarter results?
Do you agree that Wall Street investment banking is in deep trouble now? If yes, what cause(s) the deep trouble for investment banking? If not, why?


Fitch Downgrades UBS, Puts BofA, Others on Watch
http://www.cnbc.com/id/44895274
Fitch Ratings downgraded UBS on Thursday and placed seven other U.S. and European banks on credit watch negative, citing challenges in the economy and financial markets, as well as the impact of new regulations.
Any comments/opinions/projections?






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Lorena Li

Morning Call Topic - Oct. 12, 2011

The following is the topic which we will be discussing on October 12, 2011 at 7:30AM:


What US Stocks Follow More Than Anything Else
http://www.cnbc.com/id/44863504

US Investors Can't Escape Europe's Prolonged Debt Crisis
http://www.cnbc.com/id/44817479/


Q1
“Right now, the S&P 500 Index, the benchmark for U.S. stocks, is closely tied to movements in the euro, underscoring the need for a sweeping recapitalization of European banks—and the latest sign that every twist and turn in the crisis is dominating the markets.”

“It seems that every time some incremental piece of news comes out of the crisis—be it positive or negative—it creates a cascading level of reaction that has made investing in US markets a death trap for investors who have anything resembling a long-term horizon.”

Obviously, currently the U.S. market is almost dominated by the news from Europe, or we may say that U.S. investing climate is substantially affected by Europe. What is your opinion/comment with this phenomenon? Do you think if this situation is normal for a mature economy like the U.S.?

Q2
“Ironically, many market advisors are telling clients to ignore the daily gyrations and stick with a long-term view. But when that horizon is so blurred by European debt clouds, the strategy is a hard sell.”

Do you agree with this statement? Do you think even a long-horizon investment strategy would not work this time? Why? Why not?


Q3
“So even if the U.S. economy does avoid recession—Karl foresees a "very mild recession" while Flam says a stalemate in Europe likely will cause a recession here—it may not matter anyway if Europe isn't fixed.”

Do you agree?


Q4
"The U.S. economy is especially vulnerable to adverse events in Europe and China," says Steve Blitz, senior economist at ITG Investment Research.

Why is the U.S. economy so vulnerable to events overseas on earth?





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Lorena LI

Morning Call Topic - Oct. 10, 2011

Economy Adds Jobs, but Not Enough

Employers Hired 103,000 Workers in September, Tamping Recession Fears; Unemployment Still 9.1%
http://online.wsj.com/article/SB10001424052970203388804576616623595067228.html?mod=ITP_pageone_0

Q1  "This downturn's unique in terms of its severity, but when you look at the pattern of adding jobs back it looks a lot like the 2001 cycle," said Paul Ballew, chief economist at insurer Nationwide.
Why does Paul Ballew think the pattern look a lot like 2001 cycle? Do you agree with this statement?

Q2 In retrospect, what were industries behind the pattern of job creation in the past decades (1970s-2000s)? What kinds of Jobs do you think will fuel the next expansion?

IMF Plans New Line of Credit to Stem Crisis

The International Monetary Fund is crafting a proposal to offer new short-term credit lines to governments to prevent the spread of global financial crises, senior IMF and finance officials say.
http://online.wsj.com/article/SB10001424052970203388804576617312060188784.html
Q1 The IMF has been bouncing around the idea for a number of months. What are the primary things designed in the IMF plans to prevent the spread of global financial crises? How is it supposed to help stem crisis? Do you think if it is helpful?

Q2 In a report Friday, Moody's said European banks needed to reduce their reliance on wholesale funding. Banks in the euro area depend on average for almost half of their funding from often-skittish wholesale markets, whereas U.S. banks on average have close to 70% funding provided by more stable retail depositors.


What is wholesale funding? Compare wholesale funding with funding from retail depositors.




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Lorena Li

Dr. Ken Yook Becoms Advisor to Equity Analyst Team

We are excited to have Dr. Ken Yook become the Advisor of the Equity Analyst Team.  Dr. Yook has been with the Johns Hopkins Carey Business School since 1999 where he teaches Financial Modeling and Advanced Corporate Finance.  Under his supervision the Equity Analyst Team will continue to build upon the success which we have achieved in the past year.

Dr. Ken Yook BIO

Morning Call Topic - Oct. 7, 2011

Lorena has been leading the morning calls this semester and has done a phenomenal job with picking the various topic and structuring the calls.  The following is the topic which we will be discussing on October 7th, 2011 at 7:30AM:

Apple shares mixed following Steve Jobs death

Strong fundamentals, low valuation help offset long-term concerns

http://www.marketwatch.com/story/apple-shares-down-slightly-on-loss-of-steve-jobs-2011-10-06?link=MW_story_insert

Q1

Some analysts think Apple’s shares may see some near-term pressure as “Cook gains confidence from investors,” and recommend buying the shares on any weakness, as they “continue to believe that Apple is positioned to outperform in this tough macroeconomic environment with its defendable strategic and structural advantages and its vertical integration.”

Do you agree? Why or why not?

U.S. stocks rise on Europe and claims data

http://www.marketwatch.com/story/us-stocks-mainly-off-on-european-worries-2011-10-06?link=MW_story_popular

Q2

What is the story behind Thursday’s rally? (a summary?) Any opinions/comments?

Goldman: Recession Chance 40% in 2012, Jobless Rate to 9.5%

http://www.cnbc.com/id/44770354/

Q3

Goldman Sachs economists forecasts include:

·      The US has 40% chance to step in a recession chances

·      The jobless rate is likely to surge to the mid-9 percent range in 2012

·      Three pressures emanating from the euro zone—exports, financial conditions and credit availability—will hit the U.S.

·      The euro zone also could enter recession or be close to it, while emerging markets should experience growth next year.

Do you agree? Why or why not? Opinions/comments?

Morning Call Topic - Market Nears Bear Territory

Market Nears Bear Territory

U.S. Stocks Down Almost 17% Since April High on Europe, Economic Concerns

 

http://online.wsj.com/article/SB10001424052970204524604576609354170378860.html?mod=ITP_pageone_0&_nocache=1317772668075&mg=com-wsj

Q1. "Monday's declines cap a two-month period of frayed nerves and damaged confidence in the investment community. On the New York Stock Exchange, 837 stocks hit 52-week lows, as did 643 stocks on the Nasdaq Stock Market."

What caused such a deep and broad decline in the markets on Monday?

Q2. But why did stocks finish with surprise bounce on Tuesday? Or say what was the story that made the markets come surging back? Any comments/opinions regarding the drama in the market on Tuesday? (We know the story behinds, but I am expecting your opinions and discussions.)

Q3. FT news: "EU leaders are actively looking for ways recapitalize European banks in a coordinated plan".

Even though markets bounced back because of the news, however, the details of any plan to recapitalize the banks are unknown. In fact, any coordinated measure need approval from national governments, something that the finance ministers meeting today can't promise. Considering the immaturity of any plans to actually go ahead and recapitalize the banks, do you think if the market is overblown? Why? or Why not? Do you think if the news will become just one of rumors about an eurozone solution flying around over the last few weeks? Any projections regarding the markets?

Q4. What is the bear-market territory? And bull-market territory? Do you think if the bear-market territory will be hit sooner or later (within a few months)? Why?