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?

The Surprise Bounce

October 04, 2011 

After the publication of a FT report that "EU leaders are actively looking for ways recapitalize European banks in a coordinated plan," stocks fueled a furious rally in the final trading hour today. It makes the two primary market indies, S&P 500, and Dow Jones Industrial Average, presented a big “W” in their daily-trading chart.

S&P 500

Dow

Although markets bounced back because of the prospect of the new plan, however, the details of any plan to recapitalize the banks are unknown so far. Considering the immaturity of any plans to actually go ahead, I am suspicious of the rationality in market’s reaction today. Will the news regarding the recapitalization plan become just one of rumors about an eurozone solution flying around over the last few weeks? Only time can tell we the truth.

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Lorena Li

Morning Call Topic - New Members Join the Call

Banks Plan New Fees for Using Debit Cards

 

http://online.wsj.com/article/SB10001424052970204138204576600800330404330.html?mod=WSJ_hp_LEFTTopStories

Q1  "The industry says it needs the fees to recoup revenue it will lose because of new government regulations taking effect." What are the related new government regulation? What is the impulse behind the new regulation?

Q2 Why does the Federal Reserve Board charge and increase the swipe fee for debit cards? Even we ignore the influence to the bank industry, it seems this action will discourage customers' spending (especially for those without a credit card), which is obviously not good for economy recovery, isn't it?

Q3 Bank of America has already disclosed on Thursday in a memo that it intends to charge a $5 fee each billing cycle in which a customer uses a debit card to make a purchase next year. And its planned $5 fee is higher than what most other banks are testing or planning to charge. Why did they make this decision? Even though most banks may raise their service fees sooner or later, a higher fee than others may still increase risks of losing customers? In addition, other banks are still testing this fee limited in a few states, but BofA will start to collect the fee nationwide from next year. Any projections of potential influences for its business? Opinions? Comments?

Q4 Several other large banks, including J.P. Morgan Chase & Co., Citi Group, and Wells Fargo & Co., are testing or plan to charge similar fees in some states. What are the potential influences to the bank industry? and the economy?

Ben Brock Joins the Team!

Ben was most recently working for the SEC (U.S. Securities and Exchange Commission) and is currently pursuing the MS in Finance degree from Johns Hopkins.  Ben holds an MBA and MS in Computer Science from Johns Hopkins, MS in Telecommunications and MS in Computer Engineering from Southern Methodist University.

We are excited to have Ben join the team and to help us continue to achieve new goals.