Swashbucklers and phrases like "aye aye mateys" and "jolly rogers" will abound at the University of Wisconsin-Fond du Lac on Friday, Sept. 19, in observance of "International Talk Like a Pirate Day." * The UW-Fond du Lac mentorship program has planned costume and service events throughout the day. * Students will also be reading pirate-themed books to children at the Fond du Lac Boys & Girls Club. * Community members are encouraged to dress up on their own and volunteer on Sept. 19 at various service agencies within Fond du Lac County.
The mentorship program has been serving the community for five years. It partners with Big Brothers/Big Sisters of Fond du Lac County, the Fond du Lac School District and the Woodlands Senior Park.
When a company's stock gets beaten down in the market, its CEO often clamors about how short sellers and unjustifiably negative market sentiment are to blame.
That's not always the case, but on Sept. 17 John Mack may have had a point.
Morgan Stanley, which Mack heads, and Goldman Sachs — the only stand-alone U.S. investment banks left after the collapse of Lehman Brothers and sale of Merrill Lynch — saw their shares plunge by 24% and 14%, respectively. Morgan Stanley and Goldman haven't been without their problems, but they are viewed as the two most conservatively run investment banks — ones that have largely avoided the souring mortgage-related assets that have seized up the global financial system. Both firms reported better-than-expected, but by no means stellar, earnings just the night before.
And yet in the wake of the government's unprecedented take-over of insurance giant AIG, the shares were punished. Mack got in touch with the chairman of the Securities and Exchange Commission and the secretary of the Treasury, and then sent out an e-mail to employees: "It's very clear to me," he wrote, "we're in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down."
September 17 was a fearful day, that's for sure. The $85 billion lifeline the government threw to AIG may have prevented a total meltdown, but the Dow industrials still finished off 449 points for the day. The price of gold shot up by about $80 an ounce and the yield on the 3-month Treasury bill maturing Dec. 18 dropped to 0.04% — from 0.68% the day before. "It's a total flight to quality, which points to the sheer panic that's out there," says S&P Equity Research strategist Alec Young.
In an attempt to bring some stability to markets, the SEC announced a ban on naked short selling, the aggressive practice of betting on a stock's fall without first borrowing shares. But that did nothing to quell widespread speculation about which struggling financial institution would be the next to disappear. British bank Lloyds was in talks to buy beleaguered U.K. mortgage lender HBOS. Washington Mutual, the U.S.'s largest thrift, put itself up for auction, and Wells Fargo and Citigroup might be interested, according to reports. Morgan Stanley appeared to be on the table, too. There were murmurs the investment bank was holding conversations with Charlotte-based bank Wachovia. Chinese conglomerate Citic Group, owner of China Citic Bank, was also said to be sniffing around.
That Morgan Stanley might be up for sale had an element of surprise to it. Analysts were generally pleased with what executives at Morgan Stanley — and Goldman Sachs for that matter — had to say in recent conference calls. Glenn Schorr, a banking analyst at UBS, wrote that both firms have strong capital and liquidity positions; have reduced their exposure to problem assets and have "priced remaining exposures at what we think are reasonable levels"; and "don't have the same concentrations risk issues that the others had."
But some industry experts say the stand-alone investment bank model is no longer working. Investment banks made buckets of money for many years by tapping capital markets and leveraging to the hilt. But with credit drying up, financing activities with deposits — like commercial banks do — appears to be a better strategy. Commercial banks such as Wachovia also have fairly conservative caps on the amount of leverage they use, which affords them greater flexibility during periods of financial-system stress.
There are, of course, defenders of the stand-alone model. On Goldman's conference call, CFO David Viniar dismissed the notion that Goldman would be better off with a deposit base, saying that because of regulatory constraints, only a "small portion" of Goldman's business could be funded that way. "We think it's not about the model. It is about the performance of the company," he said.
But Marc Martos-Vila, a professor of finance at UCLA's Anderson School of Management, says it might also be about the state of financial markets. Mergers and buyouts, he notes, often come in waves. "The first merger tells the market something, and then other companies, to be competitive, try to make a move," he says. First Lehman, then Merrill, then... But does this mean the stand-alone investment bank is no longer viable? "In the short term, it doesn't seem like it is," Martos-Vila says. "But when confidence is restored in the market and they move to another type of risk, who knows?"
The Royal Purple is reporting that Joseph Hummer, a UW-Whitewater freshman from Beloit, was found dead on Monday afternoon in a cemetery near the Whitewater campus. While Hummer's death is still under investigation, an autopsy conducted yesterday pointed to asphyxiation as the initial cause of death.
My thoughts and prayers go out to the family and friends of Mr. Hummer and the entire UW-Whitewater community. A new academic year always brings so much hope and excitement, and it's so sad to learn of this tragic event.
HARPERS FERRY, W.Va. -- It wasn't that long ago that West Virginia was a rather reliable blue dot on your electoral map. Michael Dukakis won here. So did Jimmy Carter -- twice. Bill Clinton was also 2-for-2. But something has changed: Al Gore lost West Virginia by 6 points. John Kerry made it closer, but still lost by 2.5 points. It's on Barack Obama's wish list -- but the long list, not the short list..... Surely there are lots of reasons -- but don't ignore the culture gap that you would find in many other states. It's that gap that could be Obama's biggest obstacle -- in West Virginia, and far beyond.
This is not the flip-side of neighboring Virginia, where demographic changes are making a red state purple.
Fueled by a still-strong union presence, Democrats continue to enjoy a wide registration advantage, though the number of independents here is growing. Democrats hold both US Senate seats in addition to the governor's mansion in West Virginia.
With the state's battered economy, lost manufacturing jobs, and struggling mining industry, this would seem like a prime Democratic opportunity.
What's standing in Obama's way? Well -- Obama lost by 41 points in the primary here -- even though he had the nomination close to his grasps.
SEE THE VIDEO : http://abcnews.go.com/video/playerIndex?id=5829963
The TED spread, which is the spread between T-bill yields and comparable eurodollar rates has jumped to a new high. TED is an acronym for Treasury and EuroDollar. A Spread is just the difference or 'distance' between one thing and another.
Eurodollars are bank deposits denominated in U.S. dollars but held at locations outside of the U.S. Initially, the term only referred to dollar deposits in London but has been expanded to include dollar deposits at any offshore location. The deposits may be held by the foreign branches of U.S. banks or by non-U.S. banks. Eurodollar deposits may be Eurodollar certificates of deposit or simply Eurodollar time deposits.
T bills are US Treasury debt of short duration are considered to be risk free.
TED Spread = Yield on Eurodollar deposits - Yield on T Bills
The TED Spread is the difference between U.S. Treasury bill yields and yields for Euro deposit contracts of the same maturity, generally three months.
The theory is that US dollars held in offshore accounts are not subject to short term market activity and regulations by the Fed. They are a slightly better measure of the short term risk associated with holding dollars that are not US Treasuries.
The TED spread is used as a measure of investor confidence. Remember, for the individual components (T bills and Eurodollar deposits) the higher the yield the higher the perceived risk, the lower the yield the lower the perceived risk.
When the spread is small, investors are not requiring a large amount of additional compensation for the additional risk of deposits. This means the Eurodollar yield is lower, and closer to that of the T Bills.
When the spread is large, investors are demanding a higher yield on Eurodollars as compared to the higher quality of U.S. Treasury bills.
A sudden widening of the TED spread is indicative of a flight to quality and a perception of risk in corporate credit markets.
A rising TED spread at the extreme is thought to foretell a downturn in the U.S. stock market as liquidity is withdrawn from the equity markets. We think this is more of a confirming indication than a bellwether since analysis of the SP after extreme readings using TED alone is mixed. In that sense we would use it much as we would use VIX to indicate a period of high or low volatility and elevated or quiescent risk. Spreads by definition are indicators of risk.
