Government Bond Markets Global Outlook Fisher Capital Management Seoul - Conditions in the government bond markets have remained very difficult over the past month, and there have been further falls in some of the minor markets, especially in the euro-zone, because of continuing fears about sovereign debt defaults. The agreement reached by the member countries of the euro-zone to combine with the
IMF to provide any necessary support to enable Greece to refinance its maturing debts and avoid a default has had a poor response in the markets; but at least Greece has been able to make further bond issues; and the gilt edged market has coped fairly well so far with a disappointing Budget statement that has left any real attempt to resolve the serious UK debt problems until after the general election. But the sudden weakness in the world bond markets after a series of disappointing auctions has once again increased the tensions.
Our position remains unchanged; any existing exposure to bonds should be further reduced in favor of US & Euro equities.
Fisher Capital Management Seoul, South Korea - The global economic recovery is developing slowly, and so short-term interest rates
are likely to remain at low levels for a considerable period. It is also possible that
the “fudged” agreement amongst member countries of the euro-zone will provide
an opportunity for the introduction of the necessary austerity measures; and that
a new government will finally begin to address the debt problems in the UK. But
the risks in the situation are still increasing, sovereign debt defaults may still occur,
and the single currency system in the euro-zone may not be sustainable in its present
form. Higher bond yields therefore appear unavoidable; prospects for all the bond
markets are unattractive.
Developments in the bond market over the past month have clearly illustrated the
need for caution. The US economy continues to recover. The Fed has left shortterm
interest rates unchanged, and has indicated that they will remain “at exceptionally
low levels for an extended period”. This tended to enhance the “safe haven” status
of the US equity market for most of the past month, as conditions continued to
deteriorate in other bond markets.
Fisher Capital Management Seoul, South Korea - Most of the available evidence supports the view that the economic recovery is
continuing, but only at a slow pace. The unemployment rate remains close to 10%,
and the housing sector is still depressed, with both new housing starts and sales of
existing homes weakened still further by adverse weather conditions. However
retail sales are holding up fairly well, and manufacturers are beginning to increase
capital expenditures and inventories, and so there is a general expectation that
growth in the first quarter will be around a 2% annualized rate.
Fisher Capital Management Seoul, South Korea - The Fed has confirmed that its buying programmed for mortgage-backed securities
has ended, and that it may be moving slowly towards re-selling some of these
securities; but it seems to be in no hurry, and so both the economic background,
and the position of the central bank, remain broadly supportive.
The situation facing investors in the mainland European bond markets is more
serious. The economic background is improving, with the weaker euro providing
considerable support in export markets, and so the area continues to move out of
recession. But progress is slow, and so the European Central Bank is maintaining
very low short-term interest rates, and providing support. However the massive
fiscal deficits are threatening to overwhelm the bond markets and to lead to sovereign
debt defaults, and so investors have continued to switch from the bonds of the
weaker countries into those of the stronger countries, and have widened the yield
spreads across the markets. The latest Greek bond auctions have received only a
very moderate response, and there is considerable uncertainty whether even the
markets of the stronger countries are adequately discounting the risks in the situation.
Fisher Capital Management Seoul, South Korea - The available evidence on the performance of the euro-zone economy is mixed,
but slightly more encouraging. The weakness in domestic demand is continuing,
and retail sales volumes are disappointing in most member countries; but the
manufacturing sector, especially in Germany, is much more buoyant, with exports
providing most of the momentum. The latest Ifo index of business sentiment in
Germany is sharply higher, and other countries are also sharing in the improvement.
Analysts are therefore forecasting growth around the 0.5% level in the first quarter
of the year.
Tuesday, March 29, 2011
Fisher Capital Management- Financial Market August 2010
Fisher Capital Management- Financial Markets: Sentiment in the financial markets has improved
over the past month. The global economic recovery is continuing,
so far there have been no sovereign debt defaults, and there has
been a modest recovery in the euro. Investors and traders therefore
appear to have concluded that the gloom was overdone.
But there has been evidence of a worsening situation in Spain, and
the decision by the Chinese authorities to adopt a “more flexible”
towards renminbi has also raised some concerns about the growth
prospects for the Chinese economy.
Fisher Capital Management- Equity Markets: All the major equity markets, and the emerging
markets, have improved over the past month. Wall Street has outperformed
markets elsewhere because of some welcome economic
data; there have been strong gains in most of the mainland European
markets as the sovereign debt crisis has appeared to ease; the UK
market has welcomed the measures by the new coalition government
to address the problems of the huge UK fiscal deficit; and the
Japanese market has also moved slightly higher. Corporate results
have been satisfactory; and this has helped to improve sentiment
amongst investors.
Government Bond Markets have had another unusual month. The
sovereign debt crisis might have been expected to lead to a general
weakness in bond markets; but the main effect has been to produce
aggressive switching for the “weaker” markets to the “stronger”
ones, and a further widening of the yield curve.
As a result the major markets are unchanged or only slightly lower
at a time when the “weaker” markets, especially in Southern Europe,
have continued their sharp declines. Slow economic growth and
low short-term interest rates are continuing to provide support.
Currencies: The improvement in sentiment in the markets has led
to a movement of funds out of the “safe havens” of the dollar and
the yen into commodity-related currencies and “riskier” assets.
Both the dollar and the yen are therefore slightly weaker over the
month; and this movement has also eased some of the pressure on
the euro, and allowed it to recover.
Sterling has also improved as the markets have welcomed the
measures introduced by the new UK government to reduce the
fiscal deficit.
Fisher Capital Management- Shrt-Term Interest Rates: There have been no changes in shortterm
interest rates over the past month in the major financial
markets.
Fisher Capital Management- Commodity markets: have produced a mixed performance over the
past month, with some weakness in base metal prices, but strong
gains in the prices of cocoa, coffee, oil and precious metals.
over the past month. The global economic recovery is continuing,
so far there have been no sovereign debt defaults, and there has
been a modest recovery in the euro. Investors and traders therefore
appear to have concluded that the gloom was overdone.
But there has been evidence of a worsening situation in Spain, and
the decision by the Chinese authorities to adopt a “more flexible”
towards renminbi has also raised some concerns about the growth
prospects for the Chinese economy.
Fisher Capital Management- Equity Markets: All the major equity markets, and the emerging
markets, have improved over the past month. Wall Street has outperformed
markets elsewhere because of some welcome economic
data; there have been strong gains in most of the mainland European
markets as the sovereign debt crisis has appeared to ease; the UK
market has welcomed the measures by the new coalition government
to address the problems of the huge UK fiscal deficit; and the
Japanese market has also moved slightly higher. Corporate results
have been satisfactory; and this has helped to improve sentiment
amongst investors.
Government Bond Markets have had another unusual month. The
sovereign debt crisis might have been expected to lead to a general
weakness in bond markets; but the main effect has been to produce
aggressive switching for the “weaker” markets to the “stronger”
ones, and a further widening of the yield curve.
As a result the major markets are unchanged or only slightly lower
at a time when the “weaker” markets, especially in Southern Europe,
have continued their sharp declines. Slow economic growth and
low short-term interest rates are continuing to provide support.
Currencies: The improvement in sentiment in the markets has led
to a movement of funds out of the “safe havens” of the dollar and
the yen into commodity-related currencies and “riskier” assets.
Both the dollar and the yen are therefore slightly weaker over the
month; and this movement has also eased some of the pressure on
the euro, and allowed it to recover.
Sterling has also improved as the markets have welcomed the
measures introduced by the new UK government to reduce the
fiscal deficit.
Fisher Capital Management- Shrt-Term Interest Rates: There have been no changes in shortterm
interest rates over the past month in the major financial
markets.
Fisher Capital Management- Commodity markets: have produced a mixed performance over the
past month, with some weakness in base metal prices, but strong
gains in the prices of cocoa, coffee, oil and precious metals.
Fisher Capital Management: Government Bond Markets Global Outlook Part2
Fisher Capital Management: Government Bond Markets Global Outlook Part 2 - Our position remains unchanged; any existing exposure to bonds should be further reduced in favor of US & Euro equities.
The European Central Bank appears to share this view, although it has warned that the recovery “is likely to remain uneven”, and has kept short-term rates at very low levels. The bond markets have therefore continued to receive considerable support from the economic background and the actions of the central bank.
Fisher Capital Management Seoul, South Korea: However, these factors have been much less important than the fears about the debt problems in Greece and in other weaker members of the euro-zone. After considerable
prevarication, due primarily to strong German opposition to a bail-out; an agreement
has been reached amongst the member countries that, in conjunction with the IMF,
they will provide support for Greece if this becomes necessary to prevent a default
on its sovereign debts.
But the details of the agreement are very vague, and there is certainly no guarantee
that the country can carry out its promises to introduce significant reductions in
spending levels to reduce the size of its debts. The agreement has helped the country
to issue a further ¤5 billion bond; but it was forced to offer an interest rate of 5.9%
on a seven-year bond, 325 basis points above the equivalent German bund, and
that issue has subsequently moved to a substantial discount. Conditions have also
been made worse by the downgrade in Portugal’s credit rating, and so the pressures
on the bond markets are continuing.
Fisher Capital Management Seoul, South Korea: The gilt edged market has coped fairly well so far with the latest weakness in the
bond market, an inadequate response in the latest Budget to the debt problems in
the UK, and a warning from the Fitch rating agency that the government’s timetable
for reducing the fiscal deficit was “frankly too slow”, and that the country’s
credit rating was at risk. The economic recovery remains very slow, and the Bank
of England is holding short-term interest rates close to zero, so the market is
receiving some support; but in all the circumstances it is perhaps surprising that
it has managed to perform so well.
Fisher Capital Management Seoul, South Korea: The economic background in the UK remains depressed, but is slowly improving.
Retail sales bounced back strongly; the public sector continued its recruitment
programmed; and there has been a pickup in activity in both the manufacturing and
service sectors of the economy.
It was not surprising therefore that the Bank of England kept short-term interest
rates unchanged at the latest meeting of its Monetary Policy Committee and even
suggested that it would be prepared to reactivate its quantitative easing programmed
if this proved to be necessary. But this may not be enough to sustain gilt edged
prices at current levels.
Fisher Capital Management Seoul, South Korea: The latest Budget statement is forecasting a slightly lower fiscal deficit of £167 billion in the 2009/10 fiscal year, and a halving of the deficit by 2013/14; but there
is considerable skepticism in the markets about the growth assumptions underlying
the figures, and about the willingness of the politicians to address the real problems
involved in reducing the deficit. If there is no credible plan to achieve this reduction,
the country may well lose its AAA credit rating. Prospects have therefore become
even more uncertain, and a move to higher yield levels seems unavoidable.
Fisher Capital Management Seoul, South Korea: The Japanese bond market is slightly weaker over the past month. It is likely that this year, for the first time, bond issuance may provide greater support for the fiscal
deficit than tax revenues. This has already led to a downgrade on Japanese public
debt by Standard and Poor’s, and with new bond issuance this year estimated to
reach ¥44,300 billion, and to reach ¥55,300 billion by 2013, further downgrades
seem likely. Japanese institutional investors are used to financing massive deficits,
but it seems unlikely that deficits of this size can be adequately financed at present
yield levels. Prospects for the Japanese market therefore remain unattractive
The European Central Bank appears to share this view, although it has warned that the recovery “is likely to remain uneven”, and has kept short-term rates at very low levels. The bond markets have therefore continued to receive considerable support from the economic background and the actions of the central bank.
Fisher Capital Management Seoul, South Korea: However, these factors have been much less important than the fears about the debt problems in Greece and in other weaker members of the euro-zone. After considerable
prevarication, due primarily to strong German opposition to a bail-out; an agreement
has been reached amongst the member countries that, in conjunction with the IMF,
they will provide support for Greece if this becomes necessary to prevent a default
on its sovereign debts.
But the details of the agreement are very vague, and there is certainly no guarantee
that the country can carry out its promises to introduce significant reductions in
spending levels to reduce the size of its debts. The agreement has helped the country
to issue a further ¤5 billion bond; but it was forced to offer an interest rate of 5.9%
on a seven-year bond, 325 basis points above the equivalent German bund, and
that issue has subsequently moved to a substantial discount. Conditions have also
been made worse by the downgrade in Portugal’s credit rating, and so the pressures
on the bond markets are continuing.
Fisher Capital Management Seoul, South Korea: The gilt edged market has coped fairly well so far with the latest weakness in the
bond market, an inadequate response in the latest Budget to the debt problems in
the UK, and a warning from the Fitch rating agency that the government’s timetable
for reducing the fiscal deficit was “frankly too slow”, and that the country’s
credit rating was at risk. The economic recovery remains very slow, and the Bank
of England is holding short-term interest rates close to zero, so the market is
receiving some support; but in all the circumstances it is perhaps surprising that
it has managed to perform so well.
Fisher Capital Management Seoul, South Korea: The economic background in the UK remains depressed, but is slowly improving.
Retail sales bounced back strongly; the public sector continued its recruitment
programmed; and there has been a pickup in activity in both the manufacturing and
service sectors of the economy.
It was not surprising therefore that the Bank of England kept short-term interest
rates unchanged at the latest meeting of its Monetary Policy Committee and even
suggested that it would be prepared to reactivate its quantitative easing programmed
if this proved to be necessary. But this may not be enough to sustain gilt edged
prices at current levels.
Fisher Capital Management Seoul, South Korea: The latest Budget statement is forecasting a slightly lower fiscal deficit of £167 billion in the 2009/10 fiscal year, and a halving of the deficit by 2013/14; but there
is considerable skepticism in the markets about the growth assumptions underlying
the figures, and about the willingness of the politicians to address the real problems
involved in reducing the deficit. If there is no credible plan to achieve this reduction,
the country may well lose its AAA credit rating. Prospects have therefore become
even more uncertain, and a move to higher yield levels seems unavoidable.
Fisher Capital Management Seoul, South Korea: The Japanese bond market is slightly weaker over the past month. It is likely that this year, for the first time, bond issuance may provide greater support for the fiscal
deficit than tax revenues. This has already led to a downgrade on Japanese public
debt by Standard and Poor’s, and with new bond issuance this year estimated to
reach ¥44,300 billion, and to reach ¥55,300 billion by 2013, further downgrades
seem likely. Japanese institutional investors are used to financing massive deficits,
but it seems unlikely that deficits of this size can be adequately financed at present
yield levels. Prospects for the Japanese market therefore remain unattractive
Fisher Capital Management: Government Bond Markets Global Outlook Part2
Fisher Capital Management: Government Bond Markets Global Outlook Part 2 - Our position remains unchanged; any existing exposure to bonds should be further reduced in favor of US & Euro equities.
The European Central Bank appears to share this view, although it has warned that the recovery “is likely to remain uneven”, and has kept short-term rates at very low levels. The bond markets have therefore continued to receive considerable support from the economic background and the actions of the central bank.
Fisher Capital Management Seoul, South Korea: However, these factors have been much less important than the fears about the debt problems in Greece and in other weaker members of the euro-zone. After considerable
prevarication, due primarily to strong German opposition to a bail-out; an agreement
has been reached amongst the member countries that, in conjunction with the IMF,
they will provide support for Greece if this becomes necessary to prevent a default
on its sovereign debts.
But the details of the agreement are very vague, and there is certainly no guarantee
that the country can carry out its promises to introduce significant reductions in
spending levels to reduce the size of its debts. The agreement has helped the country
to issue a further ¤5 billion bond; but it was forced to offer an interest rate of 5.9%
on a seven-year bond, 325 basis points above the equivalent German bund, and
that issue has subsequently moved to a substantial discount. Conditions have also
been made worse by the downgrade in Portugal’s credit rating, and so the pressures
on the bond markets are continuing.
Fisher Capital Management Seoul, South Korea: The gilt edged market has coped fairly well so far with the latest weakness in the
bond market, an inadequate response in the latest Budget to the debt problems in
the UK, and a warning from the Fitch rating agency that the government’s timetable
for reducing the fiscal deficit was “frankly too slow”, and that the country’s
credit rating was at risk. The economic recovery remains very slow, and the Bank
of England is holding short-term interest rates close to zero, so the market is
receiving some support; but in all the circumstances it is perhaps surprising that
it has managed to perform so well.
Fisher Capital Management Seoul, South Korea: The economic background in the UK remains depressed, but is slowly improving.
Retail sales bounced back strongly; the public sector continued its recruitment
programmed; and there has been a pickup in activity in both the manufacturing and
service sectors of the economy.
It was not surprising therefore that the Bank of England kept short-term interest
rates unchanged at the latest meeting of its Monetary Policy Committee and even
suggested that it would be prepared to reactivate its quantitative easing programmed
if this proved to be necessary. But this may not be enough to sustain gilt edged
prices at current levels.
Fisher Capital Management Seoul, South Korea: The latest Budget statement is forecasting a slightly lower fiscal deficit of £167 billion in the 2009/10 fiscal year, and a halving of the deficit by 2013/14; but there
is considerable skepticism in the markets about the growth assumptions underlying
the figures, and about the willingness of the politicians to address the real problems
involved in reducing the deficit. If there is no credible plan to achieve this reduction,
the country may well lose its AAA credit rating. Prospects have therefore become
even more uncertain, and a move to higher yield levels seems unavoidable.
Fisher Capital Management Seoul, South Korea: The Japanese bond market is slightly weaker over the past month. It is likely that this year, for the first time, bond issuance may provide greater support for the fiscal
deficit than tax revenues. This has already led to a downgrade on Japanese public
debt by Standard and Poor’s, and with new bond issuance this year estimated to
reach ¥44,300 billion, and to reach ¥55,300 billion by 2013, further downgrades
seem likely. Japanese institutional investors are used to financing massive deficits,
but it seems unlikely that deficits of this size can be adequately financed at present
yield levels. Prospects for the Japanese market therefore remain unattractive
The European Central Bank appears to share this view, although it has warned that the recovery “is likely to remain uneven”, and has kept short-term rates at very low levels. The bond markets have therefore continued to receive considerable support from the economic background and the actions of the central bank.
Fisher Capital Management Seoul, South Korea: However, these factors have been much less important than the fears about the debt problems in Greece and in other weaker members of the euro-zone. After considerable
prevarication, due primarily to strong German opposition to a bail-out; an agreement
has been reached amongst the member countries that, in conjunction with the IMF,
they will provide support for Greece if this becomes necessary to prevent a default
on its sovereign debts.
But the details of the agreement are very vague, and there is certainly no guarantee
that the country can carry out its promises to introduce significant reductions in
spending levels to reduce the size of its debts. The agreement has helped the country
to issue a further ¤5 billion bond; but it was forced to offer an interest rate of 5.9%
on a seven-year bond, 325 basis points above the equivalent German bund, and
that issue has subsequently moved to a substantial discount. Conditions have also
been made worse by the downgrade in Portugal’s credit rating, and so the pressures
on the bond markets are continuing.
Fisher Capital Management Seoul, South Korea: The gilt edged market has coped fairly well so far with the latest weakness in the
bond market, an inadequate response in the latest Budget to the debt problems in
the UK, and a warning from the Fitch rating agency that the government’s timetable
for reducing the fiscal deficit was “frankly too slow”, and that the country’s
credit rating was at risk. The economic recovery remains very slow, and the Bank
of England is holding short-term interest rates close to zero, so the market is
receiving some support; but in all the circumstances it is perhaps surprising that
it has managed to perform so well.
Fisher Capital Management Seoul, South Korea: The economic background in the UK remains depressed, but is slowly improving.
Retail sales bounced back strongly; the public sector continued its recruitment
programmed; and there has been a pickup in activity in both the manufacturing and
service sectors of the economy.
It was not surprising therefore that the Bank of England kept short-term interest
rates unchanged at the latest meeting of its Monetary Policy Committee and even
suggested that it would be prepared to reactivate its quantitative easing programmed
if this proved to be necessary. But this may not be enough to sustain gilt edged
prices at current levels.
Fisher Capital Management Seoul, South Korea: The latest Budget statement is forecasting a slightly lower fiscal deficit of £167 billion in the 2009/10 fiscal year, and a halving of the deficit by 2013/14; but there
is considerable skepticism in the markets about the growth assumptions underlying
the figures, and about the willingness of the politicians to address the real problems
involved in reducing the deficit. If there is no credible plan to achieve this reduction,
the country may well lose its AAA credit rating. Prospects have therefore become
even more uncertain, and a move to higher yield levels seems unavoidable.
Fisher Capital Management Seoul, South Korea: The Japanese bond market is slightly weaker over the past month. It is likely that this year, for the first time, bond issuance may provide greater support for the fiscal
deficit than tax revenues. This has already led to a downgrade on Japanese public
debt by Standard and Poor’s, and with new bond issuance this year estimated to
reach ¥44,300 billion, and to reach ¥55,300 billion by 2013, further downgrades
seem likely. Japanese institutional investors are used to financing massive deficits,
but it seems unlikely that deficits of this size can be adequately financed at present
yield levels. Prospects for the Japanese market therefore remain unattractive
Government Bond Markets Global Outlook Fisher Capital Management Seoul
Government Bond Markets Global Outlook Fisher Capital Management Seoul - Conditions in the government bond markets have remained very difficult over the past month, and there have been further falls in some of the minor markets, especially in the euro-zone, because of continuing fears about sovereign debt defaults. The agreement reached by the member countries of the euro-zone to combine with the
IMF to provide any necessary support to enable Greece to refinance its maturing debts and avoid a default has had a poor response in the markets; but at least Greece has been able to make further bond issues; and the gilt edged market has coped fairly well so far with a disappointing Budget statement that has left any real attempt to resolve the serious UK debt problems until after the general election. But the sudden weakness in the world bond markets after a series of disappointing auctions has once again increased the tensions.
Our position remains unchanged; any existing exposure to bonds should be further reduced in favor of US & Euro equities.
Fisher Capital Management Seoul, South Korea - The global economic recovery is developing slowly, and so short-term interest rates
are likely to remain at low levels for a considerable period. It is also possible that
the “fudged” agreement amongst member countries of the euro-zone will provide
an opportunity for the introduction of the necessary austerity measures; and that
a new government will finally begin to address the debt problems in the UK. But
the risks in the situation are still increasing, sovereign debt defaults may still occur,
and the single currency system in the euro-zone may not be sustainable in its present
form. Higher bond yields therefore appear unavoidable; prospects for all the bond
markets are unattractive.
Developments in the bond market over the past month have clearly illustrated the
need for caution. The US economy continues to recover. The Fed has left shortterm
interest rates unchanged, and has indicated that they will remain “at exceptionally
low levels for an extended period”. This tended to enhance the “safe haven” status
of the US equity market for most of the past month, as conditions continued to
deteriorate in other bond markets.
Fisher Capital Management Seoul, South Korea - Most of the available evidence supports the view that the economic recovery is
continuing, but only at a slow pace. The unemployment rate remains close to 10%,
and the housing sector is still depressed, with both new housing starts and sales of
existing homes weakened still further by adverse weather conditions. However
retail sales are holding up fairly well, and manufacturers are beginning to increase
capital expenditures and inventories, and so there is a general expectation that
growth in the first quarter will be around a 2% annualized rate.
Fisher Capital Management Seoul, South Korea - The Fed has confirmed that its buying programmed for mortgage-backed securities
has ended, and that it may be moving slowly towards re-selling some of these
securities; but it seems to be in no hurry, and so both the economic background,
and the position of the central bank, remain broadly supportive.
The situation facing investors in the mainland European bond markets is more
serious. The economic background is improving, with the weaker euro providing
considerable support in export markets, and so the area continues to move out of
recession. But progress is slow, and so the European Central Bank is maintaining
very low short-term interest rates, and providing support. However the massive
fiscal deficits are threatening to overwhelm the bond markets and to lead to sovereign
debt defaults, and so investors have continued to switch from the bonds of the
weaker countries into those of the stronger countries, and have widened the yield
spreads across the markets. The latest Greek bond auctions have received only a
very moderate response, and there is considerable uncertainty whether even the
markets of the stronger countries are adequately discounting the risks in the situation.
Fisher Capital Management Seoul, South Korea - The available evidence on the performance of the euro-zone economy is mixed,
but slightly more encouraging. The weakness in domestic demand is continuing,
and retail sales volumes are disappointing in most member countries; but the
manufacturing sector, especially in Germany, is much more buoyant, with exports
providing most of the momentum. The latest Ifo index of business sentiment in
Germany is sharply higher, and other countries are also sharing in the improvement.
Analysts are therefore forecasting growth around the 0.5% level in the first quarter
of the year.
IMF to provide any necessary support to enable Greece to refinance its maturing debts and avoid a default has had a poor response in the markets; but at least Greece has been able to make further bond issues; and the gilt edged market has coped fairly well so far with a disappointing Budget statement that has left any real attempt to resolve the serious UK debt problems until after the general election. But the sudden weakness in the world bond markets after a series of disappointing auctions has once again increased the tensions.
Our position remains unchanged; any existing exposure to bonds should be further reduced in favor of US & Euro equities.
Fisher Capital Management Seoul, South Korea - The global economic recovery is developing slowly, and so short-term interest rates
are likely to remain at low levels for a considerable period. It is also possible that
the “fudged” agreement amongst member countries of the euro-zone will provide
an opportunity for the introduction of the necessary austerity measures; and that
a new government will finally begin to address the debt problems in the UK. But
the risks in the situation are still increasing, sovereign debt defaults may still occur,
and the single currency system in the euro-zone may not be sustainable in its present
form. Higher bond yields therefore appear unavoidable; prospects for all the bond
markets are unattractive.
Developments in the bond market over the past month have clearly illustrated the
need for caution. The US economy continues to recover. The Fed has left shortterm
interest rates unchanged, and has indicated that they will remain “at exceptionally
low levels for an extended period”. This tended to enhance the “safe haven” status
of the US equity market for most of the past month, as conditions continued to
deteriorate in other bond markets.
Fisher Capital Management Seoul, South Korea - Most of the available evidence supports the view that the economic recovery is
continuing, but only at a slow pace. The unemployment rate remains close to 10%,
and the housing sector is still depressed, with both new housing starts and sales of
existing homes weakened still further by adverse weather conditions. However
retail sales are holding up fairly well, and manufacturers are beginning to increase
capital expenditures and inventories, and so there is a general expectation that
growth in the first quarter will be around a 2% annualized rate.
Fisher Capital Management Seoul, South Korea - The Fed has confirmed that its buying programmed for mortgage-backed securities
has ended, and that it may be moving slowly towards re-selling some of these
securities; but it seems to be in no hurry, and so both the economic background,
and the position of the central bank, remain broadly supportive.
The situation facing investors in the mainland European bond markets is more
serious. The economic background is improving, with the weaker euro providing
considerable support in export markets, and so the area continues to move out of
recession. But progress is slow, and so the European Central Bank is maintaining
very low short-term interest rates, and providing support. However the massive
fiscal deficits are threatening to overwhelm the bond markets and to lead to sovereign
debt defaults, and so investors have continued to switch from the bonds of the
weaker countries into those of the stronger countries, and have widened the yield
spreads across the markets. The latest Greek bond auctions have received only a
very moderate response, and there is considerable uncertainty whether even the
markets of the stronger countries are adequately discounting the risks in the situation.
Fisher Capital Management Seoul, South Korea - The available evidence on the performance of the euro-zone economy is mixed,
but slightly more encouraging. The weakness in domestic demand is continuing,
and retail sales volumes are disappointing in most member countries; but the
manufacturing sector, especially in Germany, is much more buoyant, with exports
providing most of the momentum. The latest Ifo index of business sentiment in
Germany is sharply higher, and other countries are also sharing in the improvement.
Analysts are therefore forecasting growth around the 0.5% level in the first quarter
of the year.
Fisher Capital Management- Financial Market August 2010
Fisher Capital Management- Financial Markets: Sentiment in the financial markets has improved
over the past month. The global economic recovery is continuing,
so far there have been no sovereign debt defaults, and there has
been a modest recovery in the euro. Investors and traders therefore
appear to have concluded that the gloom was overdone.
But there has been evidence of a worsening situation in Spain, and
the decision by the Chinese authorities to adopt a “more flexible”
towards renminbi has also raised some concerns about the growth
prospects for the Chinese economy.
Fisher Capital Management- Equity Markets: All the major equity markets, and the emerging
markets, have improved over the past month. Wall Street has outperformed
markets elsewhere because of some welcome economic
data; there have been strong gains in most of the mainland European
markets as the sovereign debt crisis has appeared to ease; the UK
market has welcomed the measures by the new coalition government
to address the problems of the huge UK fiscal deficit; and the
Japanese market has also moved slightly higher. Corporate results
have been satisfactory; and this has helped to improve sentiment
amongst investors.
Government Bond Markets have had another unusual month. The
sovereign debt crisis might have been expected to lead to a general
weakness in bond markets; but the main effect has been to produce
aggressive switching for the “weaker” markets to the “stronger”
ones, and a further widening of the yield curve.
As a result the major markets are unchanged or only slightly lower
at a time when the “weaker” markets, especially in Southern Europe,
have continued their sharp declines. Slow economic growth and
low short-term interest rates are continuing to provide support.
Currencies: The improvement in sentiment in the markets has led
to a movement of funds out of the “safe havens” of the dollar and
the yen into commodity-related currencies and “riskier” assets.
Both the dollar and the yen are therefore slightly weaker over the
month; and this movement has also eased some of the pressure on
the euro, and allowed it to recover.
Sterling has also improved as the markets have welcomed the
measures introduced by the new UK government to reduce the
fiscal deficit.
Fisher Capital Management- Shrt-Term Interest Rates: There have been no changes in shortterm
interest rates over the past month in the major financial
markets.
Fisher Capital Management- Commodity markets: have produced a mixed performance over the
past month, with some weakness in base metal prices, but strong
gains in the prices of cocoa, coffee, oil and precious metals.
over the past month. The global economic recovery is continuing,
so far there have been no sovereign debt defaults, and there has
been a modest recovery in the euro. Investors and traders therefore
appear to have concluded that the gloom was overdone.
But there has been evidence of a worsening situation in Spain, and
the decision by the Chinese authorities to adopt a “more flexible”
towards renminbi has also raised some concerns about the growth
prospects for the Chinese economy.
Fisher Capital Management- Equity Markets: All the major equity markets, and the emerging
markets, have improved over the past month. Wall Street has outperformed
markets elsewhere because of some welcome economic
data; there have been strong gains in most of the mainland European
markets as the sovereign debt crisis has appeared to ease; the UK
market has welcomed the measures by the new coalition government
to address the problems of the huge UK fiscal deficit; and the
Japanese market has also moved slightly higher. Corporate results
have been satisfactory; and this has helped to improve sentiment
amongst investors.
Government Bond Markets have had another unusual month. The
sovereign debt crisis might have been expected to lead to a general
weakness in bond markets; but the main effect has been to produce
aggressive switching for the “weaker” markets to the “stronger”
ones, and a further widening of the yield curve.
As a result the major markets are unchanged or only slightly lower
at a time when the “weaker” markets, especially in Southern Europe,
have continued their sharp declines. Slow economic growth and
low short-term interest rates are continuing to provide support.
Currencies: The improvement in sentiment in the markets has led
to a movement of funds out of the “safe havens” of the dollar and
the yen into commodity-related currencies and “riskier” assets.
Both the dollar and the yen are therefore slightly weaker over the
month; and this movement has also eased some of the pressure on
the euro, and allowed it to recover.
Sterling has also improved as the markets have welcomed the
measures introduced by the new UK government to reduce the
fiscal deficit.
Fisher Capital Management- Shrt-Term Interest Rates: There have been no changes in shortterm
interest rates over the past month in the major financial
markets.
Fisher Capital Management- Commodity markets: have produced a mixed performance over the
past month, with some weakness in base metal prices, but strong
gains in the prices of cocoa, coffee, oil and precious metals.
Monday, March 28, 2011
Investor Wins $2 Million and Auto Dealership in Fraud Suit
A judge ruled in favor of North Shore Auto Group investor Chuck Brahos Friday, convicting the dealership's managing members of fraud and breach of fiduciary duty.
By Jennifer Fisher | Email the author | March 15, 2011
Highland Park investor Chuck Brahos walked out of the Lake County Courthouse on Friday looking jubilant, and half-seriously raised his hands in the air in victory.
“I feel vindicated,” he said.
Brahos had just heard the final verdict on a case he filed nearly three years ago, against Carl Ritz of Northbrook and Carey Chickerneo and Steven Goodman of Highland Park, principals of Highland Park’s North Shore Auto Group. After Brahos invested $750,000 in the company and signed on as a non-managing member in 2006, Ritz, Chickerneo and Goodman created a phony operating agreement behind his back and attempted to expel him as a shareholder, according to Judge Margaret Mullen.
Because of the complexity of the issues involved, Brahos’ suit was decided in two parts. In February, a jury ruled that Chickerneo, Ritz and Goodman were guilty of fraud and awarded Brahos more than $2 million.
Final judgment was entered on Brahos’ lawsuit Friday, when Judge Mullen ruled in a bench trial that Chickerneo, Ritz and Goodman were also guilty of breach of fiduciary duty. According to Mullen, the three managing partners created a false operating agreement, which they submitted to the bank at the closing of the loan the partners took out to buy North Shore Auto Group. That agreement did not contain the provisions Brahos believed were necessary to protect his investment—and the provisions he believed he had signed on to.
“I find that Mr. Brahos would not have made his capital contributions without these provisions,” Mullen said.
Because Brahos was a shareholder and Ritz, Chickerneo and Goodman were managing members of North Shore Auto, they owed Brahos a fiduciary duty—“care in the conduct of the company’s business,” Mullen explained. Furthermore, because Chickerneo acted as the auto group’s lawyer, he owed Brahos an additional duty as overseer of the group’s dealership and loan transactions. But Chickerneo did not ensure that the operating agreement was legal, and all three members did not abide by the operating agreement Brahos believed he had signed on to, according to Mullen. For example, the three voted to maintain their salaries from 2007 to 2010 without repaying any of Brahos’ investment, despite the fact that the contract Brahos signed stipulated that salaries should be reduced with time if his investment was not returned.
“They disregarded the plaintiff’s interests, lied to him, acted in contravention to the agreement that they made and then they expelled him without cause,” Mullen said.
In October 2008, Ritz, Chickerneo and Goodman scheduled a meeting, and despite Brahos’ requests, refused to provide an agenda. Then they held a vote to expel him from the company. But, Mullen said, “Mr. Brahos did nothing that could be construed as wrongful conduct”—and the operating agreement he signed prohibited expulsion without cause.
In her judgment, Mullen cited Brahos’ believability as a witness as a key factor behind her decision in his favor.
In contrast, she said, Chickerneo, Ritz and Goodman were “remarkably incredible witnesses, at best evasive and at worst, impeachable.”
Ritz, Goodman and Chickerneo were not present for Friday’s verdict. According to their lawyer, Elizabeth Dillon of O’Hagan Spencer, they are considering filing an appeal.
Meanwhile, Brahos said he was relieved that the “rollercoaster ride” of an ordeal was over.
“It feels good to be a company member again,” he said.
According to the operating agreement Brahos signed—which Mullen affirmed as the correct, legal version on Friday—he was to become managing partner of the company within 24 months if 85 percent of his investments had not been repaid, along with fellow investor and non-managing member Nicholas Gouletas. That makes Brahos a managing member now, according to his lawyer, Robert T. O’Donnell.
Brahos declined to comment on what will happen with North Shore Auto Group in the future.
By Jennifer Fisher | Email the author | March 15, 2011
Highland Park investor Chuck Brahos walked out of the Lake County Courthouse on Friday looking jubilant, and half-seriously raised his hands in the air in victory.
“I feel vindicated,” he said.
Brahos had just heard the final verdict on a case he filed nearly three years ago, against Carl Ritz of Northbrook and Carey Chickerneo and Steven Goodman of Highland Park, principals of Highland Park’s North Shore Auto Group. After Brahos invested $750,000 in the company and signed on as a non-managing member in 2006, Ritz, Chickerneo and Goodman created a phony operating agreement behind his back and attempted to expel him as a shareholder, according to Judge Margaret Mullen.
Because of the complexity of the issues involved, Brahos’ suit was decided in two parts. In February, a jury ruled that Chickerneo, Ritz and Goodman were guilty of fraud and awarded Brahos more than $2 million.
Final judgment was entered on Brahos’ lawsuit Friday, when Judge Mullen ruled in a bench trial that Chickerneo, Ritz and Goodman were also guilty of breach of fiduciary duty. According to Mullen, the three managing partners created a false operating agreement, which they submitted to the bank at the closing of the loan the partners took out to buy North Shore Auto Group. That agreement did not contain the provisions Brahos believed were necessary to protect his investment—and the provisions he believed he had signed on to.
“I find that Mr. Brahos would not have made his capital contributions without these provisions,” Mullen said.
Because Brahos was a shareholder and Ritz, Chickerneo and Goodman were managing members of North Shore Auto, they owed Brahos a fiduciary duty—“care in the conduct of the company’s business,” Mullen explained. Furthermore, because Chickerneo acted as the auto group’s lawyer, he owed Brahos an additional duty as overseer of the group’s dealership and loan transactions. But Chickerneo did not ensure that the operating agreement was legal, and all three members did not abide by the operating agreement Brahos believed he had signed on to, according to Mullen. For example, the three voted to maintain their salaries from 2007 to 2010 without repaying any of Brahos’ investment, despite the fact that the contract Brahos signed stipulated that salaries should be reduced with time if his investment was not returned.
“They disregarded the plaintiff’s interests, lied to him, acted in contravention to the agreement that they made and then they expelled him without cause,” Mullen said.
In October 2008, Ritz, Chickerneo and Goodman scheduled a meeting, and despite Brahos’ requests, refused to provide an agenda. Then they held a vote to expel him from the company. But, Mullen said, “Mr. Brahos did nothing that could be construed as wrongful conduct”—and the operating agreement he signed prohibited expulsion without cause.
In her judgment, Mullen cited Brahos’ believability as a witness as a key factor behind her decision in his favor.
In contrast, she said, Chickerneo, Ritz and Goodman were “remarkably incredible witnesses, at best evasive and at worst, impeachable.”
Ritz, Goodman and Chickerneo were not present for Friday’s verdict. According to their lawyer, Elizabeth Dillon of O’Hagan Spencer, they are considering filing an appeal.
Meanwhile, Brahos said he was relieved that the “rollercoaster ride” of an ordeal was over.
“It feels good to be a company member again,” he said.
According to the operating agreement Brahos signed—which Mullen affirmed as the correct, legal version on Friday—he was to become managing partner of the company within 24 months if 85 percent of his investments had not been repaid, along with fellow investor and non-managing member Nicholas Gouletas. That makes Brahos a managing member now, according to his lawyer, Robert T. O’Donnell.
Brahos declined to comment on what will happen with North Shore Auto Group in the future.
WaMu, Lehman, Madoff, Blockbuster, New Stream: Bankruptcy
By Bill Rochelle
(This report contains items about companies both in bankruptcy and not in bankruptcy. Updates Lehman and adds Madoff, Tribune and Javo in Updates; Epic Energy in New Filing, Fisher Island in Involuntary Filing and Vulcan Materials in Downgrade.)
March 21 (Bloomberg) -- Washington Mutual Inc. is in bankruptcy court today seeking approval for supplemental disclosure materials that creditors will receive before they vote again and make elections giving up claims against third parties in return for distributions.
Assuming the new disclosure is approved, the confirmation hearing for approval of the plan will commence May 2. The new disclosure describes the revised plan WaMu filed to comply with the bankruptcy judge’s 109-page opinion on Jan. 7 finding defects in the prior version she declined to confirm.
The revised disclosure materials say that the net distributions to creditors are now estimated to be $7.37 billion, compared with $7.45 billion under the plan the judge wouldn’t approve. The decline is due mostly to increased operating expenses and professional costs resulting from the delay in confirmation.
The so-called creditor cash available for distribution on implementation of the plan is now estimated to be $6.18 billion, including $2.07 billion in tax refunds. WaMu estimates that tax refund recoveries may rise by $60 million to $120 million from ongoing tax litigation.
WaMu is now projecting that the recovery on the so-called Piers claims will be 49 percent rather than 74 percent. Except for holders of subordinated claims, the 100 percent recovery is intact for creditors previously scheduled for full payment.
For details on the new plan, click here for the Feb. 14 Bloomberg bankruptcy report. For details on the opinion denying confirmation of the prior plan, click here for the Jan. 10 Bloomberg bankruptcy report.
Click here to read the May 18 Bloomberg bankruptcy report for a summary of WaMu’s original plan. To read about the settlement before it was modified, click here for the May 24 Bloomberg bankruptcy report. For a summary of changes WaMu made to its plan in October, click here for the Oct. 7 Bloomberg bankruptcy report.
The WaMu holding company filed under Chapter 11 in September 2008, one day after the bank subsidiary was taken over. The bank, once the sixth-largest depository and credit- card issuer in the U.S., was the largest bank failure in the country’s history. The holding company filed formal lists of assets and debt showing property with a total value of $4.49 billion against liabilities of $7.83 billion.
The holding company Chapter 11 case is In re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Updates
Lehman Brokerage Trustee Sues Citibank for $1.3 Billion
The trustee liquidating Lehman Brothers Inc., the brokerage subsidiary of Lehman Brothers Holdings Inc., filed a complaint on March 18 seeking to recover more than $1.3 billion from Citibank NA and affiliates.
The complaint recounts how the Lehman broker didn’t file for liquidation under the Securities Investor Protection Act until Sept. 19, 2008, four days after the parent holding company filed in Chapter 11. During the week before the broker’s filing, Citibank required the broker to deposit $1 billion as security so the bank would continue clearing foreign-exchange trades.
The complaint alleged that Citibank didn’t affect a setoff against the $1 billion until hours after the filing under SIPA. The Lehman broker contends that setting off after the filing was a violation of the so-called automatic stay.
The Lehman broker argues that the setoff wasn’t permissible under so-called safe harbor provisions in bankruptcy law. The trustee also contends there wasn’t the required mutuality so setoff would be permissible in any event.
The Lehman brokerage trustee also lays claim to $342 million, with $190 million representing deposits after bankruptcy. In addition, the trustee seeks $62 million in deposits before bankruptcy and $90 million in net payables owing by the bank or its affiliates.
The trustee’s complaint describes how Barclays Plc deposited $700 million at the bank before the broker’s filing so that Citibank would continue providing services. The trustee says Citibank repaid Barclays to maintain relations.
Lehman reported on March 18 that total cash grew about $100 million in February, to end the month at $22.6 billion. Unrestricted cash at the month’s end was $18.7 billion.
Cash receipts during the month were $496 million.
Lehman Brothers Special Financing Inc. leads the Lehman companies with $8.89 billion cash. In second place is Lehman Commercial Paper Inc. with $4.49 billion, followed by the holding company with $2.32 billion. All amounts include restricted cash.
Professional fees and expenses since the case began now total $1.2 billion, including $30.1 million in professional costs plus fees for the U.S. Trustee system in February.
The fees for Alvarez & Marsal LLC, Lehman’s financial advisers, now total $412.7 million, including $9.2 million in February. The fees for Weil Gotshal & Manges LLP, Lehman’s principal bankruptcy lawyers, total $279.9 million, including $7.8 million in February. For other Bloomberg coverage, click here.
Lehman is aiming to hold a confirmation hearing on Nov. 17 for approval of one of two competing Chapter 11 plans. There will be a June 28 hearing for approval of disclosure statements explaining Lehman’s plan and a competing plan proposed by a group including Paulson & Co.
The Lehman holding company Chapter 11 case is In re Lehman Brothers Holdings Inc., 08-13555, while the liquidation proceeding under the Securities Investor Protection Act for the brokerage operation is Securities Investor Protection Corp. v. Lehman Brothers Inc., 08-01420, both in U.S. Bankruptcy Court, Southern District of New York (Manhattan).
New York Times Wants Disclosure of Madoff Bankers’ Names
The New York Times and several television outlets owned by NBC Universal LLC gave the bankruptcy judge a 20-page letter explaining why he should unseal the remainder of complaints by the trustee for Bernard L. Madoff Investment Securities Inc. against financial institutions. The complaints filed in December were unsealed except for the names of people who worked for the defendant banks.
Today, we also review the Madoff trustee’s amended $1 billion complaint against Fred Wilpon and the trustee’s suit against a lawyer in Austria.
The Times says that U.S. law allows disclosure of the names of individuals mentioned in lawsuits although not accused of wrongdoing. The newspaper said the only names routinely omitted from public disclosure are those of minors, undercover policemen, and sexual assault victims. “No exceptions exist for bankers,” the media’s letter said.
The Times said that the unnamed bankers were all at least “somewhat” involved in the “greatest scam of our history.”
Citibank NA, UBS AG and Natixis previously filed papers urging the judge to keep their employees’ identities secret. The bankruptcy judge in February directed the banks and the media to submit papers making their arguments for and against unsealing the names of bank officers and employees mentioned in the trustee’s complaints.
The trustee filed an amended $1 billion complaint on March 18 against Wilpon, the owners of the New York Mets baseball club, and Wilpon’s friends, family, and associates. The trustee said the new complaint added facts showing the “deep dependency” of Wilpon’s businesses “on continuation of the Madoff fraud.”
In a complaint originally filed in December and unsealed in February, the trustee sought $300 million in false profits and an unspecified amount of principal. Although the trustee previously said he was after $700 million in principal payments, the revised complaint quantifies his demand going back six years.
Among the allegations, the trustee describes how Wilpon restructured $500 million of his companies’ debt after the Madoff fraud surfaced. The trustee alleges that Wilpon and the banks structured the transactions in an attempt “to circumvent any potential recovery action.” The bankruptcy judge appointed former New York Governor Mario Cuomo to mediate the lawsuit.
The Madoff trustee filed a second complaint on March 18 against Ewald Weninger, an Austrian lawyer retained to assist in the investigation and lawsuit against Bank Medici AG, its founder Sonja Kohn, Bank Austria and UniCredit SpA. The trustee seeks to recover $810,000 in fees paid to Weninger and a declaration that he isn’t entitled to collect $270,000 in unpaid fees.
The complaint alleges that Weninger disclosed confidential information and acted “adverse to the interests” of the trustee. Weninger allegedly told some potential defendants they wouldn’t be sued if they provided information voluntarily. Later, he demanded that the trustee release certain defendants from the suit.
For Bloomberg coverage on the amended Wilpon complaint, click here. For Bloomberg coverage of the Weninger complaint, click here.
The Madoff firm began liquidating on Dec. 11, 2008, with the appointment of the trustee under the Securities Investor Protection Act. Bernard Madoff individually went into an involuntary Chapter 7 liquidation in April 2009 and his bankruptcy case was consolidated with the firm’s liquidation. Madoff is serving a 150-year prison sentence following a guilty plea.
The Wilpon lawsuit is Picard v. Katz, 10-5287, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Weninger suit is Picard v. Weninger, 11-01680, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Madoff liquidation case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities Inc., 08-01789, U.S. Bankruptcy Court, Southern District New York (Manhattan). The criminal case is U.S. v. Madoff, 09-cr-00213, U.S. District Court for the Southern District of New York (Manhattan).
Blockbuster Says Liquidation Plan Maybe Not Possible
Blockbuster Inc. admitted in a bankruptcy court filing on March 18 that the ability to confirm even a liquidating Chapter 11 plan “has not been determined.”
The Dallas-based movie rental chain was referring to the requirement that all expenses of the Chapter 11 case must be paid in full before a plan is confirmed. Blockbuster told suppliers in late January that it couldn’t pay for goods shipped after the bankruptcy filing in September.
Late last week the bankruptcy judge signed an order formally setting April 4 as the date for an auction. The opening bid will be $290 million, which won’t pay even half the $630 million in secured first-lien bonds. The hearing for approval of the sale will take place April 7.
The disclosure about the difficulty of confirming a plan was contained in a motion for a five-month extension of the exclusive right to propose a plan. If granted by the judge at an April 21 hearing, the new deadline would be Aug. 19.
Dallas-based Blockbuster began reorganization in September with 5,600 stores, including 3,300 in the U.S. and the remainder abroad. Among the U.S. stores, 3,000 were owned. The rest are franchised. About 200 stores closed before bankruptcy.
The petition listed assets of $1.017 billion against debt of $1.465 billion. Blockbuster estimated it owes $57 million in accounts payable in addition to secured and subordinated notes.
The case is In re Blockbuster Inc., 10-14997, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Tribune Judge Says Settle or Face Chapter 11 Trustee
At the end of the second week of the trial to confirm a reorganization plan for Tribune Co., the bankruptcy judge said he might appoint a Chapter 11 trustee if he decides that neither of the competing plans merits approval.
The trial will resume April 11. The judge told both sides to discuss settlement in the meantime.
Aurelius Capital Management LP, the largest holder of debt predating the 2007 leveraged buyout, opposes settlements that would be imposed by Tribune’s plan. Aurelius and three indenture trustees are proponents of a competing plan where lawsuits would continue after plan confirmation to recover damages from alleged fraudulent transfers that occurred along with the LBO.
The company’s plan is co-sponsored by the official creditors’ committee and senior lenders Oaktree Capital Management LP, Angelo Gordon & Co. and JPMorgan Chase & Co. To read Bloomberg coverage, click here.
Tribune, the second-largest newspaper publisher in the U.S., listed $13 billion in debt for borrowed money and assets of $7.6 billion in the Chapter 11 reorganization begun in December 2008. It owns the Chicago Tribune, Los Angeles Times, six other newspapers and 23 television stations.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District Delaware (Wilmington).
New Stream Proposes 3% Breakup Fee for McKinsey & Co.
New Stream Capital LLC, which characterizes itself as a fund manager specializing in “non-traded private debt,” filed a motion last week for authority to pay a 3 percent breakup fee to an affiliate of McKinsey & Co. Inc., the consulting firm that’s under contract to buy the portfolio of life insurance policies for $127.5 million.
New Stream intends on selling the portfolio to New York- based McKinsey as part of the prepackaged Chapter 11 plan that was accepted by three classes of creditors before the Chapter 11 filing on March 13. Ridgefield, Connecticut-based New Stream says it knows of no authority requiring an auction when the sale is pursuant to a plan.
The motion for approval of the breakup fee, scheduled for hearing on April 8 in U.S. Bankruptcy Court in Delaware, says that an affiliate of McKinsey is an investor in New Stream U.S. and Cayman Islands funds.
Other investors with over $90 million in the U.S. and Cayman funds contend they were “duped” into investing on the promise they would be treated the same as investors in the Bermuda fund. Instead of being treated the same, the objecting investors say they are being offered a “pittance” under the reorganization plan.
New Stream said the objectors’ allegations were rejected previously by a U.S. district judge and an arbitrator. In an e- mailed statement, the company said the investors are “trying for a third bite at the apple in bankruptcy court.”
The Securities and Exchange Commission appeared in court last week and told the bankruptcy judge that it is conducting an investigation.
New Stream to a large extent invested in the so-called life-settlement market, where life insurance policies are purchased for less than the death benefit from owners of policies on individuals’ lives. McKinsey will provide up to $57 million in financing to fund $5 million a month required to cover premiums. The financing in substance will be added to the purchase price, raising the total to more than $184 million, a court filing says.
The objecting creditors filed involuntary Chapter 11 petitions earlier in March against three New Stream funds. The three are not among those that began the prepackaged reorganization on March 13.
The prepackaged plans calls for full payment to investors in a Bermuda fund owed $81.6 million on what amounts to a first- lien claim. Investors in a Bermuda fund with the equivalent of a $369.1 million second-lien claim are to receive residual assets from the sale.
Investors in U.S. and Cayman Islands funds with $319.3 million in claims may receive as much as $15 million, according to a court filing by New Stream. The payments for those investors are to come from McKinsey and creditors in the other classes.
The prepackaged case is In re New Stream Secured Capital Inc., 11-10753, U.S. Bankruptcy Court, District of Delaware (Wilmington). The first-filed involuntary case is In re New Stream Secured Capital Fund (U.S.) LLC, 11-10690, in the same court.
LTAP Gives Up, Turning Policies Over to Wells Fargo
LTAP US LLP, a purchaser of life insurance policies in the so-called life-settlement market, agreed to turn collateral over to Wells Fargo Bank NA as the result of an opinion by the bankruptcy judge last month giving the lender a victory that was the death knell for the Chapter 11 case begun in December.
U.S. Bankruptcy Judge Kevin Gross in Delaware gave the bank the right to foreclose when he simultaneously refused to approve $40 million in financing that would have come ahead of the bank’s lien. The new money would have been used to pay premiums on life insurance policies.
Last week LTAP and San Francisco-based Well Fargo submitted a settlement agreement where the policies will be turned over to the bank in exchange for secured debt and related expenses. If approved by the bankruptcy judge at an April 2 hearing, the Chapter 11 case will be dismissed within 30 days after the sale is completed.
LTAP said it will have “no significant assets” after the policies are gone.
The bank currently is owed $252.3 million. Gross was willing to allow foreclosure because the policies didn’t have a present value sufficient to pay the bank, he found.
LTAP currently has 410 policies on 313 lives with aggregate death benefits of $1.36 billion, according to the settlement papers. In addition to Well Fargo, unsecured creditors are owed $7.6 million.
When LTAP filed for Chapter 11 protection in December, it said the policies were worth $311.5 million. Based in Atlanta, LTAP is managed by a company wholly owned by Berlin Atlantic Holding GmbH & Co.
In the life-settlement market, companies like LTAP buy a policy for less than the death benefit from the owner of a policy on an individual’s life. The price is higher than what the policy owner would receive were the policy instead surrendered.
The case is In re LTAP US LLP, 0, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Javo Beverage Sets Confirmation After Settlement
Javo Beverage Co., a provider of concentrated coffees and teas for beverage dispensers, scheduled an April 28 confirmation hearing for approval of the Chapter 11 plan after the bankruptcy judge approved the explanatory disclosure statement last week.
Javo filed under Chapter 11 in late January with an agreement for current investor Coffee Holdings LLC to become the owner. As revised, the plan would give Coffee Holdings 90 percent of the equity in exchange for $3.2 million in financing for the Chapter 11 case, $6 million in senior notes and $12.1 million in subordinated notes of the operating company.
The plan for unsecured creditors and subordinated noteholders of the operating company was improved after negotiations with the official creditors’ committee.
General unsecured creditors with $2.5 million in claims are now to be paid in full with interest in quarterly installments over one year. Holders of $11.1 million in subordinated notes of the operating company are to receive 10 percent of the new stock plus an $800,000 note, for a 19.9 percent recovery.
Holders of subordinated notes of the holding company receive nothing.
Coffee Holdings owns 23 percent of the existing common stock, according to court filings.
Javo, based in Vista, California, listed assets of $14.7 million against debt totaling $26.7 million. Sales of $19.6 million for the three quarters ended Sept. 30 resulted in a $3.6 million loss from operations and an $8 million net loss. The business was never profitable, court papers said.
Most of the debt is attributable to three note issues. There is another $2.4 million in accounts payable, according to a court filing.
The case is In re Javo Beverage Co. Inc., 11-10212, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Metamorphix Sold on Credit Bid for First-Lien Notes
Metamorphix Inc. and subsidiary MMI Genomics Inc., which call themselves the “most experienced laboratory in the world for canine DNA identification and parentage testing,” were authorized last week by the bankruptcy judge to sell the assets to holders of the 12.5 percent secured notes.
The noteholders swapped the assets for $5.75 million in notes and $246,000 cash.
Noteholders filed an involuntary petition in January 2010 against the parent. An order for relief putting the parent into Chapter 11 was signed in September. The subsidiary filed under Chapter 11 in November.
The parent listed assets of $314,000 and debt totaling $79.5 million. Subsidiary Genomics listed assets of $1.28 million and debt of $10.85 million. Most of the debt is $56 million on two issues of notes with first and second liens on the assets.
The case is In re Metamorphix Inc., 10-10273, U.S. Bankruptcy Court, District of Delaware (Wilmington).
PJ Finance Wins Cash Use At Least until April 6
PJ Finance Co. LLC and affiliates, the owners of 32 apartment buildings, can remain in business at least until April 6 as the result of a hearing last week where the secured lender unsuccessfully objected to the use of rental income.
The bankruptcy judge in Delaware granted interim use of cash that’s collateral for the secured claim of Torchlight Loan Services LLC, the special servicer for $475 million in mortgage- backed securities. The bankruptcy judge preserved Torchlight’s objection to the use of cash until the final hearing on April 6.
Torchlight did win a concession that’s sometimes important. The interim order allowing use of cash gave the lender the right to bid its lien rather than cash if there is a sale of the properties.
Among the projects’ 9,500 units, 1,700 aren’t in condition to be rented, PJ said in a filing. PJ said it has a commitment for Gaia Real Estate Investments LLC to invest $42 million and serve as the foundation for a reorganization plan.
Trade suppliers are owed $4.4 million, according to court papers.
The projects are in Arizona, Florida, Georgia, Tennessee and Texas. PJ gives its address as the office of a law firm in Chicago.
The case is PJ Finance Co. LLC, 11-10688, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Southwest Georgia Case to Remain in Albany, Georgia
When Southwest Georgia Ethanol LLC filed under Chapter 11 in early February in Albany, Georgia, the owner of the 100 million-gallon-a-year ethanol plan immediately filed a motion seeking to transfer the case to the branch of the court in Macon, Georgia.
The company said Macon would be more convenient because it’s closer to the airport in Atlanta. Last week, the company withdrew the motion seeking transfer.
The plant in Mitchell County, Georgia, began production in October 2008. The petition listed assets of $164.7 million and debt totaling $134.1 million. In addition to bank debt, liabilities include $12.6 million owing on two subordinated notes. Revenue was $168.9 million for the fiscal year ended in September, resulting in a $2.2 million net loss. The company is owned by First United Ethanol LLC which didn’t file bankruptcy.
The case is In re Southwest Georgia Ethanol LLC, 11-10145, U.S. Bankruptcy Court, Middle District of Georgia (Albany).
Watch List
Moody’s Gives YRC a Ca Rating on Outlook to Restructure
YRC Worldwide Inc., the largest less-than-truckload freight hauler in the U.S., was dealt a Ca corporate rating on March 18 by Moody’s Investors Service in light of an increased risk surrounding the company’s “efforts to conclude critical refinancing that is instrumental to its ability to avoid bankruptcy.”
Moody’s was reacting to YRC’s announcement last week that if failed to meet one of the “milestones” in last month’s restructuring agreement with lenders and the Teamsters union.
The agreement in principle called for amending the contribution schedule for multiemployer pension plans. By the March 10 deadline, the required majority of pension plans had not agreed. As a result, the lenders have the right to declare a default under existing loan agreements.
To survive without a Chapter 11 reorganization, Moody’s described YRC as needing relief on “debt service, pension contributions, and wage concessions” from the Teamsters union. The company suffers from what Moody’s called a “prolonged industry downturn.”
The new Moody’s rating is on par with the downgrade issued earlier in the week by Standard & Poor’s.
YRC reported a $322 million net loss in 2010 on operating revenue of $4.33 million. The operating loss was $230.6 million.
Overland Park, Kansas-based YRC operates under names including Yellow Transportation and Roadway Express. YRC rose 56 cents to $1.88 on March 18 in Nasdaq Stock Market trading.
Dynegy Corporate Rating Downgraded on Refinancing Risk
Power producer Dynegy Inc. was demoted to a CC corporate rating on March 18 by Standard & Poor’s in view of the possibility of covenant violations in the secured loan agreement as of June 30. The downgrade from S&P was the third in one year.
Although S&P believes the secured credit will be paid in full or nearly so, the ability to refinance is limited because “access to markets at this juncture is quite doubtful.” Even if the banks modify covenants, S&P says “forward dark spreads continue to remain weak, and no structural recovery in the power market is yet visible.”
S&P predicts unsecured creditors could recover up to 30 percent in the event of payment default.
Management had proposed solving financial problems by taking the company private. Shareholders turned down two proposals, one by Blackstone Group LP and the other from Carl Icahn.
Dynegy, based in Houston, has 17 owned or leased power plants with about 11,700 megawatts of electric generating capacity, according to S&P. It reported a $234 million net loss in 2010 on revenue of $2.32 billion. The net loss in 2009 was $1.25 billion.
Dynegy rose 12 cents to $5.66 on March 18 in New York Stock Exchange composite trading.
New Filing
Houston’s Epic Energy to Files for Reorganization in Denver
Epic Energy Resources Inc., a provider of engineering and construction-management services for energy infrastructure, filed for Chapter 11 reorganization on March 18 in Denver.
Financing for the reorganization will be provided by holders of some of the $13.9 million in 10 percent secured debentures due December 2012, the company said in a statement.
The Houston-based company reported a net loss of $14.3 million on revenue of $11 million for the six months ended June 30. The operating loss in the period was $7.7 million.
The June 30 balance sheet had $18.6 million in assets against $20 million in liabilities. The Chapter 11 petition puts the assets at $5.5 million.
The case is In re Epic Energy Resources, 11-15521, U.S. Bankruptcy Court, District of Colorado (Denver).
Involuntary Filing
Fisher Island Developer Hit with Involuntary Petition
Six creditors filed involuntary Chapter 11 petitions on March 17 in Miami against a developer on Fisher Island, Florida, and two affiliates.
The creditors, saying they are collectively owed $32.4 million, also filed a motion seeking the appointment of a Chapter 11 trustee.
Without providing details, the creditors say an unnamed third party supplanted Fisher Island’s management and is arranging transactions that would benefit the third party at the expense of creditors.
The creditors say that the development’s prior management doesn’t dispute the debt owed to them and is willing to enter into a repayment schedule.
The first-filed case is In re Fisher Island Investments Inc., 11-17047, U.S. Bankruptcy Court, Southern District Florida (Miami).
Downgrade
Vulcan Materials Loses Investment-Grade Status
Vulcan Materials Co., the largest U.S. producer of sand and gravel, lost investment-grade status on March 18 when Standard & Poor’s lowered the corporate credit by two steps to BB, the second-highest junk grade.
S&P doesn’t believe credit standing will improve to investment-grade status in the next two years even though demand “will be flat to slightly up in 2011.”
Vulcan, based in Birmingham, Alabama, also produces asphalt and ready-mix concrete.
Vulcan reported a $96.5 million net loss in 2010 on sales of $2.41 billion. The stock closed on March 18 at $43.02, up 57 cents in New York Stock Exchange composite Trading.
Daily Podcast
Anguilla Resort, West End, New Credit Bubble: Bankruptcy Audio
The Bloomberg bankruptcy podcast opens with a description of two significant new filings. The Viceroy Anguilla Resort is reorganizing in Delaware after Starwood Capital Group LLC bought the secured debt. West End Financial Advisors LLC sought Chapter 11 protection in New York after the Securities and Exchange Commission filed a civil complaint alleging securities fraud. The podcast observes that lenders are willing to buy new notes from Lantheus Medical Imaging Inc. and Vision Solutions Inc. although knowing in both cases that the proceeds will end up in the pockets of the owners. Bloomberg Law’s Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle end the podcast by noting how the financial recovery isn’t helping companies with the lowest credit ratings. To listen, click here.
--With assistance from Linda Sandler and Bob Van Voris in New York; Karen Gullo in San Francisco; and Steven Church, Dawn McCarty and Michael Bathon in Wilmington, Delaware,. Editors: Glenn Holdcraft, Mary Romano
To contact the reporter on this story: Bill Rochelle in New York at wrochelle@bloomberg.net
To contact the editor responsible for this story: David Rovella at drovella@bloomberg.net
(This report contains items about companies both in bankruptcy and not in bankruptcy. Updates Lehman and adds Madoff, Tribune and Javo in Updates; Epic Energy in New Filing, Fisher Island in Involuntary Filing and Vulcan Materials in Downgrade.)
March 21 (Bloomberg) -- Washington Mutual Inc. is in bankruptcy court today seeking approval for supplemental disclosure materials that creditors will receive before they vote again and make elections giving up claims against third parties in return for distributions.
Assuming the new disclosure is approved, the confirmation hearing for approval of the plan will commence May 2. The new disclosure describes the revised plan WaMu filed to comply with the bankruptcy judge’s 109-page opinion on Jan. 7 finding defects in the prior version she declined to confirm.
The revised disclosure materials say that the net distributions to creditors are now estimated to be $7.37 billion, compared with $7.45 billion under the plan the judge wouldn’t approve. The decline is due mostly to increased operating expenses and professional costs resulting from the delay in confirmation.
The so-called creditor cash available for distribution on implementation of the plan is now estimated to be $6.18 billion, including $2.07 billion in tax refunds. WaMu estimates that tax refund recoveries may rise by $60 million to $120 million from ongoing tax litigation.
WaMu is now projecting that the recovery on the so-called Piers claims will be 49 percent rather than 74 percent. Except for holders of subordinated claims, the 100 percent recovery is intact for creditors previously scheduled for full payment.
For details on the new plan, click here for the Feb. 14 Bloomberg bankruptcy report. For details on the opinion denying confirmation of the prior plan, click here for the Jan. 10 Bloomberg bankruptcy report.
Click here to read the May 18 Bloomberg bankruptcy report for a summary of WaMu’s original plan. To read about the settlement before it was modified, click here for the May 24 Bloomberg bankruptcy report. For a summary of changes WaMu made to its plan in October, click here for the Oct. 7 Bloomberg bankruptcy report.
The WaMu holding company filed under Chapter 11 in September 2008, one day after the bank subsidiary was taken over. The bank, once the sixth-largest depository and credit- card issuer in the U.S., was the largest bank failure in the country’s history. The holding company filed formal lists of assets and debt showing property with a total value of $4.49 billion against liabilities of $7.83 billion.
The holding company Chapter 11 case is In re Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Updates
Lehman Brokerage Trustee Sues Citibank for $1.3 Billion
The trustee liquidating Lehman Brothers Inc., the brokerage subsidiary of Lehman Brothers Holdings Inc., filed a complaint on March 18 seeking to recover more than $1.3 billion from Citibank NA and affiliates.
The complaint recounts how the Lehman broker didn’t file for liquidation under the Securities Investor Protection Act until Sept. 19, 2008, four days after the parent holding company filed in Chapter 11. During the week before the broker’s filing, Citibank required the broker to deposit $1 billion as security so the bank would continue clearing foreign-exchange trades.
The complaint alleged that Citibank didn’t affect a setoff against the $1 billion until hours after the filing under SIPA. The Lehman broker contends that setting off after the filing was a violation of the so-called automatic stay.
The Lehman broker argues that the setoff wasn’t permissible under so-called safe harbor provisions in bankruptcy law. The trustee also contends there wasn’t the required mutuality so setoff would be permissible in any event.
The Lehman brokerage trustee also lays claim to $342 million, with $190 million representing deposits after bankruptcy. In addition, the trustee seeks $62 million in deposits before bankruptcy and $90 million in net payables owing by the bank or its affiliates.
The trustee’s complaint describes how Barclays Plc deposited $700 million at the bank before the broker’s filing so that Citibank would continue providing services. The trustee says Citibank repaid Barclays to maintain relations.
Lehman reported on March 18 that total cash grew about $100 million in February, to end the month at $22.6 billion. Unrestricted cash at the month’s end was $18.7 billion.
Cash receipts during the month were $496 million.
Lehman Brothers Special Financing Inc. leads the Lehman companies with $8.89 billion cash. In second place is Lehman Commercial Paper Inc. with $4.49 billion, followed by the holding company with $2.32 billion. All amounts include restricted cash.
Professional fees and expenses since the case began now total $1.2 billion, including $30.1 million in professional costs plus fees for the U.S. Trustee system in February.
The fees for Alvarez & Marsal LLC, Lehman’s financial advisers, now total $412.7 million, including $9.2 million in February. The fees for Weil Gotshal & Manges LLP, Lehman’s principal bankruptcy lawyers, total $279.9 million, including $7.8 million in February. For other Bloomberg coverage, click here.
Lehman is aiming to hold a confirmation hearing on Nov. 17 for approval of one of two competing Chapter 11 plans. There will be a June 28 hearing for approval of disclosure statements explaining Lehman’s plan and a competing plan proposed by a group including Paulson & Co.
The Lehman holding company Chapter 11 case is In re Lehman Brothers Holdings Inc., 08-13555, while the liquidation proceeding under the Securities Investor Protection Act for the brokerage operation is Securities Investor Protection Corp. v. Lehman Brothers Inc., 08-01420, both in U.S. Bankruptcy Court, Southern District of New York (Manhattan).
New York Times Wants Disclosure of Madoff Bankers’ Names
The New York Times and several television outlets owned by NBC Universal LLC gave the bankruptcy judge a 20-page letter explaining why he should unseal the remainder of complaints by the trustee for Bernard L. Madoff Investment Securities Inc. against financial institutions. The complaints filed in December were unsealed except for the names of people who worked for the defendant banks.
Today, we also review the Madoff trustee’s amended $1 billion complaint against Fred Wilpon and the trustee’s suit against a lawyer in Austria.
The Times says that U.S. law allows disclosure of the names of individuals mentioned in lawsuits although not accused of wrongdoing. The newspaper said the only names routinely omitted from public disclosure are those of minors, undercover policemen, and sexual assault victims. “No exceptions exist for bankers,” the media’s letter said.
The Times said that the unnamed bankers were all at least “somewhat” involved in the “greatest scam of our history.”
Citibank NA, UBS AG and Natixis previously filed papers urging the judge to keep their employees’ identities secret. The bankruptcy judge in February directed the banks and the media to submit papers making their arguments for and against unsealing the names of bank officers and employees mentioned in the trustee’s complaints.
The trustee filed an amended $1 billion complaint on March 18 against Wilpon, the owners of the New York Mets baseball club, and Wilpon’s friends, family, and associates. The trustee said the new complaint added facts showing the “deep dependency” of Wilpon’s businesses “on continuation of the Madoff fraud.”
In a complaint originally filed in December and unsealed in February, the trustee sought $300 million in false profits and an unspecified amount of principal. Although the trustee previously said he was after $700 million in principal payments, the revised complaint quantifies his demand going back six years.
Among the allegations, the trustee describes how Wilpon restructured $500 million of his companies’ debt after the Madoff fraud surfaced. The trustee alleges that Wilpon and the banks structured the transactions in an attempt “to circumvent any potential recovery action.” The bankruptcy judge appointed former New York Governor Mario Cuomo to mediate the lawsuit.
The Madoff trustee filed a second complaint on March 18 against Ewald Weninger, an Austrian lawyer retained to assist in the investigation and lawsuit against Bank Medici AG, its founder Sonja Kohn, Bank Austria and UniCredit SpA. The trustee seeks to recover $810,000 in fees paid to Weninger and a declaration that he isn’t entitled to collect $270,000 in unpaid fees.
The complaint alleges that Weninger disclosed confidential information and acted “adverse to the interests” of the trustee. Weninger allegedly told some potential defendants they wouldn’t be sued if they provided information voluntarily. Later, he demanded that the trustee release certain defendants from the suit.
For Bloomberg coverage on the amended Wilpon complaint, click here. For Bloomberg coverage of the Weninger complaint, click here.
The Madoff firm began liquidating on Dec. 11, 2008, with the appointment of the trustee under the Securities Investor Protection Act. Bernard Madoff individually went into an involuntary Chapter 7 liquidation in April 2009 and his bankruptcy case was consolidated with the firm’s liquidation. Madoff is serving a 150-year prison sentence following a guilty plea.
The Wilpon lawsuit is Picard v. Katz, 10-5287, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Weninger suit is Picard v. Weninger, 11-01680, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Madoff liquidation case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities Inc., 08-01789, U.S. Bankruptcy Court, Southern District New York (Manhattan). The criminal case is U.S. v. Madoff, 09-cr-00213, U.S. District Court for the Southern District of New York (Manhattan).
Blockbuster Says Liquidation Plan Maybe Not Possible
Blockbuster Inc. admitted in a bankruptcy court filing on March 18 that the ability to confirm even a liquidating Chapter 11 plan “has not been determined.”
The Dallas-based movie rental chain was referring to the requirement that all expenses of the Chapter 11 case must be paid in full before a plan is confirmed. Blockbuster told suppliers in late January that it couldn’t pay for goods shipped after the bankruptcy filing in September.
Late last week the bankruptcy judge signed an order formally setting April 4 as the date for an auction. The opening bid will be $290 million, which won’t pay even half the $630 million in secured first-lien bonds. The hearing for approval of the sale will take place April 7.
The disclosure about the difficulty of confirming a plan was contained in a motion for a five-month extension of the exclusive right to propose a plan. If granted by the judge at an April 21 hearing, the new deadline would be Aug. 19.
Dallas-based Blockbuster began reorganization in September with 5,600 stores, including 3,300 in the U.S. and the remainder abroad. Among the U.S. stores, 3,000 were owned. The rest are franchised. About 200 stores closed before bankruptcy.
The petition listed assets of $1.017 billion against debt of $1.465 billion. Blockbuster estimated it owes $57 million in accounts payable in addition to secured and subordinated notes.
The case is In re Blockbuster Inc., 10-14997, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Tribune Judge Says Settle or Face Chapter 11 Trustee
At the end of the second week of the trial to confirm a reorganization plan for Tribune Co., the bankruptcy judge said he might appoint a Chapter 11 trustee if he decides that neither of the competing plans merits approval.
The trial will resume April 11. The judge told both sides to discuss settlement in the meantime.
Aurelius Capital Management LP, the largest holder of debt predating the 2007 leveraged buyout, opposes settlements that would be imposed by Tribune’s plan. Aurelius and three indenture trustees are proponents of a competing plan where lawsuits would continue after plan confirmation to recover damages from alleged fraudulent transfers that occurred along with the LBO.
The company’s plan is co-sponsored by the official creditors’ committee and senior lenders Oaktree Capital Management LP, Angelo Gordon & Co. and JPMorgan Chase & Co. To read Bloomberg coverage, click here.
Tribune, the second-largest newspaper publisher in the U.S., listed $13 billion in debt for borrowed money and assets of $7.6 billion in the Chapter 11 reorganization begun in December 2008. It owns the Chicago Tribune, Los Angeles Times, six other newspapers and 23 television stations.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District Delaware (Wilmington).
New Stream Proposes 3% Breakup Fee for McKinsey & Co.
New Stream Capital LLC, which characterizes itself as a fund manager specializing in “non-traded private debt,” filed a motion last week for authority to pay a 3 percent breakup fee to an affiliate of McKinsey & Co. Inc., the consulting firm that’s under contract to buy the portfolio of life insurance policies for $127.5 million.
New Stream intends on selling the portfolio to New York- based McKinsey as part of the prepackaged Chapter 11 plan that was accepted by three classes of creditors before the Chapter 11 filing on March 13. Ridgefield, Connecticut-based New Stream says it knows of no authority requiring an auction when the sale is pursuant to a plan.
The motion for approval of the breakup fee, scheduled for hearing on April 8 in U.S. Bankruptcy Court in Delaware, says that an affiliate of McKinsey is an investor in New Stream U.S. and Cayman Islands funds.
Other investors with over $90 million in the U.S. and Cayman funds contend they were “duped” into investing on the promise they would be treated the same as investors in the Bermuda fund. Instead of being treated the same, the objecting investors say they are being offered a “pittance” under the reorganization plan.
New Stream said the objectors’ allegations were rejected previously by a U.S. district judge and an arbitrator. In an e- mailed statement, the company said the investors are “trying for a third bite at the apple in bankruptcy court.”
The Securities and Exchange Commission appeared in court last week and told the bankruptcy judge that it is conducting an investigation.
New Stream to a large extent invested in the so-called life-settlement market, where life insurance policies are purchased for less than the death benefit from owners of policies on individuals’ lives. McKinsey will provide up to $57 million in financing to fund $5 million a month required to cover premiums. The financing in substance will be added to the purchase price, raising the total to more than $184 million, a court filing says.
The objecting creditors filed involuntary Chapter 11 petitions earlier in March against three New Stream funds. The three are not among those that began the prepackaged reorganization on March 13.
The prepackaged plans calls for full payment to investors in a Bermuda fund owed $81.6 million on what amounts to a first- lien claim. Investors in a Bermuda fund with the equivalent of a $369.1 million second-lien claim are to receive residual assets from the sale.
Investors in U.S. and Cayman Islands funds with $319.3 million in claims may receive as much as $15 million, according to a court filing by New Stream. The payments for those investors are to come from McKinsey and creditors in the other classes.
The prepackaged case is In re New Stream Secured Capital Inc., 11-10753, U.S. Bankruptcy Court, District of Delaware (Wilmington). The first-filed involuntary case is In re New Stream Secured Capital Fund (U.S.) LLC, 11-10690, in the same court.
LTAP Gives Up, Turning Policies Over to Wells Fargo
LTAP US LLP, a purchaser of life insurance policies in the so-called life-settlement market, agreed to turn collateral over to Wells Fargo Bank NA as the result of an opinion by the bankruptcy judge last month giving the lender a victory that was the death knell for the Chapter 11 case begun in December.
U.S. Bankruptcy Judge Kevin Gross in Delaware gave the bank the right to foreclose when he simultaneously refused to approve $40 million in financing that would have come ahead of the bank’s lien. The new money would have been used to pay premiums on life insurance policies.
Last week LTAP and San Francisco-based Well Fargo submitted a settlement agreement where the policies will be turned over to the bank in exchange for secured debt and related expenses. If approved by the bankruptcy judge at an April 2 hearing, the Chapter 11 case will be dismissed within 30 days after the sale is completed.
LTAP said it will have “no significant assets” after the policies are gone.
The bank currently is owed $252.3 million. Gross was willing to allow foreclosure because the policies didn’t have a present value sufficient to pay the bank, he found.
LTAP currently has 410 policies on 313 lives with aggregate death benefits of $1.36 billion, according to the settlement papers. In addition to Well Fargo, unsecured creditors are owed $7.6 million.
When LTAP filed for Chapter 11 protection in December, it said the policies were worth $311.5 million. Based in Atlanta, LTAP is managed by a company wholly owned by Berlin Atlantic Holding GmbH & Co.
In the life-settlement market, companies like LTAP buy a policy for less than the death benefit from the owner of a policy on an individual’s life. The price is higher than what the policy owner would receive were the policy instead surrendered.
The case is In re LTAP US LLP, 0, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Javo Beverage Sets Confirmation After Settlement
Javo Beverage Co., a provider of concentrated coffees and teas for beverage dispensers, scheduled an April 28 confirmation hearing for approval of the Chapter 11 plan after the bankruptcy judge approved the explanatory disclosure statement last week.
Javo filed under Chapter 11 in late January with an agreement for current investor Coffee Holdings LLC to become the owner. As revised, the plan would give Coffee Holdings 90 percent of the equity in exchange for $3.2 million in financing for the Chapter 11 case, $6 million in senior notes and $12.1 million in subordinated notes of the operating company.
The plan for unsecured creditors and subordinated noteholders of the operating company was improved after negotiations with the official creditors’ committee.
General unsecured creditors with $2.5 million in claims are now to be paid in full with interest in quarterly installments over one year. Holders of $11.1 million in subordinated notes of the operating company are to receive 10 percent of the new stock plus an $800,000 note, for a 19.9 percent recovery.
Holders of subordinated notes of the holding company receive nothing.
Coffee Holdings owns 23 percent of the existing common stock, according to court filings.
Javo, based in Vista, California, listed assets of $14.7 million against debt totaling $26.7 million. Sales of $19.6 million for the three quarters ended Sept. 30 resulted in a $3.6 million loss from operations and an $8 million net loss. The business was never profitable, court papers said.
Most of the debt is attributable to three note issues. There is another $2.4 million in accounts payable, according to a court filing.
The case is In re Javo Beverage Co. Inc., 11-10212, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Metamorphix Sold on Credit Bid for First-Lien Notes
Metamorphix Inc. and subsidiary MMI Genomics Inc., which call themselves the “most experienced laboratory in the world for canine DNA identification and parentage testing,” were authorized last week by the bankruptcy judge to sell the assets to holders of the 12.5 percent secured notes.
The noteholders swapped the assets for $5.75 million in notes and $246,000 cash.
Noteholders filed an involuntary petition in January 2010 against the parent. An order for relief putting the parent into Chapter 11 was signed in September. The subsidiary filed under Chapter 11 in November.
The parent listed assets of $314,000 and debt totaling $79.5 million. Subsidiary Genomics listed assets of $1.28 million and debt of $10.85 million. Most of the debt is $56 million on two issues of notes with first and second liens on the assets.
The case is In re Metamorphix Inc., 10-10273, U.S. Bankruptcy Court, District of Delaware (Wilmington).
PJ Finance Wins Cash Use At Least until April 6
PJ Finance Co. LLC and affiliates, the owners of 32 apartment buildings, can remain in business at least until April 6 as the result of a hearing last week where the secured lender unsuccessfully objected to the use of rental income.
The bankruptcy judge in Delaware granted interim use of cash that’s collateral for the secured claim of Torchlight Loan Services LLC, the special servicer for $475 million in mortgage- backed securities. The bankruptcy judge preserved Torchlight’s objection to the use of cash until the final hearing on April 6.
Torchlight did win a concession that’s sometimes important. The interim order allowing use of cash gave the lender the right to bid its lien rather than cash if there is a sale of the properties.
Among the projects’ 9,500 units, 1,700 aren’t in condition to be rented, PJ said in a filing. PJ said it has a commitment for Gaia Real Estate Investments LLC to invest $42 million and serve as the foundation for a reorganization plan.
Trade suppliers are owed $4.4 million, according to court papers.
The projects are in Arizona, Florida, Georgia, Tennessee and Texas. PJ gives its address as the office of a law firm in Chicago.
The case is PJ Finance Co. LLC, 11-10688, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Southwest Georgia Case to Remain in Albany, Georgia
When Southwest Georgia Ethanol LLC filed under Chapter 11 in early February in Albany, Georgia, the owner of the 100 million-gallon-a-year ethanol plan immediately filed a motion seeking to transfer the case to the branch of the court in Macon, Georgia.
The company said Macon would be more convenient because it’s closer to the airport in Atlanta. Last week, the company withdrew the motion seeking transfer.
The plant in Mitchell County, Georgia, began production in October 2008. The petition listed assets of $164.7 million and debt totaling $134.1 million. In addition to bank debt, liabilities include $12.6 million owing on two subordinated notes. Revenue was $168.9 million for the fiscal year ended in September, resulting in a $2.2 million net loss. The company is owned by First United Ethanol LLC which didn’t file bankruptcy.
The case is In re Southwest Georgia Ethanol LLC, 11-10145, U.S. Bankruptcy Court, Middle District of Georgia (Albany).
Watch List
Moody’s Gives YRC a Ca Rating on Outlook to Restructure
YRC Worldwide Inc., the largest less-than-truckload freight hauler in the U.S., was dealt a Ca corporate rating on March 18 by Moody’s Investors Service in light of an increased risk surrounding the company’s “efforts to conclude critical refinancing that is instrumental to its ability to avoid bankruptcy.”
Moody’s was reacting to YRC’s announcement last week that if failed to meet one of the “milestones” in last month’s restructuring agreement with lenders and the Teamsters union.
The agreement in principle called for amending the contribution schedule for multiemployer pension plans. By the March 10 deadline, the required majority of pension plans had not agreed. As a result, the lenders have the right to declare a default under existing loan agreements.
To survive without a Chapter 11 reorganization, Moody’s described YRC as needing relief on “debt service, pension contributions, and wage concessions” from the Teamsters union. The company suffers from what Moody’s called a “prolonged industry downturn.”
The new Moody’s rating is on par with the downgrade issued earlier in the week by Standard & Poor’s.
YRC reported a $322 million net loss in 2010 on operating revenue of $4.33 million. The operating loss was $230.6 million.
Overland Park, Kansas-based YRC operates under names including Yellow Transportation and Roadway Express. YRC rose 56 cents to $1.88 on March 18 in Nasdaq Stock Market trading.
Dynegy Corporate Rating Downgraded on Refinancing Risk
Power producer Dynegy Inc. was demoted to a CC corporate rating on March 18 by Standard & Poor’s in view of the possibility of covenant violations in the secured loan agreement as of June 30. The downgrade from S&P was the third in one year.
Although S&P believes the secured credit will be paid in full or nearly so, the ability to refinance is limited because “access to markets at this juncture is quite doubtful.” Even if the banks modify covenants, S&P says “forward dark spreads continue to remain weak, and no structural recovery in the power market is yet visible.”
S&P predicts unsecured creditors could recover up to 30 percent in the event of payment default.
Management had proposed solving financial problems by taking the company private. Shareholders turned down two proposals, one by Blackstone Group LP and the other from Carl Icahn.
Dynegy, based in Houston, has 17 owned or leased power plants with about 11,700 megawatts of electric generating capacity, according to S&P. It reported a $234 million net loss in 2010 on revenue of $2.32 billion. The net loss in 2009 was $1.25 billion.
Dynegy rose 12 cents to $5.66 on March 18 in New York Stock Exchange composite trading.
New Filing
Houston’s Epic Energy to Files for Reorganization in Denver
Epic Energy Resources Inc., a provider of engineering and construction-management services for energy infrastructure, filed for Chapter 11 reorganization on March 18 in Denver.
Financing for the reorganization will be provided by holders of some of the $13.9 million in 10 percent secured debentures due December 2012, the company said in a statement.
The Houston-based company reported a net loss of $14.3 million on revenue of $11 million for the six months ended June 30. The operating loss in the period was $7.7 million.
The June 30 balance sheet had $18.6 million in assets against $20 million in liabilities. The Chapter 11 petition puts the assets at $5.5 million.
The case is In re Epic Energy Resources, 11-15521, U.S. Bankruptcy Court, District of Colorado (Denver).
Involuntary Filing
Fisher Island Developer Hit with Involuntary Petition
Six creditors filed involuntary Chapter 11 petitions on March 17 in Miami against a developer on Fisher Island, Florida, and two affiliates.
The creditors, saying they are collectively owed $32.4 million, also filed a motion seeking the appointment of a Chapter 11 trustee.
Without providing details, the creditors say an unnamed third party supplanted Fisher Island’s management and is arranging transactions that would benefit the third party at the expense of creditors.
The creditors say that the development’s prior management doesn’t dispute the debt owed to them and is willing to enter into a repayment schedule.
The first-filed case is In re Fisher Island Investments Inc., 11-17047, U.S. Bankruptcy Court, Southern District Florida (Miami).
Downgrade
Vulcan Materials Loses Investment-Grade Status
Vulcan Materials Co., the largest U.S. producer of sand and gravel, lost investment-grade status on March 18 when Standard & Poor’s lowered the corporate credit by two steps to BB, the second-highest junk grade.
S&P doesn’t believe credit standing will improve to investment-grade status in the next two years even though demand “will be flat to slightly up in 2011.”
Vulcan, based in Birmingham, Alabama, also produces asphalt and ready-mix concrete.
Vulcan reported a $96.5 million net loss in 2010 on sales of $2.41 billion. The stock closed on March 18 at $43.02, up 57 cents in New York Stock Exchange composite Trading.
Daily Podcast
Anguilla Resort, West End, New Credit Bubble: Bankruptcy Audio
The Bloomberg bankruptcy podcast opens with a description of two significant new filings. The Viceroy Anguilla Resort is reorganizing in Delaware after Starwood Capital Group LLC bought the secured debt. West End Financial Advisors LLC sought Chapter 11 protection in New York after the Securities and Exchange Commission filed a civil complaint alleging securities fraud. The podcast observes that lenders are willing to buy new notes from Lantheus Medical Imaging Inc. and Vision Solutions Inc. although knowing in both cases that the proceeds will end up in the pockets of the owners. Bloomberg Law’s Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle end the podcast by noting how the financial recovery isn’t helping companies with the lowest credit ratings. To listen, click here.
--With assistance from Linda Sandler and Bob Van Voris in New York; Karen Gullo in San Francisco; and Steven Church, Dawn McCarty and Michael Bathon in Wilmington, Delaware,. Editors: Glenn Holdcraft, Mary Romano
To contact the reporter on this story: Bill Rochelle in New York at wrochelle@bloomberg.net
To contact the editor responsible for this story: David Rovella at drovella@bloomberg.net
Tuesday, March 22, 2011
China: Market Overview 1st Quarter 2010 Fisher Capital Management Korea
Fisher Capital Management Seoul Korea - April is going to set the tone for the world economy depending on how China is labeled by the US and China’s reaction to it. Our gut feeling is that apart from the rhetoric — which is in the air with respect to the Yuan-dollar rates, China’s current account surplus and internet independence — neither of them will rock the boat.
Already five prominent members of the G20 — South Korea, Canada, France, the US and the UK — have sent a coded warning to China against reneging on economic agreements. Perception of China and the US in international relations is far apart.
According to China, the main issues are Taiwan and the sale of arms to Tibet and
for the US the issues are the Yuan-dollar rate, trade surplus and Internet freedom.
China: Market Overview 1st Quarter 2010 Fisher Capital Management Seoul Korea - Under the Omnibus Trade and Competitiveness Act of 1988, the U.S. government
is to decide whether to label China a “currency manipulator.” This has not been
done since 1994, but if China is named, it will give the US Congress new ammunition
to press for concrete action. China is asserting itself in international relations.
Beijing has emerged from the global recession with a fresh confidence about its
state-led economy, which has delivered stimulus projects from high-speed railways
to highways and bridges with remarkable efficiency. And it is in no mood to be
lectured by Washington about how to support the world economy or to operate her
own economy.
China’s economic growth will be around 10% in 2010 following strong industrial
output growth in coming months. Inflation may rise to 3.5–4% in 2010. The government’s target of inflation is 3%. But, China has hidden debt risk among Chinese local government investment companies. Official estimates of the total outstanding loan balance for such investment entities exceed Rmb 6,000bn — or roughly 20% of GDP — a figure that may be an underestimate.
China: Market Overview 1st Quarter 2010 Fisher Capital Management Korea - Undervaluation of the Yuan is taken for granted and is estimated to be in the range of 30–40%. The US administration believes that the Yuan’s appreciation will not only solve the trade deficit problem between the US and China but also the US unemployment.
Beijing’s position is that China’s currency policy isn’t the cause of the U.S.’s economic problems, and that China wouldn’t adjust its currency rate under outside pressure. “The Chinese government will only make the decision according to the national condition and the country’s development level,” according the Chinese President Wen. China believes that a surge in the Yuan could destabilize the global economy, hitting developing nations especially hard and even perhaps causing the value of the dollar to plunge.
The World Bank forecasts that China’s current-account surplus, the broadest measure
of its trade position, will rise this year to $304 billion, after dropping to $284.1 billion
in 2009 from a record $426.1 billion in 2008.
Fisher Capital is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Already five prominent members of the G20 — South Korea, Canada, France, the US and the UK — have sent a coded warning to China against reneging on economic agreements. Perception of China and the US in international relations is far apart.
According to China, the main issues are Taiwan and the sale of arms to Tibet and
for the US the issues are the Yuan-dollar rate, trade surplus and Internet freedom.
China: Market Overview 1st Quarter 2010 Fisher Capital Management Seoul Korea - Under the Omnibus Trade and Competitiveness Act of 1988, the U.S. government
is to decide whether to label China a “currency manipulator.” This has not been
done since 1994, but if China is named, it will give the US Congress new ammunition
to press for concrete action. China is asserting itself in international relations.
Beijing has emerged from the global recession with a fresh confidence about its
state-led economy, which has delivered stimulus projects from high-speed railways
to highways and bridges with remarkable efficiency. And it is in no mood to be
lectured by Washington about how to support the world economy or to operate her
own economy.
China’s economic growth will be around 10% in 2010 following strong industrial
output growth in coming months. Inflation may rise to 3.5–4% in 2010. The government’s target of inflation is 3%. But, China has hidden debt risk among Chinese local government investment companies. Official estimates of the total outstanding loan balance for such investment entities exceed Rmb 6,000bn — or roughly 20% of GDP — a figure that may be an underestimate.
China: Market Overview 1st Quarter 2010 Fisher Capital Management Korea - Undervaluation of the Yuan is taken for granted and is estimated to be in the range of 30–40%. The US administration believes that the Yuan’s appreciation will not only solve the trade deficit problem between the US and China but also the US unemployment.
Beijing’s position is that China’s currency policy isn’t the cause of the U.S.’s economic problems, and that China wouldn’t adjust its currency rate under outside pressure. “The Chinese government will only make the decision according to the national condition and the country’s development level,” according the Chinese President Wen. China believes that a surge in the Yuan could destabilize the global economy, hitting developing nations especially hard and even perhaps causing the value of the dollar to plunge.
The World Bank forecasts that China’s current-account surplus, the broadest measure
of its trade position, will rise this year to $304 billion, after dropping to $284.1 billion
in 2009 from a record $426.1 billion in 2008.
Fisher Capital is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Fisher Capital Management South Korea, Brazil’s Economy: 1st Quarter
Fisher Capital Management Seoul Korea, Brazil’s Economy - The brief recession of 2009 has given way to a robust increase in consumer demand and recovery in investment in Brazil in 2010. The economy is likely to grow 5.5%
this year. GDP grew 2% year-on-year in the fourth quarter of 2009 and fell 0.2%
for the whole of 2009 compared with 2008.
Fisher Capital Management South Korea Investing: - The central bank did not raise its target overnight interest rate, the so-called Selic rate, unchanged leaving it at 8.75% a year. This was expected as the presidential
election is nearing. The rate fell from 13.75% to 8.75% between December 2008
and July 2009. By the year-end, the rate is expected to rise by 250 basis points to
curb inflation.
Even though the US and Brazil are not as open an economy as one would believe.
Trade accounts for approximately 14% for both the countries. US cotton subsidies had been a bone of contention for the two countries. The US was accused of excessive cotton subsidies by Brazil. After eight years of litigation at the World Trade Organization Brazil has won the case and Brazil’s move to raise tariffs on
a wide range of American goods has a potential of starting a new front in the trade
war with the US over cotton subsidies. Overall, the issue is still not blown out of
proportion as the two countries are engaged on other fronts.
Fisher Capital Management Korea, Brazil’s Economy: 1st Quarter Investment - Brazil’s government announced a R$958.9bn programme of investments in infrastructure for 2011 to 2014. The program is known as the PAC 2 … the
Portuguese acronym for accelerated growth programme, part two … to increase
Brazil’s investment rate and its potential for economic growth during the period
of the next government, which begins on January 1 2011.
Fisher Capital Management South Korea, Investment News: Henrique Meirelles who provided monetary stability to Brazil is all set to stand for election either as a Vice President or a senator. President Lula may choose him to
run for the Vice President office to send a message that macroeconomic stability
will be maintained under Ms Rousseff, presidential nominee of Mr. Lula’s party in the October election.
Fisher Capital is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Let us keep you informed of all the latest news and developments with our free monthly newsletter of analysis and recommendations.
Join our mailing list to recieved our free monthly Fisher Capital newsletter, with analysis of the latest financial and investment news and developmetns, plus of course our current research findings and recommendations.
this year. GDP grew 2% year-on-year in the fourth quarter of 2009 and fell 0.2%
for the whole of 2009 compared with 2008.
Fisher Capital Management South Korea Investing: - The central bank did not raise its target overnight interest rate, the so-called Selic rate, unchanged leaving it at 8.75% a year. This was expected as the presidential
election is nearing. The rate fell from 13.75% to 8.75% between December 2008
and July 2009. By the year-end, the rate is expected to rise by 250 basis points to
curb inflation.
Even though the US and Brazil are not as open an economy as one would believe.
Trade accounts for approximately 14% for both the countries. US cotton subsidies had been a bone of contention for the two countries. The US was accused of excessive cotton subsidies by Brazil. After eight years of litigation at the World Trade Organization Brazil has won the case and Brazil’s move to raise tariffs on
a wide range of American goods has a potential of starting a new front in the trade
war with the US over cotton subsidies. Overall, the issue is still not blown out of
proportion as the two countries are engaged on other fronts.
Fisher Capital Management Korea, Brazil’s Economy: 1st Quarter Investment - Brazil’s government announced a R$958.9bn programme of investments in infrastructure for 2011 to 2014. The program is known as the PAC 2 … the
Portuguese acronym for accelerated growth programme, part two … to increase
Brazil’s investment rate and its potential for economic growth during the period
of the next government, which begins on January 1 2011.
Fisher Capital Management South Korea, Investment News: Henrique Meirelles who provided monetary stability to Brazil is all set to stand for election either as a Vice President or a senator. President Lula may choose him to
run for the Vice President office to send a message that macroeconomic stability
will be maintained under Ms Rousseff, presidential nominee of Mr. Lula’s party in the October election.
Fisher Capital is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Let us keep you informed of all the latest news and developments with our free monthly newsletter of analysis and recommendations.
Join our mailing list to recieved our free monthly Fisher Capital newsletter, with analysis of the latest financial and investment news and developmetns, plus of course our current research findings and recommendations.
South Korea: Market Overview 2010 Fisher Capital Management Seoul
South Korea: Fisher Capital Management Seoul - The South Korean economy is expected to grow by 4–5% in 2010. The government’s efforts were seriously questioned when it clipped the independence of the central bank when the government sent its observers to the central bank’s policy meetings.
However, the central bank will start raising interest rates in the third quarter to prevent inflation and asset bubbles. For the time being inflation is stable. It fell from 3.1% in January to 2.7% in February, but inflation will accelerate in the second half due to higher oil prices and rising imports. This should see policy interest rates
to go up by 25 basis points in the third quarter and another 25 basis points in December.
South Korea: Market Overview 2010 Fisher Capital Management Seoul - The government appointed Mr. Kim, who has served as a presidential economic secretary and is currently South Korea’s ambassador to the Organization for Economic Cooperation and Development. Under the new leadership, the central bank may cooperate even more closely with the government than it has under Governor Lee. The central bank under Mr. Kim may be more willing to risk inflation
in order to ensure that the economic recovery remains on track. The Korean policy
interest rate has been at an all-time low of 2.0% for more than a year now and the bank expects inflation to stay around 2.5% in the near future.
South Korea: Market Overview 2010 Fisher Capital Management Seoul - Fisher Capital is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
The Fisher Capital Difference
While many financial institutions talk about wealth management, few actually provide the resources to deliver an integrated solution.
Access to industry leading Investment Advisors- Investment Advisors who are invited to join Fisher Capital are recognized leaders in financial services who share our values of trust and integrity. They have built successful practices and are respected by clients for delivering results and superior service.
Exclusive and industry leading products and services - Our Investment Advisory teams constantly review the marketplace searching for trends and opportunities to enhance wealth. Core investment solutions are complemented by our ability to deliver institutional power allowing you to invest alongside Fisher Capital through exclusive offerings such as private equity as well as hedging strategies and other alternative investment strategies.
Personal Investment Management - Fisher Capital is home to many leading Portfolio Managers who assist private clients and institutional investors preferring the convenience of delegating the day-to-day decision making in their portfolio.
Experience our difference - Learn how your Investment Advisor, with the support of the team of professionals at Fisher Capital, can help address the issues you face while preserving, enhancing and transferring your wealth.
Contact your Investment Advisor today.
Let us keep you informed of all the latest news and developments with our free monthly newsletter of analysis and recommendations.
Join our mailing list to recieved our free monthly Fisher Capital newsletter, with analysis of the latest financial and investment news and developmetns, plus of course our current research findings and recommendations.
However, the central bank will start raising interest rates in the third quarter to prevent inflation and asset bubbles. For the time being inflation is stable. It fell from 3.1% in January to 2.7% in February, but inflation will accelerate in the second half due to higher oil prices and rising imports. This should see policy interest rates
to go up by 25 basis points in the third quarter and another 25 basis points in December.
South Korea: Market Overview 2010 Fisher Capital Management Seoul - The government appointed Mr. Kim, who has served as a presidential economic secretary and is currently South Korea’s ambassador to the Organization for Economic Cooperation and Development. Under the new leadership, the central bank may cooperate even more closely with the government than it has under Governor Lee. The central bank under Mr. Kim may be more willing to risk inflation
in order to ensure that the economic recovery remains on track. The Korean policy
interest rate has been at an all-time low of 2.0% for more than a year now and the bank expects inflation to stay around 2.5% in the near future.
South Korea: Market Overview 2010 Fisher Capital Management Seoul - Fisher Capital is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
The Fisher Capital Difference
While many financial institutions talk about wealth management, few actually provide the resources to deliver an integrated solution.
Access to industry leading Investment Advisors- Investment Advisors who are invited to join Fisher Capital are recognized leaders in financial services who share our values of trust and integrity. They have built successful practices and are respected by clients for delivering results and superior service.
Exclusive and industry leading products and services - Our Investment Advisory teams constantly review the marketplace searching for trends and opportunities to enhance wealth. Core investment solutions are complemented by our ability to deliver institutional power allowing you to invest alongside Fisher Capital through exclusive offerings such as private equity as well as hedging strategies and other alternative investment strategies.
Personal Investment Management - Fisher Capital is home to many leading Portfolio Managers who assist private clients and institutional investors preferring the convenience of delegating the day-to-day decision making in their portfolio.
Experience our difference - Learn how your Investment Advisor, with the support of the team of professionals at Fisher Capital, can help address the issues you face while preserving, enhancing and transferring your wealth.
Contact your Investment Advisor today.
Let us keep you informed of all the latest news and developments with our free monthly newsletter of analysis and recommendations.
Join our mailing list to recieved our free monthly Fisher Capital newsletter, with analysis of the latest financial and investment news and developmetns, plus of course our current research findings and recommendations.
Tuesday, March 15, 2011
Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010
Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - India is in a sweet spot. The central government budget which set the tone for reducing fiscal deficit and an unexpected increase in the policy rate to rein in inflation has convinced the markets and economists that India is on its way to having a robust economic growth. Industrial output also continued to grow at a fast pace in January as companies produced more cars and cement. In the fiscal year 2011 that ends in March 2011, GDP growth of 8.5% is achievable. Long-term predictions for the southwest monsoons are expected to be normal, giving a boost to agricultural production and domestic demand.
Fisher Capital Management Seoul Korea- Inflation in India has been surging, driven by a low base and high food prices as the weakest monsoon rains in 37 years last year hurt farm output. Inflation running at 8.5% may have peaked and it is expected to ease by April as the winter-sown crop comes to market. The year-on-year inflation rate for food articles was 16.22% in the week ending March 13, far above the comfortable zone for the central bank and the government. In order to manage the inflationary expectations, the central bank increased overnight lending and borrowing rates by 0.25 percentages point each, making it one of the first major central banks to raise rates. The central bank further announced that it would continue to roll back its loose monetary policy to manage prices, as the country can’t have sustained strong growth with high inflation. We expect a 0.25-percentage-point rate hike in mid-April and another increase of one percentage point through March 2011.
Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - The rebound in industrial activity also saw a surge in India’s exports for the third month running in January. Exports in January rose 11.5% from a year earlier to $14.34 billion, after having increased 9.3% to $14.61 billion in December. Imports increased 35.5% in January to $24.70 billion while oil imports rose by 56% to $7.05 billion. Non-oil imports, a barometer of investment activity, grew 28.8% to $17.65 billion.
On the back of robust economic numbers and policy pronouncements, the rating agency Standard & Poor’s raised its rating outlook to stable, expecting the fiscal situation to recover and growth to remain strong in the coming years. The government’s commitment to follow the recommendations of the 13th Finance
Commission, as well as its move to reduce fertilizer subsidies and raise domestic fuel prices were taken as positive indicators. The country’s external position continues to be in a comfortable zone.
Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - It is unlikely that India will benefit from the Google-China spat as the Indian government will not provide the kind of benefits China extends to the manufacturing sector in China. But some relocation is likely to emerge. For example, American companies GoDaddy and Dell have threatened to pull out of China and relocate themselves in India.
Fisher Capital Management Seoul Korea- Inflation in India has been surging, driven by a low base and high food prices as the weakest monsoon rains in 37 years last year hurt farm output. Inflation running at 8.5% may have peaked and it is expected to ease by April as the winter-sown crop comes to market. The year-on-year inflation rate for food articles was 16.22% in the week ending March 13, far above the comfortable zone for the central bank and the government. In order to manage the inflationary expectations, the central bank increased overnight lending and borrowing rates by 0.25 percentages point each, making it one of the first major central banks to raise rates. The central bank further announced that it would continue to roll back its loose monetary policy to manage prices, as the country can’t have sustained strong growth with high inflation. We expect a 0.25-percentage-point rate hike in mid-April and another increase of one percentage point through March 2011.
Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - The rebound in industrial activity also saw a surge in India’s exports for the third month running in January. Exports in January rose 11.5% from a year earlier to $14.34 billion, after having increased 9.3% to $14.61 billion in December. Imports increased 35.5% in January to $24.70 billion while oil imports rose by 56% to $7.05 billion. Non-oil imports, a barometer of investment activity, grew 28.8% to $17.65 billion.
On the back of robust economic numbers and policy pronouncements, the rating agency Standard & Poor’s raised its rating outlook to stable, expecting the fiscal situation to recover and growth to remain strong in the coming years. The government’s commitment to follow the recommendations of the 13th Finance
Commission, as well as its move to reduce fertilizer subsidies and raise domestic fuel prices were taken as positive indicators. The country’s external position continues to be in a comfortable zone.
Fisher Capital Management Seoul Korea: Market Overview 1st Quarter 2010 - It is unlikely that India will benefit from the Google-China spat as the Indian government will not provide the kind of benefits China extends to the manufacturing sector in China. But some relocation is likely to emerge. For example, American companies GoDaddy and Dell have threatened to pull out of China and relocate themselves in India.
Fisher Capital Management: Market Performance – US Economy
Fisher Capital Management Report, Part 1 - Output growth exceeded what were once considered lofty expectations during the third quarter, as real GDP (inflation adjusted Gross Domestic Product) rose by a 3.5% annual pace from the previous quarter. To be sure, this was the first gain in economic activity after four consecutive quarterly declines in GDP. While technically this indicates an end to the recession, we point out that on a year-over-year (YOY) basis, economic activity has still declined 2.3%, yet it represents an improvement from the -3.8% YOY in the second quarter, the worst annual drop in seven decades. The components of GDP were led by growth in personal consumption, which increased 3.4% as stimulus programs such as “Cash for Clunkers” allowed consumer spending to increase by the largest amount in two years. Home construction surged at an annual rate of 23%, spurred on by the $8,000 tax credit for first-time buyers. Another decline in business inventories also added to output, as did the growth in government spending (2.3%). Though businesses increased spending on equipment and software, fixed investment remained weak.
Market Performance, US Economy: Fisher Capital Management Report - As the positive effects of federal stimuli diminish, we continue to project an economic recovery that is “less spectacular” than in previous experiences. While output growth has improved as government programs spurred consumption relative to housing and autos, our concern rests on the economy¹s ability to sustain these rates of growth as government programs wane. Indeed, personal spending fell 0.5% in September after the “Cash for Clunkers” program concluded in August. Consumer confidence also weakened in October as the unemployment rate approached 10%. Until we experience a sustainable floor in housing and a ceiling on the unemployment rate, we suspect output growth will rely on exports, inventories, and government outlays, areas that we characterize as “cushions” for growth.
Market Performance, US Economy: Fisher Capital Management Report - As the unemployment rate lingers within the range of 10% and Fed policymakers remain committed to keeping interest rates low for an “extended period,” we look for real GDP to expand at an average rate of approximately 2.5% in 2010.
Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Market Performance, US Economy: Fisher Capital Management Report - As the positive effects of federal stimuli diminish, we continue to project an economic recovery that is “less spectacular” than in previous experiences. While output growth has improved as government programs spurred consumption relative to housing and autos, our concern rests on the economy¹s ability to sustain these rates of growth as government programs wane. Indeed, personal spending fell 0.5% in September after the “Cash for Clunkers” program concluded in August. Consumer confidence also weakened in October as the unemployment rate approached 10%. Until we experience a sustainable floor in housing and a ceiling on the unemployment rate, we suspect output growth will rely on exports, inventories, and government outlays, areas that we characterize as “cushions” for growth.
Market Performance, US Economy: Fisher Capital Management Report - As the unemployment rate lingers within the range of 10% and Fed policymakers remain committed to keeping interest rates low for an “extended period,” we look for real GDP to expand at an average rate of approximately 2.5% in 2010.
Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Market Overview December 2009: Fisher Capital Management
Market Overview December 2009: Fisher Capital Management - Stocks closed lower in October for the first time in seven months, as investors questioned whether the huge rally off the March lows had exceeded the economy’s ability to generate growth in output and profits.
Indeed, equities capped off a volatile month (the Dow Jones Industrial Average (DJIA) experienced triple-digit moves in ten trading sessions!) with a volatile week, as the S&P 500 Index experienced its worst five-day span since early July.
For the month, the DJIA eked out a fractional gain, while all the other major equity market indices suffered losses. Small cap stocks, which had been among the performance leaders of the seven-month rally, experienced the worst hit, with the Russell 2000® Index falling by almost 7%. In another sign that the market may be growing skeptical of the “higher risk, higher reward” strategy, the NASDAQ Composite Index, dominated by technology holdings, declined 3.6% for the month.
Market Overview December 2009: Fisher Capital Management - Yet perhaps emblematic of the struggles experienced in the markets recently, growth stocks outperformed value in October, contradicting the idea that the pursuit of “risk” had become out of favor over the past several weeks. Moreover, the weakness in U.S. markets failed to extend beyond our borders last month, as developed markets (MSCI EAFE) experienced just a fractional loss, while the emerging markets (MSCI EM) managed to rise by up to 1%, adding to their impressive year-to-date (YTD) returns.
From a sector perspective, two of the three leading performers off the March lows (financials and materials) declined by the largest amounts in October, as investors appeared to lock in gains of approximately 150% for the financials sector and 75% for the materials sector. Despite the weakness in the technologyladen NASDAQ Composite last month, the higher-quality and larger-cap tech names comprising the S&P 500 Index’s information technology sector simply dropped fractionally. Rising oil prices pushed the energy sector higher by 3%, and the “defensive trade” was still evident within the consumer staples sector, which held on for a 1% gain.
Market Overview December 2009: Fisher Capital Management - In other asset classes, fixed-income was mixed last month. The yield on the 10-year Treasury note backed up by seven basis points, as traders likely moved funds elsewhere as the Federal Reserve concluded its $300 billion Treasury purchase program. The dollar continued to weaken, hovering near 14-month lows, which helped drive up the prices for oil, gold, and most commodities.
Fisher Capital Management Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world. As a full service company Fisher Capital Management Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Indeed, equities capped off a volatile month (the Dow Jones Industrial Average (DJIA) experienced triple-digit moves in ten trading sessions!) with a volatile week, as the S&P 500 Index experienced its worst five-day span since early July.
For the month, the DJIA eked out a fractional gain, while all the other major equity market indices suffered losses. Small cap stocks, which had been among the performance leaders of the seven-month rally, experienced the worst hit, with the Russell 2000® Index falling by almost 7%. In another sign that the market may be growing skeptical of the “higher risk, higher reward” strategy, the NASDAQ Composite Index, dominated by technology holdings, declined 3.6% for the month.
Market Overview December 2009: Fisher Capital Management - Yet perhaps emblematic of the struggles experienced in the markets recently, growth stocks outperformed value in October, contradicting the idea that the pursuit of “risk” had become out of favor over the past several weeks. Moreover, the weakness in U.S. markets failed to extend beyond our borders last month, as developed markets (MSCI EAFE) experienced just a fractional loss, while the emerging markets (MSCI EM) managed to rise by up to 1%, adding to their impressive year-to-date (YTD) returns.
From a sector perspective, two of the three leading performers off the March lows (financials and materials) declined by the largest amounts in October, as investors appeared to lock in gains of approximately 150% for the financials sector and 75% for the materials sector. Despite the weakness in the technologyladen NASDAQ Composite last month, the higher-quality and larger-cap tech names comprising the S&P 500 Index’s information technology sector simply dropped fractionally. Rising oil prices pushed the energy sector higher by 3%, and the “defensive trade” was still evident within the consumer staples sector, which held on for a 1% gain.
Market Overview December 2009: Fisher Capital Management - In other asset classes, fixed-income was mixed last month. The yield on the 10-year Treasury note backed up by seven basis points, as traders likely moved funds elsewhere as the Federal Reserve concluded its $300 billion Treasury purchase program. The dollar continued to weaken, hovering near 14-month lows, which helped drive up the prices for oil, gold, and most commodities.
Fisher Capital Management Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world. As a full service company Fisher Capital Management Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Tuesday, March 8, 2011
U.S. Equities: Fisher Capital Management Reports
As mentioned previously, stocks finished a volatile month in October with a volatile final week of trading, as investors began to question whether the market¹s impressive rally had surpassed the economy¹s ability to generate growth in output and profits.
To be sure, throughout the market’s impressive rebound, the technical picture for stocks gathered steam, as excess liquidity helped drive the market higher.
Fisher Capital Management, US Equities Reports: As one technical achievement passed another, we began to postulate that the market’s technicals appeared significantly better than its fundamentals.
Some of these concerns may be coming to fruition over the near term, as a few technical strengths appear to have softened in recent weeks. Indeed, as the S&P 500 Index approached the 1,100 level during the middle of October, the market ran into strong resistance, falling by approximately 5% from that high by month-end.
Fisher Capital Management, US Equities Reports: This may prove to be an important development because at 1,100, the S&P 500 was within about 20 points of achieving a 50% retracement, whereby the market could have recouped 50% of the loss from the October 2007 high of 1565 to the March 2009 low of 666. Given all the cash parked in money markets and shortterm Treasury bills, another surge or two above 1,100 is certainly possible. Yet 1,121 is a number that should be on the radar for all investors, because if it is achieved, very little technical resistance exists on the path to 1200.
In addition to the strong resistance, stocks failed to hold a key support level on the last day of October. The market’s 50-day moving average (DMA) was 1,052 heading into Halloween weekend, but investors were spooked by poor readings on personal spending and consumer confidence, resulting in a close (1,036) below the important 50- DMA level. An important test will be in the first several trading days of November to see whether or not the market can sustain its rally above this key support level.
Fisher Capital Management, US Equities Reports: This weakness was exacerbated by a surge in the market’s “fear gauge” toward the end of October. The Chicago Board Options Exchange Volatility Index, or VIX, which measures the cost of using options as insurance against declines in the S&P 500 Index, surged in the final few days of trading last month.
While the VIX had been at a 14-month low in the middle of October, the 25% jump at the end of the month suggests investor skittishness about market direction over the next several weeks, particularly as the catalyst of earnings season draws to a close.
Fisher Capital Management, US Equities Reports: Fortunately, the fundamental picture has brightened. Better than expected economic data suggests the possibilities for an improvement in corporate performance. Interest rates and inflation remain low, providing a healthy backdrop for corporations that have been very aggressive cutting costs from their expense structures.
Indeed, recent earnings news has been somewhat positive, with 70% of the companies in the S&P 500 Index having reported an average decline in earnings per share (EPS) of 12% for the
third quarter, exceeding expectations.
Fisher Capital Management, US Equities Reports: Given our projections for a “less spectacular” economic recovery in 2010, though, we continue to believe that consensus estimates for corporate profit growth of up to 35% next year are too high. Consequently, our operating EPS projections remain more than 12% below consensus expectations ($75.00) for 2010.
Businesses can’t cut costs forever, and at some point we believe revenue growth is a necessity to help justify valuations for a market that is already trading at a price/earnings (P/E) ratio of 16 to 17 times our $65.00 estimate for next year. Until we begin to see an improvement in the longer-term trends for housing, employment, credit, sales, and profits, we suspect the market will be unwilling to pay anything more than historically average P/E multiples (16 to 17 times) for a dollar of earnings. Therefore, we continue to believe the market, as defined by the S&P 500 Index, will likely be fairly valued within the current range of 1,050 to 1,100 over the next six months.
Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world. As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
To be sure, throughout the market’s impressive rebound, the technical picture for stocks gathered steam, as excess liquidity helped drive the market higher.
Fisher Capital Management, US Equities Reports: As one technical achievement passed another, we began to postulate that the market’s technicals appeared significantly better than its fundamentals.
Some of these concerns may be coming to fruition over the near term, as a few technical strengths appear to have softened in recent weeks. Indeed, as the S&P 500 Index approached the 1,100 level during the middle of October, the market ran into strong resistance, falling by approximately 5% from that high by month-end.
Fisher Capital Management, US Equities Reports: This may prove to be an important development because at 1,100, the S&P 500 was within about 20 points of achieving a 50% retracement, whereby the market could have recouped 50% of the loss from the October 2007 high of 1565 to the March 2009 low of 666. Given all the cash parked in money markets and shortterm Treasury bills, another surge or two above 1,100 is certainly possible. Yet 1,121 is a number that should be on the radar for all investors, because if it is achieved, very little technical resistance exists on the path to 1200.
In addition to the strong resistance, stocks failed to hold a key support level on the last day of October. The market’s 50-day moving average (DMA) was 1,052 heading into Halloween weekend, but investors were spooked by poor readings on personal spending and consumer confidence, resulting in a close (1,036) below the important 50- DMA level. An important test will be in the first several trading days of November to see whether or not the market can sustain its rally above this key support level.
Fisher Capital Management, US Equities Reports: This weakness was exacerbated by a surge in the market’s “fear gauge” toward the end of October. The Chicago Board Options Exchange Volatility Index, or VIX, which measures the cost of using options as insurance against declines in the S&P 500 Index, surged in the final few days of trading last month.
While the VIX had been at a 14-month low in the middle of October, the 25% jump at the end of the month suggests investor skittishness about market direction over the next several weeks, particularly as the catalyst of earnings season draws to a close.
Fisher Capital Management, US Equities Reports: Fortunately, the fundamental picture has brightened. Better than expected economic data suggests the possibilities for an improvement in corporate performance. Interest rates and inflation remain low, providing a healthy backdrop for corporations that have been very aggressive cutting costs from their expense structures.
Indeed, recent earnings news has been somewhat positive, with 70% of the companies in the S&P 500 Index having reported an average decline in earnings per share (EPS) of 12% for the
third quarter, exceeding expectations.
Fisher Capital Management, US Equities Reports: Given our projections for a “less spectacular” economic recovery in 2010, though, we continue to believe that consensus estimates for corporate profit growth of up to 35% next year are too high. Consequently, our operating EPS projections remain more than 12% below consensus expectations ($75.00) for 2010.
Businesses can’t cut costs forever, and at some point we believe revenue growth is a necessity to help justify valuations for a market that is already trading at a price/earnings (P/E) ratio of 16 to 17 times our $65.00 estimate for next year. Until we begin to see an improvement in the longer-term trends for housing, employment, credit, sales, and profits, we suspect the market will be unwilling to pay anything more than historically average P/E multiples (16 to 17 times) for a dollar of earnings. Therefore, we continue to believe the market, as defined by the S&P 500 Index, will likely be fairly valued within the current range of 1,050 to 1,100 over the next six months.
Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world. As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Fisher Capital Management Reports: International Equities
The third quarter saw double-digit returns for the world¹s equity markets. U.S. large-cap stocks, as measured by the Russell 1000 Index, rose 16.07%, bringing that index’s year-to-date return to 21.08%. Mid-cap stocks were the best performers overall, with the Russell Mid-Cap Index gaining 20.62% for the third quarter and 32.63% for the year. Value stocks bounced back during the quarter, outperforming growth stocks across the full range of market capitalizations. Small-cap value stocks were the best performers for the quarter but still lagged their small growth counterparts by almost 13 percentage points for the year.
International Equities: Fisher Capital management, Korea reports: International equities posted double-digit gains for the third quarter as well. The MSCI EAFE IMI Index gained 19.82% in the third quarter, with local-currency average market returns of 15.10% boosted by the weak performance of the U.S. dollar.
Emerging markets produced another strong quarter, but one that was more in line with developed market returns than was the case during the second quarter of 2009, as the MSCI Emerging Market IMI Index rose 21.30% for the third quarter. Both developed and emerging markets were driven higher by the strong performance of European equity markets, while Asian markets, particularly in Japan, lagged.
Fisher Capital Management Outlook: At the end of the quarter, markets reacted negatively to mixed economic news, signaling a potential correction off the recent highs. The strong rally since the market’s low of March 9, 2009 has left observers wondering whether rapidly-rising stock valuations have become prematurely rich and earnings expectations somewhat stretched.
While we are cautious about the performance of the market in the short term, we continue to expect a slower, but more robust and sustained, “smile-shaped” economic recovery in the long run.
Many financial institutions talk about wealth management.
Few have the resources to deliver an integrated solution. We are among the few.
Providing a client service that is second to none. Learn how your Investment Advisor, with the support of the team of professionals at Fisher Capital, can help address the issues you face while preserving, enhancing and transferring your wealth...Diversification and quality are our research guidelines. At Fisher, we are committed to a long-term investment philosophy that emphasizes quality and diversification. We do business this way because years of experience have convinced us that...
We find the right investment balance for our clients. Fisher leads the way in the provision of first class advisory services across the investment spectrum. Our clients range from private individuals, to intermediaries and global institutions...
Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
International Equities: Fisher Capital management, Korea reports: International equities posted double-digit gains for the third quarter as well. The MSCI EAFE IMI Index gained 19.82% in the third quarter, with local-currency average market returns of 15.10% boosted by the weak performance of the U.S. dollar.
Emerging markets produced another strong quarter, but one that was more in line with developed market returns than was the case during the second quarter of 2009, as the MSCI Emerging Market IMI Index rose 21.30% for the third quarter. Both developed and emerging markets were driven higher by the strong performance of European equity markets, while Asian markets, particularly in Japan, lagged.
Fisher Capital Management Outlook: At the end of the quarter, markets reacted negatively to mixed economic news, signaling a potential correction off the recent highs. The strong rally since the market’s low of March 9, 2009 has left observers wondering whether rapidly-rising stock valuations have become prematurely rich and earnings expectations somewhat stretched.
While we are cautious about the performance of the market in the short term, we continue to expect a slower, but more robust and sustained, “smile-shaped” economic recovery in the long run.
Many financial institutions talk about wealth management.
Few have the resources to deliver an integrated solution. We are among the few.
Providing a client service that is second to none. Learn how your Investment Advisor, with the support of the team of professionals at Fisher Capital, can help address the issues you face while preserving, enhancing and transferring your wealth...Diversification and quality are our research guidelines. At Fisher, we are committed to a long-term investment philosophy that emphasizes quality and diversification. We do business this way because years of experience have convinced us that...
We find the right investment balance for our clients. Fisher leads the way in the provision of first class advisory services across the investment spectrum. Our clients range from private individuals, to intermediaries and global institutions...
Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Fisher Capital Management: Market Performance
Market Performance: Fisher Capital Management - Stocks closed lower in October for the first time in seven months, as investors questioned whether the huge rally off the March lows had exceeded the economy’s ability to generate growth in output and profits.
Indeed, equities capped off a volatile month (the Dow Jones Industrial Average (DJIA) experienced triple-digit moves in ten trading sessions!) with a volatile week, as the S&P 500 Index experienced its worst five-day span since early July.
For the month, the DJIA eked out a fractional gain, while all the other major equity market indices suffered losses. Small cap stocks, which had been among the performance leaders of the seven-month rally, experienced the worst hit, with the Russell 2000® Index falling by almost 7%. In another sign that the market may be growing skeptical of the “higher risk, higher reward” strategy, the NASDAQ Composite Index, dominated by technology holdings, declined 3.6% for the month.
Market Performance: Fisher Capital Management - Yet perhaps emblematic of the struggles experienced in the markets recently, growth stocks outperformed value in October, contradicting the idea that the pursuit of “risk” had become out of favor over the past several weeks. Moreover, the weakness in U.S. markets failed to extend beyond our borders last month, as developed markets (MSCI EAFE) experienced just a fractional loss, while the emerging markets (MSCI EM) managed to rise by up to 1%, adding to their impressive year-to-date (YTD) returns.
From a sector perspective, two of the three leading performers off the March lows (financials and materials) declined by the largest amounts in October, as investors appeared to lock in gains of approximately 150% for the financials sector and 75% for the materials sector. Despite the weakness in the technologyladen NASDAQ Composite last month, the higher-quality and larger-cap tech names comprising the S&P 500 Index’s information technology sector simply dropped fractionally. Rising oil prices pushed the energy sector higher by 3%, and the “defensive trade” was still evident within the consumer staples sector, which held on for a 1% gain.
Market Performance: Fisher Capital Management - In other asset classes, fixed-income was mixed last month. The yield on the 10-year Treasury note backed up by seven basis points, as traders likely moved funds elsewhere as the Federal Reserve concluded its $300 billion Treasury purchase program. The dollar continued to weaken, hovering near 14-month lows, which helped drive up the prices for oil, gold, and most commodities.
Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Indeed, equities capped off a volatile month (the Dow Jones Industrial Average (DJIA) experienced triple-digit moves in ten trading sessions!) with a volatile week, as the S&P 500 Index experienced its worst five-day span since early July.
For the month, the DJIA eked out a fractional gain, while all the other major equity market indices suffered losses. Small cap stocks, which had been among the performance leaders of the seven-month rally, experienced the worst hit, with the Russell 2000® Index falling by almost 7%. In another sign that the market may be growing skeptical of the “higher risk, higher reward” strategy, the NASDAQ Composite Index, dominated by technology holdings, declined 3.6% for the month.
Market Performance: Fisher Capital Management - Yet perhaps emblematic of the struggles experienced in the markets recently, growth stocks outperformed value in October, contradicting the idea that the pursuit of “risk” had become out of favor over the past several weeks. Moreover, the weakness in U.S. markets failed to extend beyond our borders last month, as developed markets (MSCI EAFE) experienced just a fractional loss, while the emerging markets (MSCI EM) managed to rise by up to 1%, adding to their impressive year-to-date (YTD) returns.
From a sector perspective, two of the three leading performers off the March lows (financials and materials) declined by the largest amounts in October, as investors appeared to lock in gains of approximately 150% for the financials sector and 75% for the materials sector. Despite the weakness in the technologyladen NASDAQ Composite last month, the higher-quality and larger-cap tech names comprising the S&P 500 Index’s information technology sector simply dropped fractionally. Rising oil prices pushed the energy sector higher by 3%, and the “defensive trade” was still evident within the consumer staples sector, which held on for a 1% gain.
Market Performance: Fisher Capital Management - In other asset classes, fixed-income was mixed last month. The yield on the 10-year Treasury note backed up by seven basis points, as traders likely moved funds elsewhere as the Federal Reserve concluded its $300 billion Treasury purchase program. The dollar continued to weaken, hovering near 14-month lows, which helped drive up the prices for oil, gold, and most commodities.
Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.
Tuesday, March 1, 2011
Triad Boiler Room Systems Launched New Commercial Boilers
Fisher Capital on Boiler Room Equipment, Inc: Triad Boiler Systems manufactures uniquely rugged small-footprint hot water boilers, steam boilers, and radiant heating systems. All our boilers use 12 gauge firetubes in compact vessels that fit through very small doorways! Inputs range up to 2,000,000 BTU's. Create a highly efficient system with millions of BTU's by sequencing a string of these modular vessels.
TRIAD's commercial boilers and industrial grade Hot Water Heating, Domestic Hot Water, and Steam boilers are used in a wide variety of applications. Our commercial boilers are used at schools, universities, apartments, hospitals, office buildings, retirement communities, and churches. Industrial uses have included bakeries, smelting operations, food processing, quenching systems, and various heating applications for manufacturing. Triads’ modular boilers and radiant heating systems can be natural gas fired, oil fired, or dual fuel fired. For simplicity of operation and maintenance, all controls on our boilers are well known, off-the-shelf products. There area no proprietary parts on these boilers! This simplicity of operation is part of our philosophy, and an important reason why our customers return to us again and again.
TRIAD has been manufacturing high-quality boilers since 1926, and developed the modular boiler concept with primary/secondary piping, receiving a patent for it in 1967. We put this experience, knowledge, and expertise into every boiler.
We believe in quality - it is the overriding characteristic driving our company. This is why we manufacture extremely rugged, well-designed hot water and steam boilers that can provide decades of dependable service. We welcome your inquiries.
Benefits of Modularity
TRIAD's elegantly simple design maintains consistent water volume where heat is required.
• Boilers are activated sequentially, drawing water from the main loop into the next hot water boiler until the heating need is meet.
• firing boilers remaining isolated, so no heated water circulates through cold boilers.
• During most of the year the unfired boilers provide additional backup.
• Outdoor temperatures and loop water temperatures are constantly monitored.
Fisher Capital on Boiler Room Equipment, Inc: The efficiency of this design is most apparent during warmer months, when a conventional hydronic heating or steam boiler could still be operating at full capacity.
Primary-Secondary Piping
TRIAD integrates modularity with a single pipe primary-secondary system. TRIAD was the first company to employ a Primary-Secondary concept. It operates with two loops, (i) the primary loop, or building main loop, and (ii) smaller secondary loops off of each hot water boiler, which supply heated water to the primary loop.
Upon a call for heat, the boiler pump begins pushing the return water into the boiler and out through the secondary loop, supplying this hot water up into the primary loop (the main header), where it mixes with the cooler return water from the main loop of the building.
• Supply and return water are blended, avoiding the need for expensive and unreliable mixing valves commonly used in two pipe systems.
• The secondary loop isolates each hot water boiler, resulting in a very efficient system that minimizes thermal shock.
Control Panel
TRIAD Boilers can be sequenced by the use of our control panel that provides many attractive features:
• Temperature set-back when less heat is required, such as nights and weekends.
• Adjustments for latent heat, to take advantage of hot boiler water that retains heat after the burner shuts down.
• Outdoor reset based on atmospheric temperatures.
• Monitoring of return water temperatures to maintain accurate heating output.
It is also very easy to sequence our boilers using the panel of any other major manufacturer.
Packaged Product
Fisher Capital on Boiler Room Equipment, Inc: All TRIAD hot water boilers and steam boilers are fully assembled, packaged products, which offer several advantages over boilers that must be assembled at the jobsite
• Onsite labor costs are minimized.
• Quality control is higher at the factory than at the jobsite
• The ease of installation of a packaged boiler allows for quicker start up.
Benefits of Steel Boilers
Easy to Clean
To maintain boiler efficiency, heating surfaces must be kept clean and free of combustion by-products. All TRIAD heating surfaces, especially the firetubes, are easy to access. It is impossible to clean all the heating surfaces of a cast iron boiler, and what can be reached is difficult to clean.
TRIAD also makes it easy to maintain clean water surfaces. The cleaning of the interior of a cast iron boiler is a major undertaking, and even then only the vertical surfaces can be cleaned. The inability to clean the horizontal surfaces can have a significant impact on operating efficiency.
Easy to Repair
Because of their steel construction, TRIAD hot water and steam boilers can be repaired in the field with minimal disruption. A leak can be permanently welded or the tubes re-rolled with little difficulty. It is impossible to permanently weld a cracked cast iron boiler section or a leaking copper fin-tube boiler. The firetubes are easily accessed through the top and through the firedoor.
Fast Water Circulation
Poor circulation of water within the typical cast iron boiler is very common due to their design limits, while TRIAD's steel hot water boilers provide for faster circulation.
TRIAD's commercial boilers and industrial grade Hot Water Heating, Domestic Hot Water, and Steam boilers are used in a wide variety of applications. Our commercial boilers are used at schools, universities, apartments, hospitals, office buildings, retirement communities, and churches. Industrial uses have included bakeries, smelting operations, food processing, quenching systems, and various heating applications for manufacturing. Triads’ modular boilers and radiant heating systems can be natural gas fired, oil fired, or dual fuel fired. For simplicity of operation and maintenance, all controls on our boilers are well known, off-the-shelf products. There area no proprietary parts on these boilers! This simplicity of operation is part of our philosophy, and an important reason why our customers return to us again and again.
TRIAD has been manufacturing high-quality boilers since 1926, and developed the modular boiler concept with primary/secondary piping, receiving a patent for it in 1967. We put this experience, knowledge, and expertise into every boiler.
We believe in quality - it is the overriding characteristic driving our company. This is why we manufacture extremely rugged, well-designed hot water and steam boilers that can provide decades of dependable service. We welcome your inquiries.
Benefits of Modularity
TRIAD's elegantly simple design maintains consistent water volume where heat is required.
• Boilers are activated sequentially, drawing water from the main loop into the next hot water boiler until the heating need is meet.
• firing boilers remaining isolated, so no heated water circulates through cold boilers.
• During most of the year the unfired boilers provide additional backup.
• Outdoor temperatures and loop water temperatures are constantly monitored.
Fisher Capital on Boiler Room Equipment, Inc: The efficiency of this design is most apparent during warmer months, when a conventional hydronic heating or steam boiler could still be operating at full capacity.
Primary-Secondary Piping
TRIAD integrates modularity with a single pipe primary-secondary system. TRIAD was the first company to employ a Primary-Secondary concept. It operates with two loops, (i) the primary loop, or building main loop, and (ii) smaller secondary loops off of each hot water boiler, which supply heated water to the primary loop.
Upon a call for heat, the boiler pump begins pushing the return water into the boiler and out through the secondary loop, supplying this hot water up into the primary loop (the main header), where it mixes with the cooler return water from the main loop of the building.
• Supply and return water are blended, avoiding the need for expensive and unreliable mixing valves commonly used in two pipe systems.
• The secondary loop isolates each hot water boiler, resulting in a very efficient system that minimizes thermal shock.
Control Panel
TRIAD Boilers can be sequenced by the use of our control panel that provides many attractive features:
• Temperature set-back when less heat is required, such as nights and weekends.
• Adjustments for latent heat, to take advantage of hot boiler water that retains heat after the burner shuts down.
• Outdoor reset based on atmospheric temperatures.
• Monitoring of return water temperatures to maintain accurate heating output.
It is also very easy to sequence our boilers using the panel of any other major manufacturer.
Packaged Product
Fisher Capital on Boiler Room Equipment, Inc: All TRIAD hot water boilers and steam boilers are fully assembled, packaged products, which offer several advantages over boilers that must be assembled at the jobsite
• Onsite labor costs are minimized.
• Quality control is higher at the factory than at the jobsite
• The ease of installation of a packaged boiler allows for quicker start up.
Benefits of Steel Boilers
Easy to Clean
To maintain boiler efficiency, heating surfaces must be kept clean and free of combustion by-products. All TRIAD heating surfaces, especially the firetubes, are easy to access. It is impossible to clean all the heating surfaces of a cast iron boiler, and what can be reached is difficult to clean.
TRIAD also makes it easy to maintain clean water surfaces. The cleaning of the interior of a cast iron boiler is a major undertaking, and even then only the vertical surfaces can be cleaned. The inability to clean the horizontal surfaces can have a significant impact on operating efficiency.
Easy to Repair
Because of their steel construction, TRIAD hot water and steam boilers can be repaired in the field with minimal disruption. A leak can be permanently welded or the tubes re-rolled with little difficulty. It is impossible to permanently weld a cracked cast iron boiler section or a leaking copper fin-tube boiler. The firetubes are easily accessed through the top and through the firedoor.
Fast Water Circulation
Poor circulation of water within the typical cast iron boiler is very common due to their design limits, while TRIAD's steel hot water boilers provide for faster circulation.
Richard Fisher: Robert Brown’s Boiler Installation
Richard Fisher on Boiler room management - with the current state of the economy, it is extremely important that you are fully aware of the ways in which you can make savings around your home, along with the steps you can take to ensure that you do not waste more money that you need to.
There are small steps that can be taken, such as turning off lights when leaving a room, or not leaving electrical devices on standby when they are not in use. Regarding heat loss, you can install draft excluders on your windows and doors, as well as making sure your house is properly insulated; insulation in cavity walls, as well as in ceilings can save many hundreds of pounds in heating costs over a long period of time.
Regarding heat loss, while it is important to guard against heat being lost through insulation, it is incredibly important to consider how the heat is produced in the first place; is your current method efficient both economically and environmentally.
Richard Fisher on Boiler room management - Boiler replacement. If you have an old, inefficient electric boiler, it may be a good idea to arrange boiler installation for a new gas boiler. Gas boiler installation could save you hundreds of pounds each year, reducing your bills significantly.
All boiler installation jobs are complicated and can involve a large amount of work. If however you make sure you use a trained professional, the job can be stress free and quickly finished, with minimum fuss. If you do decide to carry out the installation yourself, you must be sure to read up on the subject in great depth, taking all recommended precautions before commencing work. It is also advisable that you have an assistant, to help with removal and installation, so you can concentrate on the technical aspects of the work fully.
Richard Fisher on Boiler room management - Required certification. There are levels of certification and permits required to legally undertake such work, such as building codes and planning permission laws.
You can often check these aspects with your local council and planning authority, as well as with your local gas company and supplier.
Once you are sure that you are ready to undertake the work, it is a good idea to prepare the area in which the boiler will be installed. In this area, there should be a gas supply, a water supply, and an electrical supply all within a close proximity of the boiler; the greater the distance between these supplies and the boiler, the greater the difficulty in installation. It is important to note that boiler installation should not take place near to any combustible substances; such is the danger of an explosion.
Once your boiler is delivered, you should make sure that all parts are present and correctly formed, prior to attempting an installation. Once you are sure everything is fine, you can begin your boiler installation along the guidelines that you have learned in your studies.
For More Information Visit : http://www.npower-online.co.uk Read more: http://business.ezinemark.com/boiler-installation-3183cd92936.html#ixzz18JwINJZW
There are small steps that can be taken, such as turning off lights when leaving a room, or not leaving electrical devices on standby when they are not in use. Regarding heat loss, you can install draft excluders on your windows and doors, as well as making sure your house is properly insulated; insulation in cavity walls, as well as in ceilings can save many hundreds of pounds in heating costs over a long period of time.
Regarding heat loss, while it is important to guard against heat being lost through insulation, it is incredibly important to consider how the heat is produced in the first place; is your current method efficient both economically and environmentally.
Richard Fisher on Boiler room management - Boiler replacement. If you have an old, inefficient electric boiler, it may be a good idea to arrange boiler installation for a new gas boiler. Gas boiler installation could save you hundreds of pounds each year, reducing your bills significantly.
All boiler installation jobs are complicated and can involve a large amount of work. If however you make sure you use a trained professional, the job can be stress free and quickly finished, with minimum fuss. If you do decide to carry out the installation yourself, you must be sure to read up on the subject in great depth, taking all recommended precautions before commencing work. It is also advisable that you have an assistant, to help with removal and installation, so you can concentrate on the technical aspects of the work fully.
Richard Fisher on Boiler room management - Required certification. There are levels of certification and permits required to legally undertake such work, such as building codes and planning permission laws.
You can often check these aspects with your local council and planning authority, as well as with your local gas company and supplier.
Once you are sure that you are ready to undertake the work, it is a good idea to prepare the area in which the boiler will be installed. In this area, there should be a gas supply, a water supply, and an electrical supply all within a close proximity of the boiler; the greater the distance between these supplies and the boiler, the greater the difficulty in installation. It is important to note that boiler installation should not take place near to any combustible substances; such is the danger of an explosion.
Once your boiler is delivered, you should make sure that all parts are present and correctly formed, prior to attempting an installation. Once you are sure everything is fine, you can begin your boiler installation along the guidelines that you have learned in your studies.
For More Information Visit : http://www.npower-online.co.uk Read more: http://business.ezinemark.com/boiler-installation-3183cd92936.html#ixzz18JwINJZW
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