Europe’s economic catch-22

Posted by & filed under Economic Analysis, Governments & Regulators.

Description:  Facing massive national debts, some European nations are planning to cut spending even as unemployment continues to rise.

Source: CNNMoney – video report
 
Date: 02/05/2010

Link: http://money.cnn.com/video/fortune/2010/02/05/f_sl_euro_default.fortune/

Questions for discussion:

  • What is the connection between the economic problems in Europe and the Euro?
  • How is the economic and financial crisis in Europe different from the US experience?
  • Can Europe grow its economy sufficiently to solve the financial crisis today?
  • Is a currency devaluation likely?
  • How should financial managers deal with the possibility of a currency devaluation?

Glass-Steagall crash course

Posted by & filed under Financial analysis, Governments & Regulators.

Description:  Obama and Volcker want to limit big banks. Readers of ‘The Buzz’ think it’s a good idea but are skeptical regulation will pass Congress.

Source: CNNMoney – video report
 
Date: 02/02/2010

Link: http://money.cnn.com/video/news/2010/02/02/n_bz_glass_steagall.cnnmoney/

Questions for discussion:

  • Should Glass-Steagall be returned? Why or why not?
  • How much blame for the crisis is rightly placed at the foot of regulatory agencies like the SEC or individual banks?

Liquor store privatization could be boon for Big Booze

Posted by & filed under Governments & Regulators, Growth & Valuation, Market Analysis.

Description: With their finances on the rocks, states that control the sale of liquor to the public are looking at handing the job to private enterprise, a move that could raise revenue, streamline government, and prove a boon to the spirits industry.

Source: Marketwatch.com

Date: 02/06/2010

Link:  http://www.marketwatch.com/story/liquor-store-privatization-a-boon-for-big-booze-2010-02-06

Questions for discussion:

  • How will this move by state governments affect industry financials?
  • How are investors likely to react?

Corporate Bond Spreads Rise Most Since November: Credit Markets

Posted by & filed under Governments & Regulators.

Description:  Corporate borrowing costs are rising at the fastest pace in more than two months on concern that worsening government finances will slow the global economy and make it harder for companies to meet debt payments.

Source: Bloomberg.com

Date: 02/08/2010

Link: http://www.bloomberg.com/apps/news?pid=20601103&sid=auWwLKPsLRFM

Questions for discussion:

  • Summarize the report and the impact this trend will have on corporate debt financing. 
  • How can finance managers and investors be expected to respond?

Toyota shares up after apology, Prius recall news

Posted by & filed under Company Analysis, Management Issues.

Description: Shares in Toyota Motor Corp (7203.T) edged higher after the head of the world’s largest automaker made a public apology for safety problems and said it would bring in outside experts to review quality controls.

Source: Reuters.com

Date: 02/07/2010

Link:  http://www.reuters.com/article/idUSTOE61602420100208

Questions for discussion: 

  • How would you play a short term investment in Toyota? Explain your thinking.
  • How do you think the stock will perform over the next 12 months?

Geithner’s bailout burden

Posted by & filed under Company Analysis, Governments & Regulators, Industry Analysis.

Description:  Treasury Secretary Tim Geithner says he will always feel legitimate pressure from the public even though the bailout wasn’t ‘under his watch.

Source: CNNMoney – video report
 
Date: 01/29/2010

Link: http://money.cnn.com/video/news/2010/01/29/n_geithner_stimulus_bailout.cnnmoney/

Questions for discussion:

  • Do you share the views put forward by Treasury Secretary Tim Geithner? Explain your answer.
  • In which ways do you think financial managers or investors might behave differently over the next few years because of the financial crisis we have experienced? Explain your answer.

Tesla Motors files for IPO, seeking $100 million

Posted by & filed under Company Analysis, Financial Planning, Growth & Valuation.

Description: High-end electric-car company Tesla Motors filed for an initial public offering Friday, seeking $100 million in the public-financing arena as conventional auto makers are reeling from anemic sales and product recalls.

Source: Marketwatch.com

Date: 01/29/2010

Link:  http://www.marketwatch.com/story/tesla-motors-files-for-ipo-to-raise-up-to-100-mln-2010-01-29

Questions for discussion:

  • What are the factors favoring the success of this IPO and those against?
  • Summarize all of the financial instruments mentioned in the article that comprise the overall financial structure of the firm.

Plentiful-Job Gauge Points to U.S. Payroll Growth: Chart of Day

Posted by & filed under Economic Analysis, Growth & Valuation.

Description:  Economists who expect a revival of U.S. employment growth this month have history on their side, according to Thomas J. Lee, a JPMorgan Chase & Co. strategist.

Source: Bloomberg.com

Date: 01/29/2010

Link: http://www.bloomberg.com/apps/news?pid=20601109&sid=aMnej1hFAk_s

Questions for discussion:

  • What is your judgement of the chart and predictions presented in the report.
  • How might financial managers be expected to react in terms of revised planning, if the predictions are correct? Explain your answer.

Dollar rallies on stronger-than-expected data

Posted by & filed under Economic Analysis.

Description: The dollar rose against major currencies on Friday after stronger-than-expected economic data reinforced the view the United States was recovering from recession faster than other developed countries.

Source: Reuters.com

Date: 01/29/2010

Link:  http://www.reuters.com/article/idUSTRE5BF27F20100129

Questions for discussion: 

  • How will the dollar’s activity affect financial management of firms that import and export?
  • Where do you believe the dollar is headed over the next few months? Explain your thinking.

The Places They Go When Banks Say No

Posted by & filed under Financial Planning.

Description: In the glory days of the digital photo frame business, when his products were still a novelty and shoppers were flush with cash, getting a bank loan to manufacture them was a cinch, Michael Levy says.

Source: NYTimes.com

Date: 01/30/2010

Link: http://www.nytimes.com/2010/01/31/business/smallbusiness/31order.html?ref=business

Questions for discussion:

  • Summarize the problems facing small businesses since the financial crisis hit?
  • What alternatives are small business owners employing as a result of the credit freeze?
  • What are the possible consequences of these changes?
  • Do you believe they are permanent or will borrowing practices return to what they were before eventually?