Five Things You Need to Know for Wednesday
What you need to know (and what it means).
Five things you need to know to stay ahead of the pack on Wall Street.
1. Thus Spoke Greenspanthustra
Alan Greenspan, former chairman of the US Federal Reserve, said that current imbalances in the global economy could be corrected if high-growth countries allowed their currencies to strengthen, according to the Financial Times.
- Mr. Greenspan spoke, via satellite phone (very James Bond-like), on a wide-ranging number of financial topics at the FT Asian Financial Centres Summit in Seoul.
- He said that high-growth Asian countries which endeavor to "prevent the exchange rates from moving creates all sorts of distortions."
- But wait, there's more. Mr. Greenspan warned of a potential fall in global asset prices because the current "abnormal situation" of ample liquidity cannot last forever.
- Had we been there, we would have immediately broken into the conversation and asked what might be the source of this "ample liquidity" - a clever question with damning subtlety and the implicit suggestion to "take a look at that man in the mirror, Mr. Greenspan" hanging quietly in the air.
- We weren't there, but apparently someone DID ask our question!
- According to the FT, Mr. Greenspan replied: "The source of this liquidity was the market value of assets worldwide, which had been rising faster than nominal gross domestic product globally due to a decline in real long-term interest rates and a significant fall in real equity premiums."
- Are you not shocked, SHOCKED?
- We are. Why? Because what this sentence really means, if broken down logically, is this: The source of this liquidity is the rising market value of asset values due to excess liquidity.
"Am I understood?- The self-overcoming of morality, out of truthfulness; the self-overcoming of the moralist, into his opposite-into me-that is what the name of Zarathustra means in my mouth."
- Friedrich Nietzche, Thus Spoke Zarathustra
2. Risk is just another word for no one left to bid.
Investors in structured credit products risk not being able to sell or obtain an acceptable price following a market downturn because buyers may shun the fast-growing market, the IMF said on Tuesday, according to Reuters.
- In its annual Global Financial Stability Report, the IMF said the risk of liquidity disturbances is material and certain products and market segments are particularly vulnerable.
- Which products and market segments specifically?
- The secondary market, away from the biggest banks, according to the IMF.
- Last year, liquidity issues arose following debt ratings downgrades of Ford and GM.
- Some institutions reportedly lost hundreds of millions of dollars due to an absence of bidders.
- But enough bad news. The good news, according to the IMF: "Credit derivative and structured credit markets help to improve financial stability by facilitating the dispersion of credit risks as banks, especially systemically important institutions ... shift credit risk to a broader set of investors."
3. "Listen here GOOG, you little whippersnapper, your grandpappy YHOO was out there internetting, search engining and beating the IPO bushes before you were a twinkle in an investment banker's eye."
Are we really that old? Yes. Yahoo! (YHOO) debuted its stock in an initial public offering on April 12, 1996.
- The YHOO IPO 10 years ago raised $33.8 million by selling 2.6 million shares.
- the stock closed the day at $33, up 270% from its IPO price.
- By January 2, 2000, the stock had reached an intra-day high of $500 per share (pre-split).
- By Sep. 25, 2001, the stock had reached an all-time intra-day low of $8.02 per share.
- Since the high YHOO is down 71%, while since its intra-day low, YHOO is up 576%.
4. Might as well have 1.3 billion people in China walking around with their heads down typing into their BlackBerry and bumping into each other too.
Research In Motion, maker of the BlackBerry device, expects to launch its service with China Mobile by mid-year, according to Reuters.
- China is the world's largest telecommunications market.
- China Mobile, the world's top cellular carrier by subscribers, holds two-thirds of that market.
- RIMM expects to launch its BlackBerry wireless email service with another 100 telecoms providers globally this year.
- The company already offers the BlackBerry service with over 160 carriers in more than 60 countries worldwide.
- In March RIMM agreed to pay NTP $612.5 million to settle a four-year legal dispute that had threatened to shut down the BlackBerry service in the U.S.
5. Foreman - Ali Rematch!
Fomer boxing rivals set to square off in historic 15-round fat-reducing grill battle
Ok, admittedly, we just made that up. But now that Muhammed Ali has reportedly sold the rights to his image and name for $50 million to licensing firm CKX, the Foreman - Ali grill battle is not entirely beyond the realm of possibility.
- Entertainment and licensing firm CKX has bought the marketing rights to the name of boxing legend Muhammad Ali, according to the BBC.
- CKX also controls the rights to Elvis Presley's image.
- The company has created a new firm, Greatest of All Time, to manage the Ali name.
- Ali and his wife will retain a 20% stake in the firm.
- Former heavyweight George Foreman was paid $146.5 million in 1999 by kitchen appliance maker Salton to put his name to a fat reducing grill.
Let's get ready to griiiiiillllllllllll!
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