Two Crowes with one stone

If you think the bro-mance between Tim Burton and Johnny Depp is only two more collaborations away from a full on Brokeback Mountain moment, then Ridley Scott and Russel Crowe must be feeling each other up in the metaphorical back seat. On the press trail for their latest project Body Of Lies, a political thriller also starring Leonardo DiCaprio, Scott revealed he wants Crowe to play two major characters in his adaptation of Robin Hood. No, you didn’t just drink the Kool-Aid. Ridley Scott ACTUALLY wants Crowe in a dual role as both Robin Hood and the Sheriff of Nottingham.
Speaking to MTV's Movie Blog, Scott said:
"He's playing both. [Crowe's dual roles would be] "a good old clever adjustment of characters. One becomes the other. It changes."
The film will be called Nottingham and to be frank, I can’t picture Crowe playing either roles let alone both. Okay, I can maybe see him as the Sheriff but I don’t think anyone wants to see the Crowe-man in tights. Ever.

Below: A very possible version of what Crowe could look like as Robin Hood. Anyone smell an Oscar?

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Alice in Burtonland

I would doubt there’s anyone in the whole wide world who hasn’t heard about Tim Burton’s adaptation of Alice in Wonderland. Regardless I thought a quick run down can’t hurt. The film started shooting last week in Cornwall, England and 18-year old Aussie actress Mia Wasikowska is in the lead role of Alice. Wasikowska has been pretty much plucked from obscurity after only minor roles in a handful of small budget films including one of my personal favourites; Suburban Mayhem. After the success of The Nightmare Before Christmas 3D, Disney have agreed to let Burton release this film in Digital Disney 3D too. The only other news to escape to the media is Burton-bosom buddy Johnny Depp will be playing the mad hatter. Well dah! It wouldn’t be a Tim Burton film if Depp wasn’t in it. Alice’s Adventures in Wonderland has always been one of the darkest children’s stories and my blood is bubbling with excitement to see Burton’s Gothic take. All other cast and set details are unknown at this stage and kudos to the film crew for keeping everything hush hush. The project is set for release on March 5, 2010 in the US, later in Oz.

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US Markets Makes Massive Bounce Back But Baltic Dry Index Continues Its Plunge

The markets had a huge day as Dow makes big comes back

• NEW YORK (CNNMoney.com) -- Stocks rallied Tuesday, with the Dow jumping 485 points on bets that Congress will pass a version of the government's $700 billion package, following Monday's crushing defeat.
  
  But credit markets remained frozen. Several closely watched measures of bank lending fear hit all-time highs, as firms continued to hoard funds.
  
  The Dow Jones industrial average (INDU) added 485 points, recovering much of the record 777 points lost the day before. It was the third-biggest one-day point advance for the indicator in its history.
  
  The Standard & Poor's 500 (SPX) index rose 5% and the Nasdaq composite (COMP) gained about 5%.
  
  Stock gains accelerated late in the day after the FDIC - the agency that insures depositors in case of a bank failure - said it wants to increase the amount of money it can insure.
  
  Raising the limits could make businesses and individuals less anxious to withdraw money from accounts at a struggling bank. It could also help get the $700 billion plan passed by mollifying critics who think the plan is too focused on Wall Street, rather than Main Street.

Time to go in the market? Over at CNBC, Bob Pisani has some important notes.

• The major indices Tuesday regained more than half of yesterday's losses on 1) hopes that a bailout bill will be passed in Congress this week, 2) lack of concerted selling, as volume was lighter than normal due to the Jewish holidays, and 3) hopes that regulators might help out.
  
  This is a dangerous game, because it means that the market is hostage to the “TARP trade,” and has become detached from any fundamental consideration.
  
  And with good reason: without knowing borrowing costs for corporations, it's impossible to figure out where stocks should be trading. That’s what the TARP is supposed to do: put some kind of floor on the credit market.
  
  But this too will pass; by next week, we should get back to real issues like earnings and the global economy.

And the Baltic Dry Index continues its massive plunge!

The Index is now at 3217 points, down some 287 points or another 8.1%!

Many had purchased some shipping stocks as investments when the Baltic Dry Index was trading much higher However with with such drastic plunge, perhaps its time review one's investments and perhaps its best not to be delusional and assume that the Baltic Dry Index would soar back to its previous highs as the business fundamentals has clearly changed.

And how amazing it is that it was just on 1st September that I had highlighted the comments from OSK Research on the BDI Baltic Dry Index in for strong recovery on my blog posting Baltic Dry Index Set For Strong Recovery???.

The index then was 6809 points.

One month later the index is now at 3217 points!

The grave danger of listening to these so-called experts!

On Forbes Shippers Far From Shipshape

• Fear and trembling about the global economy is sinking the Baltic Dry Index, pushing it down to its lowest level in two years on Tuesday. As the uncertainty surrounding the U.S. bailout package and questions regarding the sustainability of China’s industrial demand continue to rock the U.S. stock market, investors should expect freight rates to continue to slide.
  
  The Baltic Dry Index, which measures shipping rates on 40 routes across the world, sank 8.2%, or 287 points, to 3,217, on Tuesday, down from 3,504 on Monday – its seventh straight day of decline.
  
  Lazard Capital Markets analyst Urs Dur said China’s Golden Week holiday has been keeping charterers at bay. While conventional wisdom is that next week, once the holiday is over, activity will begin to pick up again, Dur said high iron-ore inventories in China and plummeting freight rates means it will take a while for the shipping market to right itself. “If you had asked me a month ago, I would have said a turnaround would have come at the end of September, before Golden Week,” he said.
  
  Now things aren’t looking so good. Althouigh owners of ships on long-term contracts are being paid, world trade hasn’t stopped and ships are still moving, the outlook for the next two years is weakening. Dur thinks freight rates will turn around once Congress agrees on a bailout package and banks stabilize lending. That’s when he suggests jumping into stocks like Genco Shipping and Trading, Eagle Bulk Shipping (nasdaq: EGLE - news - people ), and Navios Maritime Holding, which are stable.
  

Other postings on BDI:

1. Views On Current Weakness On Baltic Dry Index
2. The Collapse of the Baltic Dry Index
3. Goldman Downgrades Bulk Shippers!
4. Baltic Dry Index Keeps Falling!
5. Baltic Dry Index Stages Strong Rebound!
6. Baltic Dry Index Set For Strong Recovery???
7. Baltic Dry Index Plunges To Seven Month Lows!
8. The Baltic Dry Index Keeps On Plunging!
9. Baltic Dry Index Continues To Plunge

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Baltic Dry Index Continues To Plunge

And the Baltic Dry Index plunged another 6% or 242 points.

Do see yesterday's posting Baltic Dry Index Keeps On Plunging!!

On purchasing.com Dry bulk ocean freight rates tank on credit concerns

• Credit crunch partly to blame for massive nosedive in freight rate index
  By Dave Hannon -- Purchasing, 9/29/2008 1:28:00 PM
  
  “The demand for goods is there; there is just not enough liquidity to move those goods around.”
  
  The words of Stamatis Molaris, CEO of Excel Maritime in a Reuters interview on Friday have an eerie ring to them—eerie in the sense that we may be hearing a lot more of them from executives up and down the supply chain. Speaking on a day when the Baltic Dry Index plunged to a two-year low, Molaris said tight credit conditions would slow orders for materials that require massive ships as well as the ability to build those ships.
  
  “If the credit crunch lasts beyond the short term, then shipyards—especially the newer ones—are going to fall like a house of cards,” he told Reuters, adding that even Excel with its strong balance sheet may find it hard to raise funds for new acquisitions in the current environment. "Get me funding and I'll look at a ship. I cannot stress this enough: The banks are not lending any money."
  
  The Baltic Dry Index, which measures drybulk shipping rates on 40 routes across the world, fell 417 points Friday to close at 3,746 and by the end of the day Monday it was down to 3,504.
  
  Similarly, Norden CEO Carsten Mortensen also blamed the credit crunch for the freight rate plunge. He told Lloyd’s List that “A very dramatic two months in the banking sector have pushed down rates and sentiment much more than most market participants had expected. Does that change our fundamental belief in the demand for dry cargo bulk transportation going forward? Not really.”
  
  Even the Wall Street Journal referred to the Baltic Dry Index plunge as “ripple effects of the crisis in the real economy."
  
  But other sources say it’s not just the credit markets at play and there are real changes afoot in demand trends for ocean shipping. Jeffrey Landsberg, a freight options broker at Imarex, told Forbes that reports out of China that it will boycott iron ore from Brazil and use domestic iron ore put dry bulk shipping firms and rates into a panic. Forbes points out that Vale said the news was untrue, but the damage was done to the index notwithstanding.
  
  But Landsberg also agreed that tight credit markets would hinder shipbuilding, citing three separate South Korean shipyards that announced they would likely have to cancel 40 big ships because they aren’t able to raise enough capital to finance construction.

On the Financial Times. Jumping ship

• Jumping ship
  Published: September 29 2008 03:00 Last updated: September 29 2008 03:00
  
  Yet more reason to panic? The Baltic Dry index, which measures dry bulk shipping costs, plunged by nearly a quarter last week - 10 per cent on Friday alone - as rates plummeted for the biggest ocean carriers of raw materials. Shipping groups' shares, notably in Asia, have followed suit. Given the index's reputation as a leading indicator, that looks scary. In fact, the index's predictive value has weakened as it has become far more volatile than the commodities markets underlying it, gyrating around on factors such as shipping supply bottlenecks. It has twice doubled and fallen back within 15 months; its latest slide leaves it 70 per cent below its May peak.
  
  The Baltic Dry once correlated closely with global commodity indices. It started yoyoing in 2002 as China became a vast suction pump for materials such as iron ore and coking coal, straining the global supply chain. And China is driving today's plunge. The expected post-Olympic rebound - as polluting plants shuttered during the Beijing games reopened - has not occurred, with steel producers jittery over demand. They have also suspended buying iron ore from Brazil's Vale in protest over cheeky demands by the world's largest producer for a mid-contract price increase. With China's ore stockpiles overflowing, ships are sailing empty from Brazil. Another pressure on the index may be sell-offs of forward freight agreements, or options contracts on freight rates, as finance houses dump derivatives.
  
  But while its movements may be exaggerated, the Baltic Dry's drop does reflect a weakening of Chinese raw material demand. Meanwhile, Drewry, the London-based shipping consultants, forecasts growth in container ship imports from Asia to Europe will fall from 15 per cent in recent years to 4-5 per cent this year while container imports from Asia to the US will decline 2 per cent. Just as money is no longer rocketing round the financial system, so goods flowing round the world's seaways are slowing too.

However, there are some who remains optimistic. Analyst sees shipping demand rebounding this year

• NEW YORK - One analyst suggests that the spreading credit crisis and the lifting of some temporary factors will allow drybulk shipping demand to rebound by the end of this year.
  
  Shipping activity slowed significantly, as anticipated, around the Olympics in Beijing. But demand did not rebound this month as was widely expected, Jefferies analyst Douglas Mavrinac said, because of a Chinese boycott of Brazilian iron ore.
  
  Last week, an association representing the largest Chinese iron ore suppliers formalized a boycott against a major Brazilian supplier, as that company announced plans to hike prices to Asian customers by about 11 percent.
  
  Mavrinac said he expects iron ore deliveries from Brazil to China will remain "limited" in the near future, but will need to increase as China runs of its own supplies of the commodity, used to make steel.
  
  Until then, drybulk stocks and the heavily watched Baltic Dry Index will likely fall further, he said.
  
  But possibly by as early as November, Mavrinac said the boycott should be lifted and drybulk trade - which also includes shipments of grain, coal and cement - should pick up.
  
  The analyst even predicts that the Baltic Dry Index, which measures drybulk shipping rates on 40 routes across the world, might return to record levels it set in May.
  
  The index, managed by the Baltic Exchange in London, closed down 242 points Monday at 3,504. It has declined since hitting an all-time high on May 20 of 11,793.
  
  And Mavrinac said that shipping demand and the potential jump in drybulk stocks will likely grow even stronger as the credit crisis spreads. The analyst notes that shaky financial markets are making it difficult for shipowners to finance the building of new ships, so the 2010-influx that was expected will likely be limited, keeping demand high.
  
  Most drybulk stocks sank by double-digit percentages and set fresh year-lows Monday, as the U.S. House of Representatives failed to pass the $700 emergency bailout package designed to ease quickly spreading financial woes.

Other postings:

1. Views On Current Weakness On Baltic Dry Index

2. The Collapse of the Baltic Dry Index

3. Goldman Downgrades Bulk Shippers!

4. Baltic Dry Index Keeps Falling!

5. Baltic Dry Index Stages Strong Rebound!

6. Baltic Dry Index Set For Strong Recovery???

7. Baltic Dry Index Plunges To Seven Month Lows!

8. The Baltic Dry Index Keeps On Plunging!

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Dow Plunges!

Yes stocks were hit bad as approximately $1.2 trillion in market value is gone after the House rejects the $700 billion bank bailout plan.

CBS Marketwatch reported the following. House rejects financial-rescue package

• The House on Monday voted down the Bush administration's historic $700 billion financial rescue plan, triggering one of the worst days for stocks and dealing a sharp blow to bipartisan efforts, despite repeated warnings about the U.S. teetering on the brink of an economic precipice.
  
  A clearly disappointed Treasury Secretary Henry Paulson blasted another dire warning Monday afternoon about stressed world markets reducing credit availability -- a threat to American jobs and livelihood.
  
  "This is much too important to simply let fail," Paulson said.
  
  Officials are trying to figure out what the next step will be for rescue-related legislation, and an aide in the House speaker's office said lawmakers are ready to work in a bipartisan way. U.S. stocks plunged when the vote results became clear, and the Dow Jones Industrial Average ended down 777 points, or 7%, to 10,365.
  
  Finger pointing followed soon after the vote. Republican leaders accused House Speaker Nancy Pelosi of driving away some GOP votes with a partisan floor speech. Rep. Barney Frank, chairman of the financial services committee, said Republicans may be "covering up the embarrassment" of not having the votes.
  
  "And because somebody hurt their feelings they decide to punish the country," Frank said. "I mean, I would not have imputed that degree of pettiness and hypersensitivity."
  
  Pelosi said bipartisan needs to move legislation forward: "The crisis has not gone away."
  
  Some House members balked at giving the Treasury immense power -- the ability to buy up hundreds of billions of bad debt. And there were ongoing complaints over insufficient accountability, transparency and large-scale government intervention. But Paulson, along with Federal Reserve Chairman Ben Bernanke, has been intent over the past week on broadcasting warnings about dire consequences if the plan was even delayed.
  
  With elections approaching, lawmakers, both Democrats and Republicans, are under intense scrutiny, and nervous about voting for a plan that risks so much taxpayer money without any definitive promise of success. In the end, there were 205 in favor of the legislation and 228 against. Among Democrats, 140 voted in favor and 95 against. Among Republicans, 65 voted in favor and 133 against.
  
  Critics also say the plan inadequately addressed job losses and a distressed housing market --problems that underlie current economic weakness. Meanwhile, those in favor of the plan were looking to treat a manageable symptom -- the frozen credit market -- if not the actual disease.
  
  A vote in the Senate was expected Wednesday, and the president would have followed with a speedy signature.

Many thanks to Trader Mike for putting the plunge into perspective. The Worst One-Day Percentage Losses for the Dow, S&P 500 and Nasdaq »

• Today was the third worst one-day decline for the Nasdaq. Here are the 10 worst percentage losses for the Nasdaq:
  
  October 19, 1987: -11.35%
  April 14, 2000: -9.67%
  September 29, 2008: -9.14%
  October 26, 1987: -9.01%
  October 20, 1987: -9.00%
  August 31, 1998: -8.56%
  April 3, 2000: -7.64%
  January 2, 2001: -7.23%
  October 27, 1997: -7.16%
  December 20, 2000: -7.12%
  
  The S&P 500 had its second worst day since 1950. (The data’s from Yahoo Finance and only goes back to 1950. The S&P 500 index was created in 1957, but it has been extrapolated back in time.) Here are the 10 worst one-day percentage losses for the S&P 500::
  
  October 19, 1987: -20.47%
  September 29, 2008: -8.79%
  October 26, 1987: -8.28%
  October 27, 1997: -6.87%
  August 31, 1998: -6.80%
  January 8, 1988: -6.77%
  May 28, 1962: -6.68%
  September 26, 1955: -6.62%
  October 13, 1989: -6.12%
  April 14, 2000: -5.83%
  
  There are a lot of October & September dates in that list!
  And finally the Dow. I’m not sure where today’s drop ranks but it’s not in the top 5 (via Dave Manuel).
  
  October 19, 1987: -22.61%
  October 28, 1929: -12.82%
  October 29, 1929: -11.73%
  November 6, 1929: -9.92%
  December 18, 1899: -8.72%
  
  From the data I pulled from Yahoo Finance, which only goes back to 1928, today was the 17th worst day since 1928.. It was the fourth worst in modern times — which is probably a better measure given how different the world is now. Given all the circuit breakers put in post the 1987 and 1989 “market breaks” it would be real difficult (if not impossible) to get another 22% down day. Here’s the modern top five worst Dow days:
  
  October 19, 1987: -22.61%
  October 26, 1987: -8.04%
  October 27, 1997: -7.18%
  September 17, 2001: -7.13%
  September 29, 2008: -6.98%

And on the NY Times, warnings are out that this financial crisis could spread worldwide! Financial Chill May Hit Developing Countries

• September 26, 2008
  Financial Chill May Hit Developing Countries
  By MARK LANDLER
  
  WASHINGTON — As Europe and Asia play down the need for an American-style bailout for their banks, the crisis may threaten a different class of countries: those in Eastern Europe, Latin America and Africa that depend on foreign capital and shoulder American-style trade deficits.
  
  Alarmed by the threat, the managing director of the International Monetary Fund, Dominique Strauss-Kahn, is calling for a multilateral consultation — involving the United States, Europe, China and other financial powers — to develop a coordinated response to the crisis.
  
  “We’re facing a systemic crisis, and it needs a systemic response,” Mr. Strauss-Kahn said in an interview on Wednesday. “The I.M.F. is the right place to organize a global response to weaknesses in the global financial system.”
  
  His initiative is an attempt to thrust the fund back into the thick of world events — a role it played in previous financial crises in Asia, Russia and Latin America, but has not played in the current turmoil.
  
  Whether or not he succeeds, economists agree that Mr. Strauss-Kahn, a former French finance minister, has identified a risk. The crisis, by squeezing the flow of capital, threatens countries from the Baltic to Africa that depend on foreign money to finance their deficits.
  
  “There are a number of countries where you can get quite worried if capital flows stop,” said Thomas Mayer, the chief European economist at Deutsche Bank in London. “When you look at their high current-account deficits, Central and Eastern Europe seem particularly vulnerable.”
  
  A second category of countries are those who export oil or other commodities, and are vulnerable to a decline in prices — something that economists said would happen if the crisis hobbled growth. Oil plunged last week as Wall Street teetered, but it bounced back as hope rose for a bailout.
  
  “If the world economy does experience something like a global recession next year, those countries will be at risk,” said Michael Mussa, a senior fellow at the Peterson Institute for International Economics.
  
  There are more than 20 countries with current-account deficits that exceed 5 percent of their economic output, Mr. Strauss-Kahn said, putting them in what the fund considers the endangered category.
  
  Mr. Strauss-Kahn declined to name names, but outside economists listed Bulgaria, Estonia, Romania and Turkey as among the red flags in Europe. In Africa, they said, South Africa and Nigeria were worrisome; and in Latin America, Venezuela and Ecuador.
  
  The list, Mr. Strauss-Kahn said, does not include the four largest emerging-market countries — China, Russia, Brazil and India — which are running healthy trade surpluses or have hundreds of billions in foreign exchange reserves, though Russia is vulnerable to a drop in oil prices.
  
  Western Europe, economists say, is unlikely to be seriously affected, despite having banks that hold mortgage-related assets. This has made European officials reluctant to heed the Treasury Department’s call for them to undertake their own efforts to bolster the financial system.
  
  Treasury Secretary Henry M. Paulson Jr. has resisted efforts by Congress to make foreign banks ineligible for the plan. But administration officials said they planned to set priorities on which ones to help, based on whether their governments were willing to help with the cleanup process.
  
  Two of the most threatened countries lie on Europe’s eastern frontier: Bulgaria and Romania, which have racked up high current account deficits and are running overheated economies.
  
  “These countries have been growing too fast or borrowing too much,” said Peter Akos Bod, a former president of the Hungarian central bank. “Should there be a sudden stop in capital, they would be in deep trouble.”
  
  Latin America is a perennial source of worry, given its history of troubled fiscal policy. For the moment, several countries, notably Venezuela, are benefiting from the soaring price of oil.
  
  But if oil and other commodities were to decline, said John Williamson, a senior fellow at the Peterson Institute who specializes in the region, “South America would be less comfortably placed.”
  
  Mr. Strauss-Kahn said he recognized that the monetary fund would be largely a bystander in this crisis, given that the problems began in the United States and remain largely a domestic banking issue.
  
  But he said the fund could play a role in giving advice. Among its suggestions: rather than buy distressed mortgage-related securities from banks, the Treasury should swap them for bonds, which Mr. Strauss-Kahn said would be cheaper and leave some of the risk with the banks.
  
  Mr. Strauss-Kahn said he also planned to confront one of the most politically charged issues at the fund: strengthening its pressure on China to allow its currency, the renminbi, to rise.
  
  Critics in the Bush administration and Congress say the fund has not pushed China hard enough on its currency. Mr. Strauss-Kahn acknowledged the difficulty of being tougher, given the politics of the fund.
  
  The fund’s last multilateral consultation, to discuss global imbalances, was held in 2006. It included China, Japan, the European Union, Saudi Arabia, and the United States. Mr. Strauss-Kahn did not say which countries would be invited to take part this time, though other officials said it would probably include those countries and emerging markets like Brazil and Russia.

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Baltic Dry Index Keeps On Plunging!!

Previous blogged on the Baltic Dry Index.

1. Views On Current Weakness On Baltic Dry Index
2. The Collapse of the Baltic Dry Index
3. Goldman Downgrades Bulk Shippers!
4. Baltic Dry Index Keeps Falling!
5. Baltic Dry Index Stages Strong Rebound!
6. Baltic Dry Index Set For Strong Recovery???
7. Baltic Dry Index Plunges To Seven Month Lows!
8. The Baltic Dry Index Keeps On Plunging!

Here's yet another update on the Baltic Dry Index.

The Index had yet another horror story last Friday plunging another 10% pr 417 points.

Index is now at 3746!

And with such a plunge, shipping stocks across Asia fell too!

• Sept. 29 (Bloomberg) -- Mitsui O.S.K. Lines Ltd., Japan's largest operator of iron-ore ships, dropped in Tokyo trading along with domestic rivals, as rates for carrying commodities had their biggest slump on record.
  
  The shipping line declined as much as 4.8 percent to 901 yen and traded at 909 yen as of 9:17 a.m. in Tokyo. Nippon Yusen K.K., Japan's biggest shipping line by sales, dropped as much as 3.8 percent and Kawasaki Kisen Kaisha Ltd., the third-largest, slid as much as 4.8 percent.
  
  The Baltic Dry Index, a measure of commodity-shipping rates, dropped 10 percent on Sept. 26, as Chinese steelmakers stopped buying iron-ore from Brazil's Cia. Vale do Rio Doce as part of a pricing standoff. The index has tumbled 80 percent since a peak in June.
  
  ``There's no strength left to even muster a rebound,'' said Yoshihisa Miyamoto, an analyst in Tokyo at Okasan Securities Co. ``This week shipping lines are set for a punch that will put to rest anyone left that wants to buy.''
  
  Chinese steelmakers, the world's biggest iron-ore consumers, won't buy from Vale in the ``short term,'' the China Iron and Steel Association said Sept. 26. Vale wants to raise prices for Asian mills to match what European clients are paying. The association says that's ``unreasonable'' because of slowing steel demand from automakers and builders.

Some noteworthy points.

1. Index has plunged 80% since its peak in June!!!

2. Slowing steel demands!

And yes many are seeing their investments plunged due to their investments in shipping stocks.

Makes one wonder.

Is investing to be blamed or should one be realistic enough to understand that perhaps they did not understand the nature of business or the business economics of the business they had invested in?

And of course, some are still holding on to their investments, refusing to accept what has happened. Some call it being in denial mode. I wonder if they realise that there is a probability that perhaps this shipping index would never reach anyway near its peak again. A probability but on the other hand, who am I to say, it would never?

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B.I.G Mistake???

The trailer for a biopic on the life of notorious (pardon the pun) rapper Biggie Smalls hit the world wide web today and, to my surprise, actually looks quite good. Newcomer Jamal Woolard is playing Biggie also known as the Notorious B.I.G and you can view the trailer here at yahoo movies http://movies.yahoo.com/movie/1810008210/video/9861799
It will be interesting to see the effect this film has on the hip hop community upon its 2009 release especially since some of the central characters in the film are still alive today e.g Puff Daddy and Snoop Dogg. Until then, here’s a brief list of films I recommend to wet you appetite on the gangster rapper sub-genre-

Biggie and Tupac (2002)

This is an awesome documentary and a Herculean effort on behalf of white director Nick Broomfield who ploughed through the neighbourhoods of Tupac and Biggie in attempt to uncover the truth behind their deaths. There’s some brilliant and rare footage of the two rappers in their youth hustling and freestyling on the streets of Brooklyn. More than just the back-story, Broomfield literally risks his life to document the events that led to the untimely deaths of two promising artists.
Get Rich or Die Tryin (2006)
From six time Oscar nominated director Jim Sheridan this film is based on the youth of Curtis `50 cent’ Jackson. Sheridan’s film exceeds the gangster genre by refusing to skimp on the details. He shows his protagonist for what he is; a criminal who leads a dangerous and empty life. Critically this was extremely well received and praised for working as a gritty crime thriller. A must see.

Fear of a Black Hat (1994)

A true diamond in the rough, this is one of the funniest films I have seen to date. A spoof on the hip hop culture of the nineties this mockumentary follows the journey of fictional rap group Niggaz With Hats as they try to conquer the international music scene. Along with an awesome response on Rotten Tomatoes, the parodies in the film are way ahead of its time.

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Dr. Marc Faber: Looks Like We Are In A Financial Crisis

Just in.. “Looks like we’re in a financial crisis,” says Marc Faber

• Speaking at the CLSA conference in Hong Kong, bearish Dr Marc Faber refrains from saying ‘I told you so’, and remains pessimistic about the global outlook for markets and economies.
  
  “The severity of a downturn is proportional to the excesses that preceded it,” began Marc Faber, leading off his speech to the CLSA conference in Hong Kong.
  
  He then pointed out those excesses, with the chief culprit in his opinion being the mistake of leaving the US federal funds rate at 1% until June 2004, three years after the US economic expansion began. That has led to a mis-pricing of capital and overly strong debt growth with a consequent diminishing of asset quality in financial institutions. Today, US debt-to-GDP levels are higher than they were in the days preceding the Wall Street crash of 1929.
  
  Even though one solution would be to adopt tighter monetary conditions, Faber believes that such a move would be contrary to the US government philosophy that overlooks asset bubbles – and when these asset bubbles deflate, they flood the market with liquidity. “Central bankers have become hostages to inflated asset markets,” he points out. He notes that virtually every asset class from commodities to collectables has witnessed a price boom in recent years.
  
  In turn those bubbles are now popping. It started with property, then subprime, then financial institutions. Next to go will be equities as problems hit the wider economy, first in America, and then, given that market decoupling has not occurred, worldwide. “Sell those left standing,” he recommends, “while their valuations are still in the sky.”
  
  While Faber sees some potential for short-term strength for the US dollar, ultimately he feels the dollar is a worthless currency, and the only way that the US indices can return to previous highs is by the dollar being diluted by inflation.
  
  “The financial sector will never again see the conditions of the last 25 years, and the S&P index won’t make a new high in real terms for the next 20 years, “ he observes. “Indexing is dead and you can only make money on stocks with a trading mentality and by stock selection.”
  
  Faber is not a fan of the US bailout package, and suspects that the US government is overzealous in its interventions, with Hank Paulson coincidentally synchronising his interventions to time with falls in the Goldman Sachs stock price. “If the government buys everything, then hedge funds can simply arbitrage by buying all the rubbish and selling it to the Fed.”
  
  After his speech was concluded he said that the US cannot stomach asset prices falling to their natural level and a better use of the American bailout package would be to take over the banks and recapitalise them, or to use the money to buy up the surfeit of American homes; if people didn’t want to sell them for fear of reducing home prices, simply demolish them.
  
  Furthermore, although he acknowledges the possibility that the US bailout might serve to prevent US property prices falling much further, he thinks that this stability would be married with no real prospect for price increases and therefore long-term price stagnation in real terms.
  
  His investment solutions remain unchanged from his customary message, namely: farmland and commodities. On the equities side, he sees potential for Japan to outperform, with Japanese financial institutions looking interesting.

How?

Dr. Faber also appeared on CNBC. http://www.cnbc.com/id/26895741

• $700 billion may not be enough to bail out Wall Street says one analyst, given the lack of transparency and the length and breadth of financial markets involved.
  
  Marc Faber, editor & publisher of 'The Gloom, Boom & Doom Report', told CNBC's Asia Squawk Box on Friday, he doubts that $700 billion would make any difference when you consider the size of U.S. credit markets.
  
  "Looking at the size of the credit market in the United States, the equities market, the housing market and then looking at the size of the credit default swap market, which is around $62 trillion now, and the world wide derivatives market which is now $1,300 trillion dollars, I very much doubt that $700 billion would make any difference at all. In fact, I think it's a bad proposal in the sense that it will distort market pricing," Faber said.
  
  Faber says that the fundamental problem is not falling home prices as U.S. Treasury Secretary Henry Paulson suggests.
  
  "The problem is that too much money was lent against homes at inflated asset values. In other words that means at the peak of the market, people went and lent them 120 percent against the value of the home. And that is the problem -- the leverage in the system," Faber said.
  
  He added that the current bailout plan proposed by the Treasury and the U.S. Federal Reserve does not address this leverage problem in the markets.
  
  "My friend suggested what would be much cheaper -- go in and buy a million homes in the United States and burn them down. Because that will reduce the supply. Of course it is an economic nonsense solution, but it is as good as the Treasury's proposal," Faber quipped.
  

There's this comment on FinancialSense market wrap today.

• Housing, jobs, and durable goods were all disasters. Expect to see production cutbacks and rising unemployment. Anyone who thinks the US is not in recession is in absolute fantasyland. - Mike 'Mish' Shedlock ( see Horrid Data: Housing, Jobs, Durable Goods )
  

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Update on Gamuda's Current Receivables Issue

Here's an update to the blog posting Gamuda's Current Receivables Issue

The below is screen shot of what I wrote back then.

Gamuda reported its earnings the other day.

The receivables issues highlighted earlier has increased!

The receivables amount is now 1.319 billion versus 1.012 billion 3 months ago!

Sweet holy cow!

What's happening here?

What exactly are these receivables and why is it ballooning at such an incredible pace?

Do you reckon that there is a massive problem here?

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Warren Buffet Talks About Goldman Sachs Investment: Transcript of CNBC Interview

The transcript of the interview between Warren Buffett and CNBC in regards to Berkshire investment in Goldman Sachs comes in 3 parts.

1. http://www.cnbc.com/id/26867866
2. http://www.cnbc.com/id/26869518
3. http://www.cnbc.com/id/26871327

Here are some of the interesting points.

• BECKY QUICK: We know you get all kinds of deals, all kinds of people who come knocking asking you to jump in. You've said no to everything to this point. Why is this the right deal at the right time?
  
  WARREN BUFFETT: Well, I can't tell you it's exactly the right time. I don't try to time things, but I do try to price things. And I've got a formula that says bet on brains, and bet of them when it's the right type of deal. And in this case, there's no better firm on Wall Street. We've done business with them for years, with Goldman, and the price was right, the terms were right, the people were right. I decided to write a check.

And this was rather interesting in my opinion.

• BECKY: Does the backdrop of the Federal government potentially getting involved with a massive bailout plan for Wall Street, does that have anything to do with this deal?
  
  BUFFETT: Well, I would say this. If I didn't think the government was going to act, I would not be doing anything this week. I might be trying to undo things this week. I am, to some extent, betting on the fact that the government will do the rational thing here and act promptly. It would be a mistake to be buying anything now if the government was going to walk away from the Paulson proposal.

WOW! Firstly this is a huge endorsement on what Paulson wants to do. Secondly, Buffett is clearly stating how critical things are at this moment of time.

• BECKY: Why would that be a mistake? Because the institutions would collapse, or because you could get a better price?
  
  BUFFETT: Well, there's just no telling what would happen. Last week we were at the brink of something that would have made anything that's happened in financial history look pale. We were very, very close to a system that was totally dysfunctional and would have not only gummed up the financial markets, but gummed up the economy in a way that would take us years and years to repair. We've got enough problems to deal with anyway. I'm not saying the Paulson plan eliminates those problems. But it was absolutely, and is absolutely necessary, in my view, to really avoid going over the precipice.

Buffett then continues..

• BUFFETT: Yeah, well, both the economy and the financial markets, but there're so intertwined that what happens, they're joined at the hip. And it doesn't pay to get into horror stories in terms of naming institutions or anything. But I will tell you that the market could not have, in my view, could not have taken another week like what was developing last week. And setting forth the Paulson plan, it was the last thing, I think, that Hank Paulson wanted to do. there's no Plan B for this.

Ahem! We were that close.... !!!

• BECKY: Warren, you mentioned that Wall Street could not have taken another week like that. But what does that mean to the American taxpayer who's sitting at home saying, 'Why is this my problem?'
  
  BUFFETT: Yeah, well, it's everybody's problem. Unfortunately, the economy is a little like a bathtub. You can't have cold water in the front and hot water in the back. And what was happening on Wall Street was going to immerse that bathtub very, very quickly in terms of business. Look, right now business is having trouble throughout the economy. But a collapse of the kind of institutions that were threatened last week, and their inability to fund, would have caused industry and retail and everything else to grind to something close to a halt. It was, and still is, a very, very dangerous situation. No plan is going to be perfect, but thanks heavens that Paulson had the imagination to step up with something that is of the scope that can really do something about it. And what he did with the money market funds, that was not an idea that I had, but as soon as I heard about it, that was an important stroke. Because the money, pulling out of the money market funds and going to Treasuries, and driving Treasury yields down to zero. That -- a few more days of that and people would have been reading about lots and lots of troubles.
  
  JOE: But when the more dire it looked, in terms of communicating, with some of these Senators, the three-month or one-month bill, again, started acting similar to what was happening on Thursday. Now we averted that disaster on Thursday, but it's already been three or four days. It's almost as if these guys already forgot about the position that we were in. Do you think that accounted -- we're still susceptible to that happening again if it looked like they're not going to go through with this?
  
  BUFFETT: No, it would get worse. Last week will look like Nirvana (laughs) if they don't do something. I think they will. I understand where they're very mad about what's happened in the past, but this isn't the time to vent your spleen about that. This is the time to do something that gets this country back on the right track. What you have, Joe, you have all the major institutions in the world trying to deleverage. And we want them to deleverage, but they're trying to deleverage at the same time. Well, if huge institutions are trying to deleverage, you need someone in the world that's willing to leverage up. And there's no one that can leverage up except the United States government. And what they're talking about is leveraging up to the tune of 700 billion, to in effect, offset the deleveraging that's going on through all the financial institutions. And I might add, if they do it right, and I think they will do it reasonably right, they won't do it perfectly right, I think they'll make a lot of money. Because if they don't -- they shouldn't buy these debt instruments at what the institutions paid. They shouldn't buy them at what they're carrying, what the carrying value is, necessarily. They should buy them at the kind of prices that are available in the market. People who are buying these instruments in the market are expecting to make 15 to 20 percent on those instruments. If the government makes anything over its cost of borrowing, this deal will come out with a profit. And I would bet it will come out with a profit, actually.

Do read the rest of the transcripts. Here are the links again.

1. http://www.cnbc.com/id/26867866

2. http://www.cnbc.com/id/26869518

3. http://www.cnbc.com/id/26871327

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A bone to pick . . .

I said I’d keep you updated on the filming of The Lovely Bones but unfortunately since my last post there hasn’t been much to report. The only recent snippet from the Peter Jackson camp was shooting has been progressing ahead of schedule. THIS JUST IN! Clearly enough of the movie has been filmed to throw together a trailer and the press in London were treated to an exclusive screening last week. A contributor from online movie and video games bible Ain’t It Cool News had this to say:
“Finally we got to see the trailer for lovely bones – have not read the book myself but my girlfriend ensures me that from the footage I described the film should be a massive hit. Trailer is very upsetting but in my mind give away WAY too much of the plot.”
Hmmm. . . well the subject of the entire book is quite upsetting so I’ll overlook that comment. I mean, honestly, a novel about a 14-year-old girl who is raped and murdered isn’t exactly going to draw fans from the The Devil Wears Prada and Memoirs of a Geisha crowd. Frankly, if the film wasn’t upsetting then I’d be calling Jackson a sell out for steering away from Alice Sebold’s original material. I hope not too much of the plot is revealed because although audiences will want to know in detail what the movie is about (in 2 to 3 minutes mind you) they still need to want to know more to go and see it.

I just hope they post the trailer on YouTube soon.

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Why Such Poor Reporting?

Posted on Star Business: Sapura Resources returns to black in first quarter

• KUALA LUMPUR: Sapura Resources Bhd posted a pre-tax profit of RM478,000 in the first quarter ended July 31, 2008 compared with a pre-tax loss of RM1.73mil in the previous corresponding period.
  
  The company’s revenue increased to RM60mil from RM55.4mil previously. - Bernama

Ok Star Business is only re-broadcasting what Bernama wrote.

As one can read, this news brief talks only on Sapura pre-tax profit.

And in the financial world, such reporting makes no sense because one needs to address corporate taxes too.

So what's the point of publishing how much pre-tax profits Sapura Resources made?

And if you include in the corporate taxes, Sapura Resources lost money.

Here is the link to Sapura Resources said earnings report.
Quarterly rpt on consolidated results for the financial period ended 31/7/2008

And it's rather amazing because the Edge has managed to report it correctly.

24-09-2008: Sapura Resources’ 2Q loss narrows

• KUALA LUMPUR: Sapura Resources Bhd’s net loss for the second quarter (2Q) ended July 31, 2008 narrowed to RM753,000 from to RM1.73 million a year earlier due to more vehicles sold and a rise in the number of students in its education business.
  
  Revenue rose 8.4% to RM60 million from RM55.36 million a year earlier. No dividend was declared.
  
  For the six months to July 31, its net loss narrowed to RM2.07 million from RM4.94 million a year earlier, while revenue rose 37% to RM124.99 million from RM91.26 million.

Can we hope for better financial reporting?

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Massive Redemptions At Hedge Funds!

This is massive!

Published on the UK Independent.

• By Nick Clark
  Tuesday, 23 September 2008
  
  Hedge funds could have an unprecedented level of cash pulled out by investors this quarter, according to insiders, just as they faced millions of pounds of losses from last week's shock regulation of short selling. It has been a tough year for the industry with high-profile funds blowing up, clients increasing redemptions, as well as public fury over short selling and increased threats of regulation.
  
  One hedge fund expert pointed to The Hedge Fund Implode-O-Meter (HFI) as how he judges the state of the industry. The HFI was set up online in the wake of the credit crunch "to track as hedge funds learn the double-edged-sword nature of the often extreme leverage they use".
  
  The group's "imploded funds" list has hit 51 companies since the sub-prime mortgage crisis in the United States kicked off a widespread downturn. That compares with its historical list, stretching back more than a decade to the end of 2006, of just 14, including the collapse of Long-Term Capital Management and Amaranth.
  
  This year, big names including Peloton Capital Partners, Carlyle Capital Corporation and Dillon Read Capital Management are just some of the half century to collapse. "We think hedge funds have largely lost their way," HFI said. "Notably, most have abandoned capital-preservation for the goal of aggressive accumulation of capital gains, with the benefit of lax regulation and extreme leverage available to exploit."
  
  It has 34 stocks on its "ailing/watch list" of those that have suffered significant value declines or temporarily halted redemptions. According to EuroHedge, a hedge fund data provider, 272 individual funds strategies were launched during the first six months of 2008, the lowest for nine years. In the same time, 243 funds have been liquidated, the highest in a six-month period.
  
  Nouriel Roubini, the New York University economics professor, says worse is to come. He believes there will be an increase in client withdrawals and a shake-up of how funds are regulated.
  
  The redemptions seem to have started in earnest, although currently the evidence is mainly anecdotal. One UK hedge fund manager confided that last week had the highest number of investors rushing to withdraw funds that he has known. The industry will know for sure whether it is a drip or a deluge when the data providers release their statistics for the third quarter, next month. One market analyst said: "I know even the good hedge funds have been suffering withdrawals recently. Investors are very nervous."
  
  Performance numbers are also under pressure. Some have done well out of the market disturbance, but on average the performance numbers are at a low ebb. Andrew Baker, the deputy head of Aima, the hedge fund trade body, said: "The performance is undoubtedly soggy. There are not many strategies that stand out."
  
  EuroHedge revealed that strategies that have done particularly badly this year include several run by Naissance Capital, once bankrolled by the Habsburg families, which are down a fifth and Pico Fund, which is down 32 per cent. At Endeavour Fund, set up by former Salomon Smith Barney traders, the second fund has fallen by 40 per cent, while its third fund is down 38.79 per cent in 2008. In the emerging markets, PharmaInvest Fund's investments in emerging markets are 38.16 per cent down.
  
  Other funds have sought to lock in investors by halting redemptions. The latest example was RAB, with its flagship Special Situations Fund, as it was so desperate to prevent exits after a 22 per cent drop in performance that it offered vastly reduced fees in return for a lock-in period of three years.
  
  One of the main problems experienced by hedge funds is the extent of leverage in the industry. The funds were able to take on huge amounts of debt, with little capital needed as security, to boost returns. One observer said some of the leveraged strategies were like "picking up pennies in front of a steamroller, and that only takes a turn in the market to cause severe problems".
  
  Andrew Lodge, the managing director of fund of hedge funds Nedbank Investments, said: "Some funds have gone in for huge leverage-driven strategies, which can be a problem. The appetite for leverage is less." He added that some could be affected by increased margin calls, and could face issues over their covenants.
  
  At the same time, hedge funds, like the banks, have had to write down exposures to investments in risky instruments including collateralised debt obligations and asset backed securities, and also been exposed to the huge swings in the market.
  
  Another issue is the regulators sniffing around. There have been wider calls for transparency and official controls of the industry, which has already been stung by the shock short-selling rules.
  
  Mr Lodge said: "It's a myth to say hedge funds aren't regulated. There is a perception that they are running wild with no oversight, which isn't true. We would welcome some regulation, just as long as it doesn't strangle the industry."
  
  On Friday, the FSA banned short selling in financial stocks, and forced hedge funds to disclose their positions. As the underlying shares rose as a result, the industry was looking at well over £1bn in paper losses on the day.
  
  Stuart McLaren, financial services partner at Deloitte, said: "When the dust has settled, I expect the regulators to look at the role that hedge funds have played in the current issues. I expect there will be increased calls for regulation, but I doubt much will come from it."
  
  Mr Baker said: "Some hedge funds are doing well. However, the number of professionals feeling good about life will be dwindling. The health indicators are generally negative, while costs are up and performance is down. Many are feeling battered and bruised and feeling worried about the future."

Source: http://www.independent.co.uk/news/business/news/hedge-funds-suffer-mass-redemptions-938959.html

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Warren Buffett Gives Goldman Sachs A Vote Of Confidence!

Yes the unthinkable has happened!.

Berkshire Hathaway has invested some $5 Billion into Goldman Sachs!

As reported in CNN

• Goldman (GS, Fortune 500) will sell $5 billion of preferred stock to the insurance and investment giant, which will also receive warrants to purchase $5 billion of common stock with a strike price of $115 per share, the company announced Tuesday. Berkshire (BRKA, Fortune 500) has five years to exercise the warrants.

And here is what Warren has to say.

• "Goldman Sachs is an exceptional institution," said Buffett in a statement. "It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance."

Of course the folks at Goldman Sachs are extremely happy.

• "This investment will further bolster or strong capitalization and liquidity position," said Lloyd Blankfein, Goldman's chief executive

And needless to say the market is reacting well to this news.

• "It's a vote of confidence in Goldman," said Nancy A. Bush, founder of NAB Research. "I can't imagine something better than the good housekeeping seal of approval."

Over at CNBC. http://www.cnbc.com/id/26858974

• Shares of Goldman soared over 11 percent in after-hours trading following the announcement. US stock futures also jumped on the news.
• This is a marriage of two incredibly intelligent, attractive partners," said Michael Holland, a money manager at Holland in New York. "Buffett is saying about the top management of Goldman Sachs that they're distinct and different from their competitors—and it's a vote of confidence which is gold plated. You don't get better than this."
• The investment is Buffett's second major purchase in less than a week. Thursday, his MidAmerican Energy Holdings affiliate agreed to buy power supplier Constellation Energy Group for $4.7 billion.

And on another article, written by Alex Crippen on CNBC: Warren Buffett Gives Goldman Sachs a Surprise $5B Vote of Confidence

• In a surprise return to Wall Street, Warren Buffett's Berkshire Hathaway has a deal to invest at least $5 billion in Goldman Sachs.
  
  Up until now, he has rejected all pleas to come to Wall Street's aid during the current crisis.
  
  Goldman revealed the vote of confidence from the man generally considered the world's greatest investor late this afternoon in a news release.
  
  Berkshire will buy $5 in preferred Goldman stock with a dividend of 10 percent. It will also get warrants to buy another $5 in common stock over five years.
  
  Buffett has avoided Wall Street since he came to Salomon Brothers' aid as a hands-on manager when it was hit by a trading scandal in 1991. He had bought a $700 million stake in the company four years before.
  
  He eventually turned a profit on the investment, but it was a long and difficult experience for him, making tonight's news especially unexpected.
  
  In a brief off-camera telephone conversation tonight, Buffett told CNBC's Becky Quick he loves the terms of the deal and he loves Goldman. (It's important to note that Buffett got a much better deal than any individual investor could hope for.)
  
  Even so, Becky tells me she's "stunned" by this development, and I am too. Neither of us can believe it just now.
  
  Becky jokes she would have predicted that Buffett would buy a stake in Pepsi, arch-rival of his beloved Coca-Cola, before he put money into a Wall Street firm again.
  
  She expects to speak extensively with Buffett live on the air tomorrow (Wednesday) morning just after 8a ET on Squawk Box. They'll cover the Goldman investment as well as everything else that's happening in the financial world right now, including his support of the administration's increasingly controversial bailout plan.
  
  While Buffett came to New York to help run Salomon years ago, its inconceivable that he would leave Omaha this time around to pitch in at Goldman's executive suite.
  
  Buffett is quoted in the release with some very positive comments about Goldman, which recently converted from an investment bank to a bank holding company.
  
  "Goldman Sachs is an exceptional institution. It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance.”
  
  Goldman CEO Lloyd Blankfein returns the favor in his quote. "We are pleased that given our longstanding relationship, Warren Buffett, arguably the world’s most admired and successful investor, has decided to make such a significant investment in Goldman Sachs. We view it as a strong validation of our client franchise and future prospects. This investment will further bolster our strong capitalization and liquidity position."
  
  Berkshire will also receive warrants to purchase $5 billion of common stock with a strike price of $115 a share. The warrants can be used at any time over a five year period.
  
  In addition, Goldman will raise at least $2.5 billion in common equity through a public offering.
  
  Goldman shares are higher in after-hours trading tonight (Tuesday.) Morgan Stanley is also gaining.
  
  Buffett's strong endorsement of the newly minted "bank holding company" could help lift the financial sector, and the entire stock market, when trading gets underway in the morning.
  

And for future reference, here is the five year chart of Goldman Sachs.

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Marc Faber: Feds Were Like Drug Dealers!!!!

Dr. Marc Faber did not mince his words when he appeared on CNBC.

• "About 15 percent of U.S. households have negative equity. Who supplied the leverage into the system? It's called the Federal Reserve Board," Faber said.
  
  "If I'm the drug dealer I'm not responsible that everybody takes drugs, but I facilitate it, especially if I give it out free of charge, I can enlarge the market share, and that's what the Fed has done."
  
  Liquidity will dry up even more, volatility will stay high and financial assets are going to suffer as the crisis continues to unfold. The bailout plan is unlikely to work and the global economy will take the hit, he predicted.
  
  "People rely on the people in Congress, at the Fed, at the Treasury, people that brought us into this trouble, to take us out of trouble. I don't think they will succeed," Faber said. "We can have recovery rallies but a new high on the S&P is practically out of the question for a very long time. In real terms, equities are still very high and economically, I think the world will go into a slump."
  
  The main provider of global liquidity was the U.S. current account deficit, which increased at a fast pace over the past 10 years, but this will no longer be the case.
  
  "Next year, if the economy in the U.S. is as weak as I think it would be, the trade and the current account deficit will continue to contract," Faber said. "When global liquidity contracts, it's not a good time for financial assets."
  
  Other sources of funding, such as foreign reserves of resources-rich countries, are also likely to dry up, Faber said. "I think sovereign wealth funds are going to be very busy supporting their own markets, they won't have much money to buy assets around the world."

And he feels that the short selling ban is sooooooooooo stupid!

• Volatility comes from the fact that, as the private sector tightens lending conditions to adjust its risk management, central banks are injecting liquidity in the money markets to grease the system, he said, adding that banning short-selling will not contribute to reducing volatility and was a "stupid measure."
  
  "Short sellers are not responsible for current problems. The current problems are caused by the US Fed (Federal Reserve), that was sitting there and letting credit growth go out of bounds," Faber said.
  
  "We have to see very clearly that the cause of the problem was excess leverage. The biggest hedge funds were Fannie Mae and Freddie Mac, they had the leverage of one over 150 and under the eyes of Congress, under the eyes of the SEC and everybody… and nobody did anything about it. Then, people go and bitch about the short sellers," he added.
  
  The fact that the rules on short-selling are changing nearly daily, with new names added to the list of securities in which short-selling is banned or with specific rules regarding hedging and confidentiality contributes to adding uncertainty, he said.

Source: http://www.cnbc.com/id/26848829

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Some Interesting Comments

Bob Pisani had some interesting stuff to say regarding yesterday's markets.

• The despair of Wall Street, redux. Volatility with no volume. That's what we got today. The Dow swung in a 400 POINT RANGE, but volume was about half what it was at the end of last week.
  
  Why? Some said too much uncertainty over the Treasury bill, some said with no short sellers adding liquidity, what do you expect? Others said the reflation trade has added another level of confusion.
  
  The markets may have acted negatively over concern about all the strings Democrats are attaching to the Treasury Department rescue plan, but don't kid yourself: a deal will get done.
  
  Still, don't underestimate what this bill is doing to the psychology on the Street. Most stock traders would be willing to accept more help for homeowners facing foreclosure as part of the bill.
  
  What's left? Some Dems want a stake (warrants) in any company that sells assets to the program. That's a problem. We're selling you the assets, below market price probably, and you still want warrants?
  
  Also an issue: drastically limiting pay for executives. We are probably not just talking about CEOs. We're probably talking about anyone in management. And--as we all know--commercial bank management makes A LOT less than investment bank management. ( my comments: yes about time, yes? Those buggers were paid insanely. It's totally obscene that anyone could be paid so much! )
  
  Bottom line: less business, less pay, less reward. That's what Wall Street management is facing today.
  
  Little wonder some guys are thinking of getting out altogether.
  

Source: http://www.cnbc.com/id/26841732

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Did JP Morgan Got 'Bailed Out'??

On today's FinancialSense market wrap commentary, market commentator Rob Kirby wrote a highly interesting piece called, And the Band Played On

The following passages were most interesting.

• Late last week, I wrote about a very strange occurrence – the reporting of J.P. Morgan “transferring” 138 billion dollars to Lehman, after Lehman had already filed for Chapter 11 bankruptcy early last Monday morning.
  
  This bears repeating.
  
  The advance was reportedly “to allow” Lehman to settle securities trades with clients. J.P. Morgan was then immediately reimbursed by the Federal Reserve for the same 138 billion.
  
  What was not originally reported, or likely not understood at the time due to the types of securities that Lehman did most of their business in [Credit Derivatives], it is a virtual certainty that J.P. Morgan [the largest derivatives player in the world with 8.1 Trillion in Credit Derivatives alone] was the “client” [the other side of the Lehman trades that needed to be settled].
  
  The critical piece of information that completes the daisy-chain: The world only learned about J.P. Morgan’s 138 billion advance from a bankruptcy court document, where Lehman was asking the court for the authority to give the settlement of claims of J.P. Morgan “special status.”
  
  Here’s how this flow-of-funds looks visually:
  
  
  It is highly likely [or a certainty on my planet] that J.P. Morgan was INSOLVENT and was “BAILED OUT” last Monday, September 15, to the tune of 138 billion dollars. This would explain why the Fed and Treasury dictated that Lehman fail – to disguise or otherwise obfuscate the recapitalization of or illicit transfer of 138 billion to A MUCH SICKER, TEETERING ENTITY, J.P. Morgan Chase.
  
  This makes sense. Investment banks are dropping like flies, owing to their involvement in credit derivatives – this is a fact.
  
  J. P. Morgan is – HANDS DOWN – the largest derivatives player in the world with a book of 90 Trillion in notional value on March 31, 2008 – with 9% of the book composed of Credit Derivatives. That amounts to a cool 8.1 Trillion worth of Credit Derivatives. We know this from the Office of the Comptroller of the Currency’s Quarterly Derivatives Report – pg. 24.

read rest of his article here ...

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More on Privatisation of VADS

More on Privatisation of VADS

OSK wrote the following the following in their report.

• Farewell To A Gem
  
  TM has proposed to privatise VADS at RM7.60 per share, matching our target price for the stock, which values the company at 12x FY09 EPS. We view the takeover as a beneficial exit option for minority shareholders as it addresses the stock’s illiquidity. We believe TM had taken cognisance of this in arriving at the offer price, with due consideration for VADS’ solid balance sheet. Hence, we are of the opinion that the minorities should acquiesce to the offer. Fully valued at RM7.60.
  
  Offer price at our target of RM7.60. TM has proposed to undertake the privatisation of VADS at RM7.60 per share implemented via selective capital repayment. The deal values VADS at 12x FY09 EPS, or a market capitalisation of RM1bn, matching our target price for the stock. The offer, which carries a 12% and 18.4% premium over the stock’s last traded and the 5-day volume weighted average price respectively, has adequately factored in the company’s enviable cash flow/balance sheet and dividend prospects.
  
  Solid fundamentals. VADS has not disappointed given its successive y-o-y growth in revenue and earnings, charting CAGRs of 28.6% and 39.3% respectively since listing in 2002. Its earnings are highly visible, thanks to strong recurring revenue from the managed network services (MNS) segment. The focus on the business process outsourcing (BPO) space unlocks a strong revenue stream and is expected to spearhead earnings growth going forward. We project EPS growth at a healthy 25% on average p.a. going into FY10.
  
  One more bites the dust. We were one of the first to commence coverage on VADS in 2005 and had consistently picked the stock as our top pick in the small cap ICT sector for 3 consecutive years. Its privatisation will undoubtedly remove a jewel whose track record is difficult to emulate. The scarcity value attached to the stock is reflected in the takeover price, which we deem fair. We advise minorities to accept the offer as it is a good exit strategy to unlock the value of a stock that has been plagued by liquidity constraints and is trading at an unwarranted discount to its global BPO peers.

This is where it is sooooooooooooooo wrong.

Acquiesce to the offer?

According to my pal Wikiseng, to acquiesce is to knowingly standing by without raising any objection to infringement of his rights...

So if I am not flawed again, is OSK telling VADS minority shareholders just to accept the offer, in regardless?

Forget about the fact that company has solid fundamentals?

Forget about the fact the stock had managed to register stellar CAGR growth of 28.6% and 39.3% since listing?

Forget about the fact the offer price is priced only at 12x FY09 EPS?

Forget about asking if the offer price is justifiable or not?

Just acquiesce to the offer.

Sad isn't it?

Don't you think you are not fully compensated?

So how?

Better consider what happens here before you invest in any listed subsidiary.

So long farewell, it's time to say goodbye....

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The Day The World Almost Ended.

Here's an interesting write on how the events unfolded last week, Almost Armageddon

• The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post.
  
  Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level - a 22 percent decline! - while the clang of the opening bell was still echoing around the cavernous exchange floor.
  
  According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning.
  
  The panicked selling was directly linked to the seizing up of the credit markets - including a $52 billion constriction in commercial paper - and the rumors of additional money market funds "breaking the buck," or dropping below $1 net asset value.
  
  The Fed's dramatic $105 billion liquidity injection on Thursday (pre-market) was just enough to keep key institutional accounts from following through on the sell orders and starting a stampede of cash that could have brought large tracts of the US economy to a halt.
  
  While many depositors treat money market accounts as fancy savings accounts, they are different. Banks buy a variety of short-term debt, including commercial paper, with the assets. It is an important distinction because banks use the $1.7 trillion commercial-paper market to fund their credit card operations and car finance companies use it to move autos.
  Without commercial paper, "factories would have to shut down, people would lose their jobs and there would be an effect on the real economy," Paul Schott Stevens, of the Investment Company Institute, told the Wall Street Journal.
  
  Cracks started to show in money market accounts late Tuesday when shares in one fund, the Reserve Primary Fund - which touted itself as super safe - fell below the golden $1 a share level. It had purchased what it thought was safe Lehman bonds, never dreaming they could default - which they did 24 hours earlier when the 158-year-old investment bank filed Chapter 11.
  
  By Wednesday, banks sensed a run on their accounts. They started stockpiling cash in anticipation of withdrawals.
  
  Banks, which usually keep an average of $2 billion in excess reserves earmarked for withdrawals, pumped that up to an astounding $90 billion by Wednesday, Lou Crandall, chief economist at Wrighton ICAP, told The Journal.
  
  And for good reason. By the close of business on Wednesday, $144.5 billion - a record - had been withdrawn. How much money was taken out of money market funds the prior week? Roughly $7.1 billion, according to AMG Data Services.
  
  By Thursday, that level, fed by the incredible volume of sell orders pouring in from institutional investors like pension funds and sovereign funds, had grown to $100 billion. It was still not enough to stem the tidal wave.
  
  The banks knew something drastic had to be done. So did Paulson.
  
  The injection of capital into the market was followed up by calls from Treasury Secretary Hank Paulson to major money market players like Bank of New York Mellon and State Street in Boston informing them that federal money was in the market and they should tell their clients the Feds would be back with a plan to stem the constriction in the credit market.
  
  Paulson knew the $105 billion injection was not a real solution. A broader, more radical answer was needed.
  
  Hours after Paulson made his round of calls to calm the industry, word leaked out that an added $1 trillion bailout of banks was being readied. Investors cheered. At about 3 p.m., news of the plans was filtering up and down Wall Street, fueling a 700-point advance in the Dow Jones industrial average through 4 p.m. Friday.
  
  By that time, Paulson had announced the plan. It included insurance on money market accounts, a move that started in quiet Thursday morning, when the former Goldman Sachs executive saved the country from a paralyzing meltdown.
  
  

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