Archive for the 'Capital Markets' Category

This is sad. They say 20% of the sub-prime mortgages are in default, this is the story of one of those people.

Until this month, few Canadians knew what “subprime” meant. Fewer still could imagine why they should even care. Common in the United States, these loans are a rarity in Canada, accounting for roughly 5 per cent of all mortgages.

But these risky loans – made at inflated rates to borrowers with inadequate income and spotty credit histories – were all the rage south of the border. Last year, they accounted for 20 per cent of new mortgages, spawning a $1-trillion (U.S.) market.

I think it’s best summed up by this quote from an ex Amazon employee:

We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday.

It’s so interesting..

The telco’s have been getting a lot of attention the last couple weeks. On the 22nd of March the Globe & Mail reported that Telus was taking BCE to court over an ad run in Western Canada, were Frank and Gordon (the lovable Bell spokesbears) were bragging that Bell had the most powerful network. The only problem, was that Bell runs off of Telus networks in the West!

This past week BCE was rumoured (on the front page of the Globe) to soon be the target of a takeover by KKR — an American private equity firm. BCE quickly denied the reports, but the very next day were reported to be in talks with Telus for a possible merger. The following script (it’s a joke) from a Bell Mobility TV commercial was in todays Globe:

Bell Mobility’s latest TV commercial, take 23. Action:

Gordon: So, Frank, did you hear about the company being taken over by Lenny Kravitz?

Frank: That’s Henry Kravis, Gord. And by the time he’s finished with us, you can forget about your lifetime supply of jelly beans.

Gordon: What would an American leveraged buyout company want with us? I was checking BCE stock yesterday on my new phone using our unlimited calling plan, and apparently the share price hasn’t moved since Alexander Graham Bell last called his mom on her birthday.

Frank: That’s just it, Gord. It doesn’t matter how well you and I do at attracting the elusive 14-35 demographic in the face of intense competition from hipper, nimbler providers such as Rogers and Virgin Mobile, the fact remains that our shareholders are fed up with BCE stock stinking up their RRSPs.

Gordon: So that nice man, Michael Sabia, who interviewed us for the job, is he in trouble?

Frank: Let’s just say he might just want to think of posting his résumé on workopolis.com. You too, my furry friend. I hear they’re thinking of replacing you with a possum.

Gordon: Oh yeah? Well, don’t count your chickens, because when they find out how much Norm McDonald is getting paid to do your voice, he’ll be the out the door and you’ll be talking like Ryan Seacrest.

Frank: Seacrest’s cheap. He’s got no class.

Gordon: Maybe, but I’m scared, Frank. Very scared. I can’t afford to go back to building dams for a living. Can’t Ottawa step in?

Frank: That’s an idea! Hey, why don’t I call Stephen Harper using Bell Mobility’s amazing family and friends plan?

(Close-up on Frank holding the ultracool LG Fusic phone. He dials.)

Frank: Prime Minister’s office, please. Oh, hi Mr. Harper. Say, I wondered if you could do something to stop Americans taking over Canada’s most prized telecommunications network and infrastructure? Hmm-hmm. Yep. Uh-ha. OK. (Hangs up.)

Gord: What’s he say?

Frank: He said he’d like to help us, but there’s no Quebec or 905 votes in it.

Gord: That’s it. I’m outta here. Screw those monkeys, I’m heading over to Telus.

Frank: Me too.

Exeunt, pursued by a bear.

Yesterday was a bad day in the markets; North American exchanges fell the most since September 17 2001 — the first trading day after September 11. It all started with a comment by the Chinese government that they were going to crack down on speculators in China, causing a tidal wave of selling across world markets. There was one big difference though between yesterday and September 17th. Yesterday, even when people were pulling money out of markets to ’safe havens’ Gold fell also. For those who don’t know, when bad things happen in the world, investors/traders have a ‘flight to quality’. They’ll pull money out of capital markets and put them in resources, metals, treasuries, currency etc.. The interesting thing is that didn’t happen yesterday. I read an article in today’s Globe that highlighted this issue, it’s an good read.

Link to article

I read this Saturday morning in the Globe and Mail (23.12.06 by Derek DeCloet), I loved it.

‘Twas the night before Christmas, when all through Bay Street
The brokers and traders had put up their feet
They hung up no stockings, ’cause their only real goal
Is to make sure that Flaherty gets a large chunk of coal

In Cowtown, the oilmen met near Bankers Hall
(Beats fighting the crowd at Chinook Centre mall)
They set up a bonfire, instead of a tree
So they could burn the poor minister in effigy

Then outside the door there arose such a clatter,
I woke from my slumber to see what was the matter
So loud was the noise, I could only assume
That Xstrata’s Big Mick had burst into the room

For a moment I thought, as I peered through the glass
That I spotted Ted Rogers, with a bag full of cash
Though we worry how much he will spend on the Jays
He’s got a good plan: “Cable fees will be raised!”

But the man with the sack wasn’t Ted, Jim or Mick
I knew, soon enough, that it must be St. Nick.
He climbed in the sleigh, one more check of his list
(Anyone bet Flaherty’s house will be missed?)

“Now Dasher! Now Dancer! Now Prancer and Vixen!
Head eastward, then north, to the home of Gord Nixon!”
Though why he needs toys is not plain to see
Doesn’t Royal Bank’s stock price defy gravity?

Some gifts are simple, and obvious too
Like Inco’s new owners — that Brazilian crew
They will get parkas, ’cause they weren’t ever told
That winter in Sudbury could be so damn cold!

Or consider John Sleeman — he’s easy to please:
“I need books and tapes, Santa, to learn Japanese”
And Heather and Gerry, they cannot complain
She’ll receive lots of books, and he’ll get some airplanes

For others, it’s harder — how can Santa delight
A child whose year has already been bright?
Take Gluskin and Sheff, the two boys with the grins
Who are lolling in money from their IPO wins

Or Jim, from RIM, which has had a great run
(Though the stock options probe just might spoil the fun)
He’s lucky and rich, but he’s got one more scheme
“Santa,” he said, “I still want my own team.”

Some gifts are so big, even St. Nick has no say
A new job for Pannell? Respect for PK?
Mike Z has a wish — get Nortel out of trouble
“Sorry,” said Santa, “I can’t bring back the bubble”

The elves are confused (they’re a little bit dumb)
About why Eric Sprott asked for uranium
When Michael MacMillan sent his own wishful pitch
“Forget it, big fella — you’re already too rich.”

Munk’s an old geezer, but not without wants
NovaGold, say, or even Newmont?
The TSX boss craves the biggest of all
“Please,” he begged Santa, “can’t I have Montreal?”

Santa gave a big sigh, then leapt to his feet
“They sure are demanding, this bunch from Bay Street
“But as for ol’ Flaherty, he can go and pound sand
“Thanks to his trust tax, I just lost fifty grand!”

Update (Nov. 20 2006): The more I thought about this manifesto the more annoyed I became. This reeks of shameless self promotion. Furthermore after learning about Garlinghouse’s track record and reading Kevin Kelleher article from the TheStreet.com I couldn’t agree more:

So, now heads must roll at Yahoo!. If so, I’d like to nominate the first one: Brad Garlinghouse.

Things have been busy this last couple weeks, but nothing really that I can disclose. That coupled with things coming up prevented me from writing a wrap-up the last couple weeks.

I came across across an article on MarketWatch about the Peanut Butter Manifesto – an internal (now external) memo written by Yahoo! exec Brad Garlinghouse. After reading other reports, I learned that this has been circulating inside Yahoo for the last couple weeks now. Garlinghouse is a gutsy guy a confused fellow and actually (had) shaved a Y into the back of his head. Initially I thought this was purposely leaked as a precursor to big changes coming – after reading the memo, I think it may have been purposely leaked but for other reasons..

I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular. I hate peanut butter. We all should.

The entire letter can be read from the WSJ.