Inside the Meltdown
These are very interesting video on the 2008 Financial Crisis from Frontline:
Enjoy!
Useful website for Technical Interview question
For those of you who are practicing for Finance/Investment banking interview, here is the list of websites that are very useful for technical review besides the Vault Guide:
ibankingfaq.com
mergersandinquisitions.com
investmentbankinginterviewprep.blogspot.com
khanacademy.org/#finance
investopedia.com
jobjuice.com
Wall Street Breakfast - 10.10.2011
Merkel, Sarkozy eurozone pledge again short on details. Angela Merkel and Nicolas Sarkozy yesterday made yet another pledge to take action to solve the eurozone’s debt crisis, saying they would formulate a plan by early next month to recapitalize European banks and accelerate economic coordination in the currency bloc. However, the German and French leaders provided no details, with sources saying they still have to resolve differences over who will pay for the recapitalization and how deeply to restructure Greece’s debts.
Euro attention turns to Slovakia. While France and Germany slug out the details over the eurozone’s rescue fund, Slovakia has become the latest of the smaller countries to threaten the future of the region. Leaders of the governing coalition are due to meet later today in an attempt to persuade the SaS party, a junior partner, to support the expansion of the fund. However, it seems that SaS chief Richard Sulik is unconvinced: “The greatest threat to the euro is the bailout fund itself,” Sulik told Spiegel Online.
Dexia to be rescued. The Merkel-Sarkozy talks were given extra urgency by the woes of Dexia (DXBGF.PK), whose rescue was agreed to by France, Luxembourg and Belgium last night. The latter’s government will buy the bank’s Belgian business for €4B ($5.4B) and all three countries have provided a combined guarantee of €90B to secure borrowing over the next 10 years. Belgium will take responsibility for 60.5% of the total, a pledge that could hit its Aa1 rating: on Friday, Moody’s warned it may downgrade Belgium because of the burden it was set to take on.
Superior Energy to buy Complete Production for $2.7B. Oil-field services company Superior Energy (SPN) has agreed to buy Complete Production (CPX) for $2.7B in cash and stock, with the $32.90-a-share offer representing a 61% premium to Complete’s closing price on Friday. The transaction will combine Superior’s presence in oil-producing regions around the world with Complete’s expertise in hydraulic fracturing, and provide stronger competition to the Big Four service companies: Schlumberger (SLB), Halliburton (HAL), Baker Hughes (BHI) and Weatherford (WFT).
Alibaba looking to buy out Yahoo stake. Alibaba is interested in buying Yahoo’s (YHOO) 40% stake in the Chinese company, and has held talks with Singaporean investment company Temasek about providing the financing, Bloomberg reports. Yahoo’s holding in Alibaba, which is also interested in participating in a consortium that will buy the U.S. portal, is worth an estimated $13B. Yesterday, Reuters revived speculation that Yahoo founder Jerry Yang is looking to take the company private with the help of private-equity firms.
Yahoo withdraws from Hulu auction. Sidetracked by its own potential sale, Yahoo has withdrawn from the auction to buy online video Web site Hulu, The Wall Street Journal reports. The list of those still in the running following the latest bidding deadline last week comprises Dish (DISH), Amazon (AMZN) and Google (GOOG), with the latter prepared to offer over $2B. However, Hulu’s owners - News Corp. (NWSA), Walt Disney (DIS), Comcast (CMCSA) and Providence Equity Partners - still may decide not to sell the company and are considering other options.
Dow, Aramco sign accord for $20B plant. Dow Chemical (DOW) and Saudi Aramco signed a deal over the weekend that advances their plans to build one of the world’s biggest chemical plants in Saudi Arabia. Costing $20B, of which the firms will provide $12B, the facility is expected to start production in 2015 and earn annual revenue of $10B within a few years of opening. The companies hope to raise the rest of the money for constructing the factory via an IPO of the joint venture company that will operate the plant.
Hedge fund Q3 performance worst since crisis. The value of assets at hedge funds fell an average of 5.5% in Q3 2011, Hedge Fund Research says, with violent market swings helping cause the worst quarter since the depths of the 2008 financial crisis. And in the first nine months of 2011, funds focused on equities only provided the same returns as the S&P 500. In September, just two strategies made money out of 18 tracked: funds specializing in shorting stocks rose 6.9%, while those that took a quantitative approach to betting on interest rates and currencies inched up 0.2%.
Chrysler closing in on new labor deal. Chrysler (FIATY.PK) and the UAW are due to discuss the final details of a new labor contract today, with a vote of union members possibly occuring by the end of the week. The UAW has summoned local leaders from Chrysler factories to meet in Detroit, where union President Bob King will update them on a framework for an agreement, The Wall Street Journalreports. Meanwhile, Ford (F) workers started voting on their tentative agreement at the weekend.
Pre-orders for new iPhone set to hit record. Initial sales of Apple’s (AAPL) iPhone 4S are likely to beat those for the previous version of the device, with AT&T (T) and Sprint (S) reporting strong preorders after the product became available on Friday. AT&T said it sold over 200,000 iPhone 4S (AAPL) devices within 12 hours. The iPhone 4S will be available in shops this Friday.
Two more banks closed. Regulators closed two banks on Friday, bringing to 76 the number of failures in 2011 compared with 129 by this time last year. The banks were in Minnesota and Missouri, with the cost to the FDIC’s insurance fund expected to be a combined $189.7M.
Stocks Plunge with Commodities
Stock indexes slid to around 1%. With this change many things have happened, “…a rising chorus of analysts warning that high oil prices are threatening global growth.”
The energy and oil sectors are among the first to be affected. 
Youtube Channels
Google is working on new ideas to better position itself to keep up with the new internet connected televisions. One of the things they are doing is revamping Youtube by making more channels like televisions have.
“It is planning to spend as much as $100 million to commission the creation of original content for the premium channels.”
Scotland Questions Libya
With the increasing excitement in Libya, more and more countries have stepped in to help the Libyan people. Recently, Scotland has released their intention to question the former Libyan Minister.
“‘We have notified the Foreign and Commonwealth Office that the Scottish prosecuting and investigating authorities wish to interview Mr. Koussa in connection with the Lockerbie bombing,’ a Crown Office spokeswoman said.”
This interview is expected to reveal great insights on why Mr. Koussa has engaged in certain activities.
Bank of America Still on the Rebound
As effects of the crises are beginning to disappear, the Federal Reserve began to lift previous restrictions on many financial institutions. Thirteen of these institutions may now spend capital freely without permission from the Federal Reserve. With the same hope, Bank of America requested approval to increase its own dividend to shareholders. This request was unfortunately denied, showing that Bank of America may still be struggling. Capital One Financial Corp. may also be in a similar situation.
Cautiously Watching Inflation
There is a “solid unity of purpose among central bankers to continue to anchor solidly inflation expectations,” Mr. Trichet said Monday, adding “this doesn’t mean that we take the same decisions.”
Sustained levels of inflation have raised fear in the eyes of the central banks. Countries around the world are cautiously looking for signs of increased inflation in order to gauge interest rate levels in the coming months.
iPad Slows PC Sales
With the new release of the iPad this week, sales have significantly decreased for PC’s. The new iPad offers many additional features at the same price. The iPad, and other new media tablets coming out, are expected to be very successful.
“The technology researcher said it expects world-wide PC shipments to rise 10.5% to 387.8 million units in 2011, down from its November growth estimate of 14%. Gartner expects 2012 global PC shipments to increase 14% to 440.6 million units, down from its prior view of a 15% increase.”
Mideast Turmoil leads to Rise in Price of Crude Oil
Recent unrest in Libya has caused a shock in crude oil prices, causing it to exceed $100 a barrel for the first time since 2008. Investors fear that with the supply shock cutting off as much as a third of Libya’s daily output, any other shock could send prices to $150 a barrel. This threat has created large volatility in the market and has stirred speculation and fears regarding future prices. However, many fears have been quelled due to the excess reserves help by many Western countries.
Blockbuster Auction
Without the ability to adapt to the new-age rental services available, Blockbuster agreed to sell for $290 million. With the emergence of Netflix and Redbox, Blockbuster found itself unable to keep up and on the verge of bankruptcy. Blockbuster has requested that the New York bankruptcy court allow for an auction of the bankrupt company which will hopefully produce an offer towards the end of April.
Credit Suisse Pulls Ahead
Credit Suisse has place six billion Swiss francs of “of contingent capital securities with two large shareholders.” These bonds were helped created by some of Credit Suisse’s bankers. They are called “co-cos”, which is short for contingent-convertible bonds. These bonds convert to equity if capital requirements fall below the threshold.
“Collins Stewart analyst Matt Czepliewicz said: ‘It places Credit Suisse ahead of the pack in meeting [capital] requirements and in developing this new segment of the European bank capital market.’”
The S&P Comeback
The S&P is making a great comeback from the dark moments of the financial crisis. The S&P shows promising signs of recovery, which will help restore the confidence of the American people. “At its close Tuesday of 1324.57, the S&P 500 is just points away from doubling off its 666.79 intraday nadir, reached in the darkest moments of the financial crisis in March 2009.
The index still needs a boost of about 0.7% to get over that symbolic hump. But, if it does so in the coming days, the S&P 500 will have doubled at the quickest pace since it rocketed to 16.15 from 8.06 in 1936.”
No Inflation for the United States
Ben Bernanke, the Chairman of the Federal Reserve, ignored rumors of inflation in the United States. China and other countries have accused the United States of driving up global food and energy prices, but Bernanke has commented that this is not so. In the defense of the U.S. monetary policy, he says that these high prices are likely due to the excess demand of the emerging markets.
Ford Experiences Growth Despite Drop in Fourth-Quarter
Ford Motor Co. recently reported a $6.6 billion income for 2010, a $2.7 billion increase from last year. Even with this growth, investors are skeptical due to the unanticipated drop in fourth-quarter earnings which have been attributed to higher costs. Ford reported income of $190 million for the fourth-quarter, down from $1.7 billion in the third. This unexpected drop caused its shares to fall 13%. Despite this drop, some optimistic investors claim that these higher costs are attributed to product development and a strategy for success in the future. 
Global Plans for China
China is planning on expanding globally in the next few years. This expansion includes getting into the U.S. retail banking market, and also diving into emerging markets. China is also thinking there is potential success in African markets. While making these bold moves, China has already committed to be cautious when making moves to expand.
U.S. Chooses 4 Banks for Share Sale of AIG
“J.P. Morgan Chase & Co., Goldman Sachs Group Inc., Bank of America Corp. and Deutsche Bank AG were picked from a pool of 10 banks that last week pitched for lead roles in the historic share sale, the people said. The fee that banks have been asked to accept on the coming offering is about 0.5%, or $5 million on every $1 billion”
These banks will each have a significant part in this deal, which could be the biggest offering in U.S. history.
Facebook Prepares for IPO Next Year
The well-known social networking site recently received a $50 billion valuation, up from its $10 billion valuation in 2009. With the increasing investor interest, Facebook announced plans to allow its investors to grow over 500 this year. In order to be in compliance with SEC regulations, Facebook must begin releasing financial information or go public by April 2012.
