Randomly Noted

As 2010 draws to a close, there has been – as one could expect – a change in the top five companies traded here in terms of their market capitalizations. Three of the top five from 2009 stayed in the top five for 2010 – Exxon Mobil continues to be first with a market cap of $369.92 billion (up from $327 billion a year ago). Amazing what high oil prices will do.

The new number two is Apple, riding the success of its iPad tablet, launched in the middle of this year. Apple’s market cap at the end of this year was $296 billion, up from $188 billion a year ago. That’s a whopping 57% gain.

The other carryover was Microsoft, which came in 3rd this year at $238.27 billion. It held the number 2 spot last year with a $278 billion market cap. That means this year it declined 14%. The new kids in the top five class?

Continue reading…

We haven’t heard much recently on the commercial real estate front other than some big workouts have been done for loans of some high profile deals before the financial crisis hit. Today, Fitch Ratings issued a report that makes it clear that while the commercial real estate market may have shown signs of improvement in some parts of the country, in others it remains a problem.

Fitch downgraded a series of mortgage passthrough securities today because of problems with some of the underlying loans. We know how hard hit the housing sector has been and how related companies suffered as well. But perhaps no town has suffered as much as High Point, NC.

Continue reading…

We learn today that giant insurance company Allstate has sued BankAmerica and its Countrywide Financial unit over a bum investment. It seems Allstate bought $700 million of Collateralized Debt Obligations from Countrywide which were backed by residential mortgages originated by the mortgage lender. Allstate believes Countrywide misrepresented  the quality of the portfolio.

Well, we don’t know yet the merits of this case – and we don’t know exactly what Countrywide disclosed in the offering documents for this CDO (were these stated-income mortgages? was performance of the mortgages listed in the documents? default rates? delinquencies?) To be sure, Countrywide originated some really bad mortgages and it is entirely possible that some of those made their way into the CDO Allstate bought.

Continue reading…

Here’s a good one for you – It’s Carl Icahn’s fault that Blockbuster Inc. is in the sad state it is in today. At least that’s the view of disgruntled junior bondholder Lyme Regis Partners, who claim in a lawsuit that Icahn set the video retail chain to fail so that he could take over the company (as reported on Dow Jones Daily Bankruptcy Review).

The lawsuit goes on to allege that because of his insider status, Icahn had a much better view of how bad things were for Blockbuster and there that allowed allowed him to position himself ahead of the other investors because he knew before everyone else that the company was much closer to bankruptcy.

Continue reading…

As we noted in an early post about Mauldin/Whitney and municipal budgets, a big reason for the budget gaps facing many state and local governments are because of massive costs to fund pension plans. On a recent “60 Minutes” segment, NJ Gov. Chris Christie made his position clear – states shouldn’t have pension plans and instead should have 401(k) plans like most companies have today. (Needless to say, his position is not popular with many of the unions, particularly the teachers).

Continue reading…

Two of the brightest people in the financial industry are John Mauldin (great economic insights) and Meredith Whitney (she called the banking industry crisis well before it happened in 2008). And they couldn’t disagree more on how severe the budget crisis is for state and local governments – and what that ultimately means for municipal bond holders.

Whitney appeared in a recent “60 Minutes” segment  called “The Day of Reckoning,” which took a look at the financial condition of states budgets. She thinks the state governments will be ok but not so for city and county governments. She predicts a spate of 50 to 100 sizable government defaults – and was predicting that coud amount to hundreds of billions of dollars. She believes the defaults will begin within a year. (Click here to see the “60 Minutes” segment.)

Continue reading…

In the 1950s, the reknowned Nat King Cole sang a song called “Unforgettable.” For the U.S. economy, 2010 was the opposite, most forgettable.

Oh sure, a lot happened. But who remembers mile 18 in a 40-mile forced march? That’s if 2010 did represent mile 18. Maybe it was mile 23. It wasn’t mile 37.

Back near the start of 2010, Obama economic aide Larry Summers properly described the U.S. economy, calling it a “statistical recovery and a human recession.” The phrase outlasts Summers, who just left the employ of the administration.

Continue reading…

We are now living through the reason the leader of Securities and Exchange Commission earlier this year called for the right for the agency to fund itself.

We are now living through the reason the Congress won’t honor that request.

It’s about power and control. It’s about the opportunity to take a second whack at signed legislation through a tight grip on the purse.

Let us summarize. SEC Chairman Mary L. Schapiro has asked for the right, granted other U.S. financial regulators, for the SEC to fund itself through the fees it collects from the companies under its purview. That would allow the agency to better meet enforcement and other duties.

Continue reading…

At first, it’s hard to tell if BMO Financial Group’s $4.1 billion acquisition of Marshall & Ilsley is about a strategic expansion of business in the U.S. or an opportunistic buy of a bank beat up by bad real estate loans.

The answer is it is probably both. Marshall & Ilsley has lost money for nearly two years because its loan portfolio – heavily commercial – soured across the board. But it has a strong deposit footprint in Wisconsin, Minnesota, Florida and Arizona.

Continue reading…

Federal Express reported an 18% decline in second quarter earnings today. At first blush, that might appear to indicate that maybe the economy isn’t on the road to recovery after all. That’s because FedEx, and fellow shipping company UPS, are looked at as proxies for the economy. When businesses are building more products, they need to ship in tools that help them do that. And when consumers are opening their wallets, they buy products that are often shipped to them.

But read above the bottom line numbers at FedEx and you see some positive news.

Continue reading…