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Authorities neutralised an organised crime group that used to operate on the territory of Bulgaria, which was part of an international organisation, which secured part of the process of the laundering of money passing through the country and which is acquired through drugs trafficking from Latin America to Europe.
The investigation revealed that the money used to come from destinations such as the Antilles, Venezuela, Panama and other countries. After the money was transferred to controlled bank accounts in Bulgaria, the sums were immediately redirected to China, Hong Kong, Spain and the USA.
It was also ascertained that the money flow was passing through the bank accounts of the members of the group and controlled juridical persons.
According to initial data, the laundered sum since the turn of the year is estimated at more than BGN 5 million.
Authorities raided three addresses in Sofia, where they found bank, company and tax documents, personal computers, cell phones.
Three people were arrested, aged 25 and 37.
Purchase home with some financial due diligence - Economic Times
Is your safety net in place?
Optimum loan amount
How should you arrive at the right amount to borrow? The number of dependents, other debts, additional sources of income, expenditure level and interest rates has a direct bearing on the right loan amount.
Lenders know pretty well that borrowers cannot afford to spend more than 40 percent of their gross salary towards a home loan repayment. When estimating the home loan amount, ensure that you take into account additional costs like stamp duty and other legal fees.
Consider a scenario where Sridhar takes a loan to the tune of Rs 40 lakhs. For a tenure of 15 years, at a 10 percent rate of interest , his monthly EMI is Rs 43,000. If Sridhar's loan amount was Rs 60 lakhs, his EMI will be Rs 64,000.
Borrowing less translates to lesser monthly financial commitment towards a home loan.
Factor in rate increase
Floating rate loans can fluctuate in either direction . A drop in the rate will translate into monthly savings . On the contrary, a rate hike can lead to increased financial outgo.
Consider a loan amount of Rs 40 lakhs. For a tenure of 15 years, at a 10 percent rate of interest, Sridhar's monthly EMI is around Rs 43,000. If the interest rate goes to 15 percent, the EMI is Rs 56,000.
If a borrower has to pay the increase in EMIs over the years, they will become difficult to manage without a sound financial plan. Hence, factor in rate increases when calculating your loan repayments.
Build a contingency fund
It is recommended that you have three to six months' salary in your cash reserve. This contingency buffer should be expanded in the event of an increase in outstanding debts, more dependents or greater expenditure .
Failing to build a contingency buffer before taking a home loan could prove to be difficult in the event of an unexpected expenditure.
Have protection plan in place
There are numerous home insurance plans targeted at home loan borrowers . They provide cover to a home loan in the event of any unforeseen event happening to the borrower . In such a situation, the family of the borrower will have the support of the insurance cover to pay for the outstanding home loan, without being burdened by monthly EMIs. Read the terms well before narrowing on a home loan insurance product.
A borrower must aim to be debt-free soon. In the event of a financial windfall , try to repay your outstanding debt towards the home loan. A home is a precious asset to which the family has an emotional attachment . Build a financial safety net so that your home purchase process is without glitches.
Tommy Smith on Liverpool FC: When money talks louder than the fans - Liverpool Echo
Stocks to buy in an uncertain macro environment - Economic Times
NEW DELHI: Indian markets started 2012 on a high note but the momentum dropped post-February suddenly on the back of a global economic slowdown, policy headwinds, a depreciating rupee and uncertainty over General Anti-Avoidance Rules (GAAR).
The Indian government deferred GAAR by a year, which has taken away the short-term overhang on FII sentiment.
"The European region reflects uncertainty due to the political change in France, which may keep markets volatile. Crude oil price correction may help improve sentiment," Siddharth Sedani, AVP, PMS, Microsec Capital Ltd, said. Sedani is of the opinion that the Nifty at the current levels of 4,950-5,050 looks conducive for long-term investors.
"The index may find strong support at the 5,000 levels where it would trade 12.3xFY13E EPS. The index may trade between 12-13xFY13E EPS which makes a range of 4,860-5,265 for May 2012," Sedani added.
The macro scenario is deteriorating due to the rising trade deficit and lack of reforms to curtail the current account and fiscal deficits.
The rupee has depreciated almost 9 percent since March on account of local macroeconomic issues as well as weak global sentiment.
Given the markets scenario, a compilation of the good stocks to invest in follows:
1) Bharti Airtel Ltd
Bharti Airtel's topline came in line with Street estimates, while bottomline remained below expectations due to higher than expected foreign exchange fluctuation losses and interest expenditure. Furthermore, the company's tax expenditure during the quarter remained above Street expectations.
However, the negative impact of these factors was partially offset by a slightly better than expected EBIDTA. The reported net income was below Street expectations of Rs 1,165 crore. This is the ninth straight quarter when the company registered a decline in net profit on a consolidated basis
According to experts, the current regulatory developments in the industry may result in significant financial burdens not only on Bharti but also on the telecom sector.
"We believe that the regulatory developments would be the key for the telecom sector in general and could lead to consolidation in the industry going forward," Sharmila Joshi, Head Equity, Fairwealth Securities Limited, said.
The telecom industry is going through uncertain times in the last few quarters for various operational and policy reasons.
"We have to appreciate that Bharti Airtel is continuing to maintain its leadership with increasing subscriber base and quality services rendered thereof," K Jayaraman, Senior Reseach Associate, Bonanza Portfolio Ltd, said.
Bharti Airtel Ltd, with its strong cash generation capability, will remain best positioned among peers to concur such developments, according to Microsec Capital. "As a result, for a long-term prospective we remain positive on the company's fundamental performance and suggest a BUY on the stock at current juncture," Microsec added.
According to Citi, it was a decent quarter for Bharti Airtel. However, the negatives from the regulatory side continue to have an overhang on the sector but that would largely be on pricing. The valuation of 6.5 times EV by EBITDA seems reasonable and the stock continues to be Citi's top pick in the telecom sector.
Kotak continues to remain positive on Bharti Airtel with a target price of Rs 390 but the regulatory news flow will continue to drag the stock.
Barclays maintains an 'overweight' rating on the stock and have a target price of Rs 440.
Technical Check: Ranajit Saha, Sr Manager, Technical Research, Microsec Capital Ltd.
Bharti Airtel Ltd clearly looks in a downtrend since July, 2011. The immediate crucial support of the stock is placed at around Rs 302. If the stock breaks Rs 302, it may further go down to Rs 272. However, a breach of Rs 320 would indicate the trend reversal of the stock and it may test the Rs 360 level in the short term.
Hindustan Unilever reported a 21 percent growth in net profit at Rs 687 crore in the fourth quarter ended March 31, 2012, up from Rs 569 crore in the corresponding quarter last year, beating market expectations. Net sales grew by 16 percent to Rs 5,660 crore from Rs 4,894 crore last year, driven largely by price increases in soaps and detergents, which is the largest contributing segment.
Despite price increases in the product portfolio (especially in the highly penetrated categories such as soaps and detergents), the company was able to maintain volume growth at around 10 percent in the domestic consumer business.
"The management indicated that innovations in various segments and sustained buoyancy in rural demand have been the key drivers of growth," Sharekhan said in a report.
Sharekhan expects the volume growth momentum to sustain as the company is focusing on innovations and enhancing its distribution reach in rural India. Overall, the brokerage expects the company's topline and bottomline to grow at a compounded annual growth rate (CAGR) of 16 percent and 15 percent, respectively, over FY2012-14.
"However, any drop in the volume growth or significant increase in the prices of raw materials would act as a key risk to earnings estimates," the report added.
Microsec also agrees with Sharekhan's view of rural penetration. The company has strong rural penetration, sustained brand power, strong distribution newtork, continuous product innovation and domestic consumption story.
Microsec Capital maintains a 'buy' recommendation for the stock with a target price of Rs 500.
CLSA upgraded the stock to 'outperform' from 'sell', and raised its target price to Rs 465 from Rs 370. The brokerage cited HUL's "strong" operating performance in the last quarter and expectations of continued "strong" growth momentum as the reasons for the upgrade.
HUL is currently trading above its 200-DMA which is placed at levels around Rs 375. For the year, the stock has gained nearly 6 percent.
Technical Check: Ranajit Saha, Sr Manager, Technical Research, Microsec Capital Ltd.
HUL has been making higher highs and lower lows since the last two months. The stock is currently trading near its lifetime high of Rs 440. The immediate crucial support is at Rs 410. We recommend holding long positions on the stock with a stop loss of Rs 410.
3) Larsen & Toubro Ltd
Larsen & Toubro reported a 14 percent increase in net profit to Rs 1,920 crore in its fourth quarter from a year earlier which came in line with analyst expectations. However, what disappointed analysts was the order inflow.
Against its guided revenue growth of 25 percent for FY12, L&T managed to book a sales growth of about 21 percent. However, a bigger setback for the company was in terms of it having to book a negative growth in order inflows for the year despite the fact that it had earlier revised its order inflow guidance to 5 percent from 15 percent for 2011-12. Order inflows for the year stood at Rs 70,574 crore against its revised guidance Rs 84,000 crore.
Despite having missed out heavily on its FY12 guidance, L&T nevertheless surprised the market as it put out a highly optimistic guidance for FY13. The company has now guided for a 15-20 percent growth in both revenues and order inflows for the year.
"We believe although the company can achieve this guidance on the revenue front, given its robust order backlog, it would be difficult to achieve 15-20 percent growth on the order inflow front, considering the challenging macro environment and, hence, are factoring an order inflow growth of 10.6 percent for FY2013," Angel Broking said in a report.
"L&T is best placed to benefit from the gradual recovery in capex cycle, given its diverse exposure to sectors, strong balance sheet and cash flow generation as compared to peers," the report added.
Angel Broking maintains L&T as its top pick in the sector as well as its 'buy' rating on the stock with a target price of Rs 1,553.
L&T is clearly banking on expanding its footprint in the Middle East, including Saudi Arabia, and the Far East, with an intention of achieving a 75:25 ratio for domestic to international sales. In FY12, global orders accounted for 18 percent of the company's order inflows for the year against 10 percent in FY11.
L&T also expects margins to sustain at the FY2012 level of 11.8 percent with 50 basis point deviation because of fluctuation in material costs. Sharekhan said the working capital cycle may see some pressure in FY2013 also because of a tough business environment and tightening liquidity situation.
The company would be undertaking a capital expenditure of approximately Rs 2,000 crore (Rs 1,700 crore in FY2012) to support growth.
According to analysts, the key positive triggers in the stock remain an uptick in business sentiment, big-ticket orders in the power and infrastructure sectors and an easing of margin pressure.
"The order inflow guidance for FY13 would be highly subjective to an uptick in infrastructure development activities in the country and in the Middle East region. We also feel that its diversity continues to cushion the overall financials in a tough business environment," a Sharekhan report said.
"At the current market price, the stock is trading at 11.9x on its FY2014 consolidated estimate. Sharekhan continues to believe that L&T is the best proxy play on India's infrastructure growth theme and maintain our 'buy' rating on the stock with a target price of Rs 1416 with a 12-month time frame."
Technical Check: Ranajit Kumar Saha, Sr. Manager - Technical Research, Microsec Capital Ltd
After making a high of Rs 1,531.80 on 17 February, 2012, L&T has given a correction of almost 27 percent in the last three months. Currently, the stock is still in a negative trend and a breach of Rs 1,110 is likely to take the stock lower to Rs 1,050 and then Rs 990.
For the stock to turn positive, it needs to maintain levels above Rs 1,240. We recommend initiating long positions on the stock only above Rs 1,240.
4) Apollo Tyres Ltd
Apollo Tyres Ltd came out with a good set of numbers in the quarter, with domestic business leading from the front overshadowing poor results from its South African operations. Apollo Tyres' consolidated topline jumped by 18.4 percent YoY to Rs 3,231 crore, driven by 8.8 percent YoY growth each in total volumes and net average realization.
While domestic operations grew 14 percent YoY in volumes, Europe witnessed a 4 percent YoY growth and South Africa an 18 percent YoY decline as operations were impacted by planned shutdowns and the rising threat of imported tyres.
On a consolidated basis, the performance was majorly lifted by India and Europe as the latter reported margins close to 17.5 percent, though volumes were slightly softer on a QoQ basis. Apollo expects stable businesses from Europe in FY13. However, the high margin profile of this business will ensure Apollo reports stable consolidated profitability through volumes from Europe.
"South Africa witnessed revenue decline of 4 percent YoY in this quarter. However, on a yearly basis, they have grown by 10.4 percent. Issues like Chinese imports and weak demand were the key concerns for the South African tyre business," LKP Securities said in a report.
"The company has regained its lost marketshare on the truck-bus-radial (TBR) side at 28 percent, and will further gain as the Chennai plant is expected to get completely ramped up by December 2012, and will function at optimum capacity of 450 MTPD from current levels of 350 MTPD," the LKP report added.
Geographical expansion in Europe of Apollo branded tyres and steady volumes will act as drivers, while South Africa, which has shown some signs of improvement and is expected to cut losses, says analysts.
LKP has raised their target price to Rs 101 (@8.5x times FY 13E consol EPS of Rs 11.9) from Rs 91, and maintains its 'buy' rating on the stock.
Angel Broking revised its target upwards for FY2013/14E at a standalone level, led by the likely improvement in OEM demand as well as replacement segments and stable raw material prices.
"We expect the company's operating margin to improve in FY2013E, driven by gradual softening of raw material prices. At Rs 82, Apollo Tyres is trading at attractive levels of 6.1x FY2014E earnings. We maintain our 'buy' rating on the stock with a target price of Rs 100," an Angel Broking report added.
Technical Check: Ranajit Kumar Saha, Sr. Manager- Technical Research, Microsec Capital Ltd
Apollo Tyres Ltd. has been in an uptrend since December 2011. The short-term crucial resistance of the stock is at Rs 87 and a breach of that level is likely to take the stock higher to Rs 94 in the extreme short term. We recommend holding long positions in the stock with stop loss of Rs 78.
5) ICICI Bank Ltd
ICICI Bank's Q4FY2012 earnings were significantly ahead of our, as well as the Street's, estimates as the net profit grew by 31 percent YoY and a 10 percent QoQ growth to Rs 1,902 crore. The profit growth was driven by strong growth in the net interest income and non-interest income.
Key highlights of the results were 33bps sequential increase in domestic NIMs, mainly driven by no securitization losses during the quarter. Also, the transmission of the base rate, the increase in investment yields and a rundown of securitisation losses fueled growth in NIM.
The bank's substantial branch expansion in the past 3-4 years is expected to sustain a far more favourable deposit mix going forward.
"A lower risk balance sheet has driven down NPA provisioning costs, which we believe will enable RoE of 16 percent by FY2014E," Angel Broking said in a report.
At the CMP, the bank's core banking business (after adjusting for subsidiaries) is trading at 1.5x FY2014E ABV (including subsidiaries, at 1.4x FY2014E ABV). Angel Broking maintains a 'buy' recommendation on the stock with a target price of Rs 1,183 for a 12-month period.
Improvement in asset quality continued for the seventh quarter in a row as the gross and net non-performing assets (NPAs) declined to 3.62 percent and 0.73 percent, respectively.
The provision coverage ratio (PCR) also improved during the quarter to 80.4 percent from 78.9 percent in Q3FY2012. The bank restructured an additional Rs 1,400 crore of advances during the quarter taking the total restructured book to Rs 4,256 crore (1.7 percent of advances).
"ICICI Bank's Q4FY2012 results mark a significant improvement in margins and asset quality, leading to an improvement in the earning profile," according to analysts.
Sharekhan expects the bank's earnings to grow at a compounded annual growth rate (CAGR) of 15 percent YoY (FY2012-14) contributing to a return on assets (ROA) of 1.5 percent.
The brokerage maintains a 'buy' recommendation on the stock with a sum of the parts (SOTP) based target price of Rs 1,070 with a 12-month time frame.
Technical Check: Ranajit Kumar Saha, Sr. Manager- Technical Research, Microsec Capital Ltd
ICICI Bank has corrected almost 22.3 percent in the last three months. On Friday, 18 May, the stock gave a smart pullback rally with decent volumes and the leading indicators are also giving an oversold signal for the stock. This pullback rally is expected to continue to Rs 850, and then Rs 895. We recommend initiating long positions on the stock with stop loss of Rs 760.
(The views and recommendations expressed in this section are the analysts' and do not represent those of EconomicTimes.com)
Stocks fall on Europe fears; Facebook debuts - Times and Democrat
It’s going to take more than Facebook’s initial public offering to push the stock market higher.
Facebook shares rose 23 cents above their $38 offering price. It seemed like everything else fell.
The Dow Jones industrial average has been in a slump over the past two weeks as traders saw an escalating risk that Greece could leave the euro, causing more disruptions in markets. Remember the go-go days of May 1, 2012? The Dow was up 8.7 percent for the year. After Friday, it’s up just 1.2 percent.
On Friday the Dow Jones industrial average dropped 73.11 points, to close at 12,369.38. It fell 3.5 percent for the week. The Dow has now declined on 12 of the last 13 trading days.
Nine of the 10 industry groups in the Standard & Poor’s 500 index fell. Financials dropped the most, 1.1 percent.
First, Facebook.
Trading for the year’s most eagerly awaited initial public offering was delayed about 30 minutes because of a glitch at Nasdaq. Nasdaq said the problem was with sending messages about whether trades had been executed. It was almost two-and-a-half hours before it said its trade messages were working normally.
The glitch sent shares of Nasdaq OMX Group Inc., parent company of the Nasdaq market, down 4.4 percent.
Facebook shares were priced at $38 and initially traded as high as $45. They closed at $38.23.
Europe was the bigger worry for investors. The Fitch ratings agency dropped Greece to the lowest possible grade for a country not in default Thursday. Fitch said Greece’s departure from the euro “would be probable” if elections next month do not reverse political trends in Greece, which have brought in politicians opposed to the terms of Europe’s bailout.
Also, ratings agency Moody’s downgraded 16 Spanish banks late Thursday, three days after downgrading Italy’s, noting they are vulnerable to huge losses on government debt.
Representatives of the G-8 are meeting this weekend at Camp David, looking for assurances that leaders in Europe can contain damage if Greece leaves the euro.
Borrowing costs for Italy rose slightly to 5.76 percent on Friday. The yield on Spain’s 10-year bond fell slightly to 6.2 percent, a level that’s still very high by historic standards.
European shares edged lower, following several days of big losses. Britain’s FTSE 100 fell 0.1 percent, Germany’s DAX lost 0.6 percent and France’s CAC-40 fell 0.1 percent.
The Standard & Poor’s 500 index fell 9.64 points to close at 1,295.22. The Nasdaq composite index fell 34.90 points, or 1.2 percent, to close at 2,778.79.
Hewlett-Packard fell 2.7 percent _ the biggest decline among the Dow’s 30 stocks _ after it said it might eliminate up to 30,000 jobs because of dwindling demand for personal computers.
Gap fell 2.3 percent even though it issued higher guidance for the year.
There were bright spots. Salesforce.com jumped 8.8 percent after the maker of web-based business software reported better-than-expected earnings and raised its guidance for the year. Foot Locker rose 8.3 percent after its quarterly profit jumped 36 percent, sprinting past Wall Street predictions and setting a company record for quarterly earnings.
Yahoo rose 3.7 percent after Dow Jones’ tech website AllThingsD.com reported that the web portal is close to a deal to sell a large part of its stake in China’s Alibaba Group. Many investors view the Alibaba stake as Yahoo’s most valuable asset.
Oil prices fell $1.08 to $91.48. Along with stocks, oil has dropped rapidly in recent days because slowing economies use less of it.
Save money and help the environment by checking on your water quality - WMI Central
Posted: Thursday, May 17, 2012 5:00 pm | Updated: 12:21 am, Sat May 19, 2012.
(ARA) - Bruce Farrar didn't like what hard water was doing to his home.
"Our dishes in the dishwasher were terrible," says Farrar, who lives in Newport Beach, Calif. "The inside of the dishwasher was just covered with calcium. Also, our showers had glass doors and I had to put a special cleaner on them because of the calcium buildup."
But the problems didn't end there. Hard water was also preventing the family's clothes washer from functioning properly, requiring the use of more soap and hotter water, which increased Farrar's grocery bill and energy costs. The added energy needs were also putting more wear and tear on his hot water heater, decreasing its lifespan.
Nearly 90 percent of American homes have hard water - water containing high levels of calcium and magnesium, according to The U.S. Geological Survey. The hardest water is commonly found in the states that run from Kansas to Texas as well as in Southern California. How can you tell if you have hard water? If your shampoo and soap don't lather up like they should, if you see scaling on your pipes and showerheads or if you have nasty brown rings in your sinks and toilets, your water is probably hard.
To know exactly how hard, and what to do about it, you should have your water diagnosed by a water quality professional. The Water Quality Association has several resources on its website to help you locate a reputable company, and many offer this service for free.
In order to make hard water into soft water, you have to remove the calcium and magnesium and the only way to do that effectively is with a salt-regenerated water softener. These work by running the incoming hard water through a resin filter that traps the calcium and magnesium in the water, as well as any iron, manganese or radium ions by replacing them with sodium ions, which must be occasionally recharged.
There are other products that claim to condition water using an electro-magnetic charge instead of salt ions, but they do not really soften water. These devices cause the hard minerals in the water to attract and form into an amorphous sludge which remains in the water.
According to the Water Quality Research Foundation, there are many benefits of true salt regenerated water softening including cutting detergent use by as much as 50 percent and allowing washers to clean clothes with cold instead of hot water. Soft water also helps dishwashers clean better, sometimes allowing you to use half the detergent. Finally, water heaters that don't have to work as hard retain their factory efficiency standards for a full 15 years as opposed to those subjected to hard water which lose almost half their efficiency over the same time period.
With ever-increasing household and energy costs facing American consumers, many are looking for ways to save money. A water softener that helps homeowners use less energy not only saves money, but also benefits the environment by allowing you to use fewer fossil fuels. Washers that use less detergent because of soft water also end up dumping fewer chemicals down drains. Finally, water softening keeps appliances out of landfills.
Eventually, and like many other Americans, Farrar made the decision that enough was enough and decided to invest in a water softener and saw immediate results. Speaking of the issues he was experiencing in the past, "All of that is fine now," says Farrar. "The water softener works well." For more information on the benefits of water softening, visit water-softening.org.
Posted in Home improvement on Thursday, May 17, 2012 5:00 pm. Updated: 12:21 am.
Forget Facebook; stocks are at serious risk - Marketwatch
By Michael A. Gayed
"A good many dramatic situations begin with screaming." -- Jane Fonda
Something major has changed in the last 48 hours which could result in a "mini-Flash Crash" in stocks if not reversed shortly.
First, some background on this week's writings. On May 14, I put out a piece I wrote Sunday night titled "Is another 'Summer Crash Coming'?" in which I addressed the idea that Marc Faber of the Gloom Boom and Doom Report brought up last week of a 1987-style crash being possible if stocks made new highs in the coming months.
In that article, I specifically looked at the bond-to-stock ratio arguing that "the trend of outperformance [in bonds relative to stocks] isn't as accelerated as it was in the Summer Crash of 2011, and the conditions are nowhere near as similar given that inflation expectations remain elevated." I concluded that the "bear paradox" of low yields in the face of stocks increasing dividends makes any kind of a deep correction a low probability event.
Later that day on Monday, I co-hosted Bloomberg Rewind alongside my colleague Ed Dempsey and discussed the negative narrative, Spring Switch, and many other macro topics. Around the 5 minute, 50 second mark, I noted that there was a "credit spread blowout" that happened early on Monday with junk debt and sovereign debt performing very poorly relative to Treasuries that day.
On Tuesday, I wrote my second major article this week on MarketWatch titled " the Most Important Question in the World ." In that writing, I re-emphasized that I said a "mini-correction" in stocks was likely when I first addressed the idea on April 6, and that my company's ATAC models had largely repositioned our clients out of stocks and into bonds since then. I specifically re-emphasized my bullishness on stocks for 2012, but did state that "should the deflation pulse beat faster, we could be in a much more serious scenario than anyone is prepared for." This piece was published Wednesday morning.
Since Wednesday, on my company's Twitter account (@pensionpartners), I have been stressing how crucial it was to watch junk debt relative to nominal Treasuries (IEF/TLT) intraday. I began seeing some very wild intraday moves, with junk debt prices collapsing (yields spiking) while safer Treasuries were aggressively being bid up (yields dropping). The speed and magnitude of this credit spread widening on Wednesday was indeed meaningful. Thursday, that spread widened even further, in a way that suggests that a credit event may be underway in the U.S. and that contagion is here.
Here we are, 48 hours after the major movement began on Wednesday, and a look at the daily chart of junk debt and sovereign debt /quotes/zigman/1511363/quotes/nls/emb EMB -0.17% shows that a "crash" may actually be here in credit markets. I say "crash" in quotes because while the price decline may not seem like much, a crash should be defined by how far back in time an investment sends you in its decline relative to a short time frame.
Meanwhile, Treasuries have spiked, with 30-year Treasuries below the panic 3% level. To say that "credit leads the stock market" is too simplistic. It is widening credit spreads which lead risk-aversion, and vice versa. Credit spreads lead equities, not credit.
As an example, take a look below at the intraday one-minute bar charts of the S&P 500 /quotes/zigman/714403/quotes/nls/spy SPY -0.86% and the SPDR Barclays High Yield Bond ETF /quotes/zigman/1510831/quotes/nls/jnk JNK +0.08% as it appeared on May 6, 2010, the day of the "Flash Crash." Notice that the Flash Crash in the S&P 500 happened over one full hour AFTER junk debt itself had its own Flash Crash (massive credit event). The stock crash was preceded by a credit event which happened before the Dow dropped 1,000 points on May 6, 2010. For a larger chart, visit http://www.pensionpartners.com/marketwatch/flashcrashlarge.PNG .
This should make sense. Despite being rated junk, bonds still have a higher claim on assets in the capital structure than stocks. If junk debt craters in price/rises in yields in a precipitous way, then it would make sense that stocks which have a lower claim on assets should soon follow. This is indeed how May 6, 2010 played out.
In the past 48 hours, the magnitude of the decline of junk debt and sovereign debt relative to Treasuries increasing suggests meaningful credit stress is occurring. The breakdown in junk is nowhere near the magnitude of the decline that happened one hour before the Flash Crash of May 6, 2010, but it still warrants attention. If junk/sovereign debt doesn't stabilize and improve shortly, the odds of a follow-through sudden break in stocks in the U.S. increase substantially.
How does this square with the bear paradox and reflation theme I have addressed time and time again? In this case, I am specifically highlighting something which is a timely observation driven by a sudden change in risk-sentiment in the bond market. If a breakdown can be averted, a significant move higher remains a very real possibility in risk assets. However, reflation now looks like a wounded animal in a post European election world which is waiting for Greece to leave the euro.
In the very short-term, Facebook /quotes/zigman/9962609/quotes/nls/fb FB +0.61% doesn't matter. Credit spread movement and improvement/deterioration is pretty much THE thing to focus on.
So yes, the move in debt spreads over the last 48 hours has increased the odds of something major to come. If recovery comes soon, I suspect things will be just fine. If not? Then I believe equities could undergo a very serious break reminiscent of the May 6 Flash Crash. Notice that this isn't a prediction, but a statement about how such a scenario could occur if indeed junk debt deteriorates further beyond the last 48 hours, and under the assumption that the magnitude of a decline could lead equities lower.
The most important question in the world may end up being answered soon after all. We remain defensively positioned in bonds, and hope for all our sake's the message of the bond market is wrong.
This writing is for informational purposes only and doesn't constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.
Road money is still just a trickle - Vancouver Business Journal
The six-year plan released this week reflects last year’s priorities since nothing has changed.
Someday: Olde Towne Road will be straightened at the sharp turn in front of The Colonies at Williamsburg. When the timeshares were developed, VDOT gave up surplus right-of-way for buffers and The Colonies gave up land to fix the curve. The project will cost $2.66 million.
Croaker Road will be widened to four lanes from Richmond Road to the James City County Library. The project includes replacing a new two-lane bridge over the train tracks. The total project cost is $12.67 million, of which $984,211 is already funded.
Longhill Road will expand to four lanes between Route 199 and Olde Towne Road and get sidewalks. The road is already over capacity. The project will cost $11.8 million, with about $135,000 in hand.
County officials consider this project the most urgent, but Olde Towne and Croaker will likely reach the construction phase beforehand.
Racefield Drive would be paved under a project that sets aside money annually until enough has accrued to complete a project. So far, the county has $69,000 toward $177,600 needed.
Hicks Island Bridge over Diascund Creek will be replaced under a similar funding scheme. The bridge has a low sufficiency rating and has been pinpointed by VDOT as priority for replacement. The project will cost $726,000, of which $280,800 is funded.
The Board of Supervisors will review the priorities next week.
Want to go? The supervisors will meet at 7 p.m. Tuesday, May 22, in Building F of the County Government Complex, off Mounts Bay Road.
Financial Advice for Surviving a Job Loss - PRLog (free press release)
Whether you are laid off indefinitely or your position is terminated altogether, losing your primary source of income can be terrifying. Being proactive from the get-go can help you maintain a more comfortable lifestyle until you replace your lost income. Here are some tips for getting by when the unexpected happens. CLICK HERE Now to Check Out Non Profit Credit Card Consolidation!
Be up-front with your creditors. Contact your lenders to see if you can negotiate lower payments or otherwise alter your payment terms temporarily. If you have student loans, for instance, you can generally put your loans into forbearance or defer them due to financial hardship. Many creditors will require proof that your income has changed, so be prepared to offer documentation.
Give up services that you can live without. While it may be painful to go without Netflix, satellite or cable TV, a lawn service or other luxuries, trimming these unnecessary costs can help you preserve your savings and have more money to put toward necessities. Some suggest giving up your cell phone or home Internet, but if these are your only points of contact for potential job offers, it is probably worth it to keep them connected.
Consider a less expensive form of transportation. If you have a hefty car loan and expensive insurance, downgrading to a used vehicle may be a good idea. Better yet, if you have access to public transportation, consider getting rid of one or more automobiles altogether. CLICK HERE now to check out Non Profit Credit Card Consolidation Now! http://www.nonprofitcreditcardconsolidation.net
Alter your grocery-buying habits. If you tend to shop wherever it is most convenient, you are probably missing out on big savings. Pay attention to circulars to find the best deals on the foods you purchase the most. You can also get more bang for your buck by shopping at discount stores and by buying staples like rice, beans, and flour in bulk. Use your time off to learn some new recipes; cooking from scratch can save you lots of money.
Do not turn to your credit cards unless you truly have no other options. Racking up significant debt, especially for non-essential expenses, will simply make it much harder to catch up when you find a new job or return to your old one. Save these lines of credit for true emergencies, such as car repairs.
Find a way to make extra money, however little. Use the free time you have left after searching for jobs to perform side jobs like lawn mowing, tutoring or giving lessons. Advertise your services in free classifieds, Craigslist or local bulletin boards.
Apply for help from the government. Depending on the circumstances of your job loss, you may qualify for unemployment benefits. Look into your options right away, because in some localities, unemployment doesn't kick in immediately. Also, investigate services like SNAP and WIC, depending on the size and composition of your family. These programs provide debit cards or vouchers for purchasing food.
Unemployment can be a difficult and stressful time for your family. With these tips for making ends meet, however, you can reduce your struggles and stay afloat while searching for your next source of income. CLICK HERE Now to Check Out Non Profit Credit Card Consolidation!
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