Category Archives: Banking & Financial Services

Thoughts On 1000 Point Fall in Dow Jones

Posted on May 8, 2010 by MyOrbit-Team| Leave a comment

http://graphics8.nytimes.com/images/2010/05/07/business/07trade_graphic/07trade_graphic-popup.jpg

Create a massive fall in the market large enough to trigger stop-losses typically set up at 5% drop, and then buy blue chip stocks at 30% less price before they recover, sell Put Options at 1000% gain, blame it all on computers and trading algorithms. Some person or some company somewhere has walked away with billions in profits after this event. It looks very well planned. This event was most probably an example of higest form of market manipulation, a bold master stroke, though illegal and unethical.

To find answers, we need to check the money-trail. Continue reading →

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Posted in Artificial Intelligence & Robotics, Banking & Financial Services, Capital Markets, Finance, Geo-Americas, Interests, MyOrbit Blogs, Risk Management, Software

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Expect A U-shaped Economic Recovery – Economist C Rangarajan

Posted on October 26, 2009 by MyOrbit-Team| Leave a comment

In an exclusive interview to NDTV, C Rangarajan, former Governor of the Reserve Bank of India (RBI) and currently the chairman of India’s Prime Minister’s Economic Advisory Council, says it is going to be a U-shaped economic recovery where we will see periods of economic stagnation. He further said in 2010 there could be some stimulus withdrawal.

In the short term, the conflict between inflation and growth always exists. As of now, there is no case for raising interest rates, at least till inflation is below 5%. The food price pressure will remain for the next 2-3 months.

Rangarajan sees price pressures due to inflation from growth, and oil prices will play a key role. 9% GDP growth for India is possible after the world economy has come out of recession in FY 2011-2012 by when the global trade will pick up.

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Posted in Accounting & Finance, Banking & Financial Services, Capital Markets, Finance, People

US Bank Stress Test Results – Follows Pareto Law

Posted on May 7, 2009 by MyOrbit-Team| 1 Comment

The much awaited “stress-test” results done for the 19 largest US Banks have found that 10 of the 19 banks need a total of about $75 billion in new capital to withstand losses if the recession worsened.

Bank of America needs $33.9 bn, Wells Fargo needs $13.7 bn and GMAC needs $11.5 bn. So these 3 banks (15% of 19) account for 78% of the capital gap. This is a classic case of Pareto law where we can see the 80/20 formation. 20% of the banks have 80% of the capital gaps.

Other banks like Citi and Morgan Stanley have smaller gaps in the  range of $1-5 bn, and many banks like Morgan Stanley are already planning to raise new capital through new stock issue.But the problem is the current capital market is not too keen to buy these banking stocks, so its a challenge even to sell/place $1 bn of banking stock today.

Overall, the stress test results can be seen as positive, as the capital gaps are not too large and not too wide spread.  It looks manageable.

Reference: http://finance.yahoo.com/news/Stress-tests-find-10-big-apf-15174824.html

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Posted in Banking & Financial Services

Citigroup Share Falls Below $1 – becomes penny stock

Posted on March 5, 2009 by MyOrbit-Team| Leave a comment

Shares of Citigroup Inc have fallen below $1 per share today touching 98 cents per share! From being the largest bank in the world to being a penny stock has been difficult for the employees (those who survive) and surely the investors.

Even a few months back, nobody could have thought of such low valuations, but today, it looks like the Citigroup stock could go further down. As the recession deepens, the problems facing Citigroup — souring loans and the impact of the recession — are only getting worse.

Now, the share price of an NYSE-listed company cannot remain below $1 for more than 30 consecutive days. If that happens, the company gets about 180 days to prove that it can boost its stock price.

One of the main questions we got is whether this price is makes the stock “cheap enough” to buy, and the answer is: we don’t know that!

We know how much money the US govt is pumping in the bank, and we know what assets Citigroup has worldwide, BUT we don’t know how big their liabilities are! And that’s taking the stock down.

Maybe some investors know more than others, and are selling while they can. But there is not much you can salvage with a penny stock.

Never could we imagine that one could not even buy a coffee with Citigroup share price. Today should serve us a warning of things to come ahead. We are in difficult times. Got to conserve cash.

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Posted in Banking & Financial Services, Geo-Americas, MyOrbit Blogs, Pricing