Saturday, June 13, 2009

Noteworthy - Week of June 7th

This week's lead headline, in my opinion, was the Supreme Court's 24-hour stay of the Chrysler's sale to Fiat and subsequent allowance. The main issue at hand in the sale was that of the senior secured bond ownership, which traditionally has been given first dibs on a company's assets during a bankruptcy proceeding. In Chrysler's case, the government stepped in and gave Chrysler's union majority ownership. This case could have huge repercussions for the bond market, as well as contract law, going-forward. Don't be surprised if the U.S. Supreme Court rules on contract law in the coming months, as many view the government's actions as unconstitutional. Here is a link to the FT coverage of this story, as well as a link to the WSJ's coverage of a story now involving the Supreme Court's decision.

A story not covered much by the mainstream media is GM's plan to spend $3 billion to help a private equity firm buy Delphi, a former GM subsidiary.

In other news, bond powerhouse PIMCO is offering its take on the U.S. economy and debt problems in white papers on their site this month. Bill Gross and Mohamed El-Erian speak up on these headline issues.

Not surprisingly, the Fed has decided to keep a lid on their future plans regarding its purchase of U.S. bonds, just as the government breathes a sigh of relief after its auction of long-term bonds fairs better than expected.

But two Japanese men have bond plans of their own, as they are caught trying to cross from Italy into Switzerland with $134 billion in U.S. certificates.

It appears now as though that Bernanke and Paulson may have strong armed Bank of America's CEO Ken Lewis into not backing out of its shotgun wedding with Merrill Lynch.

Job losses are slowing, giving the market hope.

Falling Libor rates paint a similar picture.

Art Laffer attempts to humble U.S. investors and warn them of possible hyperinflation.

In North Dakota, the economy is just fine.

For those with corporate cell phones, the IRS is trying to convince your employers to come after you for 25% of your monthly cell phone bill.

And the U.S. government now controls the lucrative tobacco market.

A new pay czar is named.

The bank toxic asset clean-up is behind schedule and might not ever take place now that things are looking up for the industry.

Geithner unveils his plan for new Wall Street regulation.

Just as Wall Street stock research reform may be dying.

And valuation issues within the mutual fund industry are in danger of become epidemic proportion. Funds may have overstated NAVs and, thus, returns.

Hope in the Chinese decoupling theory, which fell apart along with the world economy during the last year, is gaining steam again even as exports are continuing to fall...

But concern about China's plan to stimulate its economy is also growing.

Bank of China and Construction Bank of China want to reduce foreign currency risk and focus on the Renminbi, and China is looking at buying $50 billion in IMF bonds, while trying to clean up its marketplace.

Meanwhile, Australia's Rio Tinto dupes Chinalco once again, creating possible friction between the island continent and China.

Businessmen might take note of how to best market in China.

Oil and concerns over food prices continue to rise...

U.S. airlines continue to make cuts, citing environment and commodity concerns.

There is talk of a natural gas pipeline connecting Alaska to Chicago.

And the U.S. presses Europe for better stress tests.

As Ireland faces deflationary pressure and another round of credit rating cuts.

Germany continues to avoid its banking issues, but its stance on organic growth in its economy is applauded, even though its long-term economic growth will most likely be tempered.

So how can you help your children survive the environment to come?

Educate them well.

Enjoy the week and see you here next Sunday for more highlights of the week that was.

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