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Archive for the ‘Financial Management’ Category

J.P. Morgan’s Growing Loss Weighs on Banks

In Financial Management on June 28, 2012 at 20:38

24/7 Wall St.

J.P. Morgan Chase & Co. (NYSE: JPM) is weak this morning on word that the bank’s trading losses will be much wider than originally reported.  The market knew that the loss would be at least $2 billion, but for the trades to unwind the bank’s ultimate loss is one which we will not fully know until the bank’s earnings report in July.  Even then, the full loss may not be known.

The New York Times has a scathing report showing that the trading loss may total as much as $9 billion.  Other news outlets are calling it $9 billion in a headline “one-upping effort” and that may be skewing the news. We were expecting the loss to widen further from the $2 billion, maybe to as much as $4 billion or even $5 billion.  But up to $9 billion?

This trading loss, and the image blow to…

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Glencore, Xstrata Merger on the Rocks (GLCNF, XSRAY, BHP, VALE, RIO)

In Financial Management on June 28, 2012 at 20:38

24/7 Wall St.

The announcement last February that Glencore International AG (OTC: GLCNF) would acquire mining giant Xstrata plc (OTC: XSRAY) has always faced one very big problem: just 17% of Xstrata shareholders voting against the deal can kill it. Glencore, which already owns 34% of Xstrata, cannot vote in the deal that has recently been pegged at a value of $58 billion. Some earlier estimates of the deal’s value ran as high as $90 billion.

Whatever. The latest threat to the merger is a demand from Qatar Holdings — the sovereign wealth fund that owns 11% of Xstrata — that Glencore boost its offer by 16%, from 2.8 shares to 3.25 shares of Glencore stock for every share of Xstrata.

Qatar Holdings’ demand follows a dispute over a retention package for Xstrata’s senior managers worth about $270 million. The total payout to Xstrata employees would be around $337 million. Originally to be…

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A Healthcare Surprise? Gold Drops, Silver Hits 52-Week Low (GLD, SLV, SLW, GDX)

In Financial Management on June 28, 2012 at 20:36

24/7 Wall St.

The financial world has been waiting for the decision from the United States Supreme Court on Obamacare and the reaction depends upon which sector and asset class you are following.  We have seen a very mixed reaction in the healthcare sector but we have seen gold and silver fall with the broader equity market.  To tie gold and silver to healthcare seems odd on the surface, but the reality is that investors are still having a very hard time deciding what exactly gold and silver are supposed to represent.

From time to time, gold is a flight to the ultimate safety against a world of currency devaluation.  At other times it is a risk asset.  It is always supposed to be a hedge against inflation, as long as the dollar is not strengthening against other currencies.  And silver, let’s just say that it has been called “The Devil’s Metal” for…

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