Showing posts from April, 2011

Sunday Spectacle CXIX

Bank Exposure to PIIGS Revisited (source: " Foreign bank claims on PIIGS and core Europe ," The Globe & Mail. Published Thursday, Apr. 21, 2011 2:02PM EDT) As I have suggested in the past, the PIIGS are a problem but they are over-rated (except in the case that Spain or Italy falls—unlikely IMO). In any case, here is a re-hash of the foreign bank exposure to the PIIGS. I covered it in the past but it's always good re-visit this issue. As I have pointed out in the past, countries like Germany and Netherlands aren't necessarily being charitable when they allow ECB to funnel money into the troubled countries; part of the reason is actually because most of their banks are heavily exposed to the PIIGS.

Reading material for your weekend

Here are some articles I ran across over the last few weeks. Articles near the very-bottom have nothing to do with investing so read it at your discretion. Fortress Paper & Chad Wasilenkoff (Report on Business magazine): Profile of a Canadian success story in the forestry industry " Is Apple once again riding for a fall? " (The Globe & Mail): Eric DeCloet, one of the best business writers in Canada, wonders if Apple is headed for a fall similar to what it experienced in the 90's. (Highly Recommended) John Paulson on the risk in risk arbitrage (market folly; h/t GuruFocus ): Good job by market folly on finding this gem from John Paulson. Before Paulson became famous for his bet against real estate, he was mostly into risk arbitrage. Anyone into risk arbitrage should check out the referenced article. ( PDF of cited article can be found here.) Is Steve Ballmer hurting Micrsoft? (Fortune): The company has been rock solid but on the other hand, it hasn't a

Sunday Spectacle CXVIII

Sources of Government Revenue (source: " Fair shares ," Buttonwood blog, The Economist. April 1, 2011) Very broadly speaking, the first two groups will fall more heavily on the rich; the last two will absorb more (proportionately) of the income of the poor. To save space, we have shown the top and bottom five OECD nations in each category. Our many American readers will want to know the exact split of its revenue base. The answer is 40.9% comes from income, profits and capital gains (above the OECD average); 26.9% from social security (just above); 13.6% from property (second overall in the OECD); and 18.5% from goods and services (the lowest of all). In Britain, the equivalent proportions are 38.4%, 19.7%, 12.3% and 29%. Oh...for the tax-dodgers out there ;) The optimal strategy for the global tax dodger looks like getting paid in Slovakia, owning a house in Mexico and buying your goods in the US.   The difficulty with taxation, of course, is deciding between "fai

China Bull (El-Erian) vs Bear (Chanos)

Short-seller Jim Chanos is not always right but since I am a contrarian-wanna-be, I like listening to him. This segment covers a bunch of issues and involves a mini-debate between a China bear, Jim Chanos, and a China bull, Mohamed El-Erian of bond specialist, PIMCO. For what it's worth, Chanos has been bearish on China for years and been wrong. Chanos' bear thesis hasn't changed and you can brows through some of the my older posts to get his thoughts, including this post where he suggests some short possibilities . ( Direct link with transcript . h/t CanadianValue at GuruFocus )

Directors of leading American banks have little financial experience

Reuters Breakingviews hired Nestor Advisors to analyze the directorship at leading European and American banks and there are some differences. Jeffrey Goldfarb summarizes the results  and here are a couple of things that stand out (do check out his article for further info).

Sunday Spectacle CXVII

The Book Industry (source: " The business of book selling ," The Globe & Mail, April 8, 2011. Accompanied the article, " Indigo's Heather Reisman faces digital reckoning " by Marina Strauss for The Globe & Mail.) Something doesn't look right with the numbers in the chart. It says paperbacks are 2.5% of the market and I find that hard to believe. The most interesting graphic is the bottom bar graph showing the changing industry. The price of a book (hardcover vs e-book) drops from around $25 to $10. The two industries that completely dissapear from the process are the printer and the distributor. The retailing landscape will also change, with retailers earning roughly half of what they used to. However, given how online services tend to be winner-takes-all type of market—not sure if e-books will follow that—the impact on retailers will be significant and only a few will survive. Companies with legacy costs, such as physical bookstores, will suffe

Sunday Spectacle CXVI

Nuclear Power Plants Ageing Nuclear Power Plants (source for both images: " When the steam clears ," The Economist, March 24, 2011)

Pretty good interview with Nokia's CEO, Stephen Elop

Yesterday, Nokia CEO, Stephen Elop, made a visit to his alma mater, McMaster University in Hamilton, Ontario, Canada. Financial Post interviewed him and it was a very good discussion. In addition to covering Nokia's strategy, it touches on Elop's management style, and his long-term industry outlook. On an unrelated note, if someone wants to read up on Stephen Elop, here is a detailed article from Canadian Business: " Nokia: The general takes control " (Thomas Watson for Canadian Business. April 11th magazine.)