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Vodafone Group Plc Message Board

  • smalls_62 smalls_62 May 22, 2013 6:25 PM Flag

    Monkey being placed on back of VZ to get deal done

    After years of drooling over the remainder of VZW, VZ must move soon to take advantage of rock bottom debt markets prior to Fed ending or scaling back QE. Not completing a deal will leave VZ management as a failure to capitalize on high priced PPS and low cost capital markets. T should be looking at the same situation of capital markets if they are truly eyeballing expansion outside U.S. borders. They will never have a better timing. Looks like Bernanke is putting an imaginary deadline of sometime this summer. If you follow PIMCO's Gross, the deadline is leading up to September but the bond markets' move will precede the actual action. Basically needs to happen in the next 60 days. Time is of the essence.

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    • Hey Smalls, my view is more "dovish" than yours. I doubt there will be any Fed policy changes this summer, and possibly for the rest of the year. It's going to take some very good economic news to get the controlling Fed doves to move, and I doubt we get it. Employment growth is still weak, Q2 GDP probably won't be anything to write home about, and inflation is not a risk at this time. I think the economy will remain relatively weak based on slower growth in government spending (sequester), higher taxes, and a ton of new and changing regulations (health care, financial, envionmental, energy, etc.) depressing private sector business activity.

      A correction is way overdue, so a selloff in May-June won't surprise me. But I think if it happens, it'll be short, so we don't need to "go away" until fall. In fact, I think there's just as good a chance we get a year like 1995, where the market steadily moves up all year. Here's what one analyst said recently:

      "If you want to make a comparison between now and any other year, it should be 1995. As shown in the table on page two, it is the year most correlated to 2013, where the correlation coefficient is 0.96 (perfect correlation = 1.0), and in the comparison chart to the right, the pattern in 2013 has been nearly an exact match to what we saw in 1995 through 5/16. Unlike 1987, from 5/16/95 through year end of 1995, the S&P 500 gained an additional 16.6%, and the maximum drawdown from 5/16 through year end was just 1.7%!"

      All that being said, I totally agree with you that the pressure to get a VZW or buyout deal done sooner rather than later is growing. It'll be a big complex deal and will take time to put together. If they wait too long, or take too long, they risk missing out on this once in a life time cheap financing window.

      • 1 Reply to betting_my_bundle
      • Housing is coming on very strong, almost too strong. It also appears autos are picking up steam as well. unemployment continues to steadily decline. I believe it will happen sometime later this year but keep in mind the bond market will proactively move leading up to the actual Fed action. That is why I give a window of about 60 days or so before debt markets begin to brace for change. JMHO, we will see a flurry of procrastinators buying homes and co's scrambling to push bond offerings as yields turn upward. In turn, those takeovers could help drive the equity markets in addition to long term bond holders scrambling for cover into the equities market. Anything with a yield above 5% and decent company fundamentals will prove to be prime places for those running for cover. That includes our beloved VOD. Just my two cents But What The H Do I Know

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