Will make prospective new home buyers less likely to buy (as sellers will unlikely lower prices to make up for the value of the lost tax credit and it's hard to imagine mortgage rates getting much lower). This means a renaissance for rentals, i.e., companies that focus on renting apartments will see a resurgence of demand resulting in higher vacancy rates and potentially higher monthly rental income per unit. I just bought REZ as a long-term play on this phenomenon.
Despite persistently high unemployment, Treasury Secretary Timothy Geithner said Friday the Obama administration plan to stimulate the U.S. economy by spending billions of dollars on construction and other local projects is on the "expected path
Grant's rants are a failed experiment in irrational pessimism as a self-fulfilling prophecy. Hmmm, let's see if we can pick the most unlikely company out there to suffer and see if we can scare the Cramer crowd into selling it.
ASTE will be one of the bright spots. Where do you think all the stimulus money and highway funds are going to go? Read the bill, read the budget.
* Low interest rates
* Mark to market flexibility
* Industry-wide declines in bonus comp
* Bank deposits growing
* Strong demand for mortgage refinancing
Anyone else care to add to the list?
Would have thought the changes to the basket would have applied to both UYG and SKF, can't imagine the dividend was that substantial, but perhaps
Last time SKF traded where it's trading today ~$110, UYG was around $6 (versus below $3 today).
How is this possible? The decay phenomenon in action?
The fundamentals in the stock (no leverage, attractive P/E and EBITDA multiples) are solid. When you consider the fact that the growth trends are all working in ASTE's favor -- government spending, weakening $ -- what could possibly give you such confidence in your short position?
For Sellers of Pavers and Cones, Stimulus Lifts Hopes After a Troubled Year
From NY Times
FASB Moves Toward Giving Banks More Flexibility on Fair-Value
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By Ian Katz
March 16 (Bloomberg) -- The Financial Accounting Standards Board, pressured by lawmakers to change the fair-value rule blamed for worsening the financial crisis, proposed permitting companies to use “significant judgment” in valuing assets.
Companies would be able to apply the revised rule to their first-quarter financial statements, FASB Chairman Robert Herz said today during a meeting at the U.S. accounting rulemaker’s Norwalk, Connecticut, headquarters. The board is set to vote on the proposal April 2, after a 15-day public comment period.
Herz told members of the House Financial Services Committee at a March 12 hearing he would try to have a proposal for revising the rule ready within three weeks. Herz was responding to calls from Committee Chairman Barney Frank and Representative Paul Kanjorski, the Pennsylvania Democrat who leads the panel’s capital markets subcommittee, to move quickly to help banks.
Fair-value, also known as mark-to-market accounting, requires companies to set values on most securities every quarter based on market prices. Wells Fargo & Co. and other companies argue the rule doesn’t make sense when trading has dried up because it forces banks to write down assets to fire- sale prices.
“Mark-to-market is fundamentally not about a quote on a screen,” Wells Fargo Chairman Richard Kovacevich said March 13 in a speech at Stanford University in California. “It should always be about expected cash flows.”
Investor groups and the accounting industry say the rule forces companies to reveal their true financial health to shareholders.
Most financial assets are not valued using fair-value. For example, General Electric Co. told investors this month that 2 percent of the assets of its GE Capital Corp. finance arm are valued based on market prices.
An easing of capital requirements by bank regulators could be part of the solution, Herz said in a March 12 interview. Low asset values can force banks to raise capital to meet federal requirements.
“It’s a question of whether the regulators think that’s the right thing to do or not,” Herz said.
The Seeking Alpha article describes how hedge funds short the indices on which marks to market of mortgage securities are based, which increases the write-downs banks are forced to take, thereby enriching the hedge funds who have shorted the banks' stocks and gone long on the banks' credit default swaps in parallel.
Once the Obama administration begins to understand how the mechanics of this work, they will surely take steps to spoil that party. Given Obama's predilection for following in FDR's footsteps, he may take comfort in suspending mark to market with the knowledge that FDR did the same thing when faced with similar circumstances.
Great post on Seeking Alpha describes how hedge funds short the indices on which marks to market of mortgage securities are based, which increases the write-downs banks are forced to take, thereby enriching the hedge funds who have shorted the banks' stocks and gone long on the banks' credit default swaps in parallel.
Once the Obama administration begins to understand how the mechanics of this work, they will surely take steps to spoil that party and when that happens, UYG will soar!
The link below is to the actual pages from the Obama budget.
There's $70B in there for transportation in 2009 plus an additional $47B from the Recovery Act.
This does NOT include the Highway Bill that will come later this year and potentially provide a bigger boon for ASTE