Market Commentary

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An Interesting Hearing: AIG – Part Two of Three

Author: Bob Eisenbeis, Post Date: March 18, 2009

Introduction Representatives from the Federal Reserve, Office of Thrift Supervision, and New York State Insurance Department testified on March 5th before the Senate Committee on Banking, Housing, and Urban Affairs and reported on what went wrong in AIG.  Part I of this commentary explored the nature of AIG’s financial difficulties.  AIG’s problems were much deeper […]

An Interesting Hearing: AIG – Part Three of Three

Author: Bob Eisenbeis, Post Date:

Introduction Representatives from the Federal Reserve, Office of Thrift Supervision, and New York State Insurance Department testified on March 5th before the Senate Committee on Banking, Housing, and Urban Affairs and reported on what went wrong in AIG. Part I of this commentary explored the nature of AIG’s financial difficulties. Part II looked at the […]

The Times, They Are A’Changing

Author: Bill Witherell, Post Date: March 17, 2009

The lead article in the Friday, March 13th Financial Times reported that Wen Jiabao, the Chinese premier, warned the United States to take measures to guarantee its “good credit,” expressing concern about China’s large holdings of US assets.  The White House felt compelled to reply promptly that Mr. Obama intends to return the country to […]

Three Quick Points About the Fed

Author: David Kotok, Post Date:

First:   As the Federal Reserve starts its two day meeting today, Chris Whalen just released his notes regarding an unpublished Fed research work.  The summary is below.   The link to his letter is:  http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=348 . “The following article on fair value accounting ("FVA") was authored in May 2007 by a researcher who at the time […]

Systemic Risk

Author: David Kotok, Post Date: March 16, 2009

“Systemic risk is the risk imposed by inter-linkages and interdependencies in a system or market, which could potentially bankrupt or bring down the entire system or market if one player is eliminated, or a cluster of failures occurs at once. Systemic financial risk occurs when contingency plans that are developed individually to address selected risks […]

Fixing the Banking System

Author: David Kotok, Post Date: March 9, 2009

Kotok introductory note:  During the weekend, we participated in a colloquy with Bill Dunkelberg and Chris Whalen.  Our purpose was to examine the banking crisis, the risk in banking liabilities (deposits and debt), and systemic cures.  The full text of the interview follows. What is the Plan? A Discussion With Bill Dunkelberg and David Kotok […]

Investor Eyes Are on the Dragon Economy

Author: Bill Witherell, Post Date: March 8, 2009

On Wednesday, March 4, global stock markets rallied strongly on the expectation that China’s leaders would announce the next day at the opening of the National People’s Congress a massive additional fiscal stimulus program. Thursday, after the rumored announcement failed to materialize, global markets tumbled. These events illustrate the pivotal positive role the Chinese economy […]

A Forecast of the Economic Outcome from Obama’s plan

Author: David Kotok, Post Date: March 4, 2009

Kotok introductory note: There are many forecasts of the outcome of President Obama’s stimulus package. Most of them focus only on the domestic US economy, for understandable political reasons. One economist with global skills in the applied arena has modeled the outcome globally and given us permission to share it with our readers. He is […]

AIG: What It Means?

Author: David Kotok, Post Date: March 2, 2009

The news on AIG of additional federal funds and a change in the structure of the preferred stock and its implications have rattled the securities markets.  We are scheduled to discuss this tonight on National Public Radio (NPR), “All Things Considered” and on CNBC in the 8:10 p.m. segment and, subsequently, in the 8:45 p.m. […]

Citigroup: Who Has the Pea?

Author: Bob Eisenbeis, Post Date:

Last Thursday the US Treasury agreed to convert $25 billion of TARP Series H Preferred Stock into common equity at an exchange price of $3.25 per share.  The stated goal of this exchange was to increase the bank’s Tangible Common Equity and thus ensure more investor confidence in the institution’s long-term prospects.  This transaction is […]

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