Here, at your fingertips, are more than 35 years’ worth of issues and articles. Search by date, company or keyword.
Let's say that you are a corporation in search of a guaranteed investment contract, better known as a GIC. Consulting the financial pages, you see that the average GIC is quoted at a yield of around 8%. In a GIC transaction, you pay an insurance company a certain sum of money...
Balance sheets, unlike party-goers, dress soberly for New Year's Eve. Yields become distorted as portfolio managers strive to avoid even the appearance of controversy over the December 31 reporting date. This year, especially, preferences are running strong for Treasury bills and top-grade commercial paper.
The speed with which the Fed threw good news into the breach of Citi's bad news was impressive. It suggested, at a minimum, that the central bank was more concerned about the health of the No. 1 bank, which it regulates, than about the international standing of the nation's currency, which it also regulates. Theorists may look for a pattern.
Whatever Americans think of American interest rates, foreigners must increasingly think that they're low. Three-month money rates top 9% in Germany and 8% in Japan. In the U.K., which just suffered its biggest monthly increase in unemployment since 1981, three-month yields top 13%...
Today brings the publication of an accounting rule that, more than any other that the Financial Accounting Standards Board has promulgated lately, will change the way American business presents its accounts. The subject of this seminal ruling is post-retirement benefits, particularly health care. (Pensions are separate and distinct.)
The Federal Reserve is a mighty institution, but its regulatory authority stops at water's edge. It may reduce reserve requirements at home but not abroad. On the authority of Reuters, there are banking worries now in Indonesia. The Fed can regret this fact -- "Everybody is looking for quality right now," a trader at one of the state banks in Jakarta said -- but not directly address it.
The omniscient, 12-cylinder prose style of the Time stable of magazines was the style selected for the first-ever Time Warner Inc. annual report. "At a time of spiraling global demand," the combined managements thundered, "we are the preeminent source of media and entertainment."
Hopefully, people will say that the real-estate dilemma (and therefore the banking dilemma) is really no worse than it was in 1974. Contending that this is the 1974 recession all over again, they will say that we will certainly live through this debacle even as we survived that one. No doubt we will. But how little 1990 has to do with 1974 is depicted in the accompanying graph ...
Notice was taken last issue of the fact that New York State "borrowed" $87 million from its own Property/Casualty Insurance Security Fund in 1983 but hasn't yet gotten around to repaying it. Incorrectly, it was suggested that this transaction was out of the ordinary. It was not. The truth is that management-by-gambit is the everyday fiscal style of the Empire State.
As some "good" banks have gone the way of bad banks, so some investment-grade bonds have gone the way of junk. In the contraction phase of the credit cycle, trouble begins at the fringe and worms its way into the core. It begins with the thrifts and ends with the banks...
The top credit professional of the 1980s was the banker. Thus, it follows that the top credit professional of the 1990s will be the repo man. If so, "Bulldog", skip tracer and "credit adjuster" extraordinaire, is a man to know and study. He describes himself, simply, as "a leader in my field."
On October 11, Hanson, the U.K.-based Anglo-American conglomerate, dropped its plans to sell a part of its stake in Newmont Gold, the giant U.S. mining operation, via a public equity offering. It cited a lack of interest. On October 16, gold bullion plunged by $18.25 an ounce to close at $361.50 -- lower than its price before the Middle East blew up.
"The U.S. dollar has fallen by an average of 15% against other currencies since the start of the Gulf crisis," the Financial Times noted the other day, "yet you would hardly notice it from most discussion in the U.S. on economic policy. It has been scarcely mentioned in the many days of congressional debate on the budget."
As the financial news worsens, the bears become richer. Some of them have purchased new automobiles or been written up in the newspapers. Shad Rowe, our justly celebrated Dallas correspondent, was recently invited to address the investment club of a local fire department....
The Soviet Union has renounced communism, Olympia & York has announced a sale of its assets and Japanese banks have asked for a loan (see inside). Nothing is the same as it was. Probably, the capital of upset is Tokyo, and it was Japan that John Dizard, our man in Washington this week, found to be the center of attention among the top international bankers...
That cut in bank dividends (Grant's, June 8) happened after all, but not before records were shattered. Chuck Clough, from whose September Merrill Lynch Investment Strategy piece the nearby graph is borrowed, notes that money-center dividend yields now top certificate-of-deposit rates...
So much of what's going on in the world today was clearly and concisely explained on May 9, 1989, in the back of the third section of The Wall Street Journal. As you may remember, the story was on page C21. It was headed "Japanese Share of International Banking is Swelling, Says Bank for Settlements," and it led off this way...
Because banks make bad loans, they find it increasingly difficult to issue commercial paper. Eaton Vance Prime Rate Reserves Fund is a closed-end mutual fund that invests in bank loans, often loans to leveraged corporations. It has just launched a commercial-paper program...
In a bear market, the essential truth about banks is driven home like a nail. The truth is that banks are blind pools. The value of their assets may or may not be a mystery to their officers and directors. It is certainly not revealed to their public investors. Consider the titanic case of Citibank.
By coincidence, the stock of Municipal Bond Investors Assurance Corp. lost 27% last week, exactly matching the loss in the shares of Industrial Bank of Japan on the other side of the world. Big events stir up big ideas: Maybe the synchronized break in financial stocks presages a credit contraction of global dimensions. (Then again, a bull might suggest, it may only presage a global rally.) We now scale down to the practical, subcosmic questions. Does the stock market know something that the bond market doesn't? Or vice versa?
As noted in previous issues, Americans may now hold foreign currency in domestic bank accounts. As reported in last Friday's Financial Times, Argentinians may soon be allowed to keep bank deposits denominated in dollars. The new rule would acknowledge the de facto "dollarization" of the Argentine economy.
Let's take stock of the monetary aggregates. The money supply -- M-2, for instance -- is expanding slowly. By "slowly," we mean year-over-year growth rates of 5% or less. Bank reserves, the dollars that depository institutions keep on ice in vaults or with their local Federal Reserve Bank, have scarcely grown in the past year. What has grown is currency. Measured year-over-year, it is up by almost 9%.
In the bull market, a move from Avenue of the Americas one block east to Fifth must have seemed not only logical but also inevitable, and Harvey Sandler, the media-stock exponent, signed a lease some time back for new office space on the 45th floor of the General Motors Building.
After the close on Tuesday, MNC Financial, the frequently downgraded and real-estate-laden Maryland bank-holding company, broke the good news: It will pay its regular quarterly dividend again. You can't count on much in the banking business these days, and the MNC announcement was a tonic for frazzled nerves.
The government may regret the credit contraction, but it is also helping it along. Under the press of deficits, it is scaling back on guarantees, demanding more real capital from its citizen borrowers and generally doing the opposite of what Lord Keynes would have it do in a recession.
Under the heading of More Solvent Banks Than You Imagined, a new entry: Bankers Corp., holding company for Bankers Savings, Perth Amboy, N.J. Like Jamaica Savings Bank, which was featured in the last issue, Bankers is a recently converted mutual savings bank. Again like Jamaica, it is more or less out of step with the times.
Curiously, the dollar has fallen as the stock market has risen. While the Dow Jones Industrial Average pushed to a new high last Thursday, the U.S. dollar index closed in on a new low... It was a day of paradox, not to mention capital gains, for those in step with the new thinking, and aggravation for those on the other wavelength.
Nothing spoils the taste of an English muffin like a newspaper story disclosing the sale of a company the stock of which one happens to be short. News of the sale of ILFC, the aircraft-leasing company, to American International Group for $1.3 billion, stopped breakfast cold on June 26.
To sell short the Reichmann family of Toronto would seem to be, in almost equal measure, unprofitable and impertinent. The Reichmanns have built one of the world's great real-estate fortunes. They are the No. 1 landlord in New York City. They have accumulated sizable assets in energy, newsprint and retailing...
Not all is mysterious in the affairs of Olympia & York Developments Ltd. No. 59 Maiden Lane, an O&Y building in lower Manhattan that financed itself in the Eurobond market in 1985, is open every business day for inspection by the general public. Grant's visited the premises on Monday.
News of a decline in the delinquency rate on consumer installment debt between January and March was received with something like gratitude. "Banking industry experts hailed the finding as strong evidence that consumers are not taking on more debt than they can handle," the American Banker reported last week.
The new annual report of the Bank for International Settlements examines the impact of liberal bank credit on real-estate markets worldwide. Every reader of Grant's knows the American side of the story, but the BIS helpfully puts the national facts in global perspective.
The surge in bank and thrift failures is common knowledge, but the property casualty blight has not yet made a deep public impression. For most of the postwar period, property-casualty insurers did not go bankrupt. But in each of the six years ended in 1989, an average of almost 30 failed.
For us, the most telling passage in The Wall Street Journal's Monday story was this one: "The weakening real-estate market made bankers less willing to lend based on a property's theoretical resale value. They now are insisting on strong cash flow, and at some of Mr. Trump's properties, cash flow doesn't equal debt payments."
Scan the pages of the Treasury Bulletin (if you can). Note that the annual increase in the federal debt is always larger than the annual increase in "the budget deficit." Read the daily newspapers. Note that Gramm-Rudman Hollings targets are always receding into the mists of the future, like the next recession. Bears are prone to brooding about these things...
The level of total bank reserves -- in effect, the leash on the dog of lending -- is little changed from the spring of 1987. By that light, the Federal Reserve is tight. On the other hand (don't you have two?), the Fed has lately stepped up its credit-creating activity. Compared to levels six months ago, central-bank expansion is brisk.
Emanuel Friedman, Eric Billings and Russ Ramsey hung out their investment shingle in the heat of the Washington summer last year. They did not set up in business specifically to advance the thought that the subordinated debt of bank holding companies is sometimes mispriced. But that single idea has helped to win their brand-new firm an impressive clientele. w
•Quoted market prices of sovereign debt •Dr. Copper—the metal with the PH.D. in economics •Total Return Box Score
Washington produced a pair of memorable financial events on April 4, but only one made news. Publicity lit up the Treasury's confession that the public debt went over the $3 trillion mark. But the "preamble" of the House Republican Research Committee Task Force on Fiscal and Monetary Reform got no ink and no network air time.
Wanting to know what senior lending officers at the 60 largest commercial banks are thinking about, the Federal Reserve Board asks them. In February's canvass, it asked about merger related loans and home-equity loans. The results constitute new evidence of the growth of Calvinism in lending.
The real story behind the default on $13 million in medium-term notes by a big real-estate investment trust is that it happened at all. It was not supposed to happen because a squadron of banks had promised to lend if the company asked them to. The company asked all right, but the banks didn't lend.
What is the value of your junk-bond mutual fund shares, Mr. and Mrs. America? The Investment Company Institute, in a memorandum to its members stamped "URGENT," recently advised that the pricing of high-yield bonds will imminently become dicier. Presumably, it may also become lower...
Safeway Inc., the supermarket chain, is one of the miracles of the age. According to Fernand Braudel, sugar was a luxury before the 16th century, and pepper was a luxury in the 17th century. The 1,100 Safeway stores each carry sugar and pepper and as many as 45,000 other items, not excluding barbecue and Chinese takeout.
The market in junk loans, as distinct from junk bonds, turns on a difference of opinion. The public is eager to buy the mutual funds that promise "prime-plus" yields on speculative-grade bank debt. But banks have become reluctant to make the loans that stock the funds' portfolios.
The acquisition in 1955 of the old First National Bank by what is today Citicorp was a credit watershed. By a mile, the First was New York's most conservative banking institution, and it was an adherence to old-time doctrine that had cost it deposits in the fat years following World War II.
West Germans shake their heads over American speculation, Americans roll their eyes over the Japanese and the Japanese stare in wonderment at the Taiwanese. Possibly, therefore, Taiwan -- where brokerage firms outnumber listed companies -- is the least inhibited bull market in the world.
For 20 years, the Federal Reserve Board "discouraged" American banks from accepting deposits denominated in foreign currencies. The practice was not outlawed but -- tantamount to outright prohibition -- was severely frowned upon. The reason given was that the dollar needed help, not competition. ...No more.
A coincidence in the latest Playboy: Donald J. Trump, the subject of the Playboy interview, and Miss March, Deborah Driggs, share the same basic philosophy of life. Says Miss March ("from sunny Southern California"): "I'm daring. I'm outgoing, edgy—an explorer. There's not a lot I haven't done, but if you have any ideas, try me." Says Trump: "As long as I enjoy what I'm doing without getting bored or tired... the sky's the limit." So, then, go for it!