Monday Jan 30 2012
Welcome to our first audio post on Professor Elam. Today we highlight articles in the Monday Jan 30 WSJ. The idea is to explain why and how students would profit from a WSJ subscription. With your computer speaker turned on or your headphones plugged in you should be able to hear this clip.
Front page, MF Global, as we thought, the customer money is likely gone.
Note the article on South Carolina's pension fund on page C1. Note the graphs on page C3 which show that it is coming up short of its funding assumptions. This is precisely what caused Meredity Whitney to issue a warning about municipal bonds. So far her detractors have been correct, nothing has happened and muni bonds have rallied after selling off after her prediction. But, something has to give, states and cities cannot underfund pensions, deliver services, and keep the perks that unions in Wisconsin are demanding AND pay the muni bond holders.
Tucked away on page B9 is a note that UPS and Honeywell have adopted mark to maret (fair value) acocunting for its pension plans. And UPS took a $827 M pre tax charge for losses in the plan. Ouch!
We study investments and pensions in Intermed I. We will be spending more time on derivatives and investments in Intermed I this semester.
Page C5 features a positive article on gold coin buying This precedes an interest in metals investing. We recommended going long GDXJ and CEF at the end of December.
And on page C8 The Euro looks for More Gains. This backs up our belief that the US Dollar will fall probably during February.
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