Hi Jon,
An excellent and nicely detailed piece by Bloomberg on the Crash. I standing on the steps of
26 Wall St, New York, NY 10005 which is the historic Federal Hall where President George Washington was sworn in on Friday
afternoon October 16th from 2:30 to 3:45 3 PM... It was business as usual to the causal observer.
I was back at that same vantage point on Tuesday the 20th... the day after black Monday 1987.. and my lord was it a media circus
with all the news van's and their very large transmission dishes on the roof's of them, and a general throng of people who had
stopped by to be a part of history..... a reasonable amount of consternation was in the air.
thanks for posting and sharing those corrections.
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Is All That Offshore Money Already Repatriated? –
A few weeks ago, my very sharp-eyed friend, Peter Boockvar, over at the Lindsey Group took a look at multi-billion dollar treasure trove that many of our politicians are salivating about. Peter thinks there may be less here than meets the eye.
Here's a bit of what he wrote: One of the important aspects of the upcoming tax changes is repatriation and the territorial tax reform which would make the flow of company capital more agnostic as to where it’s held which in turn provides a more efficient flow of this capital.
As I always like to do, I need to provide perspective to those who just assume that this is new found cash that will come back to the US will be used for only stock buybacks or some other corporate use, assuming much of it comes back. A lot of it likely will but I also want to point out that many companies have already front loaded repatriation via large debt raisings that were used to mostly buy back stock over the past few years.
Let’s look at 4 large tech companies and their balance sheet activities over the past 3 years: Using last 3 year reporting period,
1) Apple added $95b of cash and $77b of debt and now has $260b of cash ($240b of it overseas) and $108b of debt
2) Microsoft added $40b of cash and $63b of debt and now has $140b of cash ($122b of it overseas) and$85b of debt
3) Oracle added $15b of cash and $22b of debt and now has $67b of cash ($52b of it overseas) and $53b of debt 4) Cisco added $18b of cash and $12b of debt and now has $70b of cash ($65b of it overseas) and $33b of debt In total over the past 3 years, these 4 companies have added $168b of cash to their balance sheets and $174b of debt.
Thus, one could argue that much of their repatriation has been spoken for via the rise in debt which was then used mostly for stock buybacks.
These 4 companies sit on $537b of cash but $279b of debt. Rock solid balance sheets still but just some perspective. So, if the money comes back, it may just retire a large chunk of the recently floated debt. You can't out-think those CFOs. .
John
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