Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01 -- Ignore unavailable to you. Want to Upgrade?

To: Bucky Katt who wrote (10723)	3/26/2002 12:55:23 PM
From: James Strauss	Read Replies (1) \| Respond to of 13094

Jim, the bigger untold story of another Argentine payment pass is it is going to cost more to borrow, on a geo-global basis. More risk = more cost.. The consumer confi numbers out this morn are funny, but they gave a nice pop...But really, consumers are drunk on easy money, so what else could those numbers reflect? William: The VIX is bearishly low... bigcharts.marketwatch.com We usually see the market go down when the VIX reflects so much complacency... Note that the Dow is beginning to slip below the 13 day MA... bigcharts.marketwatch.com As for Argentina, the short lived bump in the Peso will probably resolve in a devalued Peso from 4 to 6 to a dollar... Jim

To: Bucky Katt who wrote (10723)	3/28/2002 4:04:18 PM
From: Bucky Katt	Read Replies (1) \| Respond to of 13094

Like I said, borrow cost is going up in a big way> From today's WSJ, front page, right side > Sinking Commercial Paper Market Broadens Effects of Enron Troubles By GREGORY ZUCKERMAN Staff Reporter of THE WALL STREET JOURNAL For years, the commercial-paper market has served as the corporate world's automated teller machine, spitting out a seemingly endless supply of cash for businesses at super-low interest rates. But now, amid financial jitters caused by Enron Corp.'s collapse, that machine is sputtering, sending a surprising number of companies of all sizes scrambling to find money for their most basic needs, from paying salaries to buying office supplies. Some are paying higher interest rates so they can keep selling paper. But others, after getting the cold shoulder from commercial-paper investors, have turned to raising debt by other, costlier, means. These companies include Qwest Communications International Inc., Sprint Corp., Gap Inc. and Computer Associates International Inc. Tyco's New Costs Last month, amid investor concerns about accounting at Tyco International Ltd., the conglomerate had to draw on a backup line of credit from its banks to come up with cash it needed. The move to replace cheap commercial paper with the more expensive bank line will cost Tyco about $400 million in additional after-tax, annual borrowing expenses, slicing about five cents per share from first-quarter earnings, which were expected to come in at 80 cents per share. Go to Questioning the Books The commercial-paper "market has always been low-cost, ready capital -- it was always there for you," says Brad McGee, a Tyco executive vice president, who says the accounting concerns are overblown. "When a market like this dries up, it puts you in a position of greater risk." For an economy still in the tentative stages of a turnaround, the problems in the commercial-paper market underscore the profound effect Enron's collapse has had on basic workings of American finance. Increasingly skittish about corporate-accounting practices, the ultra-conservative investors who control the commercial-paper market have cut back on a key source of liquidity. Economists worry that the troubles could help put a lid on capital spending, as companies scramble to save cash -- a move that could delay or even reverse the recovery. "You're making a mistake if you forecast a big pickup in capital spending, because companies feel pressure to repair their balance sheets," says John Lonski, chief economist at Moody's Investors Service. For the past 40 years, the massive commercial-paper market has been a critical -- and almost invisible -- lubricant for the economy. Through the commercial-paper market, companies issue IOU's for critical short-term financing, lasting for as long as 270 days or as short as one day. The money is used to pay for their most basic, immediate needs, though in recent years it has also covered billion-dollar acquisitions. Commercial paper generally doesn't require any collateral. It is the cheapest source of debt financing, with rates that typically are several percentage points below those of longer-term bonds and loans from banks. That's because it's less risky to lend money for a short period -- there's less chance for an unforeseen downturn in business. The story is longer, but you get the drift........... This also why GE sunk under $40 a share, their borrow cost is going to cost them AT LEAST another $1 billion this year, and the market rightly figured this out.. Message 17243215 & Message 17228915