Archive for the ‘credit’ Category
Tuesday, February 16th, 2010
When partners have reached full partnership, remarkable things start to happen. Full partnerships between organizations are the equivalent of Olympic gold.Many try, few succeed. But those who do succeed know the work involved and the skill it takes to be the best. While the road is tricky and fraught with peril, the rewards can be rich, as we see below.
High trust enables creative risk. Only when we trust each other can we risk the quantum leap into the next generation of activity. Regardless of service or products, to move beyond the status quo takes a special talent—and that talent is best tapped into through partnerships. Some of the best breakthough examples come from the American effort to conquer space. The partnerships developed between NASA and private industry are too numerous to list— but they have yielded a lot more than the beverage Tang. From microwave ovens to insulated clothing, our lives have changed dramatically thanks to these partnerships. The creative risk taking was there. And those who formed partnerships with NASA stood to benefit like no other.
Tags: mortgage, tax, taxes, tenancy, Tenancy-in-Common, tenant, trade value
Posted in bonds, business, business tips, credit, credit cards | Comments Off
Friday, October 30th, 2009
Telecommunications companies serve as a good example at this point. They used to be fixed-line operators. The introduction of new wireless technology changed their business models since they had to adapt their strategies to the new technological landscape. Capital expenditures were massively increased for the building of new wireless networks and the competition intensified for new wireless customers since the telecommunications market was liberalized, and alternative providers were allowed to compete with the incumbent telecommunications companies. Additionally government regulators in Europe asked for billions of dollars in fees for wireless licenses (3G). These technological and regulatory changes resulted in a tremendous increase of leverage for most of the telecommunications companies and a repricing of credit risk in this sector occurred that was accompanied by a negative industry rating trend (from AA_ to BBB_). Another example for the changing landscape of an industry is the electric utilities sector. This market undergoes a liberalization process which is in different stages according to the various jurisdictions. Changes of the regulatory environment have an impact on the development of credit quality.
The business models became riskier as the competition in the sector increased, M&A activities picked up considerably and some utility companies got involved in the risky energy trading business. Formerly low risk and stable cash flows generating businesses turned into higher risk (e.g. energy trading) and more volatile cash flow businesses.
Tags: bad debt, car loans, compare credit, currency trading, debt consolidation, debt settlement, forex, funds, home equity, investment opportunities, portfolio, refinancing
Posted in Private Annuities, bonds, business tips, credit, credit cards, investing, money management | Comments Off
Wednesday, October 28th, 2009
The value chains for telecommunications wireless and electric utilities are examples for noncyclical sectors. Wireless operatorsinteract with equipment suppliers and their biggest cost positions are for subscriber acquisition, advertising and interconnection fees. Their customer base is divided into business clients and individual consumers. The success of a wireless operator will depend on the control of all parts of the value chain. This includes the costs for acquiring new customers, maintaining the existing customer base, the bargaining power with equipment suppliers, network costs and interconnection fees. The earnings situation will depend on the market power and degree of competition.
Fuel costs represent a big cost block for electric utilities hence their profitability depends to a large extent on raw material costs. Electric utility companies can diversify across the business segments generation, transmission, distribution and trading. The customer base is divided as industrial, commercial and residential.
Tags: business competition, CEO, get out of debt, income, international markets, merger, money issues, revenue, shareholders, shares
Posted in business tips, credit, credit cards, global markets, loans, money management, payday loans | Comments Off
Tuesday, October 27th, 2009
Structural economic changes of industries are important in the sector selection process for corporate bond investors because they determine how an industry functions and will allow to make projections about the development of the credit quality of specific industries. It has to be determined whether certain changes in industry dynamics occur which have a material effect on the evolution of the industry structure. Examples of some driving forces for change are:
- Long-term changes of growth patterns
- Changes in the customer base (demographics)
- Changes in production costs
- Product innovation
- Changes to production processes
- Structural changes of supplementary industries
- Changes of government policy
- Exits and new competitors.
Tags: bonds, business tips, credit score, get out of debt, making money, money issues, money management, money tips, payday loans, personal finances
Posted in business, credit, economy, global markets, loans, payday loans, taxes | Comments Off
Sunday, October 25th, 2009
Oil companies’ relative profits also peak during a recession because an economic downturn is usually accompanied by high oil prices. Utilities have a noncyclical business profile and they are subject to regulated pricing. They will realize their profit peaks relative to the market during a later stage of an economic downturn.
Consumer staples is a noncyclical sector and hence the profit peak relative to the market is reached towards the end of a recession. Profits are not robust but consumers cut spending on large discretionary purchases while the demand, for example, for food and beverages remains relatively stable across the whole economic cycle.
Group sectors according to their change in profits during recession and recovery. The profits of cyclical sectors will fall in recessions and rise during a recovery. On the other side, the profit cycle of defensive companies is countercyclical. Profits will rise in recessions and they will tend to fall in recoveries. Some industries experience structural gains which means that their profits rise during recession and recovery. Other industries suffer from structural losses which means that they realize falling profits in recession and in recovery as well. Those are industries which reached a declining stage in their industry life cycles.
Tags: crisis, foreclosure, investments, loans, money advice, mortgage, stock, stock exchange, Tenancy-in-Common, tenant, trade value
Posted in credit, credit cards, economy, finances, global markets, investing, loans | Comments Off
Friday, October 23rd, 2009
The defensive character of noncyclical sectors pays off during stages of weak economic growth. See at what stage in the economy cycle the different industries reach their profit peaks relative to the market.
This is a basis for a sector rotation strategy but the profit cycle is not the only selection criterion. Banks show a profit rebound in the early phase of a recovery because the countercyclical Fed policy that is often observed in this economic environment results in low interest rates. A steep yield curve helps banks to increase their interest margins.
Automobile manufacturers usually realize a profit rebound at the early stages of an economic rebound because consumer confidence improves and induces a higher demand for discretionary products. In this phase favorable financing is also available and especially car manufacturers can substantially increase their sales through financing initiatives like zero-percent financing and large discounts for new car sales. Cyclical industries like automobiles have a high operating leverage which means that they will benefit at the early stages of economic recovery because they experience a rise in sales. Also industries with high financial leverage benefit from rising sales volume. Fixed financial costs like interest expenses determine financial leverage.
Tags: joit, last will, Market, market cycle, market cycles, money, Partnership, payment, price, Private Annuities, tenancy
Posted in bonds, business, business tips, credit, credit cards, economy, finances | Comments Off
Thursday, October 22nd, 2009
Corporate spreads and profits showed a close relationship during past economic cycles. Deteriorating profits as a percentage of GDP go along with wider credit spreads. Market phases with improving profits are accompanied by tighter credit spreads.
The business cycle sets the parameters for the sector rotation strategy. Sectors with a high cyclical component will outperform at the early stages of an economic expansion while noncyclical sectors will tend to underperform during an expansion phase relative to the market. The cyclicality of a sector allows predictions about the development of earnings across business cycles. For example, the business of IT hardware companies depends on the capital expenditure (CAPEX) plans of other companies. In an economic slowdown when CAPEX is scaled back or postponed, IT hardware companies run a higher risk of being downgraded due to a deterioration of their credit protection measures. The most recent examples are the telecommunications equipment companies Alcatel and Ericsson. Both suffered from the lack of demand by telecommunications companies in 2002.
Tags: Aids finance, Debt, economics, estate, Estate Planning, heir, income, inheritace, insurance, Interest, rate
Posted in bonds, business, business tips, credit, credit cards, economy, finances, money management, payday loans | Comments Off