watch_it_drop77@yahoo.com
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The Obama administration hopes to jump-start this crucial machinery by effectively subsidizing the profits of big private investment firms in the bond markets. The Treasury Department and the Federal Reserve plan to spend as much as $1 trillion to provide low-cost loans and guarantees to hedge funds and private equity firms that buy securities backed by consumer and business loans.
The Fed is expected to start the first phase of the program, which will provide $200 billion in loans to investors, in early March.
But analysts question whether this approach will be enough to unlock the credit that the economy needs to pull out of a deepening recession. Some worry it may benefit only select investors at taxpayer expense.
The program also does not try to change securitization practices that, many investors say, spread risks throughout the world and destroyed financial institutions. Policy makers acknowledge that for now, fixing credit ratings, reducing conflicts of interest and improving disclosure can wait.
Under the program, the Fed will lend to investors who acquire new securities backed by auto loans, credit card balances, student loans and small-business loans at rates ranging from roughly 1.5 percent to 3 percent.
Depending on the type of security they are borrowing against, investors will be able to borrow 84 percent to 95 percent of the face value of the bonds. Investors would not be liable for any losses beyond the 5 percent to 16 percent equity that they retain in the investment.
In the initial phase, the Treasury will provide $20 billion and the Fed will provide $180 billion. Treasury Secretary Timothy F. Geithner said last week that the Treasury could increase its commitment to $100 billion to allow the Fed to lend up to $1 trillion.
Investors and economists said that the effort could help restore some lending, but added that it might not be big enough to fully replace all or most of what has been lost, especially if the nation’s biggest banks are not restored to health.
“The gap to be made up is huge,” said Hyun Song Shin, an economist at Princeton who has written extensively about the shadow banking system. “Ideally, you would like the commercial banking sector to step up and take charge of the train but they are in no position to do that because they are undercapitalized.”
The market for new securities backed by mortgages and other types of loans has collapsed. Last year, investors bought $313.9 billion of these securities, down from $1.6 trillion in 2007 and $2.1 trillion in 2006, according to Dealogic.
Last month, banks issued just $1.6 billion worth of such deals.
Banks and finance companies are holding more loans on their books, but their ability to do so has been eroding as losses rise on their existing assets. Since October, banks’ holdings of loans and leases have shrunk by 2 percent, to $7.1 trillion.
In the mortgage market, banks own just one-third of all loans, down from half as recently as 1990.
Investors and bankers say the Treasury program, called the Term Asset-Backed Securities Loan Facility, or TALF, could help unclog vital channels of capital, but they add that it is hard to know how big an impact it will have.
For one thing, the Fed will make loans against only triple-A rated securities, not lower-rated bonds, which are first to suffer losses when borrowers default on loans. That will not help banks sell junior bonds, which many investors have shunned because of fears that losses would rise as the economy worsened, said Thomas H. Atteberry, a partner at First Pacific Advisors, an investment firm based in Los Angeles.
“It’s probably a step forward but it may only be a baby step forward,” said Mr. Atteberry, who does not plan to use the TALF.
Jerry Marlatt, a partner at the law firm of Clifford Chance who specializes in securitization, said that lenders using the TALF would be willing to retain more of the risk associated with loans on their own books to get deals done. That should help ensure that lenders make better-quality loans in the future, because they will be liable for most of the losses.
Simon Johnson, an economics professor at the Massachusetts Institute of Technology and a former chief economist at the International Monetary Fund, said many people might take a dim view of the TALF program because it provided government subsidies to investors like hedge funds. Investors who borrow from the Fed could enjoy annual returns of 20 percent or more.
“The TALF,” he said, “raises a lot of questions.”
What Is a Stress Test?
At its simplest, a stress test is a way of revaluing a portfolio using a different set of assumptions. The results of a stress test show the sensitivity of the portfolio to a particular shock. Stress tests can be useful because for most asset markets,the history of returns does not provide sufficient information about the behavior of markets under extreme events. Stress tests complement traditional models with estimates of how the value of a portfolio changes in response to exceptional but plausible changes in the underlying risk factors.
You can read the article at:
http://www.imf.org/external/pubs/ft/stfs/stfs.pdf
Timeline of the Financial Crisis
Events of 2007
August, 2007: Liquidity crisis emerges[3][41][42]
September, 2007: Northern Rock seeks and receives a liquidity support facility from the Bank of England[43]
October, 2007: Record high US stock market October 9, 2007 Dow Jones Industrial Average (DJIA) 14,164[44]
Events of 2008
January, 2008: Stock Market Volatility
February, 2008: Nationalisation of Northern Rock[45]
March, 2008: Collapse of Bear Stearns
March, 2008: Federal takeover of Fannie Mae and Freddie Mac
September, 2008: Global Financial Crisis
September, 2008: Bankruptcy of Lehman Brothers
September, 2008: partial nationalization of Fortis holding
October, 2008: Large losses in financial markets world wide throughout September and October
October, 2008: Passage of EESA of 2008
October, 2008: Iceland's major banks nationalized
November, 2008: China creates a stimulus plan
November, 2008: Dow Jones Industrial Average (DJIA) touches recent low point of 7,507 points[citation needed]
December, 2008: The Australian Government injects 'economic stimulus package' to avoid the country going into recession, December, 2008
December, 2008: Madoff Ponzi scheme scandal erupts
Events of 2009
January 2009: U.S. President Barack Obama proposes federal spending bill approaching $1 trillion in value in an attempt to remedy financial crisis [46]
January 2009: Lawmakers propose massive bailout of failing U.S. banks [47]
January 2009: the U.S. House of Representatives passes the aforementioned spending bill.
January 2009: Government of Iceland collapses. [48]
February 2009: Canada's Parliament passes an early budget with a $40 billion stimulus package.
February 2009: JPMorgan Chase and Citigroup formally announce a temporary moratorium on residential foreclosures. The moratoriums will remain in effect until March 6 for JPMorgan and March 12 for Citigroup.[49]
February, 2009: U.S. President Barack Obama signs the $787 billion American Recovery and Reinvestment Act of 2009 into law. [50]
February 2009: The Australian Government seeks to enact another "economic stimulus package".
February, 2009: 2009 Eastern European financial crisis arises.
February 2009: The Bank of Antigua is taken over by the Eastern Caribbean Central Bank after Sir Allen Stanford is accused by US financial authorities of involvement in an $8bn (£5.6bn) investment fraud. Peru, Venezuela, and Ecuador, had earlier suspended operations at banks owned by the group. [51]
What's next????
Bank 'stress tests' to start soon
WASHINGTON (Reuters) -- U.S. financial regulators will soon launch a series of "stress tests" to determine which of the largest U.S. banks should get bigger capital cushions in the event of a deeper recession, a person familiar with Obama administration plans said Saturday.
The person, speaking on condition of anonymity, said if institutions are found to need additional capital, financial authorities will provide them with an "extra cushion of support."
Banks are expected to receive additional information about the tests in the coming week from regulators.
The largest U.S. banks are "well capitalized" for current conditions, the source said, but the Obama administration wants to ensure that they can withstand a more severe economic climate and can play an important role in maintaining the flow of credit.
Initial plans for the stress tests were announced Feb. 10 as part of Treasury Secretary Timothy Geithner's bank stabilization plan, but the source Saturday for the first time linked the tests to additional government support for large banks. This person did not specify what form any extra capital cushion may take.
Little is known about the form of the stress tests, but the person described them as "consistent, forward looking and conservative."
The Obama administration on Friday tried to ease market fears that the government was poised to nationalize some large banks that are continuing to struggle with losses and a lack of confidence, notably Citigroup and Bank of America.
Bank shares fell sharply, with Citigroup's (C, Fortune 500) plunging 22 percent to below the $2 price of a typical automated teller machine (ATM) fee and Bank of America (BAC, Fortune 500) trading around the $4 level.
White House spokesman Robert Gibbs said Friday that "this administration continues to strongly believe that a privately held banking system is the correct way to go."
http://money.cnn.com/2009/02/21/news/economy/stress.tests.reut/index.htm?cnn=yes
Hot Sauce #5
Thanks for the great article!
Thanks!
WID
Those who pushed it down will bring it up!
I will see BAC around $6 next week...
Have a great day!
What did I tell you couple days ago?
Read it again!
Nhan
Banks Sink on Growing Nationalization Calls
Posted by David Gaffen
The chorus of those arguing for a temporary nationalization of the banks, or at least sounding less alarmed by the prospect, continues to grow, and as the sound is amplified, the assets in question continue to fall.
The market’s reaction is not easy to understand. The continued decline in banking stocks Wednesday could be interpreted as a sign that investors are growing more comfortable with the idea that the nation’s largest, struggling banks will be taken over and restructured by the government — even if such a move is a temporary one — or a fear that it will happen, or just on a generalized fear that the next course of action from the Obama Administration is still uncertain.
More lawmakers, in recent days, have raised the possibility of this, and President Obama, for his part, has left himself plenty of wiggle room should he deem such a step necessary. Such a move was given another sheen of political cover after comments from former Federal Reserve Chairman Alan Greenspan, who said it may be necessary to go forward with such a move, as long as protection remains for senior debtholders, which Henry Blodget of Clusterstock.com interpreted to mean that “we can go ahead and hose the junior ones.”
Treasury Secretary Tim Geithner has been lukewarm on this idea, however, but few want to see a decade of malaise, similar to the experience of Japan in the 1990s. Mr. Greenspan still retains a modicum of authority on economic affairs despite the widespread criticism of his decisions, but ultimately, he cannot pull the trigger.
“This is nothing more than prodding,” says Walter Gerasimowicz, CEO of Meditron Asset Management. “It will still be up to the administration to find a way to effect this type of nationalization, and that is not at all clear at this point, and I think that’s what’s weighing on the marketplace.”
Concern about the possibility of such a takeover has spread through the preferred marketplace; preferred securities are higher in the capital structure than common stock, and those issues are declining. Bank of America’s series H securities were traded at $7.30 Wednesday, down 11%, and off 72from the 52-week high of $26 reached on Sept. 10. Citigroup’s P series preferred shares were down 7.6% to $5.95 a share; they, too, had a 52-week high of $26.
“All of the preferreds are trading like it, and all of the subordinated debt is trading like it,” says Bennet Sedacca, president of Atlantic Advisors, on nationalization. “There’s just no other way out.”
I just want to share with you what I read... Please don't accuse me basher or whatever...
Here is the news... and I hope that BAC will not be the one they mentioned in this story...
WASHINGTON - Nationalization is an option for dealing with troubled U.S. banks if they fail the U.S. Treasury's "stress test," Sen. Lindsey Graham said on Wednesday.
The Republican from South Carolina said other options in dealing with struggling banks included simply allowing them to fail, or having the government continue to inject capital into them, but he warned the continued capitalization approach "almost ruined Japan."
"They (the Japanese) kept throwing good money after bad. I think that is what we've been doing quite frankly and we need to stop that," Graham told Reuters in a telephone interview.
If institutions are truly "zombie banks," he said, one option for the government "would be would be go in, take the bank over, restructure it, break it up, sell it, get the money back. And you can call that nationalization if you want to."
The U.S. Treasury is expected in coming weeks to subject up to 25 banks with assets exceeding $100 billion each to "stress tests" to decide which banks need additional capital.
"We need to keep option three (nationalization) on the table for any bank that fails the stress test," Graham said.
http://www.newsmax.com/insidecover/bank_nationalization_gop/2009/02/18/183112.html
I agree with you that BAC and WFC won't be nationalized but the company may need to go thru a "stress test" which means the share price may be lower. There will be financial report around the end of April... We may see 'may day' around that time if BAC put out a big loss...
Save your $$$ for the right time to get in around summer.
BAC will be survived and the people who invest in it will be rewarded... but you need to do your DD's and get in the stock at the right time.
Best wishes to all
WID
SAN FRANCISCO (MarketWatch) -- The U.S. government has tried several different ways to pump capital into the nation's ailing banks, revive lending and ease the recession. Now some analysts say it may be time for the solution everyone's been trying to avoid: nationalization.
See Link below:
http://www.marketwatch.com/news/story/story.aspx?guid={0DFB5950-747C-44BF-A8FB-3F444F5FEE2A}&siteid=rss
Does anyone in here know when the Genentech, Ipsen/Tercica's patents expire so INSM can do what ever it wants... I thought 2012...
TIA.
WID
Allergan will use the coupons as advertisement promotion(s) and will write off the cost for tax purposes.
Dew: Re: MNTA
I was a little busy today so I did not put up a very detailed post today.
Given that MNTA have:
Available Cash: $108 Mil.,
M-Enoxaparin approval any time soon,
M356,
FoB M178,
M118,
Novel sugar-based compounds,
and great technology of sugars’ chemical sequences
It is justified to say the pps should be around $12-15.
Given the above conditions, MMNTA is undervalued.
I hope that helps!
Best ragards,
WID
Any idea on MNTA Q4 report tomorrow morning?
Per the last CC couple days ago, MNTA has approx $108 mil cash so the pps should be between $12-$15.
Generic Lovenox is on the right track for 4/1/09 launch-- CEO has very confident tone on it.
MNTA has an outstanding technologies for FoB programs.
It is time accumulate more shares before the stock takes off.
Best regards to all and thanks Dew for all your hard works in here.
Thanks!
GTCB will report earning on May 8, 2008 before market open.
I hope that they will announce partnership around that time.
Stay tuned!
WID
Gym,
I can tell that you have 100,100 shares... I know that magic before!
Does anyone have any info from IDIX Presentation at CROI today?
Thanks!
Cro;
I think you are wrong about Dew. He is not a distant cousin. He is the big brother.
What do you think?
Top-line Data Delay???[/]
I think that the company owes us, the investors, an explaination why they have delayed the top-line data as they promised on the press release couple weeks ago.
No one forces them to say they would release this data around the end of January. This is their own words that put them into trouble. They can say that "due to the difficulty with scheduling patients for precedures, top-line data may not be available in early of Feb. or something like this..."
Anyway, I am patiently waiting for this info and so are the people in here.
Top-line data from the US ATryn trial may not be available until mid Feb. (Feb. 12 or 13). That's what I am guessing... I hope that I am wrong.
Have a great week!
Thanks!
WID
Dear Cro:
Here is the list of the phone numbers from GTCB and you are welcome to call them to get the requested info.
CONTACT INFORMATION
Worldwide Headquarters
175 Crossing Blvd.
Framingham, MA 01702
Tel: (508) 620-9700
Fax: (508) 370-3797
Media and Investor Relations
GTC Biotherapeutics
Tom Newberry
Tel (508) 370-5374
Feinstein Kean Healthcare
Francesca DeVellis (investors)
(617) 577-8110
DIRECTIONS TO CORPORATE OFFICES
GTC Biotherapeutics
175 Crossing Boulevard
Framingham, MA 01702
(508) 620-9700
Have a great weekend.
WID
No news is good news for GTCB. I don't expect to see any news from GTCB until next week. Anything comes out between now and Monday is considered bad news.
Have a great weekend!
WID
GTCB has a BIO CEO Conference on Feb. 13, 2008 @ 11:00 am.
http://ceo.bio.org/opencms/ceo/2008/program/PresentingCompaniesSchedule.jsp
IDEV
The company's approved products consist of SANCTURA, a muscarinic receptor antagonist, and SANCTURA XR for the treatment of overactive bladder that are co-promoted with its partner Allergan, Inc.
SANCTURA XR was approved by the U.S. Food and Drug Administration (FDA) on August 3, 2007 and is available on the market in the U.S. as of January 2008. SANCTURA XR is currently being marketed jointly with Allergan, Inc.
Please make your comments, I appreciate your time and knowledge.
Disclosures: I am holding IDIX and MNTA.
Thanks a lot!
WID
Jack:
Let the dust settles and I will walk in and cleanup the room.
Thanks!
WID
Laker:
When it get below $5.00 per share because people will take profits and the stock is not marginable.
I agree with you that the current pps is a bargain now and so for MNTA.
Does anyone have any ideas when GTCB needs to raise more capital to keep the company going? Maybe Dew knows.
Thanks a lot.
I believe there is potential out there for this company but I want to see how much capital does it needs to raise next time.
I am ready to load more IDIX and MNTA if there is a big pullback.
VPHM is looking good too.
HGSI: Anyone pays any attention on this one. Please advise.
Thanks a lot!
WID
2008 CROI Conference Feb. 3-6, 2008
15th Conference on Retroviruses and Opportunistic Infections. Look for IDIX presentation of a head-to-head trial of IDX899+Truvada vs Sustiva+Truvada in first- or second-line patients.
Look for a pop in IDIX pps.
Good luck to all.
WID
2008 CROI Conference Feb. 3-6, 2008
15th Conference on Retroviruses and Opportunistic Infections. Look for IDIX presentation of a head-to-head trial of IDX899+Truvada vs Sustiva+Truvada in first- or second-line patients.
Look for a pop in IDIX pps.
Good luck to all.
WID
Dew,
I thought Brain Lawler is you.
Thanks for sharing the info.
Best regards
WID
What do you think about the future of IDIX based on what you have seen today?
Can the company survive with the cash and layalty payment from HBV franchise?
My wife make some investment in this company and I don't know much about it until we saw the lastest news on the company. Should we need to be more patient with the company?
Please advise us at our email: watch_it_drop07@yahoo.com.
We really need your advise!
Thanks!
WID
IDIX CC:
I think the company is very conservative to to forecast it cash equivalent to the end of the year and other events like phase III of HCV trials.
I hope that my decision to buy more shares of IDIX today is not a bad decision.
Let see HBV get approved in EU and the company will market the product well in US, EU, and China.
I hope that IDIX will get back into the $10's sometime this summer.
Best investment to all.
Many thanks to Go Seek and DD. Please keep up the good works!
Best regards,
WID
Go Seek,
Thanks a lot for your advice! I understand the volatility of biotech stocks and I also see the risk/reward relationship for biotech stock in general and especially for IDIX. I believe that IDIX is undervalued and will adjust itself to the right market value soon. In the next few weeks we will hear the conference call to discuss the financial result of the 1Q as well as new from EU regarding HBV. Any positive news from these two front will bring the pps upto he high $8's or $9's.
Thanks for your hard work to put together a great research website and share with us your opinion about IDIX.
I wish you and the IDIX longs well in the weeks ahead.
Best regards,
WID
If IDIX goes below $7.20 today, it may goes to the $6's by Friday. It is just my guess!
Anyone can explain why IDIX falls today? Is that related to Option Expiration this Friday or the old things of HCV midstage trials?
Please post the IMS number for this week if you have it.
Thanks!
WID
CHRONIC HEPATITIS B PATIENTS TREATED WITH TELBIVUDINE
76 WEEK FOLLOW UP OF HBEAG-POSITIVE CHRONIC HEPATITIS B PATIENTS TREATED WITH TELBIVUDINE, ADEFOVIR OR SWITCHED FROM ADEFOVIR TO TELBIVUDINE
P. Marcellin 1, H.L.Y. Chan 2, C-L. Lai 3, M. Cho 4, Y-M. Moon 5, Y-C. Chao 6, J. Heathcote 7, R. Myers 8, G. Harb 9, N.A. Brown 10
1 Hopital Beaujon, Clichy, France; 2 Prince Of Wales Hospital, Hong Kong, Hong Kong-S.A.R., China; 3 University Of Hong Kong, Hong Kong-S.A.R., China; 4 Pusan National University Hospital, Busan, South Korea; 5 Severance Hospital, Seoul, South Korea; 6 Tri-Service General Hospital, Taipei, Taiwan-R.O.C.; 7 Toronto Western Hospital, Toronto, ON, Canada; 8 University Of Calgary, Calgary, AB, Canada; 9 Novartis Pharmaceuticals Corporation, East Hanover, NJ, USA; 10 Idenix Pharmaceuticals, Cambridge, MA, USA
Background: Direct comparisons of available anti-HBV agents are important for optimizing patient care. We report results of a 1-year randomized trial of telbivudine vs adefovir followed by 24 additional weeks of open-label telbivudine.
Methods: The study enrolled 135 adults with HBeAg-positive CHB with HBV DNA >6 log10 copies/mL and serum ALT 1.3–10xULN. Patients were randomized (2:1) to adefovir or telbivudine for 24 weeks, with a secondary randomization (1:1) of adefovir recipients to continue adefovir or switch to telbivudine after W24. The primary endpoint was HBV DNA reduction at W24. After W52, most patients received telbivudine in an open-label extension trial. The effects of switching from adefovir to telbivudine in patients with suboptimal response to adefovir (HBV DNA >3 log at 24 or 52 weeks) were analyzed.
Results: At W24, mean HBV DNA reduction from baseline was significantly greater with telbivudine vs adefovir (–6.30 vs –4.97 log10 copies/mL; P<0.01). Mean viral load decreased sharply in adefovir-treated patients after switching to telbivudine at W24. Among the 78% of patients in the adefovir group with suboptimal response at W24 (HBV DNA >3 log10 copies/mL), those switched to telbivudine displayed an additional 2.1 log10 mean reduction between W24 and W52, vs. 0.9 log10 for patients who remained on adefovir. Similarly, among adefovir recipients with persistent suboptimal response at W52, a 2.1 log10 decrease in viral load occurred between W52 and W76 after switching to telbivudine. In patients receiving continuous telbivudine, the mean HBV DNA reduction from baseline was 6.3 log10, 6.8 log10, and 7.2 log10 at weeks 24, 52 and 76 respectively. Serum HBV DNA was non-detectable (<300 copies/mL) in 39%, 60%, and 72%, respectively, at these time points.
Conclusion: Telbivudine provided greater and more rapid antiviral effects compared with adefovir through 1 year of treatment. For patients with suboptimal response to adefovir, switching from adefovir to telbivudine after 24 or 52 weeks provided a substantial additional reduction of serum HBV DNA that persisted through week 76.
NM283 RESULTS AT 24 AND 48 WEEKS
Background: Valopicitabine has shown anti-HCV activity in combination with pegylated interferon (valopicitabine/pegIFN) in patients with hepatitis C. This ongoing Phase IIb trial is evaluating valopicitabine/pegIFN in treatment-naïve patients with HCV genotype 1 infection.
Methods: Enrolled patients have HCV RNA =5 log10 IU/mL by TaqMan™ PCR assay, ALT <5 xULN, compensated liver disease, and no prior treatment. Patients were randomized into 5 treatment groups: (A) pegIFN alone to W4, with valopicitabine 800mg/day added in W5; (B) valopicitabine 200mg/day + pegIFN; (C-E) valopicitabine 800mg/day, with different week 1 induction regimens, + pegIFN. PegIFNalpha-2a is dosed 180microg QW. Due to higher GI side effects with 800mg/day valopicitabine, a protocol amendment reduced the valopicitabine dose in Groups A, C, D and E to 200 or 400 mg/day after 14-22 weeks of treatment.
Results: The rate of viral decline was valopicitabine dose-related through W4. By W12, EVR (>2 log drop in HCV RNA) was evident in 85% of patients in Group B and 88% in Groups C-E. HCV RNA was below the Amplicor detection limit (<600 IU/mL) in most patients by W12. Results at W24 and W36 indicate continued anti-HCV efficacy across treatment groups, with HCV RNA non-detectable by TaqMan in most patients (Table). In Group B (valopicitabine 200mg/day + pegIFN), partial data through the end of treatment (W48) indicate maintained suppression of HCV RNA with good tolerance of study medication. Results at end of treatment (W48) will be presented.
Conclusions: At a dose of 200mg/day, valopicitabine plus pegIFN markedly suppresses viremia in treatment-naïve patients with HCV-1 infection, with satisfactory tolerability.