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KUALA LUMPUR: Banks have begun raising their base lending rates (BLRs) following Bank Negara’s move to lift the overnight policy rate (OPR) by 25 basis points last week.

Five of the largest banks in the country raised their BLR to 5.8%.

Malayan Banking Bhd (Maybank) and CIMB Bank Bhd were the first two banks to announce their interest rate hike from 5.55%.

The two banks raised their BLR and base financing rates to 5.8% effective today following Bank Negara’s OPR revision last Thursday.

In a statement, Maybank president and CEO Datuk Seri Abdul Wahid Omar said the interest rate revision was based on the recent adjustment in the OPR.

“We expect to see better growth from our core business segments, leveraging on the improving economic environment and as more customers take advantage of the diversity of our product and service offerings,” he added.

Public Bank will also raise its BLR to 5.8% today, according to Bank Negara’s banking info website.

“We are supportive of Bank Negara’s move to normalise interest rates as the economy regains stability and are immediately transmitting it to both savers and borrowers,’’ said CIMB group chief executive Datuk Seri Nazir Razak in a statement.

Nazir said it was the right time to raise interest rates as the economic environment had normalised and growth momentum was strong.

“We saw the fourth quarter gross domestic product (GDP) numbers and we are looking at a GDP growth north of 4% this year potentially,’’ he told reporters at the launch of CIMB Twin Yield Income Investment structured product yesterday.

“Those conditions suggest that it is time to normalise interest rates. As best as I can tell, it is a good decision.’’

CIMB also raised its savings and fixed deposit rates by up to 25 basis points.

The RHB banking group also raised its BLR for RHB Bank Bhd to 5.8% today.

In a statement, group managing director Datuk Tajuddin Atan said RHB would be balancing the increased borrowing rates by offering more competitive rates for depositors.

Hong Leong Bank Bhd will increase its BLR to 5.8% effective March 10.

Bank Negara raised the OPR as the economy has improved significantly and returned to its path to recovery.

“Given this improved economic outlook, the Monetary Policy Committee (MPC) decided to adjust the OPR towards normalising monetary conditions and preventing the risk of financial imbalances that could undermine the economic recovery process,’’ said Bank Negara in its monetary policy statement last week.

“At the new level of the OPR, the stance of monetary policy continues to remain accommodative and supportive of economic growth.”

A rise in interest rates is usually greeted with trepidation as economists typically worry about its impact on growth and demand.

This time around, that apprehension is not yet visible.

“At the moment the impact will not be great as it is coming off historic lows,’’ said AmResearch economist Manokaran Mottain.

The Association of Banks Malaysia said the increase in OPR would not impede access to financing nor affect the industry’s lending activities.

The banking industry recorded a loans growth of 8.6% in January and 7.8% in December.

Analysts said the impact the BLR increase would have on bank’s profits would depend on whether deposit rates would be raised by the same quantum.

They said bank margins were squeezed when interest rates were cut but they expected net interest margins to widen as interest rates rose.

source HERE

Most professional traders asked themselves the same question during last week's stock rally:

How is the market rising when I'm not buying stocks – and neither are any of my friends?

I have a chart for you showing why many of the smartest traders I know are asking themselves this question... and why they expect the market to head lower, at least in the short term.

Below is a chart that displays how some professional traders view the market. It shows the past nine months of trading in the big S&P 500 fund (SPY). Many days, this is the most frequently traded security on the market. It moves in lockstep with the benchmark S&P 500 index.



You'll notice this chart has more to it than the simple "line charts" you often see on television or in the newspaper. This chart contains much more information, which you can use to make smarter trades.

At the bottom of the chart, you'll see a series of red and black bars. These bars represent the trading volume in any given day. It's a visual representation of how much power the buyers have, versus how much power the sellers have. Red bars mark the trading volume on declining days; black bars mark the trading volume on advancing days. The taller the bar, the greater the volume.

As you can see, selling volume surged during several periods in September and October. This mass dumping of stocks is marked by (1). This burst of selling pressure is called "distribution."

After this dumping, the market went on to register new highs during November and December. This rally had no substantial buying power behind it, marked by the declining volume line (2). It's like someone threw a party and nobody showed up.

Selling power returned in a big way in mid-January... when the market registered several big declines on the biggest volume of the past six months (3). More punches to the market's gut. More distribution.

Then, in mid-February, the market managed to kick off another rally... which has brought the S&P within a whisker of its January high. But as you can see (4), this was another party that nobody attended. Volume was pathetic.

If you have heavy exposure to stocks, you should be concerned about this weak, low-volume rally. You see, the market must have a constant inflow of new money from giant investors like mutual funds, hedge funds, and pension funds in order to remain healthy. These are the folks who control billion-dollar portfolios. They are the "elephants"... and they are not buying into the market in any meaningful way.

Studying volume is no magic bullet for stock market profits. It's a "secondary indicator," not a primary indicator like price or valuation (stocks are expensive, by the way). But it is a useful gauge on your dashboard. And right now, volume is saying this rally is standing on feeble legs.

Good trading,

Brian Hunt

source HERE

Today is the day to tell your wife that you love her.
Today is the day to call your mother and chat with her for an hour.
Today is the day to send your dad a note.
Today is the day to get in touch with that friend you haven’t talked to in a while.
Today is the day to call up a special person and set up a date.
Today is the day to stop by your grandmother’s house with a sack full of groceries and make dinner for her.
Today is the day to visit that old family friend who helped you so much when you were younger.

Not Valentine’s Day. Not Mother’s Day. Not Father’s Day. Not someone’s birthday. Not Christmas.

The value a person has in your life is never really shown on a “special” day marked on a calendar and observed with a greeting card and a slickly-wrapped present. It’s shown with a few minutes (or an hour or two) of your time on a day when they don’t expect it. On a day when they’re merely in your thoughts.

Build those relationships now before the chance is gone.
Build those relationships now and they’ll pay dividends for the rest of your life.
Build those relationships now so that you can have someone to always share every exciting moment and success in your life with.
Build those relationships now when times are good so they’ll still be there when the times are bad.

I’m stopping right now so you can take the few moments you might have spent reading a longer post to instead do something to build a valuable relationship in your life, because it will often be those very relationships that are there for you when the chips are down.

source HERE

SINGAPORE: Several Asian central banks intervened yesterday in an effort to temper the rally in their currencies as the dollar weakened broadly, highlighting fears that rapid currency rises may hurt economic recovery.

Central banks in South Korea, Indonesia, India and Singapore were spotted buying US dollars to contain their currencies, driven up by the dollar's weakness and expectations that China's strong exports data may prod Beijing to allow the yuan to rise.

"I think Asian central banks are watching the pace of currency appreciation," said Thio Chin Loo, currency strategist at BNP Paribas in Singapore. "They are cautiously optimistic about the economy and don't want to prick the nascent recovery."

In a sign that concerns over strengthening currencies were not unique for emerging markets, the head of Swiss National Bank said yesterday that the central bank will fight any excessive rise of the Swiss franc against the euro, hinting at a possible intervention.
In Seoul, a senior finance ministry official, speaking after the authorities were seen buying dollars, warned that the authorities would act further to temper the won's rise if necessary.

"We are worried that the foreign exchange market is leaning excessively one way," Kim Ik-joo, head of the ministry's international finance bureau, said.

"We are closely watching foreign exchange rates and we will take proper measures if necessary," Kim said.

Dealers said the authorities tried to prevent the won from rising past the 1,200-per-dollar level, though the currency briefly hit 1,114.9 per dollar, its strongest in more than 15 months, and closed on the stronger side of the 1,200 mark.

The won has gained 4 per cent against the dollar so far this month, making it the top performer among nine emerging Asian currencies tracked by Reuters.

The rising won also intensified purchases of Korean bonds by foreigners, along with the view that rate rises will be slower coming in the year ahead, with the buying, in turn, pushing the won further up.

Confronted with a steady stream of investment funds betting that Asia will continue to lead the global economic upturn, the region's authorities have been using both verbal and market intervention to cool of the pressure on their currencies.

Taiwan went a step further last week, unveiling new controls to curb speculative inflows, giving foreign short-term investors betting on currency gains a week to invest their funds in stocks or pull out.

In Indonesia, the authorities were also spotted trying to stem the rise of the high-yielding rupiah, which jumped as much as 1 per cent yesterday, and the central bank said it would keep on buying dollars to rein in its currency.

In Singapore, the central bank was also seen buying dollars as the Singapore dollar hit a one-month high and in India, state-run banks were spotted buying the US currency after the rupee rose 1 per cent to its highest in more than 15 months.

The rupiah has gained 3 per cent against the dollar so far this month, making it the second best performer in Asia. - Reuters

source HERE

WASHINGTON: U.S. financial regulators told banks Thursday to have procedures in place to minimize their risks from loans when rock-bottom interest rates start to rise.

The advisory came from the Federal Financial Institutions Examination Council, which includes the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

The advisory wasn't meant to signal any upcoming change in interest-rate policy by the Fed.

To nurture the budding recovery, the Fed has slashed a key bank lending rate to a record low near zero, where it has been for a year.

When the economy is on firm ground, the Fed at some point will start boosting rates.

Some economists think the Fed might begin to raise rates later this year to safeguard against any inflation problems.

It's unusual for the council to issue such an advisory.

The last time it did so was in 1996, a Fed spokeswoman said.

"In the current environment of historically low short-term interest rates, it is important for institutions to have robust processes for measuring and, where necessary, mitigating their exposure to potential increases in interest rates," the council said in the advisory issued Thursday.

Higher interest rates make it more expensive for banks to borrow and increase their costs of doing business.

The council suggested that banks make sure they have sufficient capital cushions to protect against any possible losses.

"In this challenging environment, funding longer-term assets with shorter-term liabilities can generate earnings, but also poses risks to an institution's capital and earnings," the council said.

The council said banks should be testing their risk-management systems for scenarios including instantaneous and significant changes in interest rates.

Deficiencies in banks' risk-management systems - along with lax regulation - have been blamed for contributing to the financial crisis.

The crisis, the worst since the 1930s, was triggered in 2007 when home mortgages soured as the housing market collapsed. - AP

source HERE

PETALING JAYA: Banks which had made loans to LCL Corp Bhd may have to face a “haircut” when they try to recoup their money.

LCL Corp’s default in loan repayments to at least three banks could affect the financial institutions negatively, according to a local analyst.

“How adversely these banks are affected will depend on the amount borrowed and LCL Corp’s repayment scheme over time,” he told StarBiz.

LCL Corp, which last month slipped into the financially troubled Practice Note 17 (PN17) status, currently owes a total of RM112.26mil to the three banks.

The banks involved are Affin Bank Bhd (RM69.42mil), Bank Islam Malaysia Bhd (RM2.63mil) and The Royal Bank of Scotland Bhd (RM40.21mil).

“LCL Corp has 11 months to resolve its outstanding loans to these banks,” the analyst said, noting that the company had issued a statement to Bursa Malaysia on Jan 4 that it was presently considering and formulating a regularisation plan to resolve its financial obligations to the banks.

He added that the banks might well have to settle for less than what was owed.

“Ideally they would like to receive full payment but chances are slim and winding up the company’s operations is an unfavourable option,” he said.

The analyst said LCL Corp’s debt servicing capability going forward would depend on how Dubai recovered from its credit crunch, as well as collections from LCL Corp’s debtors and the sale of the company’s non-core assets.

A financial analyst from Singapore told StarBiz that LCL Corp’s debt position could signal “more companies following the course of LCL Corp in the later part of the year, especially if the credit crunch in Dubai remains unresolved.”

He noted that some banks had tightened their credit facilities to companies with exposure to Dubai in view of the higher risk of doing business there, adding that there was a lesson to be learned from the LCL Corp episode.

“They (banks) should review their lending practice to ensure that companies they back with sizable loans should not invest, do business or rely purely on one market for their growth and expansion,” the analyst said, noting that LCL Corp had relied too heavily on Dubai, with over 70% of its business, revenue and growth derived from there.

“There was a clear signal of over exposure to one region, and too much focus on the construction industry,” he noted. LCL Corp’s core business is in providing interior fit-out services.

source HERE

The European Commission (EC) itself has warned that the finances of half of the Eurozone's sixteen economies are at risk of becoming 'unsustainable', essentially bankrupt. As shown in the Wall Street Journal graphic below, Spain, Ireland, Netherlands, Slovenia, Slovakia, and Greece are all teetering on the brink.



While relatively better off European nations would prefer not to bail out their flailing neighbors, the problem with the euro currency union is that their fates are ultimately all tied together via the euro, even if politically they believe themselves to be separate countries. Thus an old criticism of the euro system is appearing more relevant than ever.

WSJ: They said a monetary union unsupplemented by a political union risked a fiscal free-for-all among governments, especially in a full-blown recession. The next year will be a good time to prove them wrong.

The focus in early 2010 will remain on Greece and its budget deficit at 12.7% of GDP, four times the EU limit. The Greek government is trying to hammer together a political consensus in parliament for a plan to bring down public spending without triggering more social unrest seen in the country's streets at the close of 2009.

more HERE

As we enter the new year investors will be wise to focus on the risks of 2009. Although the crisis appears long behind us it’s important to keep an eye on the bigger picture. Little has changed in terms of the structure of our global economy therefore the risks remain largely the same. Let’s take a moment to highlight some of these risks as we begin to prepare for a new year:

1) Those darned analysts

It would be comforting to think that Wall Street’s analysts were in fact doing us all a great big favor with their expert analysis, but the truth is, more often than not, they aren’t. As we have seen with my proprietary expectation ratio, the analysts have been behind the curve at every twist and turn of the crisis. They remained too bullish heading into 2007 & 2008 and then were behind the curve as operating earnings tanked and they turned very bearish in Q408 and Q109. Like clockwork, the ER bottomed and the market soon followed. The greatest risk heading into 2010 is an analyst community that becomes wildly bullish and sets the expectation bar too high for corporate America to hurdle itself over. Early readings show this is not a great risk at this point, but it continues to tick higher.

2) Stimulus, stimulus, stimulus.

There is little doubt that the greatest mean reversion in modern economic times has been largely due to government stimulus. The bank bailouts, housing bailouts/stimulus and auto bailouts all helped stop the bleeding during a time when the economy appeared to be on its deathbed. Unfortunately, government spending isn’t the path to prosperity and the private sector will be forced to pick up the slack sooner rather than later. 2010 is likely to largely hinge on this transition. The government will begin to sap the economy of its massive stimulus as the year drags on and with that comes increased risks that the equity markets will struggle on without big brother’s aid.

3) Anything China

China has grown to become the hope of the global economy. With their booming growth, growing consumerism, and fiscal prudence, China is the envy of the economic world. The rally in commodities and manufacturing continues to chug along with a great deal of help from China. If anything goes wrong in China (and we mean anything) equity markets will tumble.

4) The almighty bond market

Low interest rates and benign bond market action have helped to stabilize the global economy. But as the United States and Japan print paper like it’s going out style the risks in the global bond market continue to increase. As Julian Robertson (and recently David Teppers) said, bond investors will not put up with signs of inflation for long. If bond investors get antsy and yields spike in 2010 the party is over. And the party might quickly turn into a nightmare. If any country begins to dump U.S. Treasuries on the market mortgage rates would spike and that the Fed would be unable to maintain their accommodative stance. The Peter Schiff’s of the world would rejoice as the global economy tanks, a potential dollar crisis ensues and that yellow metal sky rockets higher.

5) Banks. ALL OF THEM.

Our zombie banking system continues to hold back the economy. As we copy the Japanese the battle between bank survival and loan growth continues to this day. Banks remain wary lenders as they attempt to reduce their balance sheet risks, maximize the quality of their earnings, and minimize their dependence on the Federal government. Meanwhile, the king zombie, the Central Bank of the United States, continues its boom bust policy of low interest rates and “accommodative” money. This is not only a 2010 risk, but likely a risk for the rest of this new decade. The banks are likely to be fixing their balance sheets for some time to come and the Fed’s boom bust policy will almost certainly end the same way Greenspan’s boom bust policy ended – right back where we began.

source HERE

“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.

Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.

The Emirates are staying out for now – irked that the bank will be located in Riyadh at the insistence of Saudi King Abdullah rather than in Abu Dhabi. They are expected join later, along with Oman.

The Gulf states remain divided over the wisdom of anchoring their economies to the US dollar. The Gulf currency – dubbed “Gulfo” – is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.

The project is inspired by Europe’s monetary union, seen as a huge success in the Arab world. But there are concerns that the region is trying to run before it can walk.

more HERE

Newsweek. The magazine already has slashed its rate base (circulation guaranteed to advertisers) from 3.1 million to 2.5 million. It has announced further cuts that will take this figure to 1.5 million early next year. The New York Times reported that Newsweek’s advertising fell 29.9% through the first three quarters of 2009. According to the 10-Q for The Washington Post Company (NYSE:WPO), Newsweek ad revenue plunged 47% in the third quarter from the year before. The magazine has lost almost $30 million so far this year. Newsweek had hoped to transform itself into a poor man’s version of the Economist and has largely dropped covering breaking news and reviews of the big stories of the week. The change in the editorial direction of Newsweek may have been the right thing to do, but it came much too late. Newsweek, like many other print products, hopes to rely on internet readership and advertising to improve its fortunes. Audience measurement firm Compete indicates that the audience of Newsweek.com has dropped 15% in the last year to 1.3 million unique visitors a month in October. Audience research firm comScore shows an even sharper decline. That is, by itself, an important indication that the public has not been attracted to the “new” Newsweek. The Washington Post has enough trouble with fixing problems at its flagship paper. Its online news and commentary magazine, Slate.com, had more than 3.8 million visitors in October. Slate has none of the legacy print costs of Newsweek.

Motorola. The handset and telecom infrastructure company may finally have a future three years after falling from the No.2 spot in global cell phone share to obscurity. The time has come for the company to break itself into pieces and allow buyers to scuttle a brand with a bad reputation. The firm has said it will seek a buyer for its cable and wireless equipment companies for a $4.5 billion price tag. Motorola has a market cap of $19 billion. Motorola has long-term debt of $3.9 billion and cash of about $3 billion. Motorola has three divisions. The one that created most of the company’s value until recently is its mobile devices operation. The revenue from that division fell by almost half in the last quarter from $3.1 billion to $1.7 billion. But the future for the division is brighter, primarily due to its new Droid phone which has sold remarkably well and is being heavily promoted by Verizon Wireless. Industry experts expect that one million of the handsets have been sold in the last month. The value of the Droid is not the Motorola brand but the brand of the Google (NASDAQ:GOOG) Android operating system that runs it. A more successful Motorola handset company would be attractive to Samsung or LG. The most likely buyer is Nokia (NYSE:NOK), which has a modest market share in the US. Motorola still does very well in its domestic market. Nokia does not need the Motorola brand, but it could use a successful Android handset.

Palm. The smart phone company had a modest success with the launch of its Pre. The follow-on product, the Pixi, is not doing as well. The Pre is facing renewed competition from the Motorola Droid and new high-end handsets from Nokia and Samsung. It competes with the two smart phone juggernauts the Apple (NASDAQ:AAPL) iPhone and RIM (NASDAQ:RIMM) Blackberry. In an effort to push sales, Amazon (NASDAQ:AMZN) dropped the price on the Pre to $79.99. Palm needs a deal with both AT&T Wireless (NYSE:T) and Verizon to supplement the one it has with Sprint (NYSE:S). It is not clear that those partnerships will be formed. Pre sales have fallen off, if a number of Wall St. analysts are correct. Many analysts have sharply dropped their stock price targets to $10 based on concerns that Palm will significantly miss its earnings targets. The firm’s stock has decreased from over $18 earlier this year to $11. Nokia has forecast that global handset sales will only rise 10% next year, which will make it nearly impossible for the market to support the number of manufacturers in the business today. Both LG and Samsung, the No.2 and No.3 handset companies, have weak smart phone lines. Each is jealous of its brand. With a market cap of $1.7 billion, Palm is a cheap way to move further into the high-end handset business.

Borders. Borders Group (NYSE:BGP) lost the online and brick-and-mortar bookstore war years ago to Barnes & Noble (NYSE:BKS) and Amazon.com (NYSE:BGP). The company’s stock is down to $1.20 from a 52-week high of $4.48 and its market value is less than $80 million. For the quarter ending in October, the company’s loss from continuing operations was $39.0 million,or $0.65 per share, compared to a loss of $39.0 million, or $0.64 per share, a year ago. Revenue was $595.5 million, down $86.6 million, or 12.7%. Border’s large Waldenbooks division has all but disappeared. That part of Border’s operations is down to 361 stores. With its debt net of cash at $375 million, a competitor like Barnes & Noble could buy $2 billion in annual revenue for a fraction of sales and cut general and administrative costs to improve margins. Borders has been dead for over two years, but no one has been able to dispose of the body.

Blockbuster. Blockbuster’s (NYSE:BBI) stock traded for $10 less than it did five years ago. Shares change hands for $.62 now. The video rental company had an awful third quarter. Revenue for this period of 2009 was $910.5 million, down from $1.16 billion for the same quarter a year ago. The 21% revenue decrease was mostly due to a 14% decline in same store sales. The firm’s net loss was $114 million compared to a $19 million loss in the same period in 2008. Blockbuster has only $141 million in cash and cash equivalents. No one has figured out what to do with Blockbuster. The company has 3,662 stores in the US and 1,703 overseas. Blockbuster has lease liabilities on a number of those stores, but ideally the company would be much smaller. It lost its chance to be in the online video rental business to NetFlix (NASDAQ:NFLX) and its chance at IP-based VOD to a number of internet streaming services and cable set-top box based products. The market value of the company is only $125 million. Blockbuster has bought itself some time by refinancing a large part of its debt and it has been aggressively closing stores. One of the things that Blockbuster mentions in its SEC filings is that its debt load and declining revenue could force it to seek a restructuring of its indebtedness or file for protection under the U.S. Bankruptcy Code. A bankruptcy will do almost nothing to improve Blockbuster’s prospects. Blockbuster does have over $1.7 billion in assets, not all of them saleable, but the firm will almost certainly face liquidation in the relatively near future.

Fannie Mae (FNM) and Freddie Mac (FRE) are intertwined closer than peanut butter and jelly. These two former government sponsored entities are now in government conservatorship. Their influence has largely disappeared. In the 1990’s it was believed that the government would never allow them to fold. It seems today that the GSEs are being kept afloat merely because it is cheaper and easier for the government to keep them in limbo than to repossess them and assume their liabilities. The sad thing is that even if the turnaround in housing lasts, it is just not enough to help Fannie and Freddie. Delinquencies keep rising and using traditional balance sheet analysis is nearly impossible. Whether these stay above $1.00 or not, it also seems that the NYSE keeps these listed because of the high amount of shares traded rather than on the merits of the future of these stocks. Alan Greenspan once said they should be nationalized and relaunched as eight entities that are privately owned. KBW went as far as to say the value of the common and preferred shares are worth zero. There will be some remnants left over in the operations, but these are being kept alive for appearance and convenience rather than because of their solid operating metrics.

Ambac Financial Group, Inc. (ABK) is one of the former solid bond insurers that held the market together. The reality is that its peers may be in the same boat or close behind it, but Ambac is the one with the largest question mark associated with it today. Insuring municipal bonds become very difficult in 2008 and for much of 2009 and its structured finance guarantees brought up what could be an untenable situation. What is sad is that a month ago came the company’s earnings on items which reinvigorated buyers of penny stocks and speculative stocks. Then came the change of heart. It was questionable whether Ambac could stay above regulatory capital requirements, and that was after the company disclosed that it may be forced to file for bankruptcy protection if it was unable to improve its capital position. It did claim enough regulatory capital, but then the Chief Financial Officer Sean Leonard resigned after the company missed a regulatory filing deadline and that is often enough to spook any investor in a troubled company. Back-dated tax refunds may help the company stay afloat longer, as would a new capital raise if it is even possible. But for Ambac to continue to function under normal operations, it seems as though the capital markets would have to revert back to the boom days rather than the after-shock days.

Eastman Kodak Co. (EK) has been on a downward trajectory since even before the end of the last decade. CEO Antonio Perez has not been able to fix the company since he took over in 2005 and Kodak keeps its heavy project investing and has been in a restructuring state for about as long as memory can go back. How much this has recovered from its lows is probably irrelevant today. And the notion that Perez was re-signed through 2013 is almost baffling. This was one of the greatest American brands of the 20th century. But its entrance to digital printing was very late and too many little dot.com me-too companies were able to jump way in front of the company’s digital efforts. The latest financing deal with KKR was for $700 million, and this seemed more like KKR was getting itself into a position to make a run at the company with a seniority position in the credit structure. Kodak won’t cease to exit. It just may wind up in a private equity portfolio with a much leaner and meaner structure. And that might in fact be a take-under rather than by a traditional buyout. It seems as though Eastman Kodak is in the same or an even worse boat than newspapers, with the key difference being that newspapers still have a business if advertising from auto dealers and housing ever comes back.

Sun Microsystems Inc. (JAVA) may be headed into Oracle (ORCL) and it may not. Its fate as a standalone company is however looking more and more like an inevitable fate. IBM (IBM) was interested in Sun, but dropped out. And now the European Commission somehow is worried about too much control of open source in the hands of Oracle even though much of this stuff is free or has been given away by Sun for next to nothing. Maybe having a money-losing model is what the European regulators want. But if the Sun-Oracle merger is blocked, the Sun has to do something and in a hurry. It will be forced to go out and buy a revenue and earnings stream with the main criteria being earnings. The company’s loss history and awful internals (not excluding employee morale) will make this even more so the case. So even if Sun is not acquired, it has to go make a transformative deal and it needs a good economy for its core operations to run at profitable levels. If Sun exists a year out, it seems that it will be a very different company by force more than by choice.

E*Trade Financial Corporation (NASDAQ: ETFC) is a great company with a great client base. And it was run into the ground from giving risky loans and acting as the end-user banker. Then it got bailed out in a deal with Citadel which gave the firm an extra layer of trade executions and gave Citadel control over the company’s operations. The dominance of Citadel is not as much as it was in even just a few months ago, but the company is soon to be without its replacement CEO. Things have got better at E*TRADE on operations, and the company’s solid advertising campaign allowed the firm to keep growing at a time in 2008 when suddenly the company appeared to be at-risk. The at-risk issue is one that might not go away for some time because of its loan exposure that it is stuck with and because write downs kept coming. Now, it seems that the wagons may be circling around E*TRADE despite the notion that many dismiss TD AMERITRADE (AMTD) as a suitor. E*TRADE still has a difficult ride if it has to just whether the storm and it may not have the resources needed to ride it out. That will come up for more debate if write downs and charges keep continuing. But for a larger buyer, particularly the non-bank companies that claim to be bank holding companies, then its 2.7 million brokerage accounts and total accounts of more than 4.5 million will be much more valuable to a suitor than to see what is left of the company if the finances turn back south.