Capital Alternatives in Today’s Distressed Environment

10/14/08 by Paul D. Reese, CFA, Managing Director
Howe Barnes Hoefer & Arnett

Holy Cow! It is not enough to just date this article—I guess I need to time stamp it as well just to keep up with the rapid developments in the capital markets! For the record, it is 12:00 p.m. Pacific Time on Tuesday, October 14, 2008. The body of this article was written after the U.S. markets closed on Friday, October 10, in the aftermath of the most volatile trading session in the history of the organized exchanges—and a week in which the Dow Jones Industrial Average lost over 18% of its value. Obviously, my friends, it is the most interesting and turbulent of times we are in, which bring with them calls for potential global depressions and financial meltdowns on one day and, perhaps, a potential for stabilization and a capitulation in the global credit crises the next. The global credit markets are still experiencing unprecedented seizures, but the coordinated actions of the governments of the civilized world may be beginning to unlock the credit markets, particularly in Europe, which has, in my estimation, experienced significantly greater credit seizures than here in the U.S. More >




The Art of Marginal Cost Analysis and Assessing Your True Cost of Funds
Part Two: Defensive Funding Strategies

“If it doesn't make sense, you should find for the defense.” –Johnnie Cochran

In the Q3 2008 issue of What Counts, we detailed “Marginal Cost 101”—the art of determining the incremental cost of a deposit. We also applied this analysis to the development of offensive strategies, specifically the introduction of a new high-yield checking account. We learned how to create a break-even pricing analysis of the new product using advances as a wholesale funding benchmark. More >