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May 20, 2008



I will pass this along if you are looking for a financial that will pay a very good dividend now, and have a lot of upside later and not have a huge level of insecurity. Marshall & Isley Corporation ( symbol is MI ). A Milwaukee based bank with operations thoroughout the upper midwest as well as Arizona and elsewhere is one of the nations best capitalized banks. It has already taken most of its writedowns because of that according to an April 30, 2008 research piece by Bernstein Research.

Yield today is about 5.3% and stock is trading at about 24 right now with a 52 week high of 49 and change. Good current yield while it just sits there at stares at you, but financials will return to their highs sooner or later ( unless they fail and MI is too strong ). Double your money and get twice what your money market is paying if not more.

Buford Gooch

What is a TED spread?


"What is a TED spread?"
It's either the difference in yield between a Treasury Bill and a Eurodollar (old-style Eurodollar, not the current European currency but the yield on an American dollar held in Europe; acronym explanation T = T-Bill and ED = Eurodollar) OR it's an inappropriate Kennedy joke.

Rick Ballard

The TED spread is the difference between what the USG pays for 90 day money and what banks pay (as determined via the published LIBOR rates). A year ago Treasury was paying 4.9% for 90 day money, today it's paying 1.82%. The 3/1 bid/acceptance rate remains fairly constant.

A wide TED spread indicates (maybe) a negative risk assessment by investors concerning bank's potential profitability. It may also reflect Treasury getting out well in front of a potential liquidity crisis, which (IMO) is what has happened over the past 6-9 months.


There is a fair amount of chatter going on about Libor and how it is set, and whether US lenders and borrowers should be subject to decisions made by a cabal of large London based Banks. It is the London Interbank Offered Rate. It may hold a partial explanation for the large differential.


The financial panic should be continuing. We're governed by people who just decided that OPEC should be subject to antitrust law. It's difficult to put an upper limit on how much economic damage people as stupid and powerful as Congress can do.


"The TED spread is the difference between what the USG pays for 90 day money and what banks pay (as determined via the published LIBOR rates)."
Fwiw, that's precisely what I'd said, just rephrased.

Domes tic

The day the farm bill passed, the UN said the food crisis should be lowering prices. So, what legislation got passed to have the mortgage crisis go away. The banks should have gone broke, but foreigners bought the banks and their debt. We tried to tie oil into the food crisis, but eneded up with 5% biofuels and a sell off of US aid for those programs and an agreement that oil has always affected prices. Can't we tie oil into the mortgage prices somwhow? This is not fun. I'm bailing at 150 and buying back at 200.

Rick Ballard


Yes it is - I was looking at the T-bill auctions while typing the comment and didn't see yours when I posted.


The LIBOR rate has to be manipulated a bit in order to keep the euro up. Remember the handwringer by Ambrose Evans-Pritchard? I don't think he likes open auctions very much.


How quaint, he wants to rail about exporting the pain. What part about risk and reward having a direct relationship did he miss in class? Foreign holders of debt are suppose to be immune? Maybe that is what the European Union is all about, creating a fantasy world where everything is just peachy.


There is also a Eurodollar future (and options on the futures) at the CME. As a market rate, it should eliminate some of the problems with squirrely reporting that they are worried about in LIBOR.


TM--Here is an article that was rather interesting.

Not to be a downer but Trouble Hid in the Hedges was a worthwhile read.


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