Tag Archives: Moody’s

Financial Analysts Watch Turkish Protestors

14 Jun

Civil unrest in Turkey is causing some concern on the part of credit agencies over whether Turkey will be able to maintain its economic performance.  While Turkish markets have recently rallied in light of Moody’s decision to upgrade the country, anti-government protests have occupied the capital and other Turkish cities for more than two weeks.  Protestors claim the political part in power is moving public policy to favor Islamic law, even though the country is officially secular.  A recent law curbing alcohol sales seems to have been the last straw for the non-religious half of Turkish citizens, and protests have persisted and in some cases become violent.

Rating agency Moody’s, led by Raymond McDaniel, said that the Turkish government will need to act swiftly and effectively to curb the unrest in order to maintain its newly achieved rating of Baa3, because the protests could reduce tourism revenue and thus affect the country’s debt to income ratio.  The protests could also make foreign investors hesitant to bring capital into the country if the government is seen as unstable, which is why agencies are emphasizing the dependence on the government’s reaction to the protests, rather than on the protests themselves.  Overall, both Moody’s and rival agency Fitch said there is no danger of a credit downgrade at this time.

The Turkish economy is performing better than expected this year and has managed to bring unemployment to the lowest rate in seven years.  Inflation is also down and the working class seems to be happy.  So far the protests are isolated to the educated groups of people who are against religious rule, rather than being able to ignite the working class.  Most analysts feel the protests will be controllable and not effect Turkey’s economy.

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Moody’s Gives Favorable Nonprofit Review

25 Apr

Today’s sluggish economy has been hard on many people, and non-profit organizations are no exception to that. Many have worried that as we try to find our way out of debt and back into a thriving economy, philanthropy will struggle just to survive.

For some, that’s certainly true—and maybe it always has been no matter the state of the economy. But on Tuesday, April 23rd, Moody’s gave two of Kansas City’s major non-profit foundations positive credit reviews—and that makes way for the hope that more will soon follow.

Charity

Nonprofit organizations often struggle in times of economic hardship.
Image: Shutterstock

The Hall Family Foundation and the Nelson Gallery Foundation both have high A ratings and stable outlooks. Ray McDaniel heads up Moody’s, which praised the Hall Foundation for having “excellent balance sheet coverage of debt and operations, exceptional liquidity and prudent fiscal management.” The Nelson Gallery received similar praise, with Moody’s noting that it had significantly increased gallery visits and memberships in the past year.

For nonprofits and companies alike, there is a wide array of factors that contribute to credit reviews. Debt is evaluated both as a number and by the organization’s ability to manage and repay it. Operations and expenses must be carefully documented and kept in control, and liquidity in cash flow is an important factor as well.

Liquidity in cash flow is perhaps the most important factor of all, as it helps to protect organizations when things go awry with a funding source. Groups that have money flowing in from many different places are less vulnerable. A good example of this is the recent report that the top 7% of Americans are now earning 28% more than in 2009 while the bottom 93% is earning 4% less.

Affluent Americans tend to have financial holdings in many different places—stocks, bonds, housing, investments, etc.—while lower-earning Americans invest much more of their money in one place, most notably their houses. When the Great Recession hit in 2007, the housing market and the stock market both took huge hits. But since then, the stock market has rallied back to good health while housing is only just beginning to heat back up.

As in that situation, nonprofit organizations that have many sources of income and who are actively keeping donors interested will have a much greater chance at survival in the coming years—and the Moody’s report serves to confirm that.

1st Quarter Earnings Emerge

19 Apr
profit up

1st Quarter earnings results are (mostly) out.
Image: Shutterstock

The first quarter of 2013 has already come to an end, believe it or not. For the last month and for the coming weeks, business junkies and investors alike will see a surge of earnings reports and listen in on many conference calls as well. So who is slated to release earnings soon, and who has already announced profits?

GE is scheduled to show its figures on Friday, April 19th, with a webcast hosted by CEO and Chairman Jeff Inmelt, Vice Chairman and CFO Keith Sherin, and VP Investor Communications Trevor Schauenberg. The webcast will begin at 8:00 AM EDT.

Moody’s Corporation will share its first quarter results on Friday, May 3rd via teleconference. Ray McDaniel, President and CEO of Moody’s Corporation, and Linda Huber, Executive Vice President and CFO will host the teleconference, set to begin at 11:30 AM Eastern Time.

BlackRock Inc., the world’s largest asset manager, reported that its first quarter earnings were up about 10%. Assets are at their highest ever for the company, revenue is up, and the company heads into the second quarter looking strong.

Mattel, the massive toy corporation, reported a quadrupled net income due to increased sales of Disney Princess, American Girl and Monster High dolls. Unsurprisingly, the company saw a surge in share value, which rose more than four percent to its highest in fifteen years.

Volume leaders of NASDAQ include Intel, Sirius, PowerShares QQQ Trust, Microsoft, Yahoo, Micron, Apple, Cisco, Research in Motion, and Facebook.

Fitch Threatens UK Downgrade

29 Mar

Fitch, one of three major credit rating agencies, has put the UK economy on negative watch. The agency, run by CEO Paul Taylor, says the country’s rising debt and slow growth has put it on track towards a possible downgrade in the near future. The UK was recently downgraded by Moody’s, whose CEO is Raymond McDaniel, another of the big three agencies—that means if Fitch ends up lowering the country’s credit rating as well, things may start to get a bit rocky.

 

“The persistently weak performance of UK growth, in part due to European growth, has increased uncertainty around the UK’s potential output and longer-term trend rate of growth with significant implications for public finances,” Fitch said.

 

The country’s economy shrank by 0.3% in the last quarter of 2012, according to an article from The Guardian, and another dip for the first quarter of this year is a looming possibility. If it does see another loss, that will mean a triple-dip recession. A double-dip recession occurs when a country experiences a second dip, or negative GDP after one or two quarters of growth. A triple-dip recession would be unprecedented in Britain, and brings about fear that the country will move into a “lost decade.”

 

Ed Milibrand, leader of the British Labour Party, claims that the government is to blame for this possibility. “They are shrugging their shoulders, They have run out of ideas, They are resigned to a lost decade,” he said, later emphasizing that having the right leadership in place could help move Britain out of this economic slump.

 

But Lord Mendelson, former business secretary, says it’s about the future and not the past. “Everyone knows we are in a heck of a bad way in the economy. Quite a lot more pain is going to be experienced. What we should be saying is: this is the light at the end of the tunnel. This is where we should be heading,” he says.

 

“We need to explain how we would retool and redevelop our economy. We need a politician who will fight on that rather than fight about the past or fight over what is fair and what is not fair.”

Company Earnings Calls

24 Nov

Being a public company, or a publicly traded company, means that a company offers securities (stocks, bonds, etc.) that are available to the general public to purchase. That means that the people investing in the company’s future success will want to keep a close eye on how the company is doing financially.

 

Each quarter, most public companies (about 92%) hold earnings calls that detail and discuss the company’s financial results over that period of time. Most of these calls are preceded by a press release that summarizes the company’s results. In general, conference calls are also conducted while the stock market is closed, so that investors have a chance to make a decision about trading stock before it opens again.

 

The call begins with an operator, who reads a safe harbor statement and introduces the company official(s) who will be presenting. This will usually include the Chief Executive Officer or the Chief Financial Officer, such as Moody’s Raymond McDaniel or Disney’s Robert Iger.

 

Advance warning for earnings calls are not required, but wise companies know that keeping investors and analysts happy is important; therefore, calls are usually announced at least a few days before they occur. Companies can also provide press releases, detailed reports, and webcasts of the earnings call. It’s also common for transcripts to be made available, such as KKR’s latest report with Pam Testani, Bill Sonneborn, and Mike McFerran.

 

Such resources allow investors to keep tabs on companies that they hold securities, helping them make more informed decisions on their holdings. Calls will sometimes report what earnings per share are, and what they’re expected to be in the future.

 

What To Look For in Quarterly Results

12 Oct

Quarterly results are essential to understand if you’re planning on investing in the stock market. Why? They tell us how a company is doing—whether they are profitable, what their revenues are, and what expenses they have. It helps us know whether or not it would be a good idea to keep investing—or start investing—in the company.

 

Remember those quarterly report cards back in primary and secondary school? Or perhaps your school used “progress reports.” Either way, those reports—which you may have dreaded bringing home to your parents to be signed—showed our progress and gave our teachers and parents an idea of how we were doing. An “A” meant we were at the top of our game, a “B” said we were doing pretty darn good, a “C” put us in the average group, and a “D” or “F” usually indicated you’d soon be in serious doo-doo.

 

Well, quarterly earning results fill the same function—just for businesses instead of individuals. Quarterly reports are generally filed in January, April, July, and October. Reports are filed on paper, as well as often presented and discussed aloud by CEOs such as Ray McDaniels of Moody’s.

 

So, what should you look for when reading results? Here are the most important things to take from a report:

 

  1. Compare the present quarter’s earnings with the corresponding quarter the previous year
  2. Find the gross revenue, or the total revenue brought in by the company
  3. Determine the operating income, or the profit, by subtracting expenses from the gross revenue
  4. Look for the net profit, or “bottom line,” which will tell you what is distributed to shareholders after loan repayments and tax expenses
  5. Other income gives you information about sources of income outside of core business, including interest and investments

 

Remember, this is just a basic definition of what to look for in a quarterly report. If you’re planning on investing heavily in the stock market, it’s a good idea to get professional advice to be sure you’re putting your money to good use.

How Investing Works

10 Oct

Investing is a great way to increase the money you have. Most people have invested in something—whether they realize it or not. If you have a bank account, you are investing in your bank, which is why you earn interest over periods of time based on how much money you’ve got saved. Investments can also be made through money market accounts, stocks, bonds, mutual funds, and property.

By investing, you essentially make your money liquid instead of stagnant. Investments can increase in monetary value and keep your money growing with inflation (and hopefully more). It doesn’t take a lot of money to invest; taking a small portion from each paycheck can be a great way to start.

Investments can be very simple, or very complex. The simplest forms are those we are already most familiar with, such as bank accounts. This is also the safest way to invest. That being said, if you want a bigger return on your money, you can be more aggressive and invest in the stock market. This poses a greater risk—if the market turns bad, you could potentially lose your money—but the reward can be much greater.

More aggressive investing also calls for more education and experience in the market. Many people use mutual funds or investment managers to advise them on where to put their money. Quarterly earning reports, like the one presented by Moody’s Raymond McDaniel at Credit Suisse’s conference earlier this year, are often used by big investors as a way to keep tabs on the market’s status.

Timing is key in any investment. Depending on when you will need the money you’re planning on investing, you can choose something more reliable like bank accounts or money market accounts. If you have a long time before you’ll need the money, consider Certificates of Deposit or mutual funds. And if you want to see a big return on your money, the stock market or more aggressive mutual funds might be the way to go. Just remember, the more aggressive the investment, the more liquidity it will have.