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SFG Finance Presentation 9/6/12

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QE Quick Explain, iPhone 5, Libya, U.S. Debt Crisis, Chicago Teachers Strike

QE Quick Explain, iPhone 5, Libya, U.S. Debt Crisis, Chicago Teachers Strike

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  • What is _____? QE?Uniq
  • I don’t want to lecture, you get enough of that in class.Feel free to interrupt or ask questionsTry to go thru stories in under 2 min, today longer
  • I don’t want to lecture, you get enough of that in class.Feel free to interrupt or ask questionsTry to go thru stories in under 2 min, today longer
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • “Magic “ – train losing a billion a year, more employees than passengers, “disappearedhttp://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • http://online.wsj.com/article/SB10001424052970203370604577263863362854348.html – Isle of Blindhttp://www.bluegrasspundit.com/2012/02/why-is-greece-broke-hairdressers-in.html - Haridressers and musicians live dangerous, retire at 50Explain EZ vs. EU
  • Recommendation should be a pretty brief, but attention grabbing pitch why your company is the best investment. Try to use your most interesting or strong ideas in this section. Keep it under 5 minutes.
  • Recommendation should be a pretty brief, but attention grabbing pitch why your company is the best investment. Try to use your most interesting or strong ideas in this section. Keep it under 5 minutes.
  • Recommendation should be a pretty brief, but attention grabbing pitch why your company is the best investment. Try to use your most interesting or strong ideas in this section. Keep it under 5 minutes.
  • Recommendation should be a pretty brief, but attention grabbing pitch why your company is the best investment. Try to use your most interesting or strong ideas in this section. Keep it under 5 minutes.
  • Recommendation should be a pretty brief, but attention grabbing pitch why your company is the best investment. Try to use your most interesting or strong ideas in this section. Keep it under 5 minutes.
  • Recommendation should be a pretty brief, but attention grabbing pitch why your company is the best investment. Try to use your most interesting or strong ideas in this section. Keep it under 5 minutes.
  • Recommendation should be a pretty brief, but attention grabbing pitch why your company is the best investment. Try to use your most interesting or strong ideas in this section. Keep it under 5 minutes.

SFG Finance Presentation 9/6/12 SFG Finance Presentation 9/6/12 Presentation Transcript

  • Finance Presentation
  • AgendaIntroduction• Who Am I?• What’s the “Game Plan” this Fall?Presentation• Summer News in Review – The European Debt Crisis – A Greek Tragedy – A Knight’s Tale – LIBOR• Market Update• Founders FundConclusion 2
  • Introduction
  • Who Am I?Shane Jarman• 3rd Year Finance Major – MAIB combined degree program• SFG VP of Finance• Founder’s Fund PM• Trading in the stock market for 2+ Years• I love news, politics, stocks, and talking• Talk fast, get excited, give me feedback 4
  • Weekly Game PlanWeekly Staples• Market Update• Election Coverage• Current Events“SFG’s Choice” Topics• Stock Market Basics• “What is ______?”• Random Topics “In-Depth”• Keep things interesting, fast-paced, and educational 5
  • Summer News in Review
  • The European Debt CrisisWhat Is It?• “The most serious financial crisis since at least the 1930s, if not ever.” – The Bank of England• Europe is struggling to pay the debts it has built up in recent decades• The crisis has escalated the past 2 years with Greece defaulting, unemployment in Spain hitting 25.1%, and bond yields spiking to new highs. 7
  • The European Debt CrisisWho’s involved?• All of Europe – The stronger economies of Germany and France had to bail out the PIIGS – EuroZone vs. EU• The Euro Breakup? – Tensions have been high – Germans retiring at age 69 have to bail out Greeks retiring at 58 – Trading Austerity for Bailout Funds 8
  • The European Debt CrisisWhy You Should Care• The Euro Crisis could hit home – Looking for jobs/internships soon?• Contagion – Greece is small so it was contained – Spain’s economy is 2x as big as Greece, Portugal, and Ireland combined – Too big to bail out? 9
  • The European Debt CrisisGermany vs. Greece• Germany has been fiscally responsible since WW II• AAA-rated, balanced budget expected by 2014 – This gives them huge influence over “The Troika” • The EU, ECB, and IMF • Can set austerity rules• Just how irresponsible has Greece been? Let’s take a look. 10
  • A Greek TragedyGreece = VERY Irresponsible• Debt to GDP = 178.9% – Reduced to 132.4%• 13 Billion Euro deficit Jan-Jul • Revenue: 27 billion Euros • Spending: 40 billion Euros• The Greek gov’t depends on bailout funds to pay workers• How did it get so bad? 11
  • How It Got So BadGreece Lived Large on the Euro Credit Card• Statistics / Stories will show: – The government in Greece recklessly spent for a decade – The people of Greece like their benefits, but not working/paying for them – Most entitlements are laughably abused 12
  • Reckless Spending: The OlympicsThe Olympics cost Greece $11 billion to host in 2004• They spent lavishly on the Games – What’s This? – More than a dozen venues are empty, but guarded by security officers – Government red-tape responsible 13
  • Reckless Spending: Hellenic Railways• Hellenic Railways loses $3.8 million a day – 5% of Greek Debt• Train Operators in USA = $55 k – Guess Greece? – $130k w/ $110k pension – 4 hours by train, or 2 by car? – Average pay = $78,000• More employees than passengers – They also love to strike – Workforce down 30% past decade, cost up 50% from 2001-2009 14
  • We Love Benefits, But….Greek salaries rose 50% from 2001-2009• Retirement age = 61 – Pension 80% of salary• More than 600 “dangerous” professions retire at age 50 – Receive a state pension of 95% of their last working year’s earnings• Expansive welfare network 15
  • …. Not Paying For ThemTax Evasion – “A Greek National Pastime”• “Report your own taxes” – 5,000 citizens report making over 90k BUT.. • 60,000 Greek Homes have investments over $1,000,000? – People reporting income under 10k have boats, second homes, and millions? • Official “Bribe Rate” is 2,000 Euros – Greek shippers “exempt” from taxes• “Greece is a poor country full of rich people”“The gap between what Greek taxpayers owed last year and what they paid wasabout a third of total tax revenue, roughly the size of the country’s budget deficit.” - Greek Central Bank Report 16
  • The Isle of the Blind• Zakynthos – 700 of 40,000 residents claimed “blindness” disability benefits • 1.8% while average rate is 0.2% – Free $6,500 a year plus discounts• Held “blindness” test on island – 700 paid blindness claims 170 signed up for the test 100 showed up to take it 40 were actually blind 200 still getting paid!• 200,000 welfare/pension claims halted b/c dead, ineligible claimants 17
  • A Greek Tragedy: ConlusionGreece Right Now• 23% unemployment• 2 years of Austerity – More austerity needed to secure 4.2 billion Euro bailout tranche • 40% judge / police pay cut – Golden Dawn = 5% of vote• Watch Spain and Italy’s Bonds – Drama update, ECB bond update• EU in recession, but everything seems stable 18
  • A Knight’s Tale• “Knight Capital” – What’s that?• What happened to them? – Lost $445 million in 45 min• BATS global IPO fiasco• HFT Trading = 73% of volume – Causes erratic behavior 19
  • “Sawtooth” Trading in KO• What happened to them? – Lost $445 million in 45 min• BATS global IPO fiasco• HFT Trading = 73% of volume – Causes erratic behavior, look at graphs 20
  • 2010 “Flash Crash” 21
  • LIBOR Scandal• What is the LIBOR rate? – The London Interbank Offering Rate – It’s the short-term interest rate banks (supposedly) lend to each other at• Why does it matter? – This rate underpins the $350 - $850 trillion derivative market – $350 trillion is 96 years of US gov’t spending• The rate was illegally manipulated by banks for profit 22
  • LIBOR Scandal• Trader Quotes – "We have another big fixing tom[orrow] and with the market move I was hoping we could set the … Libor as high as possible,” -Anonymous Barclays Trader, May 2006 – "Always happy to help, leave it with me, Sir,” -Anonymous Libor Rate Submitter, May 2006 – "Dude. I owe you big time! Come over one day after work and Im opening a bottle of Bollinger." -Anonymous Barclays Trader• Who was responsible? – Barclays fined nearly $500 million – JP Morgan and Citibank under investigation 23
  • Market Update 24
  • Founders Fund• The SFG Mock Investment Fund• Spring Performance – S&P 500= +6.63% – Founders Fund= +8.19%• 14 analyst positions, 5 openings this semester• Application will be e-mailed – Also on SFG Website – Due Sunday September 9th at Midnight 25