Archive for 2005

  • Oil above $66 Per Barrel
    , September 19th, 2005 at 1:41 pm

    Oil is much higher today due to Tropical Storm Rita which passing above Cuba. The storm could do more damage to the oil-producing infrastructure, not mention the already devastated areas of the Gulf Coast.

    In Florida, thousands began evacuating the Florida Keys as Rita built up speed off the Bahamas, about 430 miles from Key West. Rita, which strengthened Sunday into a tropical storm, had sustained winds of 60 mph and was forecast to be in the Straits of Florida between the Keys and northern Cuba on Monday, possibly as a Category 1 hurricane with winds of at least 74 mph, forecasters said.
    Long-range forecasts showed the system moving into the Gulf of Mexico late in the week as a hurricane, then possibly approaching Mexico or Texas. But forecasters warned those across the U.S. southern coast, which is still recovering from the impact of Hurricane Katrina, that long-term predictions are subject to large errors.
    If Rita strikes Texas, the biggest oil refiner in the country, it could spell serious disruption to the industry. Texas has 26 petroleum refineries with the capacity to pump a total of 4.6 million barrels a day, according to the U.S. Department of Energy.
    About half of oil production and 35 percent of gasoline production in the Gulf remains blocked in the wake of Hurricane Katrina, according to the Minerals Management Service.

  • Airline Bankruptcies
    , September 16th, 2005 at 3:51 pm

    Since 1978, over 100 airlines have filed for Chapter 11. Continental filed twice, and TWA did it three times. Here’s a list of airline bankruptcies over the years.

  • Consumer Confidence Plunges
    , September 16th, 2005 at 3:33 pm

    The big story today is the drop in consumer confidence. However, it didn’t merely drop, it plunged. The University of Michigan index fell from 89.1 in August to 76.9 for September. That’s larger than the drop after 9/11. The index is now at its lowest level since 1992. Nevertheless, I’m not too concerned. Katrina is still on everyone’s mind and I think it’s having a disproportionate impact. The real story, and the one that fewer people are talking about, is that the cleanup is moving along very well, and there’s even talk of Mardi Grad going off on time.

    At the UN today, Venezuela’s President Hugo Chavez, said that oil could rise to $100. BA! Even for Chavez, that’s pitiful. First off, Venezuela can’t even produce enough to meet its own quota. Venezuela must be the only country that lies about its production on the high side. On top of that, OPEC, of which Venezuela is a member, just lowered its demand forecast. Apparently, the OPEC boys didn’t “cc” Hugo.

    The good news is that oil is moving lower, so gasoline prices should follow. The market had a nice late rally today on very heavy volume. Who’s opinion do you want to take? The market’s or Hugo’s.

  • News from France
    , September 16th, 2005 at 1:47 pm

    Shares of French yogurt company, Danone, jumped on takeover rumors. This is the same company that caused national panic in France when there rumors that Pepsi was thinking of buying it. Pepsi denied the rumors but it didn’t stop Thierry Breton, the finance minister, from warning Pepsi that “this is not the Wild West.” (Pepsi is based in New York.) For good measure, Le Figaro described Pepsi as “the American Ogre.” Now, it seems that Switzerland’s Nestle might be interested in Danone. The French don’t seem so worried now.

    Also, it looks like Hewlett-Packard’s French workers are ready to strike for one day. I’m not sure what that’s supposed to prove. HP is a company with lots of problems. The company is slashing thousands of jobs, and I wouldn’t be surprised to see even more job cuts.

  • Gold at 17-Year High
    , September 16th, 2005 at 1:24 pm

    The gold bugs must be happy. Gold just reached a 17-year high.

    The yellow metal finally broke the $460/oz. barrier. Some analysts think it will go even higher.

    Citigroup analyst John Hill said he was bullish on gold due to investors’ jitters over oil, inflation and the greenback.
    “We expect gold to work higher, and fully expect a test of $500 in the coming months,” Hill said in a report. Citigroup also forecast gold will average at least $450 in 2006/07.

    Gold may indeed go higher, but I wouldn’t bet on it. The long-term trend is still down. All gold rallies start differently, but they all end the same way.

  • The New Earnings Excuse: Don’t Blame Us, Blame Katrina
    , September 15th, 2005 at 4:19 pm

    Expect to hear a lot companies saying, “We missed earnings. Don’t blame. It’s all Katrina’s fault.”

    Some analysts say companies can be too eager to blame their poor performances on exogenous shocks, such as wars and the weather, in hopes that investors will overlook other problems they are confronting.
    But as long as these companies provide assurance that the slide will be only short term, some analysts say investors could give a “free pass” to a number of companies that blame Katrina for various earnings shortfalls. The trick in the weeks ahead will be divining those companies with businesses that truly are being hurt by the damage to the New Orleans region, and those companies only somewhat affected but dealing with troubles in their operations elsewhere.

    Some unusual suspects like Cendant, Knight Ridder, Tyson Foods and Books-A-Million have already blamed Katrina for their troubles.

  • Merrill Lynch’s Analysts Will Expense for Options
    , September 15th, 2005 at 1:59 pm

    More good news for investors. Merrill Lynch will now require all of its analysts to include options expensing in their earnings estimates. This is a very good move. Since Merrill is so large, this will have a big impact on Wall Street.

  • A Screwy Idea?
    , September 15th, 2005 at 1:44 pm

    The simply screw has been around forever. Sure, there are lots of drawbacks: “Concrete cracks when it is punctured by a screw. Plastic creeps away from the pressure, sliding down the threads so that even a tightened screw loosens almost instantly.” But Kenneth LeVey, a product development director at Illinois Tool Works, has come up with a new twist on the 2,000-year-old screw.

  • The Onion Scoops Wall Street
    , September 15th, 2005 at 12:23 pm

    The Onion
    February 18, 2004

    Fuck Everything, We’re Doing Five Blades

    CNN/Money
    September 14, 2005

    Gillette unveils 5-bladed razor

  • Google Prices Shares at $295
    , September 15th, 2005 at 9:40 am

    Google priced its follow-on offering at $295. The 14-million-share offering raises over $4 billion for the search engine. This is larger than its IPO last year which raised $1.7 billion on 19.6 million shares. Impressively, the stock is up since the follow-on offering was announced.

    Google hasn’t given specific plans for the money. Since the company is cash-flow positive and it already has a sizable cash position, I assume Google will use the money for acquisitions. Yahoo and eBay have been busy on the acquisition front. Microsoft has $38 billion in cash, while eBay, Google and Yahoo all have about $3 billion. A lot of people think Google will now buy Baidu. Google already owns a small stake of Baidu.