Archive for November, 2006

• Field of Dreams
  Eddy Elfenbein, November 15th, 2006 at 10:37 am

  First, we learned that the Mets are going to play at Citi Field. Then we heard that the A’s are leaving Oakland for Fremont’s Cisco Field.
  Doesn’t anyone have respect for the purity of the game?
  Fine, we might as well join in. Ladies and gentleman, I give you Crossing Wall Street Stadium.*
  * Deal not finalized.

• The VIX Hits a Low for the Year
  Eddy Elfenbein, November 15th, 2006 at 6:52 am

  The CBOE Volatility Index, or the VIX, closed at 10.5 yesterday, the lowest point of the year. The VIX measures the volatility implied in index options contracts. The VIX is also very close to its lowest point in 13 years.
  What does it mean? That’s hard to say. Volatility is a hotly debated topic among technical analysts. Personally, I haven’t found much predicitve power in the VIX.
  Here’s a scatterplot of the VIX and how the S&P 500 has done for the following six months. The VIX is the horizontal axis, while the market’s return is the verical.
  
  This looks pretty random to me. The closest I can come up with is that high points in the VIX signal major turning points in the market, while lower points signal a continuation of the trend. For example, when the VIX is below 14.7, the market has never (since 1990) lost more than 6% six months later.

• Six-Year High
  Eddy Elfenbein, November 14th, 2006 at 4:54 pm

  
  The S&P 500 hit a six-year high today. Our Buy List is now up over 10% for the year. Today was kind of a strange day. The market was just boucing along until about 3 p.m. Then suddenly, the indexes surged higher. Barry Ritholtz says it was covering of e-mini contracts.
  Home Depot (HD) was particularly weird today. The company had blah earnings, but the stock rallied slowly as the day wore on. Eventually, shares of HD closed at a five-month high.

• Health Care Stocks
  Eddy Elfenbein, November 14th, 2006 at 2:20 pm

  I remember when health care stocks use to go up. Not anymore. Here’s a chart of the Health Care ETF (XLV) versus the S&P 500:
  
  This doesn’t look overheated to me.

• USA! USA!
  Eddy Elfenbein, November 14th, 2006 at 2:08 pm

  U.S. Still World Economic Leader
  Hey Canada: STFU!

• Two Percent Down Days
  Eddy Elfenbein, November 14th, 2006 at 1:14 pm

  The S&P 500 hasn’t had a down day of 2% or more since May 19, 2003. That’s the longest streak ever according to my data which goes back to 1950. Here are the other streaks, when they ended and how many days.
  11/14/06 1275 (current)
  10/31/78 1168
  1/8/86 1080
  5/14/73 1056
  7/28/69 1029
  8/26/66 1008

• What’s Dennis Up to These Days?
  Eddy Elfenbein, November 14th, 2006 at 10:27 am

  Remember Dennis Kozlowski? Me neither. Apparently, he used to be somewhat important. In any event, Bloomberg visits Denny in the Greybar Hotel:

  Kozlowski now plays baseball and softball behind the barbed wire and steel doors of the state prison. He’s passes time reading biographies of U.S. presidents and Che Guevara, the revolutionary leader. His latest book, given to him by a former Tyco employee, details the life of Madame Chiang Kai-shek.
  “I probably read over 100 books,” he said.
  His wife Karen filed for divorce last summer. The birthday party Kozlowski threw for her on Sardinia in 2001 was among many Tyco-financed extravagances presented to the jury that convicted him. He declined to talk about Karen.
  Kozlowski is one of 12 men housed in the protective custody unit at Mid-State, Foglia said. He’s allowed to spend 16 hours a day outside his cell and works as a dining room attendant and a teacher’s aide.
  “He’s not making anything more than $1.05 a day,” Foglia said.

  LOL

• WallStrip on Digital River
  Eddy Elfenbein, November 14th, 2006 at 10:13 am

  Today, Linday & Co. take a look at Digital River (DRIV).
  If you can’t get enough Lindsay, here she is not getting the guy in a Volvo commercial. And here she is expecting triplets in an ad for Lowe’s (LOW). Enjoy.

• Home Depot Misses Earnings
  Eddy Elfenbein, November 14th, 2006 at 9:55 am

  The housing market has taken another casualty. Today, Home Depot (HD) reported earnings of 73 cents a share, two cents below estimates. Overall revenues rose 11.3%, but same-store sales dropped 5.1%.

  Going forward, Home Depot said it believes its fiscal 2006 earnings per share will grow 4 percent to 5 percent over fiscal 2005 and that sales will grow for the year by about 12 percent. It had earlier projected earnings per share growth for the year to be on the low end of a range of 10 percent to 14 percent and sales growth for the year to be on the low end of a range of 14 percent to 17 percent.

• Earnings Preview: Home Depot
  Eddy Elfenbein, November 13th, 2006 at 1:48 pm

  From AP:

  OVERVIEW: As the housing market cools off, home-improvement companies are suffering as well. Falling lumber prices have cut into revenue, and several suppliers have reported lower results and outlooks recently, including Home Depot’s largest supplier, Masco Corp.
  In an effort to improve performance, Home Depot in October said it is putting chief executive Bob Nardelli in closer contact with top leaders throughout the company, with the four division presidents in the U.S. and Mexico reporting directly to him.
  Chief Financial Officer Carol Tome also took responsibility for supporting store operations, including asset protection and customer service initiatives.
  Home Depot is also reviewing Nardelli’s compensation in light of a sagging stock price.
  In September, the company said it would hire 1,000 new employees across the country, part of a plan to invest $350 million in its stores during the second half of the year. In August Home Depot cut 300 jobs at its headquarters in Atlanta as part of the plan.
  BY THE NUMBERS: Analysts are looking for a profit of 75 cents per share on revenue of $23.39 billion, according to a Thomson Financial poll.
  ANALYST TAKE: Credit Suisse analyst Gary Balter, who rates shares of Home Depot “Neutral,” forecast earnings of 74 cents per share and expects investors to pay as much attention to whether Home Depot meets expectations as how it get there and where it’s going.
  “Meeting expectations on cost cuts and share repurchases will not satisfy investors, in our view,” Balter wrote in a note on Monday.
  He expects Home Depot to lower its 2007 earnings growth guidance of 10 percent, or $3. “Should they move closer to our level of $2.90 vs. consensus of $2.95, that could pressure shares,” Balter wrote. “More important are comments on how protracted the slowdown will be.”
  Danielle Fox of Merrill Lynch, who rates Home Depot’s stock as a “Buy,” expects earnings in line with consensus.
  “Existing home sales slowed in the relevant six-month prior period, commodity prices are down, and the company is lapping last year’s 37 basis point comps lift from hurricanes,” she wrote in a Nov. 6 analyst note. “We expect the revenue contribution from Home Depot Supply, cost controls, and accretive share repurchases to drive modest growth this quarter as the company reinvests in store labor to improve service levels.”