Archive for March, 2007

• Looking at the Sell-Off
  Eddy Elfenbein, March 22nd, 2007 at 8:21 am

  The S&P 500 is now down 0.99% since February 26, the day before the big plunge. Here’s how the ten S&P industry groups have fared:
  Telecom……………..1.04%
  Utilities………………0.59%
  Industrials…………-0.40%
  Staples……………..-0.58%
  Energy………………-0.61%
  Healthcare…………-1.12%
  Tech………………….-1.24%
  Materials……………-1.31%
  Financials…………..-1.52%
  Discretionary………-1.82%

• European Central Bank Uses Cartoons to Indoctrinate English-Speaking Youths
  Eddy Elfenbein, March 22nd, 2007 at 7:58 am

  
  Before CNBC moved into animation, the European Central Bank had its own cartoon. Those fun-loving bankers in Frankfort gave us Alex, Anna and the adorable Inflation Monster in the teen-oriented Price stability: why is it important for you? What else could any euroteen want? (Besides actual price stability, a job, etc.).
  I wonder if our Fed would ever make a cartoon. Something tells me Bernanke is seriously into Anime. Just a hunch.
  (Hat Tip: The Mess That Greenspan Made and Is Apparently Continuing to Make.)

• Michelle Williams’ Father Beats Extradition
  Eddy Elfenbein, March 22nd, 2007 at 7:42 am

  Michelle Williams, the actress who got an Oscar nomination for Brokeback Mountain, and also played Jen Lindley in Dawson’s Creek (and most importantly, is Heath Ledger’s girlfriend), is also the daughter of Larry Williams. Papa Williams is a famous stock market trader-slash-guru. (You can check out his Web site at www.ireallytrade.com.) He’s sort of a legend in the world or commodity traders — Larry even has his own eponymous indicator, the Williams %R.
  Well, Larry Williams found himself in a bit of hot water with the IRS. They say he owes $1.9 million in taxes. He was arrested last month in Australia, fought extradition. And won.

  Williams last year challenged the validity of a notice issued by then federal Justice Minister Chris Ellison authorising a magistrate to rule on the US extradition request.
  He argued that Senator Ellison acted on advice from the US which did not identify precisely enough the alleged conduct for which his extradition was sought.
  A Federal Court judge dismissed that challenge, but Williams has successfully appealed the decision to the court’s full bench.
  Justices Roger Gyles, Jim Allsop and Robert Buchanan today overturned the earlier Federal Court order, declaring Senator Ellison’s notice invalid.
  “In the present case, the material before the minister did not even include a statement of the elements of the United States offences,” the judges said.

  Ironically, my indicator, the Elfenbein Quotient, is a ratings system for episodes of Dawson’s Creek. Small world.

• Heyday
  Eddy Elfenbein, March 22nd, 2007 at 7:15 am

  
  I went to see Kurt Andersen last night at Politics and Prose. He’s the host of Studio 360 and one of the founders of Spy.
  I’m about halfway through Heyday his latest book which is a rollicking historical novel set in 1848. I highly recommend it. Even if you’re not a history nut like me, I think you might enjoy it.
  The year 1848 is one of those years where it seems like history went into overdrive, and everything changed so quickly. I don’t think we’ve had a year like that since 1968. I particularly like how Andersen makes you feel like you’re in an age where anything is possible. You can’t help feeling that you want to go back in time.

• WallStrip on Starbucks
  Eddy Elfenbein, March 22nd, 2007 at 6:58 am

  
  Today, Lindsay goes on a Starbucks (SBUX) run.
  If someone came up to me a few years ago with the business plan of selling overpriced coffee, I would have thought they were crazy: “Sir, I assure you that the American people are far too intelligent to fall for something as transparently phony as a triple latte!” Sadly, this is why I’m not a bazillionaire.
  What else can be said about Starbucks? It’s a great American success story. Fifteen years ago, the stock went for about $21 a share. After five 2-for-1 splits, that works out to a split-adjusted price of 67 cents a share. SBUX’s 52-week high is $40.01 a share. That’s about a 60-fold gain.
  But trouble could be brewing (BA!). The stock has fallen 25% twice in the past year. Howard Schultz, however, isn’t giving in easily:

  Schultz, who lamented a nearly 10 percent slide in the company’s stock in the past year, asked shareholders not to lose confidence in the world’s largest specialty coffee retailer.
  “I’m here to tell you that I believe that there’s never been a better time to be a Starbucks shareholder,” Schultz said. “We are building Starbucks for the long term, and I would hope that after 15 years…you would give us the same trust that you have in the past.”

  Here’s the long-term chart:
  

• Financial Stocks Heart Bernanke
  Eddy Elfenbein, March 21st, 2007 at 9:56 pm

  It all started at 2:15 in the afternoon. The red line is the S&P Financial Index (^SPSY). The blue line is the S&P 500 (^GSPC).
  
  The financial stocks gained 2.41% while the entire S&P 500 was up 1.71%. Financial stocks comprise 21.7% of the S&P 500.

• Chinese Market Makes All-Time High
  Eddy Elfenbein, March 21st, 2007 at 2:46 pm

  It seems like it was only a few weeks ago that the Chinese stock market was ready to take down the world with it. Come to think of it, it was just a few weeks ago. On February 27, the Shanghai Composite Index fell 8.8%, which would be like the Dow losing over 1,000 points. The Dow responded by dropping 416 points.
  Well, now the Shanghai Composite has regained all its lost ground and is at a new all-time high. Last year, the Chinese stock market was up 130%.
  

• The Fed Stays Put
  Eddy Elfenbein, March 21st, 2007 at 2:15 pm

  As expected, the Federal Reserve left interest rates unchanged. This is the sixth straight time the Fed has held its powder. Here’s the statement:

  The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.
  Recent indicators have been mixed and the adjustment in the housing sector is ongoing (old statement: “suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market“). Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.
  Recent readings on core inflation have been somewhat elevated (old statement: “have improved modestly in recent months”). Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.
  In these circumstances, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected (this is new, despite the word “remains”). Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
  Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh.

  Barry Ritholtz provides his own reality-based Fed statement:

  The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.
  Recent indicators have been much worse than what we were hoping for: Housing is a bigger mess than we anticipated; Business Capex is heading south, as are durable goods. Retail sales have been punk for 3 months running, (and what’s with those excuses from the retailers? Too hot! Too cold! Lunar eclipse!) Don’t even ask about the Automakers. We expect the economy is likely to continue to soften until it slips to about a 1.5% GDP.
  Even worse, recent readings on inflation have been elevated. We were hoping that inflation pressures would moderate as the economy stabilized, but no such luck. In these circumstances, the Committee’s predominant policy concern is that we have painted ourselves into a corner, and we are running out of options. On the one hand, Inflation remains an ongoing concern, as medical costs, food, and energy remain problematic. On the other hand, its is apparent that growth is cooling rapidly. Housing has flipped from a net positive for consumers and job seekers to a net negative.
  All told, we are running out of options until one or the other of these gets much much worse. Future policy adjustments, therefire, will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. As noted above, if GDP slips below 1.5%, we will be shifting our bias towards easing. Appreciably worse that 1.5%, and we will have to act on rates to prevent a recession — inflation be damned.
  On a final note, the FOMC has taken up a collection, and as a retirement present, we are sending former Chairman Alan Greenspan to a lovely spa on Fiji Island for the foreseeable future. Since there are no satellite feeds, internet connections or any off island communications at all — preferably, around December 2008.

• CNBC Cartoon Show
  Eddy Elfenbein, March 21st, 2007 at 11:16 am

  
  CNBC is looking to start a cartoon show based on the comic strip CEO Dad. They’re going to start with one-minute shorts that could evolve into a half-hour show.

  “CEO Dad” centers on Frank Pitt, chief executive of a Styrofoam peanut manufacturer in Pennsylvania, who tries to balance work life and home life with his wife, Chloe, 10-year-old son J.D., 7-year-old daughter Grace and dog Taylor. His family believes he’s more focused on work than home life.
  “‘CEO Dad’ is the kind of man whose prenup has a noncompete clause,” Stern said. “The irony of the situation is that his family is everything he hopes and dreams it would be if he weren’t in it.”
  Stern said he was a workaholic CEO dad himself until a home break-in nearly took his wife’s life and he was held at gunpoint — an act witnessed by his 5-year-old daughter. After that, he became a “comedic evangelist” and set out to bring humor to others’ lives.
  “When you lose balance (in your life), the first thing to go is your sense of humor,” he said. “I’m trying to reach all the people who are working too hard to get them to laugh at themselves and find a little bit of healing.”

• Good Name for a Band
  Eddy Elfenbein, March 21st, 2007 at 11:08 am

  Ladies and gentlemen, put your hands together for Funkwerk!