Archive for March, 2007

  • The Change to Penny Spreads
    , March 19th, 2007 at 12:37 pm

    Here’s a fascinating article from Bloomberg on the effects of changing option spreads to a penny:

    Kevin Fischer spent 17 years as a floor trader at the Philadelphia Stock Exchange until Interactive Brokers Group Inc. moved him to its headquarters in Greenwich, Connecticut.
    Now he sits in front of a computer screen, creating a trading system to help investors use algorithms, sets of rules calculating the best time and price to buy or sell securities. Fischer is caught in the middle of a regulatory change that’s throwing about $1 billion of commissions up for grabs annually and putting Interactive, the world’s largest options broker, on the defensive.

  • The Fed’s Game Plan
    , March 19th, 2007 at 8:18 am

    The Federal Reserve meets again this week in Washington. A survey of 73 economists showed unanimous agreement that the Fed will leave rates unchanged at 5.25%. But the Fed could soon make a move. The futures market now indicates that there’s a 24% chance that the Fed will lower rates three times before the end of the year.
    Here’s a look at the Fed Funds rate (blue line) and core inflation rate (black line) going back a few years. The red line is the difference. Basically, in a recession the blue line should be equal to the black line. In an expansion, the blue line should be about 2.5 to 3 points higher than the black line.
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  • Dept. of Irony: Blackrock to IPO?
    , March 16th, 2007 at 1:26 pm

    Today’s big news is that private equity firm, Blackstone Group, may be going public. Strange that the company taking everyone private might be going public. Here’s an interview Maria Bartiromo did earlier this week with Steve Schwarzman, the head of Blackstone, and Laurence Fink, the head of Blackrock. (Stone. Rock. I’m not sure what the significance is.) (By the way, when Rock Hudson was on the Flintstones, they still changed his name to “Rock Hudstone.” Talk about redundancy! Stoney Curtis, I get. But Hudstone?)
    Anywho, at the very end of the clip, Maria asks Schwarzman is he’s going to go public. He knew what was in the works, but dodges the question very deftly.
    By the way, both Bartiromo and Schwarzman are on the board of the New York City Ballet. It doesn’t mean anything, I’m just mentioning it.

  • The BusinessWeek 50
    , March 16th, 2007 at 10:47 am

    BusinessWeek has unveiled its BusinessWeek 50.
    Varian Medical Systems (VAR) comes in at #14, followed by Bed Bath & Beyond (BBBY) at #15.
    Two more of our stocks appear in the Extra 25: Sysco (SYY) at #58 and Harley-Davidson (HOG) at #60.

  • Today’s CPI Report
    , March 16th, 2007 at 10:04 am

    Today’s report on consumer inflation showed that prices rose 0.4% last month, which was 0.1% more than what economists were expecting. The core rate, which excludes food and energy, rose 0.2%, which was in line with forecasts.
    Here’s a look at the core rate going back a few years:
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  • Indiana, We’re All for You!
    , March 16th, 2007 at 8:30 am

    You gotta hand it to those never-say-die kids at IU. The Mad Money Club at Indiana did everything in their power to get Jim Cramer to do a show from Bloomington. They even made a video based off 24, which is JJC’s favorite show.

    It worked! Jimmy C. is going to IU. Here’s more on the Mad Money Club’s efforts. It’s a heart-warming pull-for-underdog kinda thing.
    It’s almost like some dramatic come-from-behind upset in a bicycle race. Or something.

  • But Then Again….
    , March 16th, 2007 at 7:24 am

    Forbes:

    Greenspan Warns Of Subprime Infection

    AP:

    Greenspan: Subprime Spillover Unlikely

  • Amgen Continues to Plunge
    , March 15th, 2007 at 1:41 pm

    Shares of Amgen (AMGN) used to trade at a nice premium to the market. Not anymore.
    The stock has plunged this year, and it’s on the verge of making a 21-month low today. Still, the earnings appear to be fine. The company missed Street estimates by five cents a share last quarter, but it was still a big increase over last year’s fourth-quarter.
    Here’s a look at Amgen’s stock with the earnings-per-share line in gold. The two lines are scaled at 25-to-1 (when the lines cross, the P/E ratio is exactly 25).
    image441.png
    You can really see how far the valuation has fallen. Going by the same earnings multiple of just a few years ago, the stock could easily be worth $100 today.
    At the beginning of the year, Amgen said it expects earnings of $4.30 to $4.50 a share for 2007. The company recently stood by that forecast.

  • Yikes!
    , March 15th, 2007 at 12:48 pm

    From the Denver Post:

    Whoever sent a package with a disabled explosive device to Denver- based Janus Capital Group in late January could next send working bombs to financial-industry executives at home, a leading security expert has warned.
    “There is no doubt in my mind that the next time we hear from him, we will see real devices. That is the frightening part,” said Fred Burton, vice president of counterterrorism for Stratfor in Austin, Texas.
    Stratfor, also called Strategic Forecasting, is a corporate intelligence and risk-management company that has advised corporate clients targeted by the threatening letters.
    The mailer, who identifies himself as “the Bishop,” has made escalating threats in a series of 15 known mailings sent over 18 months to financial- service firms, primarily in the Midwest, said Wanda Shipp, a postal inspector in Chicago.

    (more…)

  • Cylical to S&P 500 Near 13-Year High
    , March 15th, 2007 at 11:17 am

    I know I’ve become a bore on this topic, but I think it’s big news. The Morgan Stanley Cyclical Index (^CYC) is still outperforming the overall stock market. If today’s activity holds up, then the CYC-to-S&P 500 ratio will surpass the peak from last May, and touch the highest point in 13 years.
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