Archive for June, 2007

  • The Lula Rally
    , June 18th, 2007 at 6:53 am

    Yale’s Robert Shiller looks at the Brazilian stock market. Since Lula took over in 2002, the stock market is up over 300%.

    Stock-market movements are certainly hard to explain, but there are reasons to believe that Brazilians might be rationally exuberant. Corporate earnings in Brazil have gone up roughly as fast as stock prices. With the price/earnings ratio remaining stable and moderate, the stock-market boom does not appear to reflect mere investor psychology.
    On the contrary, the real question is why the increase in stock prices has not outpaced growth in corporate earnings.

    Apparently, leftists are having a love affair with the stock market. Or at least, a good stock market.
    Well, maybe not all leftists. Hillary’s gone 100% cash:

    Given her history — recall her preposterous cattle future windfall — Mrs. Clinton is bound to be sensitive about her financial dealings. But in recent history, few candidates have felt compelled to go to an all-cash asset allocation to avoid potential conflicts. Al Gore, who in 2000 made a point of saying he avoided all stock-market investments, is a notable exception, if not one Mrs. Clinton should be eager to emulate. His populist campaign riff was a bust.

    But in retrospect, wasn’t Gore’s timing pretty good? (Also, going by the numbers, I’m not sure his campaign was a bust.)

  • The Cyclicals Continue to Soar
    , June 15th, 2007 at 11:40 am

    The market is up this morning and again it’s being led by cyclical stocks. The Morgan Stanley Cyclical Index (^CYC) is up over 22% this year and it’s closing in on 1,100.
    Here’s a look at the CYC divided by the S&P 500. The ratio hit another all-time high today.
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  • Core CPI = 0.14978486314%
    , June 15th, 2007 at 9:09 am

    The futures are pointing sharply higher because the core CPI for May came in at 0.1% compared with Wall Street’s forecast of 0.2%.
    The seasonally-adjusted core CPI Index for April was 209.634. For May, it was 209.948.
    So the inflation rate is 0.314 divided by 209.634 or 0.14978486314%.
    All Hail the Gods of Rounding!
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  • Signs of a Bubble
    , June 14th, 2007 at 10:41 am

    Mark Gilbert looks at signs of a bubble. Here’s a wee sample:

    If Hirst designed a vegetable display, it would look like the shop window at the just-opened Whole Foods Market Inc. branch in Kensington, one of London’s ritziest shopping areas. Analysts at JPMorgan Chase & Co. calculate that Kensington could contribute as much as 1.8 percent of the food retailer’s total sales. Whole Foods said last month that second-quarter revenue was $1.46 billion.
    It’s a food-porn cathedral dedicated to organic this, natural that and locally produced the other. On a Monday afternoon, the place was packed with gym-buffed yummy mummies driving designer pushchairs and doing battle in the produce- crammed aisles with trolley-dragging wealthy retirees.
    The zeitgeist-defining product among the free-range bananas, organic spring water and corn-fed soup is a 60-year-old Vecchia Dispensa balsamic vinegar, costing almost $200 for a triangular 100 milliliter bottle stoppered with red wax seals.
    You know there’s a bubble when an overgrown U.S. chain store can sell antique vinegar to Britons at 32 times the price of Nicolas Feuillatte champagne.

  • Best Day in Nearly a Year
    , June 13th, 2007 at 4:22 pm

    Today was the market’s best day since last July. And it really didn’t get going until after 1 p.m.
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  • Morgan Stanley Two Years On
    , June 13th, 2007 at 2:52 pm

    Remember Phil Purcell? Me neither.
    Apparently he used to be head of Morgan Stanley (MS) until the firm mutinied and drove him out. It was two years ago today that he announced his resignation.
    Let’s look at the results:
    Morgan Stanley’s stock on June 13, 2005: $49.20
    Morgan Stanley’s stock on June 13, 2007: $88.75

  • The WSJ on Schwarzman
    , June 13th, 2007 at 1:13 pm

    The WSJ has a long article on Blackstone’s Stephen Schwarzman this morning. It’s a paid link, but Bess Levin has the highlights at DealBreaker.
    The article covers such details as Schwarzman’s height (5’6″) and the size of his house (big), but out of 2,100 words, neither “skull” nor “bones” appears (though “Rod” and “Stewart” do).
    These folks need Murdoch. Now.

  • Lincare Holdings
    , June 13th, 2007 at 1:06 pm

    Since the beginning of 2006, the market value of the S&P 500 has increased by $2 trillion, but the health care sector has been warming the bench. Health care has chipped in just $66 billion, or about 3.3%, which is well below its sector weighting of 12%. Fortunately, lagging sectors are often good places to spot bargains.

    One mid-cap health care stock that I’ve got on my radar is Clearwater, FL-based Lincare Holdings (LNCR). Lincare is in the oxygen and respiratory therapy biz. You may have seen their portable oxygen tanks which, in Florida, are sorta like iPods for the retiree set.
    I’m not claiming to have any special insight here. I’ve just run the numbers on LNCR and it looks like a good stock at a good price. The shares are currently going for 13.6 times next year’s estimate, which is about a 13% discount to the market. EPS jumped 24% last quarter and is expected to rise 16% this year.
    I don’t own it, but in a market where Yahoo (YHOO) can fetch $27, Lincare at $39 ain’t bad.

  • Guess What’s Up 90% in the Past Year?
    , June 13th, 2007 at 11:41 am

    Nope, I’m not talking about a stock.
    The answer: Foreclosures.

  • The Return of Volatility
    , June 13th, 2007 at 10:59 am

    The stock market could be heading towards its fifth 100-point day move in the last six sessions. To add some perspective, there were five 100-point days in the entire fourth quarter.
    Of course, I remember when 100 points used to mean something….