Archive for August, 2007

  • Biggest Daily Declines in 3-Mo T-Bill Rates
    , August 20th, 2007 at 5:47 pm

    Going back to 1954:
    Date………………………………………..Change
    December 19, 1980……………………-1.27
    January 5, 1981………………………..-1.13
    February 22, 1982…………………….-0.94
    September 16, 1974………………….-0.85
    March 27, 1980…………………………-0.81
    April 28, 1980…………………………..-0.81
    August 2, 1982…………………………-0.81
    June 15, 1981…………………………..-0.81
    February 18, 1982……………………..-0.77
    November 15, 1973……………………-0.77
    May 26, 1981…………………………….-0.75
    September 27, 1974……………………-0.72
    September 19, 1974……………………-0.71
    April 22, 1980…………………………….-0.68
    August 20, 2007…………………………-0.67

  • Poll: Traders Would Commit Felony for $10 Million
    , August 20th, 2007 at 3:58 pm

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    From the NY Post (where else?):

    Wall Street traders don’t mind committing the crime – it’s doing the time that gives them the willies.
    More than half of traders questioned in a recent survey said they would trade on illegal insider information if the deal allowed them to pocket a $10 million profit – provided there was zero chance they would be caught.
    If there was a 10 percent chance of getting cuffed by the Feds and perp-walked, then the percentage of traders willing to break the law drops from 58 percent to 28 percent. Only 7 percent of an obviously prison-averse trader community said they would do the crime if there were a 50 percent chance of an indictment. (Yep, traders know how to play odds – Eddy)
    The survey, which polled 2,500 traders, was taken by Trader Monthly magazine.
    Ty Wenger, the editor of the magazine, attributed the high number of traders willing to commit a felony to the huge premium placed on their having an edge. “That edge is the difference between being highly successful or going belly up; there is no guaranteed money,” Wenger said. “Morality can’t be a big part of the job.”
    Perhaps it is no surprise then that the do-the-crime-but-do-no-time traders said that the public figure they despise the most is Governor Eliot Spitzer.
    Spitzer is the former state Attorney General who made his mark during eight years in office by cracking down on Wall Street – specifically investment banks, mutual funds and insurance companies.
    Sixty-two percent of traders in the survey cited Spitzer as being the most hated, far ahead of ex-New York Stock Exchange boss Dick Grasso, who finished second at 20 percent. John Thain, Grasso’s successor, garnered 11 percent with Chris Cox, chairman of the Securities and Exchange Commission, getting 7 percent.
    And speaking of Grasso, traders are just about evenly split over whether or not he got a bad rap with the Spitzer suit, claiming he was overpaid – 52 percent think he earned every penny.
    “Grasso got a bad rap,” one trader, Andre Duncan of Mercer Capital, told the magazine. “People that short deserve all the money they can get.” Duncan trades short-term equities.
    While we’re talking about money, 21 percent of traders questioned said they didn’t donate any of their salary to charity.
    Other topics addressed by the survey, which will appear in the monthly’s next issue, to hit the stands Aug. 29:
    * If you could swap lives for a year with one of the following traders, he would be . . .? Stevie Cohen, 42 percent; T. Boone Pickens, 27 percent; Paul Tudor Jones, 25 percent; and James Simons, 6 percent.
    * If you could have one super power that you could use to trade, it would be . . .? Mind reading, so I could out-think everyone on the trading floor, 68 percent; Invisibility, so I could go around screwing other traders, like Patrick Swayze did in “Ghost,” 19 percent; and superhuman speed, so I could click my mouse faster, 13 percent.

  • 90-Day T-Bill Below 3%
    , August 20th, 2007 at 11:57 am

    Unbelievable.
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    According to the futures market, there’s a 380% chance of a Fed rate cut in September. Today could be the first 60-point decline in short-term T-bills in 25 years.

  • Targeting Cramer
    , August 20th, 2007 at 11:23 am

    It didn’t take Murdoch long. Barron’s went after Cramer this past weekend:

    Cramer is unapologetic about his self-promotion, but he acknowledges his bad calls, too. What he hasn’t done is tell his viewers the overall score for his two-plus years of Mad Money picks. When he hits his “Buy Buy Buy” sound-effect button, can viewers expect market-walloping results?
    In trying to figure that out, we came across YourMoneyWatch.com, a Website started by Michael McGown, a retired securities analyst who worked for several major brokerage firms. McGown started the site not long after the show started, and says Cramer sent a complimentary e-mail after noticing it. McGown counts only Cramer’s clear and unconditional Buy recommendations, following a sensible set of rules. McGown tracks the stock until Cramer says sell. “As a person watching the show,” says McGown, “I think it’s a fair way to rate him.”
    Over two years, YourMoneyWatch has tracked 1,300 Mad Money picks. It’s this tally that shows Cramer’s stocks lagging behind the Dow and the S&P 500. This year, Cramer’s done better. McGown’s data show his picks up 3.2%, while the S&P is up 2%; the Dow, 4.9%; and the Nasdaq, 3.7%. CNBC says the YourMoneyWatch data, as well that of Cramer’s Mad Money Website, are “not authoritative.”
    Hoping to get Cramer’s advice on how to measure his Mad Money picks, I called him a few weeks ago. He tore into me. “I’ve never read a single article that I thought wasn’t a massive distortion of what the show’s all about,” he said. When I said I just wanted to see Mad Money’s record, he replied: “I’ve never seen an analysis that I’ve regarded as honest, and I doubt yours is any different.”

  • Encountering Rudy
    , August 20th, 2007 at 11:06 am

    Living in DC, I often seen famous politicos roaming the streets. Or at least, famous for DC. Once I came close to running over a senator (by accident). But in the Hamptons this weekend, Barry Ritholtz (not a Guiliani fan) found himself sitting next to the former mayor.

    “Mr. Mayor! Good luck in the presidential race. Unfortunately, its going to be an uphill battle, thanks to the current occupant of the White House. But we’re New Yorkers, and we wish you the best.”

    I think someone’s pulling to be Fed Chair.

  • Were Stocks Underpriced in 1929?
    , August 20th, 2007 at 11:01 am

    I’ve never heard this argument before:

    Consider the Great Depression, which, we were taught, was the ultimate morality play. The 1920s markets were bubbly madness. Little true growth underlay the price increases. Then came 1929. The decade of splurge required a decade of penance.
    This cuts out a lot of reality. While the stock market of the late ’20s was probably too high, it was not high enough to cause “The Grapes of Wrath.” A few years ago, Edward Prescott, a Nobel Prize winner, and Ellen McGrattan looked at the Dow in a paper for the Minneapolis Fed. Stock prices relative to fundamental values of corporations were underrated, even in August 1929, they concluded.

    Could have fooled me. (And the entire market.) I’ll look over the paper later.

  • Booker White
    , August 17th, 2007 at 5:15 pm

    It’s Friday and that’s enough Wall Street for me. Have the great Booker White sing your blues away.

  • Google’s IPO Three Years On
    , August 17th, 2007 at 1:28 pm

    Business Week remembers:

    Where was your money on the morning of Aug. 19, 2004?
    In case you don’t recognize the date, that’s the day three years ago when Google (GOOG) became a public company after selling 22.5 million shares of stock at the now laughable price of $85.

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  • The Fed Cuts Rates
    , August 17th, 2007 at 9:59 am

    The Federal Reserve cut the discount the rate by 50 basis points.
    This isn’t the regular Fed funds rate we often talk about, instead it’s the rarely used discount rate. Still, this has a huge psychological impact. I think this means that the Fed will almost certainly cut the Fed funds rate at its next meeting on September 18.
    The market is already up 200 points. Jim Cramer said this will be the biggest point move in history. For the record, the #1 day was 499.19 points on March 16, 2000.
    This is interesting time for the Fed to step in because August options contracts expire today. Days like today are often more volatile than regular trading days. In short, the Fed isn’t afraid to take on the shorts.

  • How Are We Paying Off Our Subprime Mortgages
    , August 16th, 2007 at 3:54 pm

    From The Onion:
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