Archive for March, 2008

• The Oil Bubble
  Eddy Elfenbein, March 12th, 2008 at 5:21 pm

  Ronald Bailey says that oil may be ready for a big fall:

  Although U.S. crude oil inventories have fallen, gasoline inventories are at their highest since March, 1993, notes Tim Evans, an energy futures analyst at Citigroup’s Futures Perspective. World oil production was up 2.5 percent in the first quarter of 2008 over the same period in 2007 while world oil consumption rose by just 2 percent. In fact, world production is projected to be 3.3 percent higher in the second quarter and 4.1 percent higher in the third quarter than the same periods a year ago. On the other hand, world demand is projected to rise by just 1.6 percent over the next six months.
  In fact, demand is falling in some countries. According to economist John Kemp at the commodities firm Sempra Metals, the U.S. consumed 4 percent less petroleum in January 2008 than it did the year before. Evans agrees, noting that the U.S. demand for petroleum products began falling off last July. Interestingly, this drop in U.S. oil consumption began before crude prices turned vertical and before we began to see weakness in the broader economy. Even China’s thirst for oil is abating somewhat. Its demand for oil, which once rose at 10 percent per year, has now dropped to 6 percent per year. In addition, world surplus oil production capacity has gone from a very tight 1.5 million barrels per day a couple of years ago to more than 3 million barrels today, says petroleum economist Michael Lynch.

• StockTickr Interview
  Eddy Elfenbein, March 12th, 2008 at 5:07 pm

  Here’s an interview I did with Dave Mabe over at StockTickr.

• Client #6 Was Allegedly the Duke of Westminster
  Eddy Elfenbein, March 12th, 2008 at 3:31 pm

  You just knew that a peer had to be involved.

  The escort agency at the heart of the scandal surrounding New York was allegedly also used by the Duke of Westminster.
  The peer was last year exposed as an alleged client of the Emperor Club VIP’s prostitutes.
  Zana Brazdek, then 26, told The News of the World that the duke, Gerald Cavendish Grosvenor, paid her £2,000 for two hours.

• Another SocGen Employee Held by Police
  Eddy Elfenbein, March 12th, 2008 at 9:13 am

  From Bloomberg:

  Societe Generale SA, the French bank stung by a record trading loss of 4.9 billion euros ($7.6 billion), said another employee has been taken into police custody as part of the investigation into unauthorized trades.
  Police also searched the La Defense headquarters, just outside Paris, of France’s second-biggest bank this morning, Societe Generale spokeswoman Laura Schalk said in an interview.
  Paris prosecutors’ spokeswoman Isabelle Montagne confirmed that a broker from a subsidiary of Societe Generale is now being questioned by police. The employee may be held for up to 24 hours, Montagne said. She declined to name the broker or the subsidiary.

• “FBN is just plain dumb”
  Eddy Elfenbein, March 12th, 2008 at 7:58 am

  
  Liza Featherstone looks at Fox Business News:

  At times, FBN is just plain dumb. Some of the Murdoch Playmates are genuine bimbos, while others play their dopey roles convincingly, and the choice of material they’re given isn’t pretty. One morning, Alexis Glick, the lusciously made-up anchor—also a Columbia graduate who has worked as an equity analyst for Goldman Sachs and directed New York Stock Exchange floor operations at Morgan Stanley, though you’d never guess it from her breathless on-air persona—dizzily conducts an inspiring interview with a woman who has broken the glass ceiling in the all-important industry of competitive beach volleyball. A few other critical, breaking stories on FBN, as the American economy careened into chaos and uncertainty, included a check-cashing fraud involving a corpse, and “the Meanest Mom on the Planet” (she sold her teenage son’s car after finding booze under the seat!). There’s no doubt that CNBC is more journalistically serious than Fox. Almost any random dial-flipping will provide the contrast, but here’s just one: While CNBC featured New York Times columnist David Leonhardt explaining substantive economic policy differences among the Republican candidates, Fox was reporting that despite her scandalous pregnancy, people are still watching Jamie Lynn Spears’s TV show.

  According to Neilson, just 6,300 people watch FBN.

• Jim Rogers: Abolish the Fed
  Eddy Elfenbein, March 12th, 2008 at 7:48 am

  Jim Rogers isn’t shy about his opinions:

  Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes — if you bail out every investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich.

• History Says the Rally Will Continue
  Eddy Elfenbein, March 12th, 2008 at 7:38 am

  Yesterday was the 33rd best day for the S&P 500 since 1950. Looking at the average of the top 32 days shows that the market has historically continued to rally a bit after the big surge. For the following nine days, the S&P 500 has averaged an additional gain of 1.78%.
  

• Fire Sale at the Times?
  Eddy Elfenbein, March 12th, 2008 at 7:18 am

  The Wall Street Journal reports that the New York Times is considering selling some assets. Well…it’s about time. This move is clearly in response to pressure from hedge funds that are pushing for seats on the company’s board. The funds now own as much stock as the Sulzberger family.
  In the media, pressure from hedge funds is often portrayed in a negative light, as if some slick-haired Gordon Gekko types are bullying a loveable family run enterprise. In the case of the New York Times, the funds are the only ones willing to hold the company accountable. The current management has run the company into the ground, and an asset sale should have happened a long time ago. Jack Welch, for example, wanted to buy the Boston Globe, but the Times shot him down. Now, I doubt the Times could sell the Globe even if they wanted to.
  Here’s what sclerotic companies like the Times don’t get: Even if shareholders don’t control the board, they still have a vote. They can vote by selling and that’s exactly what has happened. Shares of NYT are basically where they were 12 years ago. How could anyone think that’s serving shareholders well?
  There’s also an interesting wrinkle. One of the NYT’s non-core assets is a stake in the Boston Red Sox. You read that right. That’s like Sauron owning a stake in the Hobbit’s favorite pub. Given the Bosox recent World Series wins, I would think that the franchise could go for a nice sum. Speaking of Sauron, maybe Steinbrenner is interested?
  The Times could also let go of the IHT and even About.com. Some analysts have floated ideas of the Times being bought out by fill-in-the-blank (Buffett, Google, Bloomberg). Interesting, but I doubt it. Even if a major deal came to pass, it doesn’t avoid the major issue that the Times can’t survive in its present form. It will exist, but I don’t think it will be a New York-focused general news publication. The future lies in smaller, niche pubs.

• Best Day Ever
  Eddy Elfenbein, March 12th, 2008 at 7:17 am

  Yesterday was the best day for the stock market in five years, but this week, we’re celebrating the 75th anniversary of the best day ever.
  Well, technically it wasn’t a one-day gain. When FDR became president on March 4, 1933, there was a national bank holiday. The stock exchange shut down at didn’t reopen until March 15. When trading resumed, stocks soared. The Dow closed at 62.1 which was a 15.34% gain over the close from 12 days before.
  The Dow has never done better. By contrast, yesterday’s move doesn’t rank in the top 150. The rally of March 1933 was so strong that the Dow doubled by July.
  
  In March 1933, the U.S. effectively ended the gold standard. It’s interesting that yesterday’s rally was sparked, in part, by the Fed’s securities-lending program.

• Today’s S&P 500
  Eddy Elfenbein, March 11th, 2008 at 9:26 pm

  Here’s how every stock in the S&P 500 did today.