Archive for March, 2008

  • Things that Sound Like Chewbacca
    , March 11th, 2008 at 4:57 pm

    Vacuum Cleaner
    Nightstand
    Dog
    Cat
    Boxer
    Baby
    Dude Getting Tasered
    Hatchback
    Trash Can
    Hippie Chick

  • The Best Day in Five Years
    , March 11th, 2008 at 3:46 pm

    Today was the best day for the S&P 500 in five years.
    Date……………Gain
    11-Mar-08…….3.71%
    17-Mar-03…….3.54%
    13-Mar-03…….3.45%
    18-Sep-07…….2.92%
    13-Nov-07…….2.91%
    28-Nov-07…….2.86%
    2-Apr-03……….2.61%
    17-Aug-07…….2.46%
    6-Aug-07………2.42%
    21-Mar-03…….2.30%
    16-Jun-03……..2.24%
    1-Oct-03……….2.23%
    The last time the S&P 500 was up this much was October 15, 2002.

  • UNH at Three-Year Low
    , March 11th, 2008 at 11:29 am

    UnitedHealth Group (UNH) is plunging today on news that WellPoint (WLP) has cut its earnings forecast. If you recall, UNH is company that does nothing but make huge profits and awful headlines.
    For the record, UnitedHealth has said that it expects 2008 EPS of $3.95 to $4 a share. The company has publicly made this estimate not once, but twice. That would be a yearly increased of 13% to 14% over 2007. Not bad.
    But now the stock is down to $40 a share. Today, it reached its lowest point since 2004. In 2005, the company made $2.48 a share. So the stock is the same price, but profits are about 60% higher.
    image633.png
    In the above chart, the blue line is the stock price and it follows the left scale. The yellow is the EPS and it follows the right. The red part is the estimate. When the lines cross, the P/E ratio is 17.5.

  • The Fed Opens the Spigots
    , March 11th, 2008 at 11:25 am

    Let’s throw money at them until they stop complaining!

    The Federal Reserve, struggling to contain a crisis of confidence in credit markets, plans to lend up to $200 billion in exchange for mortgage-backed securities.
    The Fed coordinated the effort with central banks in Europe and Canada, which plan to inject up to $45 billion into their banking systems. The Fed said in a statement it will hold auctions of Treasuries in exchange for debt including AAA rated mortgage securities sold by Fannie Mae, Freddie Mac and by banks.
    Today’s steps indicate the Fed is increasingly concerned about the investor exodus from mortgage debt, which threatens to deepen the housing contraction and the economic slowdown. While they fall short of the calls by some analysts for the Fed to make outright purchases of mortgage debt, the central bank left the door open to expanding the effort.
    “This is the most significant step the Fed has taken so far,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “This relieves some of the pressure” in the credit markets, he said.

  • The Credit Crisis Subtext of the Spitzer Story
    , March 10th, 2008 at 6:01 pm

    I think this might be ironic, and not the Alanis kind either:

    The members decided that even though Client 9 had a credit of $400 to $500 with the ring, they wouldn’t let him keep the appointment until his latest deposit arrived. Client 9 made the calls himself.
    On Feb. 13, according to the affidavit, Client 9 made a hotel reservation in D.C. under his name and left a key for a woman named “Kristen.”
    Client 9 was eventually told his deposit had arrived and “Kristen” was on her way from New York. Client 9 responded, “Great, OK, wonderful.”
    Client 9 discussed with the prostitution ring a way for him to have credit stored up so that he wouldn’t have to worry about sending in a deposit in the future.
    Then they discussed a way for “Kristen” to get his hotel room key once she arrived.
    “Kristen” was sent to room 871, which Client 9 was leaving ajar; Client 9 wanted to be reminded of what she looked like and was told “American, petite, very pretty brunette, five feet five inches, and 105 pounds.”

    Was Spitzer done in by tougher credit standards? If only some banks were as prudent as whorehouses.
    Check out their rates (conveniently listed in pounds, dollars and euros). You can pay with cash, credit card, wire transfer or money order. I wonder if the rates count as core or non-core inflation.

  • L’Affaire Spitzer
    , March 10th, 2008 at 3:58 pm

    I don’t have much to add about today’s big story, but I’ll simply say that I’ve never been a big fan of Eliot Spitzer. He’s a nasty guy and he ruthlessly pursued a baseless case against Dick Grasso. According to Charlie Gasparino’s book, “King of the Club,” Spitzer’s aides told reporters that Grasso had an affair with his secretary. Charming.

  • Little Tycoons
    , March 10th, 2008 at 2:46 pm

    At the Ariel Community Academy in Chicago, each incoming first-grade class gets $20,000. The children are eventually put in charge of managing it and picking the stocks.

    The concept is simple: Ariel’s experts manage a $20,000 portfolio for each class until sixth grade, briefing them regularly along the way, and then begin turning over the decisions to the children. Upon graduation from eighth grade, each class returns the initial investment amount to the school for another first-grade class and donates, invests or pockets the profits.
    After giving half the gains to community charity programs or school initiatives, each student can then take the rest in cash or invest it in a Section 529 college savings plan, in which case they are given an additional $1,000. Last year, 80 percent of graduates invested their $150 shares in a 529.

    Given the success of stocks like Crocs, Apple and Hansen Natural, I think it might be worth listening to what kids have to say.
    Here’s how Wrigley’s (WWY) has performed over the long haul:
    WWY.gif

  • TIPS to Bernanke: Drop Dead
    , March 10th, 2008 at 2:17 pm

    The yield on Treasury Inflation-Protected Securities due in July 2012 is now negative. This means that investors are willing to take a negative real return in exchange for the (ahem) security of owning dollars.
    This means that liquidity has dried up all over the world to such an extent that investors are willing to pay a huge “liquidity premium” (meaning, they can dump their TIPS almost whenever they want) that’s greater than the real return of the bond.
    image632.png

  • Your Oil Datapoint of the Day
    , March 10th, 2008 at 1:54 pm

    Chevron (CHV), Exxon Mobil (XOM) and ConocoPhillips (COP) collectively made $10 million last quarter.
    An hour.
    (But that includes parking….)

  • Nicholas Financial Trading Well Below Book Value
    , March 10th, 2008 at 11:18 am

    Shares of Nicholas Financial (NICK) have dropped to $6.78, that’s about 12% below book value.