Archive for February, 2010

  • Stocks and Earnings Estimates
    , February 16th, 2010 at 8:58 am

    Briefing.com has an interesting chart showing the rise of the S&P 500 along with the rise in earnings estimates over the coming four quarters. It’s not a perfect match, but clearly both have been going higher.
    briefing021610.jpg
    For 2010, analysts sees earnings for the S&P 500 at $78.92. The index is currently going for about 13.7 times this year’s estimate.

  • North Dakota’s Socialist Bank
    , February 16th, 2010 at 8:36 am

    From the AP:

    It has no automatic tellers or drive-up windows, doesn’t issue credit cards, and tends only a few thousand checking and savings accounts. Its only location is a glass, steamboat-shaped headquarters near the Missouri River, where the business moved from its original 1919 home in a former auto assembly plant.
    The Bank of North Dakota — the nation’s only state-owned bank — might seem to be a relic. It was the brainchild of a failed flax farmer and one-time Socialist Party organizer during World War I.
    But now officials in other states are wondering if it is helping North Dakota sail through the national recession.
    Gubernatorial candidates in Florida and Oregon and a Washington state legislator are advocating the creation of state-owned banks in those states. A report prepared for a Vermont House committee last month said the idea had “considerable merit.” Liberal filmmaker Michael Moore promotes the bank on his Web site.
    “There’s a lot of hurt out there, a lot of states that are in trouble, and they’re tying the Bank of North Dakota together with this economic success that we’re having right now,” said the bank’s president, Eric Hardmeyer.
    Hardmeyer says he’s gotten “tons” of inquiries about the bank’s workings, including questions from officials in California, Michigan, New Mexico, Ohio and Washington state. North Dakota has the nation’s lowest unemployment rate at 4.4 percent, soaring oil production and a robust state budget surplus — but Hardmeyer says the bank isn’t responsible for the prosperity.

  • Odd Lots
    , February 15th, 2010 at 5:05 pm

    Don’t laugh at Europe’s woes
    Three Greek buys from Altucher
    Capitalism and the Jews
    Brooklyn Decker can give the stock market a rise.
    Caring for Pets Left Behind by the Rapture

    Men risk anticlimax with anatomy-boosting pants
    Computer Engineer Barbie
    School mistakes huge burrito for a weapon
    And finally, a bar watching Porter’s interception:

  • Inflation-Adjusted Prices at the Pump
    , February 15th, 2010 at 2:42 pm

    Joe Weisenthal notes that Energy Information Administration projects that gasoline will hit $3 a gallon later this year. Here’s a look at the average retail price for gasoline (all grades) adjusted to today’s dollar.
    image907.png
    In the last 11 years, real prices at the pump have more than doubled.

  • Volcker Keeping It Real
    , February 15th, 2010 at 12:45 pm

    From CNBC:

    “If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it — not save it,” Volcker said on CNN.
    “It’s called euthanasia, not a rescue.” As Congress debates financial reform in the wake of the worst financial crisis since the 1930s, Volcker has argued for fencing off investment firms primarily engaged in market speculation from commercial, deposit-taking banks.

  • Lilly’s Latest Drug is a Flop
    , February 15th, 2010 at 11:25 am

    Bad news for one of our Buy List stocks. Eli Lilly‘s (LLY) latest blood thinner drug is a massive flop. Lilly’s problem continues to be its lousy pipeline of new drugs.

    “A research philosophy is fraught with risk and opportunity,” Mr. Fernandez said in an interview. “And over the last five years, Lilly has seen more of the risk of drug development than they have the reward.”
    In a note to investors, Mr. Fernandez wrote that Lilly must move aggressively on partnerships and acquisitions to increase its revenue because more than 70 percent of its forecasted sales from existing products would lose patent protection globally by 2017. That includes the antipsychotic drug Zyprexa, the antidepressant Cymbalta and the cancer drug Gemzar, all blockbusters with more than $1 billion in sales.

  • Something’s Brewing in China
    , February 15th, 2010 at 11:09 am

    Goldman’s chief economist, Jim O’Neill, thinks China is about to revalue its currency by as much as 5%. This would be a huge deal.
    For the second time, China has ordered its banks to increase their reserves. The country is desperately trying to contain bank lending which is skyrocketing. Consider that in January alone, banks used up nearly one-fifth of this year’s lending target.
    For the last 18 months, China has firmly kept the yuan in place, but the cracks are starting to show. Their export market is booming and assets continue to inflate. Most importantly, the rest of the world isn’t happy with Beijing.
    If China did revalue the yuan, it would help cool off their economy, and it would help our economy which is something we desperately need.
    Why have the Chinese been so stringent? Let’s say you’re a communist official in Beijing. Which choice would you rather face? A) Millions of unemployed young men in your central cities. B) Anything that’s not A.
    Now you get the idea. The migration of people from rural China to their major cities isn’t merely big, it’s the largest migration in human history. Think of Tom Joad, now multiply that by 100.

  • Looking at the Fed’s Exit Strategy
    , February 15th, 2010 at 9:49 am

    Since the financial crisis began, the Federal Reserve has exploded its balance sheet from less than $1 trillion to over $2.2 trillion. Last week, Ben Bernanke discussed the Fed’s exit strategy. James Hamilton has an interesting take on what the Fed plans. Essentially, all of the strategies boil down to one thing—borrowing from the public.
    As Arnold Kling has noted, the Fed is doing something very different here. It’s moving away from its basic function of being a central bank:

    The Fed should be engaging in ordinary open market operations, which means buying Treasuries. The only reason to buy anything other than Treasuries would be if it ran out of Treasuries to buy and still could not meet its overall target–whether that target is for the money supply, nominal GDP, or some weighted average of inflation and unemployment.
    When the Fed instead is selling Treasuries or paying interest on reserves in order to sterilize the effect of buying other stuff, it is not being a central bank. It is being a piggy bank.

  • Odd Lots
    , February 12th, 2010 at 3:06 pm

    Poll: 79% of Democrats support “gays” in the military, but only 44% of Democrats support “homosexuals” in the military.

    Senator Kudlow?

    Ignore anyone who tells you that debt levels don’t matter    .
    36 songs that use the same 4 chords
    Superbowl team: online finance’s best I’m honored to have been named a Defensive Coach along with many outstanding blogs.
    Adam Corolla – Businessman
    Marijuana Farm Found Inside UK Bank

  • Quote of the Day
    , February 12th, 2010 at 10:43 am

    From Arnold Kling: “The Fed has changed from a central bank to a piggy bank.”