Archive for November, 2010

  • RBC Sees Gilead Climbing 31% in 12 Months
    , November 30th, 2010 at 6:54 pm

    Barron’s gives Gilead Sciences (GILD) some love:

    Gilead, however, may yet prove its critics wrong.

    It dominates a $13 billion global market for AIDS drugs, generates huge amounts of cash and has a promising pipeline that could produce new blockbuster AIDS medications in the next two years.

    And at just over nine times earnings, the stock offers investors a compelling bargain.

    “The stock’s fall from grace has been too significant, and I see it grinding its way higher,” says Kris Jenner, manager of the T. Rowe Price Health Sciences Fund.

    How high?

    RBC Capital Markets sees the stock climbing 31% in the next 12 months. Meanwhile, UBS Securities analyst Matt Roden launched a Buy rating on the stock on Nov. 16 and a $44 target price.

    “It trades at a multiple that’s in-line with Big Pharma, but Gilead’s growth prospects are comparatively better,” says Roden.

  • California Is Voted Off the Island
    , November 30th, 2010 at 3:38 pm

    Here are the results of the poll I ran a few days ago asking which state would you most like to see kicked out of the union:

    State PCT Votes
    California 40.47% 225
    Texas 14.21% 79
    Mississippi 5.04% 28
    Massachusetts 3.42% 19
    New York 3.06% 17
    Alaska 2.52% 14
    Utah 2.52% 14
    Arizona 2.34% 13
    Alabama 2.16% 12
    South Carolina 1.80% 10
    Louisiana 1.62% 9
    West Virginia 1.62% 9
    Hawaii 1.44% 8
    Illinois 1.44% 8
    Arkansas 1.26% 7
    Kansas 1.26% 7
    New Jersey 1.26% 7
    Ohio 1.26% 7
    Florida 1.08% 6
    Michigan 1.08% 6
    Wyoming 0.90% 5
    New Mexico 0.72% 4
    Washington 0.72% 4
    Connecticut 0.54% 3
    Delaware 0.54% 3
    Georgia 0.54% 3
    Maine 0.54% 3
    Nevada 0.54% 3
    Oklahoma 0.54% 3
    Vermont 0.54% 3
    Kentucky 0.36% 2
    Maryland 0.36% 2
    Missouri 0.36% 2
    Oregon 0.36% 2
    South Dakota 0.36% 2
    Colorado 0.18% 1
    Iowa 0.18% 1
    Montana 0.18% 1
    Nebraska 0.18% 1
    New Hampshire 0.18% 1
    North Carolina 0.18% 1
    Pennsylvania 0.18% 1
    Idaho 0% 0
    Indiana 0% 0
    Minnesota 0% 0
    North Dakota 0% 0
    Rhode Island 0% 0
    Tennessee 0% 0
    Virginia 0% 0
    Wisconsin 0% 0

    With 556 votes in, California was the big winner with just over 40% of the vote. Texas came in a distant second with 14%. Mississippi was third with just over 5%. After that, no other state could get more than 3.5%.

    I’m not surprised that California won, but I was a little shocked that states like New York and Florida got so few votes.

    If the results were adjusted for each state’s population, then Alaska would be the winner. Our northernmost state had a rate twice as much as #2 Mississippi. Then came Wyoming, Hawaii and California. (Who wants Hawaii out??)

  • Bank of America Drops on 13-Month-Old News
    , November 30th, 2010 at 2:52 pm

    Shares of Bank of America (BAC) are down today.

    Why? It’s because Julian Assange of Wikileaks fame said yesterday that early next year he will release information that could take down “one or two banks.”

    So, what banks?

    Raw Story found that last October he told Computer World that he had 5GB from Bank of America.

    In other words, the stock is down today on news that was first reported 13 months ago.

  • Exxon Mobil’s Taxes
    , November 30th, 2010 at 1:46 pm

    Senator Bernie Sanders of Vermont has tweeted:

    Last year Exxon made $19 BILLION in profit. Guess what? They paid zero in taxes & got $156 mill. refund from the IRS.

    This is technically accurate but very misleading. Exxon Mobil (XOM) paid zero federal taxes but they indeed had a massive tax bill last year.

    Before taxes, XOM recorded a profit of $34.8 billion. They paid $15.1 billion in taxes to foreign countries. The U.S. tax code allows them to deduct that tax bill from what’s due to the IRS.

    CNN/Money explains:

    Exxon paid the most taxes last year of any U.S. company, by far — but not a cent went to the IRS for income taxes. That’s because the oil giant does business in some of the mostly highly taxed countries in the world. Want to extract petroleum in Nigeria? Be prepared to fork over up to 85% of your profit in tax payments.

    Exxon doled out more than $15 billion in income tax payments to foreign countries last year. U.S. tax codes allow companies to take massive deductions in light of those international charges, which knocked Exxon’s federal income-tax bill down into negative territory.

    That said, Uncle Sam gets his money in other ways. Including sales taxes and duties, Exxon recorded $7.7 billion in U.S. tax costs last year, and paid even more overseas.

    Its grand total in global taxes for the year? A whopping $78.6 billion. The company’s effective income tax rate was a hefty 47%, its highest in three years.

  • Investor Quiz
    , November 30th, 2010 at 10:44 am

    According to the BIS, how large is the swaps market?

    I’ll give you a hint: $583 trillion.

    To put that into proper perspective, think of it this way: If you took that sum in the form of $100 bills, then stacked those bills on the floor of the Grand Canyon, that’s a shitload of money.

  • Right at the 50-DMA
    , November 30th, 2010 at 10:26 am

    The S&P 500 is currently battling with its 50-day moving average. For a brief period yesterday, the index fell below the 50-DMA, and we’re fighting it again today.

    The current reading for the 50-DMA is 1177.31.

    I’m not a big fan of technical analysis but I make an exception for the 50-DMA. It’s one of those dumb ideas that works for a really smart reason. The key is that the stock market is a momentum-driven data series. What happens yesterday impacts what happens today. Each day’s move is not independent of the day before.

    What this means for investors is that once the market gets moving in one direction, the odds are very likely that it will continue in that direction. The turning point is just about impossible to know. Historically, however, once the market breaks its average close for the past 50 trading sessions, that is often a decent indicator. It’s not good, but it’s good enough.

  • Morning News: November 30, 2010
    , November 30th, 2010 at 7:27 am

    Wall Street Set for Lower Open

    Debt Worries Push Euro to Multi-week Lows

    Retailers Report Strong Holiday Sales Online and in Stores

    EU Agrees on Rules for Future Bailouts

    Oil Has ‘Everything Going for It’ as Haven, Cameron Hanover Says

    Banks Resisting Fannie, Freddie Demands to Buy Back Mortgages

    E.U. Opens Antitrust Investigation into Google

    Netflix Partner Criticizes Comcast

    Google’s Groupon Offer: $5.3 Billion, With $700 Million Earnout

    Your Money

    The Big Uneasy

    The Next Ten Years…

  • Recession/Expansion by ISM Level
    , November 29th, 2010 at 4:25 pm

    Here’s some research I was playing around with this afternoon and I thought I’d post it. This shows the historical record of the economy being in an expansion by ISM reading.

    From To Mos. Expansion Total Mos. Percent
    77 77.9 1 1 100.00%
    76 76.9 1 1 100.00%
    75 75.9 1 1 100.00%
    74 74.9 1 1 100.00%
    73 73.9      
    72 72.9 1 1 100.00%
    71 71.9      
    70 70.9 1 1 100.00%
    69 69.9 6 6 100.00%
    68 68.9 5 5 100.00%
    67 67.9 7 7 100.00%
    66 66.9 5 5 100.00%
    65 65.9 7 7 100.00%
    64 64.9 8 8 100.00%
    63 63.9 11 12 91.67%
    62 62.9 14 15 93.33%
    61 61.9 15 16 93.75%
    60 60.9 28 28 100.00%
    59 59.9 24 25 96.00%
    58 58.9 39 40 97.50%
    57 57.9 34 34 100.00%
    56 56.9 34 34 100.00%
    55 55.9 47 48 97.92%
    54 54.9 46 48 95.83%
    53 53.9 45 45 100.00%
    52 52.9 39 41 95.12%
    51 51.9 36 38 94.74%
    50 50.9 38 42 90.48%
    49 49.9 36 41 87.80%
    48 48.9 20 24 83.33%
    47 47.9 19 25 76.00%
    46 46.9 19 25 76.00%
    45 45.9 18 22 81.82%
    44 44.9 5 12 41.67%
    43 43.9 7 17 41.18%
    42 42.9 8 13 61.54%
    41 41.9 2 5 40.00%
    40 40.9 1 9 11.11%
    39 39.9 1 9 11.11%
    38 38.9 0 7 0.00%
    37 37.9 1 8 12.50%
    36 36.9 1 7 14.29%
    35 35.9 0 7 0.00%
    34 34.9 0 2 0.00%
    33 33.9 0 1 0.00%
    32 32.9 0 3 0.00%
    31 31.9 0 3 0.00%
    30 30.9 0 3 0.00%
    29 29.9 0 1 0.00%

    In other words, the ISM has been between 49.0 and 49.9 41 times. According to NBER’s recession dating, 36 of those months have been months of economic expansion.

    The ISM has been 46.5 or greater on 613 months and 581 of those have been in expansion (or 94.78%).

    The ISM has been 42.7 or less for 75 months and just 11 of those have been in expansions (14.67%).

    The real gray area is from 41.0 to 44.9. The ISM has now been above 52.4 for 15-straight months and we get the next reading at 10 am on Wednesday.

  • Thought for the Day
    , November 29th, 2010 at 2:11 pm

    The Wall Street Journal reports:

    Stocks tumbled as investors worried that the $112.61 billion Irish bailout might not be enough to contain the euro-zone debt crisis.

    $112.61 billion works out to just over $25,000 for each citizen of Ireland. This is what “might not be enough.”

  • Investors Wisely Regain Skepticism
    , November 29th, 2010 at 1:17 pm

    Here’s an article from MSNBC on how investors are losing faith in the stock market:

    The Wall Street insider trading investigation may lead everyday investors — already rattled by a stock market meltdown, a one-day “flash crash” and the Madoff scandal — to finally conclude that the game is rigged.

    “A large part of trading has to do with trust, and I don’t have it,” says Mark Swenson, a 43-year-old plumber from New Hampshire who refuses to buy individual stocks.

    “When a stock moves up 10 percent, you don’t know why,” he added. “We can pretend that everyone has access to the same information, but they don’t.”

    Even before news broke that federal investigators were looking into whether hedge funds traded on inside information, small-time investors were pulling their money out of stocks — despite a remarkable run for the market since the spring of 2009.

    Hedge funds are speculative funds which make large bets on market movements and are usually used by wealthy private investors or institutions.

    Articles like this are written with a familiar hand-wringing tone. It’s supposed to be self-evident that this “loss of faith” is a bad thing. But from my view, it’s not bad thing at all.

    Such articles could easily be reframed as “Good News: Investors Wisely Regain Their Skepticism.”