Archive for November, 2010

• SNL on the G-20
  Eddy Elfenbein, November 15th, 2010 at 1:10 pm

• Odd Lots
  Eddy Elfenbein, November 15th, 2010 at 12:01 pm

  The Nasdaq Composite (^IXIC) is currently almost exactly half its all-time high from March 2000. If the price of gold had kept pace, it would be about $135 per ounce right now.

  Saturday will be the second anniversary of Ford (F) hitting $1.01. Today it’s at $17. That’s 17-fold in two years.

  Since late August, cyclicals and small-caps have been beating up on large-caps. Here’s the Russell 2000 compared with the S&P 100:

  

• Medtronic to Report on November 23
  Eddy Elfenbein, November 15th, 2010 at 10:43 am

  Medtronic (MDT) has said that they’ll report earnings next Tuesday, November 23.

  If their current forecast holds, I think the stock is a very good buy, but I won’t be certain until the earnings report comes out. Wall Street’s current forecast is for 82 cents per share.

  Here’s a look at Medtronic’s quarterly sales and EPS for the last several years:

  Quarter	EPS	Sales in Millions
  Jul-01	$0.28	$1,456
  Oct-01	$0.29	$1,571
  Jan-02	$0.30	$1,592
  Apr-02	$0.34	$1,792
  Jul-02	$0.32	$1,714
  Oct-02	$0.34	$1,891
  Jan-03	$0.35	$1,913
  Apr-03	$0.40	$2,148
  Jul-03	$0.37	$2,064
  Oct-03	$0.39	$2,164
  Jan-04	$0.40	$2,194
  Apr-04	$0.48	$2,665
  Jul-04	$0.43	$2,346
  Oct-04	$0.44	$2,400
  Jan-05	$0.46	$2,531
  Apr-05	$0.53	$2,778
  Jul-05	$0.50	$2,690
  Oct-05	$0.54	$2,765
  Jan-06	$0.55	$2,770
  Apr-06	$0.62	$3,067
  Jul-06	$0.55	$2,897
  Oct-06	$0.59	$3,075
  Jan-07	$0.61	$3,048
  Apr-07	$0.66	$3,280
  Jul-07	$0.62	$3,127
  Oct-07	$0.58	$3,124
  Jan-08	$0.63	$3,405
  Apr-08	$0.78	$3,860
  Jul-08	$0.72	$3,706
  Oct-08	$0.67	$3,570
  Jan-09	$0.71	$3,494
  Apr-09	$0.78	$3,830
  Jul-09	$0.79	$3,933
  Oct-09	$0.77	$3,838
  Jan-10	$0.77	$3,851
  Apr-10	$0.90	$4,196
  Jul-10	$0.80	$3,773
  Oct-10	$0.82	$3,900
  Jan-11	$0.85	$3,970
  Apr-11	$0.94	$4,297

  The last three quarters are estimates.

  Here’s a look at the growth of the trailing four-quarter sales and earnings. Sales follows the left scale and EPS follows the right. Notice how the estimates (in red) are based on an expansion in profit margins. That’s what has me concerned.

  

• Taleb Dodges Question
  Eddy Elfenbein, November 15th, 2010 at 10:04 am

  Long-time readers will know that I’m not much of a fan of Nassim Taleb. Unfortunately, Mr. Taleb has ended his media boycott to bring us his thoughts on Ben Bernanke and QE2.

  Taleb says that Bernanke doesn’t understand risk because there’s a chance that QE2 will cause hyperinflation. That’s certainly true, but it’s not an argument against QE; it’s an argument against any Fed easing at any time for any reason. Even by Taleb’s standards, this is a frivolous point. Inflation is currently flat (even Roubini thinks it’s not a problem) and unemployment is miles from the point of accelerating inflation.

  I think a lot of students would find Taleb amusing because he tells them that experts are idiots. His commentary, however, never goes beyond this. This clip has a a good example. The interviewer asks Taleb what the Fed should be doing. The truth is that Taleb doesn’t have any answers, only juvenile antics. Watch as he artfully dodges the question.