Archive for January, 2011

  • 10-DMA Streaks
    , January 18th, 2011 at 12:56 pm

    Unless something very dramatic happens, this will be the 33rd-straight trading day that the S&P 500 closes above its 10-day moving average. Part of this streak is due to the market’s huge falloff in volatility.

    Here’s a look at the longest streaks going back to 1932:

    Began Ended Days
    23-Nov-70 18-Feb-71 59
    20-Feb-35 30-Apr-35 57
    27-Oct-52 7-Jan-53 47
    7-Dec-60 10-Feb-61 45
    27-Mar-57 27-May-57 42
    12-Aug-68 24-Oct-68 42
    16-Feb-10 16-Apr-10 42
    30-Dec-42 18-Feb-43 41
    19-May-55 18-Jul-55 40
    26-Nov-71 24-Jan-72 40
    6-Apr-70 28-May-70 38
    7-Oct-35 22-Nov-35 37
    22-Aug-58 15-Oct-58 37
    26-Jul-63 18-Sep-63 37
    20-Oct-72 14-Dec-72 37
    15-Apr-97 4-Jun-97 35
    11-Jun-56 27-Jul-56 33
    1-Dec-10 present 33

  • So This Central Banker Walks Into a Bar….
    , January 18th, 2011 at 11:08 am

    The Federal Reserve recently released the full transcripts of its meetings from 2005. By glancing at them, you might be surprised by the amount of wise-cracking they do.

    Ladies and gentlemen, check out the comedy stylings of the FOMC:

    February 1-2, 2005:

    #1:

    MR. GRAMLICH. I nominate Alan Greenspan to be Chairman.
    MR. FERGUSON. And do you have a nomination for Vice-Chairman?
    MR. GRAMLICH. I nominate Timothy Geithner as Vice-Chairman.
    MR. FERGUSON. Is there a second to those nominations?
    SEVERAL. Second.
    MR. FERGUSON. Any other nominations? Any objections? Any comments? Well, we’re
    not in an era of great democracy. [Laughter] Let the record show a unanimous vote for Messrs.
    Greenspan and Geithner to be Chairman and Vice-Chairman of the FOMC until its first regularly
    scheduled meeting of 2006. Congratulations.
    CHAIRMAN GREENSPAN. Thank you very much. I wish to note that there was no voter
    fraud that I could perceive. [Laughter]
    MR. FERGUSON. And we have a turnout of 100 percent!

    #2:

    CHAIRMAN GREENSPAN. Without objection, that is approved. The next item on the
    agenda is the selection of a Federal Reserve Bank to execute transactions for the System Open Market Account. My notes indicate to me, and I quote, “New York is the odds-on favorite.” [Laughter]

    #3:

    MR. GRAMLICH. Thank you, Mr. Chairman. A lot of points have been put on the table
    already, so I feel a bit like I’m taking an oral exam, but here goes. First question, is low inflation desirable? Yes, I definitely think it is.
    MS. MINEHAN. That’s one right answer! [Laughter]

    #4:

    MR. MOSKOW. One result of the relatively poor performance of the Big Three is that Michigan now has the highest unemployment rate in the nation.
    MR. GRAMLICH. You’ve got to be first in something! [Laughter]
    MR. MOSKOW. Actually, Illinois is leading the Big Ten in basketball. [Laughter] They are undefeated so far.

    #5:

    CHAIRMAN GREENSPAN. First Vice-President Holcomb.
    MS. HOLCOMB. Thank you, Mr. Chairman. This is only the third FOMC meeting that
    I’ve had the privilege of attending, and I cannot help but notice how much the U.S. economy has
    improved in that short time. [Laughter]
    CHAIRMAN GREENSPAN. You’re welcome to attend any time!

    March 22, 2005

    #1:

    VICE-CHAIRMAN GEITHNER. Karen, could you give us a fair and balanced view—
    [laughter]—of the significance of the changes to the Stability and Growth Pact?

    #2:

    MR. KOS. Mr. Chairman, if I could just add a point on the market effect. As some of
    you know, Greece issued a 30-year bond recently at 26 basis points above the rate on Bunds, or
    about ½ point below the U.S. 10-year rate and about 100 basis points below the 30-year rate.
    CHAIRMAN GREENSPAN. Can we borrow from the Greeks? [Laughter]

    #3:

    MS. HOLCOMB. Turning to the national economy, I’d like to provide support for the Greenbook’s conclusion about the extra positive thrust in the economy by noting that congressional hearings have been focusing on the use of steroids in major league baseball rather than the economy. [Laughter]

    #4:

    VICE-CHAIRMAN GEITHNER. I have no humor in my statement and nothing that differs from the consensus.
    CHAIRMAN GREENSPAN. Your straightforward remarks are very humorous. [Laughter]
    VICE-CHAIRMAN GEITHNER. Careful. [Laughter]

    May 3, 2005

    #1:

    MR. OLSON. So I suspect that we may be closer to a pothole or perhaps even the head fake that the entire Chicago Bulls went for last night when Juan Dixon went up for his jump shot, which he made consistently.
    MR. MOSKOW. That’s unfair. [Laughter]
    MR. OLSON. It has been 17 years, Michael. It has been a long time.

    #2:

    MR. FERGUSON. To put it another way, while I’m comfortable with the strategy for today, I think we’re really entering the neutral zone. And for those of you who are Star Trek fans, you may recall that when you enter the neutral zone that’s when the aliens are most likely to attack. [Laughter] It is quite clear to me that we have executed one exit strategy, but unfortunately I think we’re entering a mode where we need a new exit strategy from the exit strategy! [Laughter]

    #3:

    MR. MOSKOW. Now, I am not going to respond to Governor Olson’s very unfair comment about the Chicago Bulls except to say that we will see how the Washington Wizards do when they lose their home court advantage in the next game and have to face the Chicago Bulls in the friendly confines of the United Center. [Laughter]
    MR. OLSON. Let me point out that it isn’t how they do but how they communicate what they do. [Laughter]
    MR. MOSKOW. Touché.
    CHAIRMAN GREENSPAN. Is that the end of your—[laughter]?
    MR. MOSKOW. Yes.

    June 29-30, 2005

    #1:

    CHAIRMAN GREENSPAN. The argument for the rapid rise in land prices in 1837 was that land was fixed in quantity. [Laughter] So, new ideas are very rare. Vice-Chair.
    VICE-CHAIRMAN GEITHNER. I remember that bubble! [Laughter]

    #2:

    VICE-CHAIRMAN GEITHNER. I meant in our history. In our history, have we used that tool to good or ill effect? Have we used it wisely and with foresight?
    CHAIRMAN GREENSPAN. You’re biasing the answer. [Laughter]
    MR. FERGUSON. The answer is obviously “yes.” [Laughter]

    #3:

    MR. POOLE. Just for the hell of it, I’d like to offer the hypothesis that property values are too low rather than too high. [Laughter]

    #4:

    MR. FISHER. Mr. Chairman, I’d like to propose that he buy my house in Washington, [laughter] given that confidence.
    MR. POOLE. If I’m right, you won’t need me to buy it.

    #5:

    MR. GRAMLICH. Sticker shock question: In the history of the world, has a country ever run a $1 trillion current account deficit?
    MS. JOHNSON. I don’t think so. [Laughter]
    CHAIRMAN GREENSPAN. Is that your question?
    MR. GRAMLICH. Yes. I didn’t say it was heavy! [Laughter]

    #6:

    CHAIRMAN GREENSPAN. I get quoted on everything under the sun that is irrelevant, but that was a really meaningful insight and it got lost! [Laughter]

    #7:

    CHAIRMAN GREENSPAN. One thing we can be sure of is that the value of the dollar will be worth 100 cents. [Laughter]

    #8:

    MR. GRAMLICH. What should monetary policy do about bubbles? I was enlisted as a speaker in this session, and I then characterized my views in Gilbert & Sullivan terms as, “Well, never. Oh, hardly ever.” [Laughter]

    #9:

    MR. GRAMLICH. Imagine what Steve Roach and John Makin would say about that! If I can coin a term, this would be viewed as a Greenspan “shotput.” [Laughter]

    August 9, 2005

    #1:

    MR. WILCOX. There used to be a view—I’m thinking back to the Brookings 1960s view—of an L-shaped supply curve.
    CHAIRMAN GREENSPAN. Well, how about a J? [Laughter]
    MR. WILCOX. I’ll give you J. [Laughter]

    #2:

    CHAIRMAN GREENSPAN. So I’d prefer to have poor but clear language [laughter] because we certainly don’t want to convey a message that will bring the long-term forward rates down.

  • AFLAC Hits Two-Year High
    , January 18th, 2011 at 10:49 am

    The stock got as high as $58.48 today although it’s pulled back some.

  • 20 New Economic Records Set Last Year
    , January 18th, 2011 at 10:35 am

    The blog Economic Collapse has a great list of 20 records that the economy set last year. Here’s a sample:

    #1 An all-time record of 2.87 million U.S. households received a foreclosure filing in 2010.

    #2 The number of homes that were actually repossessed reached the 1 million mark for the first time ever during 2010.

    #3 The price of gold moved above $1400 an ounce for the first time ever during 2010.

    #4 According to the American Bankruptcy Institute, approximately 1.53 million consumer bankruptcy petitions were filed in 2010, which was up 9 percent from 1.41 million in 2009. This was the highest number of personal bankruptcies we have seen since the U.S. Congress substantially tightened U.S. bankruptcy law several years ago.

    #5 At one point during 2010, the average time needed to find a job in the United States had risen to an all-time record of 35.2 weeks.

    #6 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs, which is believed to be a new record low.

    #7 The number of Americans working part-time jobs “for economic reasons” was the highest it has been in at least five decades during 2010.

    #8 The number of American workers that are so discouraged that they have given up searching for work reached an all-time high near the end of 2010.

    #9 Government spending continues to set new all-time records. In fact, at the moment the U.S. government is spending approximately 6.85 million dollars every single minute.

    #10 The number of Americans on food stamps surpassed 43 million by the end of 2010. This was a new all-time record, and government officials fully expect the number of Americans enrolled in the program to continue to increase throughout 2011.

  • Earnings Season Kicks It Up a Notch
    , January 18th, 2011 at 10:25 am

    Today is when earnings season starts to get serious. Just this morning, we learned that Citigroup’s (C) earnings fell short of expectations (I’m not much of a Citi fan). On the plus side, both Charles Schwab (SCHW) and Comerica (CMA) beat expectations. Shares of Apple (AAPL) are down on Steve Jobs’ health news but they should recover, and hopefully so will Mr. Jobs.

    The Buy List is doing well so far today. Gilead Sciences (GILD) is particularly strong. I’m happy to see that AFLAC (AFL) is close to a new 52-week high. Friday was a difficult day for us. While the Buy List did gain for the day, we significantly lagged the market due to our exposure to the healthcare sector. For the day, we made 0.21% which was less than the S&P 500’s 0.74%.

    Over the weekend, the New York Times had a good and very thorough article on the challenges facing Johnson & Johnson (JNJ). Last year was a very difficult one for the company due to the multiple recalls. Fortunately, J&J’s business is very diversified so the overall business hasn’t suffered. Still, the dents to their image have taken a toll. The company is very aware of what’s happened and is working hard to improve its image.

  • Morning News: January 18, 2011
    , January 18th, 2011 at 7:55 am

    World Stocks at High, Euro Jumps on ZEW

    Shipping Costs in the Pacific Are Now Negative

    Germans Remain Wary Over Boosting Bailout

    ‘Explosive’ Food Prices the Biggest Risk

    Brent Oil Rises, International Energy Agency Sees Gradual Demand Increase

    Goldman Fails to See Hype That Derailed Facebook Sale

    Apple’s Cook Faces Product Development Challenge, Google

    Comerica to Buy Sterling Bancshares for $1 Billion

    U.S. Near Approving Comcast’s NBC Deal

    Delta Profit Misses Estimates as Costs Rise

    Citigroup Set to Post Fourth Quarterly Profit

    Blog Network Behind Lolcats And Other Memes Raises $30 Million

    Leigh Drogen: Stocks Meet Sports

  • Steve Jobs’ Liver Is Worth $22 Billion
    , January 17th, 2011 at 10:35 am

    Apple (AAPL) has announced that their CEO Steve Jobs is taking another leave of absence due to his health. I concur with Paul Kedrosky that the media cover of his health is ghoulish.

    Although our markets are closed today, Clusterstock reports that shares of AAPL are down 7% today. That translates to a loss of market value of $22 billion.

  • Morning News: January 17, 2011
    , January 17th, 2011 at 7:20 am

    Tokyo Shares End Mixed As Falling Asian Bourses Offset Weaker Yen

    Orphanides Says Bailout Fund Could Buy Bonds Instead of ECB

    Spanish Bond Yields Rise on Syndicated Sale

    Yuan Hong Kong Premium Widens on Supply Limits, Bond Sales: China Credit

    Egyptian Protester Sets Himself on Fire, And Stocks Dive, As The Tunisian Domino Tumbles

    Investors Crave More Strong Bank Results

    Crude Oil Slides as Alyeska Prepares to Start Trans Alaska Pipeline System

    OPEC Raises 2011 Forecast of Demand for Its Oil as Asian Consumption Grows

    Rosneft Deal Brings BP Trove of Untapped Reserves

    10,000th Sale Lifts Airbus Past Boeing in 2010

    J. Crew Said to Get No Offers to Rival $3 Billion TPG, Green Bid

    Howard Lindzon: The Semiconductor Train…MIPS, ATML, ARMH, CRUS with Roy Kaller

  • The Marshmallow Test
    , January 14th, 2011 at 4:15 pm

    Yep, it’s Friday. Enjoy.

  • Industrial Production +0.8%
    , January 14th, 2011 at 11:15 am

    More good economic news:

    Industrial production rose in December by the largest amount in five months, providing the economy with solid momentum heading into the new year.

    Activity at the nation’s factories, mines and utilities increased 0.8 percent last month, the Federal Reserve said Friday. Industrial production was up in every month but one in 2010.

    Overall industrial activity has risen 11 percent since hitting its recession low in June 2009. But it is still 6 percent below its peak reached in September 2007.

    Factory production, the biggest slice of industrial output, rose 0.4 percent, the sixth straight monthly increase. Makers of computers and electronic products, clothing and leather, chemicals and other products were among the industries seeing gains. But auto production dipped.

    “Manufacturing looks like it is doing its job and moving the economy ahead,” said John Silvia, chief economist at Wells Fargo.

    More V-like charts: