• Eli Lilly Confirms 2010 Outlook
    Posted by on December 10th, 2009 at 10:36 am

    There’s good news from Lilly (LLY), although the market isn’t taking it that way. The company said it expects to earn $4.65 to $4.85 next year. That’s pretty good considering the stock is currently under $35.
    The problem for Lily is that several of their top drugs come off patent over the next few years. They’ve said that they plan to introduce two new drugs a year starting in 2013. Bloomberg reports: “Lilly said it has more than 60 drugs in clinical development and expects in 2011 to have 10 medicines in the final stage of trials generally required for U.S. approval.”

  • Bunning Vs. Bunning
    Posted by on December 9th, 2009 at 10:43 am

    This clip of Senator Jim Bunning has received a great deal of praise across the Internet. In my opinion, it’s cheap demagoguery.

    Bunning congratulates himself for opposing Bernanke’s nomination four years ago. He also criticizes Bernanke for his loose monetary policy. Yet one of the reasons he opposed Bernanke’s nomination four years ago was for his tight money policy.

    But Bunning has been a critic of the Fed course of “measured” hikes in short-term interest rates in order to fight inflation, saying that there is not sufficient inflationary pressures to justify the 11 quarter-percentage point hikes since June 2004.

    Incidentally, Bunning closes by calling the Fed “the Creature from Jekyll Island.” This is a reference to a crackpot Bircher conspiracy screed of the same name by G. Edward Griffin.
    Even for nutter stuff, this one is off the deep end. Here’s part of one review:

    G. Edward Griffin lays out this conspiratorial version of history in his
    book The Creature from Jekyll Island. His
    amateurish take on history is highly suspect, however. Gerry
    Rough, in a series of well- researched essays on U.S. banking history,
    reveals many historical inaccuracies, inconsistencies, and even contradictions
    in Griffin’s book and others of its genre.

    As to the conspiracy:

    Also in 1910, Senator Nelson Aldrich, Frank Vanderlip of National City (today know as Citibank), Henry Davison of Morgan Bank, and Paul Warburg of the Kuhn, Loeb Investment House met secretly at Jeckyll Island, a resort island off the coast of Georgia, to discuss and formulate banking reform, including plans for a form of central banking. The meeting was held in secret because the participants knew that any plan they generated would be rejected automatically in the House of Representatives if it were associated with Wall Street. Because it was secret and because it involved Wall Street, the Jekyll Island affair has always been a favorite source of conspiracy theories. However, the movement toward significant banking and monetary reform was well-known. It is hardly surprising that given the real possibility of substantial reform, the banking industry would want some sort of input into the nature of the reforms. The Aldrich Plan which the secret meeting produced was even defeated in the House, so even if the Jekyll Island affair was a genuine conspiracy, it clearly failed.
    The Aldrich Plan called for a system of fifteen regional central banks, called National Reserve Associations, whose actions would be coordinated by a national board of commercial bankers. The Reserve Association would make emergency loans to member banks, create money to provide an elastic currency that could be exchanged equally for demand deposits, and would act as a fiscal agent for the federal government. Although it was defeated, the Aldrich Plan served as an outline for the bill that eventually was adopted.

    So there, I’ve done Rachel Maddow’s work for her today “GOP senator references crackpot Bircher conspiracy!!”
    As you might expect, Griffin believes in more conspiracies:

    In 1974, Griffin wrote and published the book World Without Cancer,[15][16] and released it as a documentary video; its second edition appeared in 1997, and it was translated into Afrikaans, 1988, and German, 2005. It stated that cancer is a metabolic disease facilitated by the lack of Laetrile (called Vitamin B17 by its American developer), a view which has not been accepted by the majority of scientists. Because the position had been labeled “quackery” by the American Cancer Society, as well as the U.S. Food and Drug Administration and the American Medical Association, Griffin responded that such groups had a “hidden economic and power agenda”.[2][17]

    Griffin said that a grouping of financial, political, and industrial interests at “the very top of the world’s economic and political power pyramid” have “created a popular climate of bias that makes scientific objectivity almost an impossibility” and have dominant influence over the medical profession, medical schools, and medical journals.[18] A critical review in the American Journal of Public Health considered this view a “conspiracy” theory and stated that as “an emotional plea for the unrestricted use of the Laetrile as an anti-tumor agent, the scientific evidence to justify such a policy does not appear within it.”[19]

    Griffin’s websites refer visitors to doctors, clinics, and hospitals with alternative cancer treatments,[20] including sellers of laetrile,[15] a product of apricot seeds.[21] He does not sell laetrile himself.[15]

    Griffin’s productions referenced the work of biochemist Dr. Dean Burk, head and chief chemist of the Cytochemistry Section of the National Cancer Institute, who served for over 30 years. Funded by the McNaughton Foundation, Burk described his experiments to Griffin as showing that Laetrile and glucosidase set “the cancer cells dying off like flies.”[22] A systematic review in Supportive Care in Cancer, of 36 reports containing laetrile intervention data, found no controlled clinical trials, little evidence for laetrile’s effectiveness, and doubts about its safety.[3]

    Griffin became the founder and president of the Cancer Cure Foundation (now the Cure Research Foundation).[23] During the 1980s, he returned to producing films about terrorism, subversion, and Communism.

  • Nicholas Financial’s Stock Dividend
    Posted by on December 9th, 2009 at 10:21 am

    I had additional shares of Nicholas Financial (NICK) credited to my account on Monday due to the 10% stock dividend. This is in effect an 11-for-10 split.
    The share price, however, showed no evidence of splitting which means that the stock actually gapped up. Normally, I would have expected to see NICK pull back around 10%. Perhaps no one noticed.
    In any event, I’m adjusting the Buy List records to account for the split. At the beginning of the year, the Buy List “bought” 21,276.595 shares of NICK at $2.35 for a position of $50,000. The Buy List assumes all 20 positions are equally weighted at the beginning of the year for a total portfolio of $1 million.
    We now have 23,404.2545 shares of NICK and the cost basis is $2.136364.

  • After 63 Years, Eisenstadt Is Out at Value Line
    Posted by on December 9th, 2009 at 12:49 am

    This is sad:

    For 63 years, Samuel Eisenstadt was probably Value Line Inc.’s most valued employee. The statistician created an investment strategy that proved successful for decades and was endorsed by none other than Warren Buffett. But today he embarks on something new—unemployment.
    Late last Friday afternoon, the firm’s new chief executive, Howard Brecher, called Mr. Eisenstadt and told him that his services were “no longer needed” and he was retiring, effective immediately, according to Mr. Eisenstadt. Yet the 87-year-old, who helped drive the Nazis out of France and Belgium as a member of the U.S Army’s 8th Armored Division, was in no mood to be shoved aside.
    “I refuse to accept the explanation that I’m retiring,” Mr. Eisenstadt said. “I’m not retiring, and I don’t plan to retire. My mind is still sharp and wrapped up in my work. This is a very sad ending, and it really hurts.”

    (Via Salmon)

  • One-Month Treasury Bill Is a Blutarsky
    Posted by on December 8th, 2009 at 11:52 pm

    Here’s an arresting stat: The latest Treasury auction for one-month T-bills went off at a Blutarsky—0.0%.
    In other words, the government can borrow money for free for the next month. For now, this fact helps the spending brigades in Congress. Just about any spending short of burning money or filling the money hole will likely be a cost benefit for taxpayers. However, I don’t see any chance for second stimulus, plus Bernanke came down against it as well. (By the way, Paul Krugman argues that the very fact that the stimulus has failed is precisely why we need another. This is why more professors don’t get elected.)
    The zero-rate auction was incredibly popular. The bid-to-cover was 5.33 which is very high. There’s a technical reason why this bill was so popular. It will be the first one to expire in the new year. This means the institutional guys just want a safe place to park their money until 2010 begins.

  • Amazon’s Skyhigh Valuation
    Posted by on December 8th, 2009 at 12:40 pm

    I’ve been bashing Amazon.com (AMZN) for the past few months (and have been dead wrong). Still, I wanted to show you just how crazy the share price has gotten.
    Here’s a chart of Amazon and its earnings-per-share.
    image878.png
    The blue line is Amazon’s share price and it follows the left scale. The black and red line shows Amazon’s earnings-per-share and it follows the right scale. The black shows the trailing figures and the red is Wall Street’s projection.
    The two axises are scaled at a ratio of 50-to-1 which means that Amazon’s P/E Ratio is exactly 50 whenever the lines cross.
    A 50 P/E Ratio is very high, but even if we use that as a valuation, the stock is more than a year ahead of itself — even taking into account the tremendous growth forecast.

  • Rogue Trader Executed
    Posted by on December 8th, 2009 at 10:48 am

    Yikes:

    China on Tuesday executed a former securities trader for embezzlement, the first person in the industry to be put to death, but millions of yuan are still missing, a state newspaper said.
    Yang Yanming was sentenced to death in late 2005 and took the secret of the whereabouts of 65 million yuan ($9.52 million) of the misappropriated funds to his grave, the Beijing Evening News said.
    The report added that Yang was the first person working in China’s securities sector to be executed.
    “Preserve your moral integrity and don’t set too much store by business results,” Yang told the newspaper before the sentence was carried out.
    He was the general manager of the Beijing securities trading department of the China Great Wall Trust and Investment Corp., which became Galaxy Securities, from 1997 to 2003.
    Conscious that the growing gap between rich and poor could generate resentment, China is battling corruption and stock trading abuses. It has used the death penalty as a deterrent in serious cases.

    (Via: TBI)

  • What Will the Fed Do at Its Next Three Meetings?
    Posted by on December 7th, 2009 at 2:09 pm

    According to the futures market, nothing.
    The FOMC meets next week, then in January and again in March. The Cleveland Fed tracks what the futures market thinks will happen and the overwhelming view is that the Fed will keep rates at its current band between 0% and 0.25%.

  • The 90s Are Officially Over
    Posted by on December 7th, 2009 at 11:28 am

    You’ve Got Freedom: AOL ends ties with Time Warner

    AOL is shaking loose from Time Warner Inc. and heading into the next decade the way it began this one, as an independent company. Unlike the 1990s, though, when AOL got rich selling dial-up Internet access, it starts the 2010s as an underdog, trying to beef up its Web sites and grab more advertising revenue.
    Despite a few bright spots in its portfolio of sites, such as tech blog Engadget, AOL has a long way to go until Web advertising can replace the revenue it still gets from selling dial-up Internet access. One especially popular property, entertainment site TMZ, is a joint venture with a Time Warner unit that will keep TMZ and its revenue after AOL splits off.
    Now investors are getting a chance to place bets on AOL. On Wednesday, Time Warner shareholders as of Nov. 27 will get one share of AOL for every 11 of their Time Warner shares. The next morning, AOL CEO Tim Armstrong is set to ring the opening bell at the New York Stock Exchange, and AOL will begin trading under the ticker symbol of the same name — the one it had when it was known as America Online and used $147 billion worth of its inflated stock to buy Time Warner in 2001.

  • Where We Stand with TARP
    Posted by on December 7th, 2009 at 11:07 am

    It looks like Uncle Sam will only take a $42 billion bath from the TARP program. Only a few months ago, it looked like it would cost a lot more. Overall, that’s a return on equity of about -11%. That’s really not so bad. I have to confess that I’d be almost as worried if the Feds made money on TARP since it might give them confidence to try it again.
    Of the money lent to banks, TARP has worked fairly well with a profit of $19 billion on $245 billion lent out. The problem is that nonbank borrowers like General Motors have bled out the rest of the borrowing. Citigroup is the only major bank left that hasn’t paid back all of its TARP money.
    This was an ugly government policy but it was the right thing to do. Now all we need is a clear exit strategy.