• Inflation Still Contained
    Posted by on October 15th, 2009 at 1:11 pm

    The government reported on consumer prices for September:

    Inflation pressures remained modest in September even though gasoline prices edged higher.
    The Labor Department said Thursday that consumer prices rose 0.2 percent last month, matching economists’ expectations. Prices excluding energy and food were also up 0.2 percent, slightly higher than the 0.1 percent increase analysts had forecast.
    Over the past 12 months, consumer prices are actually down 1.3 percent, reflecting a severe recession which has kept a lid on price pressures across a wide range of products and services.

    The core inflation rate, which ignores food and energy prices, comes in for a lot of ribbing, but it is useful. Take a lot at the headline inflation rate (blue) compared with the core rate (black) and you can see how much more stable it is:
    image863.png
    The core rate hasn’t left range between 1% and 3% in 14 years.

  • Earnings from Baxter and Amphenol
    Posted by on October 15th, 2009 at 11:02 am

    Earnings season is kicking into high gear and we had two earnings report from our Buy List stocks this morning.
    First up is Baxter International (BAX). For the third quarter, the company earned 98 cents a share which is one penny ahead of estimates. The problem is that sales came in at $3.15 billion which is just below estimates of $3.19 billion. The company said to expect Q4 earnings between $1.02 and $1.04. The consensus is $1.04. The stock is down about 3.5% today which doesn’t make a lot of sense to me.
    This was a good report and BAX is doing very well. Since Baxter usually provides precise guidance, it doesn’t often deliver a big earnings surprise. The stock is currently going for about 13 times next year’s earnings which is a good deal.
    Amphenol (APH) is also lower today after beating earnings. The company reported earnings of 47 cents a share which was a big drop from 63 cents a share one year ago. Fortunately, that came in four cents above the Street’s estimates. Sales dropped 17% but analysts were expecting an even large drop.
    For Q4, APH sees earnings ranging between 47 and 49 cents a share, and revenue between $720 million and $735 million. The Street was expecting earnings of 47 cents a share on revenue of $711.6 million.
    Finally, Donaldson (DCI) doesn’t report until November but the shares are up today thanks to an upgrade from Credit Suisse. The analyst raised his price target from $28 to $41.

  • Dow 10,000
    Posted by on October 14th, 2009 at 1:22 pm

    We did it! The Dow cracked 10,000.
    The Dow first broke 10,000 more than 10-1/2 years ago.

  • The Countdown to Dow 10,000
    Posted by on October 14th, 2009 at 11:55 am

  • S&P 500 Above 1080
    Posted by on October 14th, 2009 at 10:45 am

    Thanks to Intel’s (INTC) impressive earnings report, the market is up again today. As a rule, Octobers following presidential elections don’t have a great history for Wall Street, but this October is defying expectations.
    The S&P 500 is currently up to 1083 which is about 60% above the March 9 closing low. I’ve been amazed that there are folks who have dismissed this rally from the get-go. Why aren’t they groveling to Jon Stewart? Where’s the public anger at them?
    As impressive as this rally has been, we’re still a long way from where the market was. Going back to the beginning of 2008, the S&P 500 is still down by about 25%.
    image862.png

  • Man who threatened Options Exchange guard with can of beer arrested
    Posted by on October 13th, 2009 at 3:34 pm

    The right to beer arms.

    A homeless man was charged with assault after allegedly raising a can of beer threateningly at a security guard and yelling obscenities at Chicago Board of Options Exchange patrons Monday night in the Loop.
    The 43-year-old man who lives at the Pacific Garden Mission was charged with misdemeanor aggravated assault, according to police who said the man was arrested on a sidewalk on the 440 block of South LaSalle Street outside the CBOE.
    Police were not immediately releasing the man’s name.
    At 9:30 p.m. a CBOE security guard told police he saw the man using obscenities and verbally abusing patrons of the exchange, according to police.
    The guard asked the man to leave the premises and the man was taken into custody after allegedly yelling at the guard, acting violently and raising a can of beer towards him in a threatening way, according to police.
    No injuries were reported.

  • Earnings Preview for Baxter International
    Posted by on October 13th, 2009 at 12:13 pm

    From AP:

    Specialty drug and device maker Baxter International reports its third-quarter 2009 results Thursday morning. The following is a summary of key developments and analyst commentary for the period.
    OVERVIEW: Baxter announced several high-profile product launches and agreements during the last three-month period.
    Last week the Deerfield, Illinois-based company said authorities in the European Union approved its swine flu vaccine. Baxter said preliminary trials of the Celvapan H1N1 vaccine is “well tolerated” by patients 18 and older.
    Baxter along with Sanofi-Aventis SA, GlaxoSmithKline PLC and several other pharmaceutical companies are rushing vaccines onto the market as governments around the world brace for a swine flu pandemic. Baxter has contracts to produce the vaccine for several countries in Europe, but not the U.S.
    BY THE NUMBERS: Baxter said in July it expects to report earnings of 95 to 97 cents per share for the third quarter.
    ANALYST TAKE: Analysts surveyed by Thomson Reuters have earnings per share of 97 cents per share on revenue of $3.2 billion.
    WHAT’S AHEAD: Baxter has already begun making shipments of its H1N1 vaccine to countries with which it has contracts, including Ireland and the U.K. The company is now studying whether a single dose of the vaccine will be enough to prompt an immune response to the flu.

  • Madoff Gets in Prison Fight
    Posted by on October 13th, 2009 at 12:10 pm

    And it was over stocks!

    Bernie “The Bruiser” Madoff got into a prison-yard tussle with a fellow inmate over — of all things — the stock market, eyewitnesses told The Post.
    And, by inmates’ accounts, the 71-year-old Ponzi schemer came out the winner.
    Madoff, serving 150 years at the Butner, NC, federal prison, was heard last week getting into a heated debate over the state of the market with another senior-citizen jailbird.
    The shouting match got so heated that the inmate pushed Madoff, who shoved back harder with both hands, causing his attacker to stumble.
    As the attacker tried to stand up straight, Madoff hovered over him red-faced and glaring, eyewitnesses said.
    The stunned attacker went chicken and took off — allowing Madoff to collect some “cred” among his fellow prisoners.
    “I didn’t think Bernie had it in him. He got the best of him; he was really aggressive, and the other guy was in shock that he fought back,” an inmate said.
    The shoving match occurred near a ball field at the lockup in front of about 20 inmates during a rare time when prison guards weren’t watching.
    An inmate said the two got lucky because if guards had seen the fight, Madoff and his pushing partner “would have went in the ‘hole,’ ” solitary confinement.
    The next day, Madoff and his attacker, described by inmates as a white male over 60 years old, made up and were spotted hanging out together.
    Prisoners interviewed by The Post said this was the first known physical altercation at the slammer for Madoff — who paid a consultant for a crash course in prison culture and survival tips before he was locked up.

  • The Microcredit Myth
    Posted by on October 12th, 2009 at 9:20 pm

    Three years ago, Mohammad Yunus won the Nobel Peace Prize for his work in micro-finance. This was the idea that you could help the world’s poor, not by large aid projects, but by small loans to poor people in the Third World. The idea is extremely popular.
    There’s just one problem—it doesn’t work:

    But two new research papers suggest that microcredit is not nearly the powerful tool it has been made out to be. The papers, by leading development economists affiliated with MIT’s Jameel Poverty Action Lab, have not yet been published, but they are already being called the most thorough, careful studies yet done on the topic. What they find is that, by most measures, microcredit does not offer a way out of poverty. It helps a few of the more entrepreneurial poor to start up businesses, and at the margins it may boost the profits of existing microenterprises, but that doesn’t translate into gains for the borrowers, as measured by indicators like income, spending, health, or education. In fact, most microcredit clients actually spend their borrowed money not on a business, but on household expenses, on paying off other debts or on a relatively big-ticket item like a TV or a daughter’s wedding. And while microcredit champions point to microloans as a tool for empowering women, the studies see no impact on gender roles, and find evidence that if any one group benefits more, it’s male entrepreneurs with existing businesses.

  • Stocks Soar, VIX Plunges
    Posted by on October 12th, 2009 at 11:47 am

    The S&P 500 (^GSPC) broke out to a new 52-week high today. We’re now up to 1078. If you’re into the number stuff, that’s almost exactly the Golden Ratio times the March intra-day low (666.79 * 1.618 = 1078.89). Spooky!
    The VIX is below 23 again. The low point today was 22.67. During 2009, we’ve been lower intra-day, but not on a closing basis. If this holds up, the VIX will close at its lowest level since last September, just before Lehman went under.