Non Tarp Banks Are Doing Better
Posted by Eddy Elfenbein on September 14th, 2009 at 12:29 pm

Paul R. La Monica finds that stocks that didn’t take TARP money have done better than the ones that did.

I’ve dug up, with the help of research available on TARP tracker Bailoutsleuth.com, at least 54 publicly traded banks that explicitly refused to take part in TARP. And it’s worth pointing out that several of them are decent-sized.
Hudson City Bancorp (HCBK) and People’s United Financial (PBCT) are both in the S&P 500. Commerce Bancshares (CBSH), BOK Financial (BOKF) and NY Community Bancorp (NYB) are among the 50 largest banks in the country as ranked by assets, according to figures from the Federal Reserve.
That’s interesting considering many big-bank executives argued that they only took TARP funds because they were strong-armed into do it and thought not taking the cash would make them look weak and unworthy of government support. That justification sounds pretty bogus now.
Consider this: Shares of the 54 banks that didn’t want a bailout are, on average, down just 16% since last September. That’s compared to a 30% drop for the KBW Bank Index and 36% plunge for the S&P Regional Bank Index.

That’s not all. The non-TARPers are expected to see a 17% jump in profits this year, plus their dividend yield now stands at 3.3%.

Eli Lilly Announces Reorg
Posted by Eddy Elfenbein on September 14th, 2009 at 9:49 am

Eli Lilly (LLY) announced a major reorganization effort today. In an effort to cut costs, the company will organize itself into five different business units. Lilly will also pare back thousands of jobs.
Lilly said that its goal is to cut cost by $1 billion a year and to have 35,000 employees by the end of 2011. That’s a reduction of about 5,500 from today.
I’m not terribly impressed when companies announced cost-cutting initiatives. Shouldn’t they be trying to cut costs all the time? Too often, these announcements are just to put out good sounding press releases. The stock is up a little today so it might be working.
While Lilly’s earnings have been good, last quarter was troubling since it came below the first-quarter’s earnings. The next earnings report may show an earnings drop over the past year. The good news is that the company reiterated its 2009’s EPS guidance of $4.20 to $4.30. Still, Lilly’s performance of late has not won my confidence.

Happy Birthday Maria
Posted by Eddy Elfenbein on September 11th, 2009 at 1:45 pm

The Money Honey turns 42.

Crossing Wall Street Eight Years Ago
Posted by Eddy Elfenbein on September 11th, 2009 at 9:04 am

The Buy List YTD
Posted by Eddy Elfenbein on September 10th, 2009 at 12:14 pm

The CWS Buy List continues to perform very well. Through yesterday’s close, the Buy List is 33.31% compared with 14.41% for the S&P 500 (neither figures includes dividends). That’s a YTD high for the Buy List and it’s a high for its outperformance against the S&P 500 which now stands at 18.9%.

The Buy List was helped yesterday by Cognizant Technology Solutions (CTSH) which said that positive demand trends are continuing into the third quarter. The stock is now a double for us. Also, Nicholas Financial (NICK) announced the opening of a new branch in Akron, Ohio.

Myths of the Credit Crisis
Posted by Eddy Elfenbein on September 9th, 2009 at 2:02 pm

Arnold Kling has a good article looking at some myths of the financial crisis. One that he tackles is the idea that there was too little regulation. Instead, Kling asserts that regulation was one of the problems.

The myth is that the regulators failed to focus on the systemic implications of financial innovation. The reality is that the regulators were keenly interested in systemic risk. However, like their counterparts in the financial industry, the regulators thought that the innovations had reduced systemic risk. The problem was not that regulators lacked a mandate to address systemic risk. What they lacked was judgment and insight.

Greenspan: Market crisis “will happen again” Me: Greenspan “will not happen again.”
Posted by Eddy Elfenbein on September 9th, 2009 at 11:38 am

From the BBC:

“The crisis will happen again but it will be different,” he told BBC Two’s The Love of Money series.
He added that he had predicted the crash would come as a reaction to a long period of prosperity.
But while it may take time and be a difficult process, the global economy would eventually “get through it”, Mr Greenspan added.
“They [financial crises] are all different, but they have one fundamental source,” he said.
“That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue.”
Speaking a year after the collapse of US investment bank Lehman Brothers, which was followed by a worldwide financial crisis and global recession, Mr Greenspan described the behaviour as “human nature”.

Follow link to video.

From Wall Street to Seasame Street
Posted by Eddy Elfenbein on September 9th, 2009 at 10:46 am

It’s getting rough out there. Elmo’s mom (who’s apparently from Virginia) loses her job.

Next up, a discussion on the national debt with Count Von Count. This may take awhile.

China alarmed by US money printing
Posted by Eddy Elfenbein on September 8th, 2009 at 3:54 pm

The good news is that someone is alarmed by U.S. monetary policy. The bad news is that it’s a top member of the Chinese Communist hierarchy.

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”.
“We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como.
“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.
China’s reserves are more than – $2 trillion, the world’s largest.

51.04% of all trading on the NASDAQ Friday was short selling
Posted by Eddy Elfenbein on September 8th, 2009 at 12:31 pm

Check this out:

There were 6,516 stocks with daily short volume reported and total NASDAQ trading volume of 1,318,772,463 shares. Total Daily Short Volume was 673,135,041 shares. 51.04% of all trading on the NASDAQ Friday was short selling.