Morning News
Posted by Eddy Elfenbein on September 2nd, 2009 at 10:47 am

I’m relieved to see that Donaldson (DCI) has come off its rotten open from this morning. This is typical after bad news—a sharply lower open followed by a rally. Let’s hope it holds.
Danaher (DHR) is in the news today. The company said it’s cutting 3,300 jobs and it will close 30 facilities which more than previously planned. The company also said it’s paying $1.1 billion for MDS’s instruments business. The shares are up today.
Joe Bank (JOSB) is also doing nicely today. The company just reported earnings of 68 cents a share, 14 cents better than estimates. Sales were up close to 10%. A year ago, the company earned 48 cents a share so that’s very nice growth. This stock is insanely erratic, but it’s been good to us this year. JOSB is up over 70% since January 1.

Donaldson’s Earnings Report
Posted by Eddy Elfenbein on September 1st, 2009 at 11:26 pm

Our filtration company, Donaldson (DCI), released pretty bad earnings after the close. For their fiscal fourth quarter, Donaldson made 35 cents a share which was five cents better than estimates but still down from 60 cents a year ago. Sales dropped over 30%.
More bad news is that the company sees fiscal 2010 EPS ranging between $1.44 and $1.64 which is less than Wall Street was expecting. I’m afraid that the stock is too high right now.

S&P 500 Total Return Index
Posted by Eddy Elfenbein on September 1st, 2009 at 11:05 pm

Forget talk of a V-shaped or W-shaped economy, we’ve had an M-shaped market for the last several years. Here’s the S&P 500 total return index since 1997:

Through Monday, the S&P 500 is up 14.97% this year including dividends.

Altria Yields 7.5%
Posted by Eddy Elfenbein on September 1st, 2009 at 12:35 pm

I really like shares of Altria (MO) and it’s probably a good candidate for next year’s Buy List. The stock is going for about 10 times this year’s earnings. The company just raised its quarterly dividend by two cents a share to 34 cents. That works out to an increase of 6.25%, and a yearly dividend payment of $1.36 comes to a yield of 7.5%.
I’ve also been impressed by the recent earnings trend. For Q2, Altria earned 50 cents a share, three cents better than expectations. The company also raised its 2009 EPS outlook for continuing ops to a range of $1.51 to $1.56 from the earlier range of $1.47 to $1.52. The net EPS range increased to $1.72 to $1.77 from $1.70 to $1.75, hence the roughly 10 times earnings I mentioned before.

Bernie’s Beach House Up for Sale
Posted by Eddy Elfenbein on September 1st, 2009 at 10:25 am

If you’re in the market for some beach front property, Bernie Madoff’s crib in Montauk is up for sale. The Feds are asking for $8.75 million. I should warn you that the AP said it’s “not that palatial.”

A Real Cash Cow
Posted by Eddy Elfenbein on September 1st, 2009 at 10:06 am

Looking to find a higher yield? French savers are turning to cows. I’m serious.

Pierre Marguerit, director of Gestel, a company in southeastern France that manages some 30,000 animals on behalf of 1,000 investors, said sales have doubled in the past year.
“You buy one or more cows, which are rented out to professional farmers. Your herd then increases as the years go by. A herd of 20 cows will bring you one extra cow every year, that’s roughly 4-5 percent,” said Marguerit.
Although the birth rate within the herd is higher, a portion of the offspring will make up for deaths, while others are sold off to cover the costs of rearing the animals.
However, in a particularly fertile year, the net increase can run as high as 7 percent.
Investors can choose to sell the new cows and take the cash, or allow their herd to build up over the years by keeping the offspring, then draw a regular income at retirement.

U.S. Libor Drops to Record Low
Posted by Eddy Elfenbein on September 1st, 2009 at 9:59 am

How things have changed. Last October 10, the three-month Libor hit 4.8%. Now it’s down to 0.33%. The TED spread has plunged as well.

The Energy Bubble
Posted by Eddy Elfenbein on August 31st, 2009 at 9:09 am

George Trefgarne says we’re about to enter an age of cheap energy. For example, the U.S.’s supply of natural gas has effectively doubled thanks to the industry’s new ability to extract gas from difficult rock formations. Trefgarne writes: When it comes to gas, America is the new Russia. And for the rest of the world, tight gas equals one thing: freedom.”

Economists Predict They’ll Be Disappointed
Posted by Eddy Elfenbein on August 31st, 2009 at 8:32 am

From a poll of economists:

Three-quarters said they would like to see the government cut spending over the next two years, while only 28 percent projected the reductions would actually take place.
The economists also favored increased regulation of financial markets, including greater oversight of derivatives, requirements on financial institutions to put more of their own funds at stake when securitizing mortgages and reform of the credit-rating companies.
This was the most surprising finding for Chris Varvares, the president of NABE and of Macroeconomic Advisers LLC in St. Louis.
“This tends to be a fairly conservative group, and you can see it except when it comes to regulation,” Varvares said in an interview. “They definitely are into more regulation in financial services.”

The survey also showed that 56% think the Fed will keep rates unchanged for the next six months. Nearly 80% think a second stimulus isn’t necessary.

Canada to issue up to $3B in U.S. dollar bonds
Posted by Eddy Elfenbein on August 31st, 2009 at 8:29 am

Here’s an interesting story. The Canadian government is issuing bonds dominated in U.S. dollars. I didn’t know the Canadian government had done this before. The article said that it’s the first foreign currency offering in more than a decade.
I support these kinds of products. For one, it keeps governments honest plus it helps diversify your debt obligations. I’d like to see the U.S. Treasury issue debt dominated in things like euros, gold, silver, oil and even shares in AIG and Fannie Mae.