• Oopsie
    Posted by on January 12th, 2008 at 1:16 pm

    From the Chicago Sun-Times:

    Ace employee makes $152 million accounting error
    BY SANDRA GUY
    Ace Hardware discovered that a mid-level employee made innocent but enormously expensive and incorrect entries in ledger books that eventually led to a $152 million accounting error, Ace Hardware CEO Ray Griffith said today.
    The poorly trained employee, who worked in the finance department at the co-op’s headquarters in Oak Brook, is no longer employed at Ace Hardware, Griffith said.
    The accounting error initially was revealed last summer.
    Ace Hardware will be forced to restate its earnings for fiscal years 2004, 2005 and 2006, and will correct its numbers for fiscal 2007.
    Investigators hired by Ace Hardware’s board of directors told the board of their findings Tuesday, and Griffith revealed the situation to Ace Hardware store owners today. The five-month investigation cost roughly $10 million.
    The unidentified employee, who had worked at Ace Hardware for at least eight years, made journal entries of a “sizeable amount” that “masked” a difference in numbers between two ledger books.
    The ledgers looked as though they were reconciled, but were not.
    The journals are the general ledger and the perpetual inventory journal.
    “Numbers were flowing through one of the ledgers but not flowing into the other,” Griffith said.
    About 25 percent of the error, or $34.6 million, dates back to 1995, Griffith said. The remainder, $117.4 million, occurred from 2002 through 2006.
    The employee did nothing fraudulent, and no inventory or money is missing, Griffith said.
    The person was not properly trained or equipped to do the job, and Griffith conceded that that was Ace Hardware’s fault.
    “We are embarrassed by it,” Griffith said. “We did not provide the training, oversight or checks and balances to help that person do [his or her] job,” Griffith said. “[The employee’s] only intent was to try to do the best job for the boss and for our company.”
    Part of the problem is the increasingly complex and competitive situation that hardware stores face, Griffith said.

  • Mississippi Fred McDowell
    Posted by on January 12th, 2008 at 12:04 pm

  • Mishkin: Stop Obsessing about the Fed
    Posted by on January 11th, 2008 at 2:41 pm

    I have to agree with Frederic Mishkin of the Fed:

    I think there is too much focus on what decision will be made about the federal funds rate target at the next FOMC meeting. What is important for pricing most financial assets is the path of monetary policy, not the particular action taken at a single meeting.

    One of the great myths of the market is the over-agency of the Federal Reserve. In reality, the Fed is much less powerful than is commonly believed.
    I think some people have to believe that there’s some mysterious group that’s in charge and running things. Ron Paul even blames the Fed for higher oil prices.
    Nobel Laureate, Edward Prescott, wrote in the Wall Street Journal:

    I am not saying that there are no real costs to inflation — there certainly are. And if we get too much inflation we can exact high costs on an economy (witness Argentina as an example). However, I am talking here of the vast majority of industrialized countries who live in a low-inflation regime and who are in no danger of slipping into hyperinflation. It is simply impossible to make a grave mistake when we’re talking about movements of 25 basis points.

  • Zacks Earnings Commentary
    Posted by on January 11th, 2008 at 10:07 am

    Here’s an interesting breakdown of the upcoming earnings season from Zacks.

  • Goldman Sachs sees recession in 2008
    Posted by on January 10th, 2008 at 11:04 am

    From Reuters:

    Goldman Sachs on Wednesday said it expects the U.S. economy to drop into recession this year, prompting the Federal Reserve to slash benchmark lending rates to 2.5 percent by the third quarter.
    In a note to clients, Goldman said real gross domestic product would contract by 1 percent on an annualized basis in both the second and third quarters. For all of 2008, the investment bank said GDP would rise by 0.8 percent.
    The unemployment rate will rise to 6.5 percent in 2009 from the current 5 percent, it said.
    The weakening economy will force the Fed to lower policy rates by an additional 1.75 percentage points from the current 4.25 percent. Starting in September, the Fed cut rates at the last three meetings of the Federal Open Market Committee, reducing the target rate on loans between banks by 1 percentage point from 5.25 percent.

    I think that might be right.

  • AFLAC Hits New High
    Posted by on January 10th, 2008 at 11:00 am

    Financial stocks may not be doing well, but AFLAC (AFL) continues to rally.
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  • Bennie and the Feds
    Posted by on January 9th, 2008 at 11:46 pm

  • Hey European Central Bank: STFU!
    Posted by on January 9th, 2008 at 11:17 pm

    bundchen1.jpg

    Bundchen Denies She Only Accepts Euros
    RIO DE JANEIRO, Brazil (AP) — Euros? Dollars? Pounds? Gisele Bundchen insists she’s perfectly happy with them all, again denying reports that the Brazilian supermodel is shunning the weak U.S. dollar in favor of European currency.
    Bundchen — known to U.S. sports fans as the girlfriend of quarterback Tom Brady — has been struggling for months to knock down recurring reports that she insists on being paid in euros, which have been rising against the dollar.
    “The story of the euro is a lie,” she told the Brazilian newspaper O Globo in comments published Wednesday. “I work with many international companies, I earn salaries in different currencies, that’s all.”

  • 10 Tips on How to Clear Your Credit Report
    Posted by on January 9th, 2008 at 11:09 pm

    From MSNBC. Here’s a sample:

    1. Reflect on the ways errors can creep in. Sometimes automated processes take over and creditors send inaccurate information about people’s bill-paying habits to one of the major credit bureaus. In other cases, people’s identities accidentally get mixed up at the credit bureau when a staffer enters a Social Security number incorrectly. And sometimes people with fabulous credit histories become victims of blatant identity theft.
    2. Check out your credit report. You can examine your credit report carefully all on your own without paying a dime. Order free annual reports from the three major credit bureaus (Equifax, Experian and TransUnion) by visiting AnnualCreditReport.com or calling 1-877-322-8228. (Note: This is the only place where you can get free credit reports once a year without any strings attached. The “free” credit reports advertised by other sources aren’t really free!)
    3. Contact the credit bureau first. If you find mistakes in your report, take the matter up with the credit-reporting agency immediately. Rather than dispute the mistake via an online form, send a letter that includes your complete name and address, a description of each item you dispute, an explanation of why you dispute it and a request for deletion or correction of the information.
    4. Keep good records. Along with your letter, enclose copies (NOT originals) of documents that support your position, as well as a photocopy of your credit report with the items in question circled. Send the letter and enclosures by certified mail, return receipt requested, so you can document what the credit bureau received. Keep copies of all correspondence, and jot down and save notes about each phone conversation you have.

  • The Nasdaq’s Losing Streak
    Posted by on January 9th, 2008 at 3:32 pm

    The Nasdaq Composite (^IXIC) looks to snap its eight-session losing streak today.
    The Dow’s record is 12 straight down days which happened twice, once in 1941:
    28-Jul-41 130.06
    29-Jul-41 129.19
    30-Jul-41 128.95
    31-Jul-41 128.79
    1-Aug-41 128.22
    4-Aug-41 128.17
    5-Aug-41 128.14
    6-Aug-41 128.10
    7-Aug-41 128.09
    8-Aug-41 127.48
    11-Aug-41 126.01
    12-Aug-41 125.81
    13-Aug-41 125.65
    And another in 1968:
    8-Jan-68 908.92
    9-Jan-68 908.29
    10-Jan-68 903.95
    11-Jan-68 899.79
    12-Jan-68 898.98
    15-Jan-68 892.74
    16-Jan-68 887.14
    17-Jan-68 883.78
    18-Jan-68 882.80
    19-Jan-68 880.32
    22-Jan-68 871.71
    23-Jan-68 864.77
    24-Jan-68 862.23
    Strange. Today is the 40th anniversary of the second one.