Lemley Yarling Management Co
309 W Johnson Street Apt 544
Madison, WI 53703
March 31, 2010
Katie doing chores. Today
she rode to Vanderpool Texas
no Verizon. April Fool’s Day it is 51 miles to Kerrville, Texas
April 2 is a rest day in Kerrville
Easter Sunday the women ride 65 miles to Blanco, Texas
and on Monday they ride 93 miles to Bastrop, Texas
They will get out of Texas on April 9.
futures declined, indicating the Standard
& Poor’s 500 Index will pare its fourth straight quarterly
advance, after a private report showed employers unexpectedly cut jobs this
month. Oracle Corp.,
Cisco Systems Inc. and JPMorgan Chase & Co. helped lead declines after ADP
Employer Services said companies eliminated 23,000 jobs this month, compared
with a gain of 40,000 forecast on average by economists in a Bloomberg survey. Goldman Sachs
Group Inc. and Morgan Stanley fell as Keefe Bruyette & Woods
Inc. cut earnings estimates on weaker investment banking results. “The ADP
numbers disappointed investors,” said Peter
Jankovskis, who helps manage about $1.8 billion as co-chief
investment officer at Oakbrook Investments in Lisle, Illinois. “Jobs are key to
turn consumer spending into something sustainable. Investors in the stock market
will be in a wait- and-see mode.”
Tuesday markets around the world
were mildly higher. Last night Asian markets closed lower and European markets are
higher at midday. Gold futures extended
their gains on Wednesday, as the dollar fell further against its major rivals
after data showed that companies in the U.S. private sector shed 23,000 jobs in
March. Gold for April delivery rose $8.50 to $1,113 an ounce in electronic
trading on Globex. Germany's jobless total fell by a seasonally-adjusted 31,000
in March, the Federal Labor Office reported Wednesday. On an unadjusted basis,
the total fell by 75,000 to 3.568 million. Economists had expected the adjusted
figure to rise by around 10,000.
The Ford warrants were
priced at $5. This morning Ford shares sold off again as the big boys and girls
continued to play their games. We obviously were early reentering our Ford
position but Ford is one stock that we think is an excellent play on the
recovery. Ford is making money with car sales running at an annual rate of 11
million. When, not if, car sales return to an annual rate of 15 million Ford is
going to earn $10 per share. That is what leverage does in the auto industry.
We bought Ford warrants (to buy shares at $9.20 which
expire on 1/01/2013) at less than the offering price and also doubled our share
position in the common at $1 per share lower than our last purchase. At some
point we will exit the common and hold the warrants.
Is it time for a correction?
Investors’ Intelligence has 48%
bulls and 19% bears in it latest reporting period.
In that same vein, the revolving door at
Treasury provides access to the big boys and sometimes girls although not so
much. It really is still a boys club. Or maybe the girls are too honest. This
story is about a fellow named Ken Wilson. Notice that Wilson went from Goldman Sachs to the Treasury during the crisis (because he
was just so invaluable to Hank) during which he talked with and took advice
from the folks at Goldman and Black Rock.
After his one year sojourn at Treasury during which he made the decisions that
rescued all his former employers and current and gave a gold mine to his future
employer Wilson moved on to Black Rock which is managing the Treasury’s
portfolio of crappy investments that Wilson helped the Treasury to buy.
But now Wilson is collecting pay as a Vice
Chairman of Black Rock and not as a Treasury employee. Who said the Robber
Barons are dead?
Drill Baby Drill: Obama cops out again, and the Repubs won’t be happy
anyway. All the states where the offshore drilling will be allowed have
Republican governors. Obama may be two-faced but he certainly isn’t stupid.
People turn table and rob a bank.
European stocks fell after disappointing U.S. jobs data stoked concerns
that official government figures later in the week will come in weaker than
anticipated. Gold gained $10 to $115 and Oil was up $1.18 to $83.55.
GOP Complain That Health Reform Slashes Corporate Welfare (http://www.huffingtonpost.com/2010/03/31/corporate-america-squeals_n_519976.html)
The Republican Party and major
corporations have joined forces in the first major rearguard attack on health
care reform, charging that the cost of complying with "Obamacare" is
resulting in hundreds of millions of dollars in added business expenses.
The crime that reform is guilty
of: Slashing corporate welfare.
Under the previous system, major corporations were subsidized by the
government to provide prescription drug coverage to their retired employees. At
the same time, corporations could claim on their tax returns that it was they
-- not the taxpayers -- who paid for the drug coverage, and could write the
expense off as a tax deduction.
Health care reform cuts out that
fat. The corporations still get taxpayer
money to help pay for their drug coverage, but they can no longer continue the
fiction that they're using their own money to do it.
Being forced to operate on a diet
of leaner corporate welfare benefits will make U.S. companies less able to
compete, Republicans argue. Removing the benefit will also force large
corporations to compete on a level -- or at least closer to level -- playing
field with small businesses, who don't get the subsidy. The charge-offs play into
the line that Republicans are pushing -- namely that health care reform is a
So far, Boeing, AT&T, AK
Steel, 3M, Caterpillar, Deere, Prudential and Valero Energy have all said that
reform is forcing them to take significant charge-offs on their balance sheet.
The welfare cuts don't go into effect for several years, but accounting rules
require the reduction to be taken in the year the law is passed.
major market measures close lower. Breadth was 2/1 negative and volume was
holiday light except for Ford.
March 30, 2010
Model Portfolio Update
March 29, 2010
This is a picture of Katie happy to be receiving mail from
Kelle and Dana. Katie rode 111 miles on Sunday. The whole group made the total
ride except the oldest rider who is 75 years of. She only rode 90 miles. They
are all amazing women. We were reading a book all day. Tomorrow the women ride
49 miles from Brackettville, Texas
85/52 to Camp Wood Texas
83/49. On Wednesday they go from
Camp Wood 39 miles to Vanderpool, Texas
We will be
traveling tomorrow and so there will be no post.
Asian stock markets rose Monday, with China's markets surging after the launch
date for stock index futures was set, but the Nikkei fell 0.1% on ex-dividend
selling ahead of the end of the fiscal year. European shares traded slightly
higher, with deal speculation boosting wireless-telecom giant Vodafone (VOD),
while miners also advanced. Asian markets closed mostly higher, with China's
market surging as the launch date for stock-index futures was set. U.S. stock
futures rose Monday on optimism surrounding the global economy ahead of the
release of nonfarm payrolls figures at the end of the week
U.S. consumer spending rose 0.3% in February, as expected, even though
personal income didn't budge amid high joblessness, while inflation stayed
benign. Personal income was flat compared to the prior month, the Commerce
Department said Monday. Private wages and salaries posted a small increase of
$2 billion, but proprietors' income fell. The saving rate slowed, as did a key
gauge of inflation.
The Greek government moved to quickly test credit markets with the sale
of a seven-year, euro-denominated bond after euro-zone leaders last week backed
a joint European-International Monetary Fund standby bailout plan. News reports
said guidance for the 5 billion euro ($6.7 billion) benchmark issue was at 310
basis points, equal to a yield of about 6%.
Ford Motor Co. (F) said Sunday it has reached an agreement to sell
Volvo Car Corp. to Zhejiang Holding Group of China for $1.8 billion. The U.S.
automaker has been in discussions to finalize the sale of its Swedish unit for
months. The transaction is expected to close in the third quarter, Ford said in
The United Auto Workers union is hoping
to raise at least $1.3 billion for its retiree health trust by selling all of
its 362 million warrants for Ford Motor Co. stock. The trust got the warrants
in December 2009 as part of the UAW's contract with the automaker. The
automaker and union agreed to the trust to help the company remove retiree
health care costs from its books. The trust set a minimum price for each
warrant at $3.50. Each warrant gives the holder the right to buy a Ford share
They should be selling the warrants
at a premium, not a discount. In fact they should apply to list them. We would
much rather own the warrants for the leverage. Some large investment bank is
advising them and it is a stupid decision. Shares of Ford are off on the
news and we bought Ford for a trade in most accounts. The warrants
sale sets up an arbitrage situation but once the warrants are sold the share
price should move higher.
A discussion of large hedge funds and performance:
Stanley Will Be Citi Stake Underwriter (CNBC)
Morgan Stanley will be responsible for selling the government’s 27 percent
stake in Citi in what is known as a
“dribble-out” process that could take the rest of the year. The plan is to sell
between 8 percent and 10 percent of average daily volume each day. That will
likely begin after Citi reports its next earnings on April 19.
How dumb in the war in
Afghanistan? Besides the tragedy of all the troops and civilians being killed
and wounded the NYT reports:
The effort to win over Afghans on former
Taliban turf in Marja has put American and NATO commanders in the unusual
position of arguing against opium eradication, pitting them against some Afghan
officials who are pushing to destroy the harvest.
From Gen. Stanley A. McChrystal on down, the
military’s position is clear: “U.S.
forces no longer eradicate,” as one NATO official put it. Opium is the main livelihood of 60 to 70
percent of the farmers in Marja, which was seized from Taliban rebels in a
major offensive last month. American Marines occupying the area are under
orders to leave the farmers’ fields alone.“Marja is a special case right
now,” said Cmdr. Jeffrey Eggers, a member of the general’s Strategic Advisory
Group, his top advisory body. “We don’t
trample the livelihood of those we’re trying to win over.”
Of course if we win them over
then we will destroy their crops. Until then we will let them sell their opium
to drug traffickers and spend billions in the U.S. to try and apprehend drug
kingpins. Up is down and round is square.
Money for Grasshoppers: Can you
imagine that Republicans want money for grasshoppers?
Wyoming’s all Republican
Congressional delegation (one
representative and two senators) doesn’t want the Feds telling them what to
do–except when they want U.S. taxpayers
to give them money to help with a problem in the state.
Farmers and ranchers across the
West are bracing for a grasshopper infestation that could devastate millions of
acres of crops and land used for grazing. ... To try to get ahead of the
problem, Wyoming has allocated $2.7 million for suppression efforts, including
aerial spraying of the pesticide Dimilin, which is fatal to maturing
grasshoppers. But Wyoming's
congressional delegation—concerned that's not nearly enough—has demanded federal help. "It does
not appear as though the USDA has any sense of urgency in the face of this
pending plague," the delegation wrote in a letter to Agriculture Secretary
Tom Vilsack last month. Wyoming Gov. Dave Freudenthal this month weighed in
as well, writing a public letter urging county, state and federal officials to
join forces to prevent "economic and ecological damage." The
forecast, he said, suggests an infestation "with disastrous
In the past few weeks every time
Ford moved over $14 selling came into the market place. Now we think we
understand why. Our guess is that some folks knew about the warrant deal and
were setting up short positions either real or synthetic to lock in the
guaranteed profit if the UAW is stupid enough to listen to investment advisors
looking for a fee who are telling them to sell the warrants at $3.50 per
Chag Pesach Kasher veSameach!
In case you were wondering how it
and Easter are determined; Easter is easy, Passover not so much: http://quasar.as.utexas.edu/BillInfo/ReligiousCalendars.html
Europe closed higher. Gold gained
$10 to $1125 and Oil was up $2.50 to $82.50.
The major stock measures were mildly higher all day.
Breadth was positive and volume was light. We
will be back Wednesday.
March 26, 2010
team bikers (Kathy, Katie, Patti) rode 60 miles to Marathon, Texas today
Saturday they ride 54 miles to Sanderson, Texas
Sunday 111 miles (flat and hopefully a tail wind) to Del Rio, Texas
and Monday 42 miles to Brackettville Texas
We were making fun of these little towns until we remembered we live in
Passover in 2010 will start on Tuesday,
the 30th of March and will continue for 7 days until Monday, the 5th
Note that in the Jewish calendar, a holiday begins on the
sunset of the previous day, so observing Jews will celebrate Passover on the
sunset of Monday, the 29th of March.
Markets are closed
Banks open on Good Friday April 2.
The prince and
princess and entourage arrive on April 1 for a week.
banks rallied in the first trading day since euro-zone nations detailed an aid
package it could offer if Greece was unable to sell bonds, while broader
European stock markets were a bit weaker. Asian markets rose strongly Friday as
worries about euro-zone debt problems eased. The euro's rebound boosted the
Nikkei 1.6% to its highest finish in nearly 18 months.
J.P. Morgan upped Nokia (NOK) and
Research In Motion (RIMM) to overweight from neutral, started Qualcomm(QCOM) at
overweight and Motorola (MOT) and Ericsson (ERIC) at underweight in a research
note arguing 2010 will be the year of the mobile computer, or smartphone.
"Smartphone prices look likely to drop, but we find that price elasticity
is high and believe this bodes well for industry health," the broker said.
Google (GOOG) and Apple (AAPL) are well positioned for mobile content and
advertising converging but Nokia, Research In Motion and Palm also have
RadioShack Corp. (RSH) is
considering a sale of the company that could fetch more than $3 billion,
according to a Friday report in the New York Post that cited investment bankers
close to the situation. (Money for buyouts is not stimulative; it is a zero sum
Final Fourth-quarter growth in U.S. GDP revised down to 5.6%; still
fastest rate in six years. Consensus GDP
was 5.9% and before that we had Preliminary
GDP. We think Final is final unless
up the usual suspects: (WSJ) More than a dozen banks and investment firms
are suspected co-conspirators in a criminal probe by the Justice Department's
Antitrust Division into alleged bid rigging and price fixing in the municipal
derivatives market, according to a court filing. The list of banks was
inadvertently filed earlier this week in U.S. District Court in Manhattan as
part of a request for a bill of particulars in a criminal case against three
former executives of CDR Financial Products Inc., a California municipal-bond
broker. The executives, including CDR founder David Rubin, were indicted in
October on conspiracy and fraud charges. They have denied wrongdoing. ... The
banks and investment firms include units of J.P. Morgan Chase & Co., UBS
AG, Citigroup Inc., Wells Fargo & Co., Bank of America Corp., General
Electric Co. and Societe Generale. None of the alleged co-conspirators have
been accused of criminal wrongdoing.
SEOUL--A South Korean naval ship sank following an explosion near a
disputed maritime border with North Korea in the Yellow Sea late Friday,
prompting a rescue mission to save approximately 100 sailors. A short time
later, a second naval ship later fired shots at an unidentified vessel,
according to South Korea's Yonhap news agency. Defense officials were trying to
determine what caused the explosion, which occurred about 10:45 p.m. local
time. Korean TV reports speculated the ship was struck by a torpedo though
there was no immediate official word.
To some the stock market recovery seems divorced from the
reality of the economy. But stocks are anticipatory and so the movement of the
markets has worked as a predicator of events-- 4th quarter GDP up 5.7% after the markets had recovered 50%. The
continued up move in the first quarter of this year would seem to indicate
better times ahead.
One reason for recent markets improvement is the
liquidity (money funds, hedge fund leverage, Fed creating cash) and the need
for return. Short term rates at zero really don’t cut it for folks who live on
there savings. There is so much money is flooding the markets and only so many
places to place it. The old adage is that folks buy’em higher and sell’em lower
and that is certainly holding true.
The action in the retailers is a good example. There was
no economic reason for retail stocks to trade at going out of business prices last March. Sales were down but most
were showing profits or manageable losses. But the hedge funds were shorting
them with abandon as one of the only games in town. This March all the retail
stocks are climbing like they are all moving
to Rodeo Drive. Hedgies, having covered their last shorts in January and
February, are buying with the same abandon they sold short last year. The same
action is occurring in other areas of the stock market reinforcing Economics
101- too much money chasing too few
In the real world we have earned a good return on our
assets for now and we would rather be outside liking in than looking for the
exits. We think stocks are mildly overpriced and we have no real feel for the
economy going forward but we don’t think the economy is as health as stocks
seem to suggest. Markets never crash off the top. And so we guess
a correction of 5% to 8%, a tradable but failing rally and then a move lower
into summer. Our emphasis is on the guess. Comfortably ensconced in
cash if we are wrong we only give up gains not incur losses.
Nobody said it would be free and AT&T can certainly afford it.
On March 23, 2010, the President
signed into law comprehensive health care reform legislation under the Patient
Protection and Affordable Care Act (HR 3590). Included among the
major provisions of the law is a change in the tax treatment of the Medicare
Part D subsidy. AT&T Inc. ("AT&T") intends to take
(tax deductible) non-cash charge of approximately $1 billion in the first
quarter of 2010 to reflect the impact of this change. As a result of
this legislation, including the additional tax burden, AT&T will be
evaluating prospective changes to the active and retiree health care benefits
offered by the company.
is their story and they are sticking to it, for now at least: (WSJ) France
and Germany backed a deal under which European Union countries and the
International Monetary Fund would play a joint role in any bailout of Greece.
The compromise solution that brings reluctant Germans on board for a possible
Greek aid package also puts the wealthy bloc in the embarrassing position of
turning to an organization that typically engineers rescues in the developing
world. French President Nicolas Sarkozy and German Chancellor Angela Merkel,
meeting here ahead of a summit of all 27 EU leaders, reached an accord under
which EU nations would direct a potential bailout of Greece--and contribute a
majority of its funding--and the IMF would play a supporting role, people
familiar with the matter said.
These polls contain the seeds for several Polish jokes:
(Bloomberg) -- Tea Party
activists, who are becoming a force in U.S. politics, want the federal
government out of their lives except when it comes to creating jobs. More than
90 percent of Tea Party backers interviewed in a new Bloomberg National Poll
say the U.S. is verging more toward socialism than capitalism, the federal
government is trying to control too many aspects of private life and more
decisions should be made at the state level. At the same time, 70 percent of
those who sympathize with the Tea Party, which organized protests this week against President Barack Obama’s
health-care overhaul, want a federal government that fosters job creation. They
also look to the government to rein in Wall Street, with almost half saying the
government should do something about executive bonuses. Supporters are also
conflicted over whether private-enterprise elements should be introduced into
government programs like Social Security and Medicare.
(WSJ) Ayad Allawi’s predominantly
Sunni alliance has won Iraq’s national election, narrowly edging out Prime
Minister Nouri Al Maliki’s list to become the largest bloc in the country’s
next parliament. The final preliminary results show Mr. Allawi’s Iraqiya bloc
winning 91 seats in the 325-member parliament to 89 seats for Mr. Maliki’s
State of Law. The upset threatens to end the lock on power that Iraq’s majority
Shiites have enjoyed since the 2003 after decades of oppression under Saddam
Hussein and could severely test the country’s fragile institutions. Before the
announcement, Shiite politicians warned of violence should their parties lose
European stocks closed lower but
up for the week. Oil lost 70 pennies to $79.92. Gold gained $12 to $1105. 1
Euro = 1.3343 U.S. dollars.
Uncle Alan is the guy who in 2001 backed the huge Federal tax cut
because he was worried that financial markets would collapse if the U.S.
retired all its debt and there were no government bonds in which to invest.
Alan Greenspan cautioned Friday the U.S. faces a mountain of debt, the likes of
which the country "has never seen before." In an interview with
Bloomberg Television, Greenspan, former Federal Reserve chairman, warned that
the debt could dampen the economic recovery.
"There is basically this
huge overhang of federal debt which we have never seen before," Greenspan
said. "It is going to have a marked impact eventually unless it is
contained, on long-term rates. That will make a housing recovery very difficult
to implement and put a dampening on capital investment as well." The
Congressional Budget Office estimated that under President Barack Obama's
budget, the U.S. would have a $9.8 trillion deficit between 2011 and 2020.
"One of the unfortunate fallouts from these huge amounts of money that
we're putting in the budget and the Fed is that $1 billion is not what it used
to be," Greenspan said. "You cannot turn someone's debt down who is
requesting $20 million or $400 million when we are talking trillions."
The major market measures were mixed at the close. The DJIA was up 10
points and the S&P 500 up 1 while the NAZZ was lower. Breath was flat and
March 25, 2010
Only Katie (middle of picture) and
her friends who are in the middle of nowhere would smile having to fix a flat
tire. Today they rest.
ride 60 miles to Marathon, Texas.
dollar has eased up from its morning low so that it now trades with a 0.3% loss
against competing currencies, but stock futures still point to a solid start for
the session. The mood among premarket participants has been generally
unaffected by the latest jobless claims tally. Initial jobless claims for the
week ended Mar. 20 totaled 442,000, which is a bit less than the expected total
of 450,000 and down 14,000 from the prior week. Continuing claims came in at
4.65 million, which is more than the 4.56 million continuing claims that had
been expected, but down roughly 54,000 week-over-week.
shares notched fresh annual highs Thursday, with European officials set to
discuss Greece's debt woes. In Asia,
export-related stocks helped push the Japanese market slightly higher, while
the Hang Seng Composite lost ground in Hong Kong.
Dubai's government said it will commit $9.5 billion to help
Dubai World restructure its $23.5 billion of debt. The Dubai government said it
would fund the Dubai World investment with its own capital and with $5.7
billion that remains from a loan the government of Abu Dhabi had made
available. Dubai World presented its restructuring plan, which includes
converting $8.9 billion of debt and claims into equity and injecting $1.5
billion into the firm to fund working capital and interest payments. Two
tranches of new debt maturing in five and eight years will also be issued as
part of the proposed restructuring.
Ambac Assurance Corp., the bond insurance unit of Ambac Financial
Group is handing over to its state regulator control of troubled contracts on
securities made up of souring mortgages, totaling about $35 billion that could
potentially bleed the insurer dry and endanger its commitments to municipal
bondholders. The Wisconsin Office of the Insurance Commissioner, will suspend payments
totaling about $120 million for March to holders of these contracts. As long as
the regulator is overseeing these contracts, monthly payments beyond March are
also suspended. In 2009, Ambac paid out $1.4 billion
in claims to policyholders, according to an annual filing with its regulator. These
payments were primarily related to losses on securities made up of souring
mortgage loans, according to people familiar with the matter. An Ambac
spokeswoman was unavailable for comment.
The commissioner's office will
seek to unwind those insurance contracts that Ambac sold to financial firms but
can't fully pay off without jeopardizing claims of other policyholders. Those
contracts being unwound were intended to protect investors mainly from losses
on mortgage securities. .... Citigroup's exposure to Ambac, using a "fair
value" estimate, is $4.5 billion, according to Citigroup's annual report.
Citigroup has reserves of about $5.5 billion for exposure to so-called monoline
insurers, including Ambac, in the event they are unable to fulfill their
commitments. ... But, in the past
decade, Ambac moved into the more lucrative (our comment -as in big bonus for executives on phantom earnings-)
arena known as "structured finance." A big chunk of these were known
as collateralized debt obligations, or CDOs, that pooled risky subprime bonds,
whose value has deteriorated substantially. As of Sep. 2009, Ambac had exposure
to $48.7 billion of CDOs. (Our comment- A
year and a half ago this news would have caused the markets to swoon. Today it
is a back page story in the WSJ. We think it means that Citi and other banks
and insurance companies and pension funds are now at risk on $35 billion of
financial instruments that have underlying mortgages in default on which they
are no longer going to receive the interest payments. And they are going to
lose all the money on the underlying principle. But what is $35 billion among
European stocks rose as sovereign
debt concerns abated, pushing the main bourses to near-two-year highs and
boosting the euro against the dollar. Oil was down 10 pennies to $80.40 and
Gold was unchanged at $1090. 1 Euro = 1.3356 U.S. dollars.
European official said Greece is saved
and stocks rallied. Then another European official said not so fast and the rally evaporated in the last hour. And that is
how trading decisions are made. It was a race to bell in the final hour for the
major market measures – the DJIA did; the NAZZ and S&P 500 didn’t – to stay in positive territory. Breadth was
negative and volume was moderate.
March 24, 2010
Action in Europe is mixed after Fitch
lowered its sovereign credit rating on Portugal to AA- from AA. The
announcement has also sent the euro sharply lower against the dollar. The
announcement has generally overshadowed news that the latest assessment of
eurozone services and manufacturing grew at the fastest pace since 2007 with
the index measure coming in at a better-than-expected 55.5. Meanwhile, a
report indicated that industrial orders in the 16-country eurozone fell 2%
month-on-month in January. In Britain, the FTSE is flat at the moment. Xstrata
is down considerably, but Anglo American is up after it was upgraded by
analysts at JPMorgan. Banks are a bit mixed. In Germany, the DAX is currently
up 0.1%. The bourse has been helped by a jump in German business confidence for
March. The Wall Street Journal reported
that Daimler AG (DAI)
has agreed to pay $185 million to resolve a long-running U.S. investigation
into allegations that the German auto maker paid tens of millions of dollars in
bribes to secure business overseas, according to sources. In France, the CAC is
currently down 0.5% amid relatively broad pressure. Total (TOT) is a primary source of
weakness at the moment, but EADS is up after WEO said that the European
reimbursable loan mechanism for aircraft subsidies is legal. In Asia, the MSCI
Asia Pacific Index slipped 0.2%, but Japan's Nikkei tacked on 0.4%. Kyocera (KYO) and Canon (CAJ) were among the better
performers, as was Mitsubishi Electric after it raised its earnings
forecast. Shares of video game maker Nintendo were especially strong, though.
In Hong Kong, the Hang Seng eked out a 0.1% gain. Upbeat results from Bank of
China buoyed buying among banking stocks. In mainland China, the Shanghai
Composite settled 0.1% higher.
(WSJ) J.P. Morgan Chase
& Co. is close to striking a deal for a tax refund of as much as $1.4
billion, due to a little-noticed clause in an economic stimulus bill, The Wall
Street Journal reported, citing people familiar with the matter. The law in
question allows companies to apply losses from 2008 or 2009 against taxes paid
in the previous five years, instead of the previous two years, the report said.
As a result, J.P. Morgan would seek more than half the total $2.6 billion in
tax refunds that would apply to failed Seattle thrift Washington Mutual, which
it bought in 2008. The report estimated that at least 250 other companies
expect about $12 billion in federal tax refunds under the law.
(MarketWatch - www.marketwatch.com)
Demand for U.S.-made durable goods rose a
seasonally adjusted 0.5% to $178.1 billion in February, the third straight
increase in a key forward-looking indicator, according to Commerce Department
data. New orders for machinery and civilian aircraft were strong in February,
while new orders for autos, defense goods and electronics declined. The 0.5%
increase in durable goods orders was weaker than the 1.7% gain expected by
economists surveyed by MarketWatch. However, January's orders were revised
higher, from a 2.6% gain to 3.9%. December's orders were also revised higher.
Fitch ratings downgraded Portugal's long-term credit rating to AA- from
AA. Fitch said the outlook on Portugal's rating was negative, and cited
"significant budgetary underperformance in 2009," as a key reason for
the downgrade. "A sizeable fiscal shock against a backdrop of relative
macroeconomic and structural weaknesses has reduced Portugal's
creditworthiness," the rating agency said. (In our mind, a cut from AA to AA- is hardly earthshaking. And we still
think the problems in Illinois and California and most of the other state
budgets are a lot more negative for economic recovery.)
(Bloomberg) -- Sales of new homes
in the U.S. unexpectedly fell in February to a record low as blizzards,
unemployment and foreclosures depressed the market. Purchases decreased 2.2
percent to an annual pace of 308.000, figures from the Commerce Department
showed today in Washington. The median sales price climbed by the most in more
than two years.
Jamie Dimon Was Right (http://krugman.blogs.nytimes.com/2010/03/23/jamie-dimon-was-right/?dbk)
About the 19th century, that is.
Dimon was castigated by many
people, me included, for saying that a financial crisis is “the type of thing
that happens every five, ten, seven, years.” Hey, no big deal.
But that is the way banking
worked once upon a time. I’m reading Gary Gorton’s Slapped by the Invisible
Hand, which tells us that there were bank panics — systemic crises — in 1873,
1884, 1890, 1893, 1896, 1907, and 1914.
On the other hand, there were no
systemic crises from 1934 to 2007.
The problem, as Gorton makes
clear, is that the Quiet Period reflected a combination of deposit insurance
and strong regulation — undermined by the rise of shadow banking. So we have a
choice: restore effective regulation or go back to the bad old days.
European stocks edged up to close at fresh multi-month highs, but the
euro and pound tumbled amid more fiscal fretting in both the euro-zone and the
U.K. oil ended down $1.31 at $80.60. Gold dropped $18 to $1086. 1 Euro = 1.3357
Lose $9 billion make a millions- only on Wall Street:
Stocks opened a bit higher out of the gate but traded mildly lower
through the day. The major
measures lost half of what they gained yesterday. With two steps forward and
one back the bulls remain in control. Breadth was negative and volume
March 23, 2010
The women ride 90 miles on
Wednesday to Fort Davis,
where they spend Thursday,
as a well deserved rest day. The sign was posted at a pecan grove. The picture
is courtesy of http://kirbyridesamerica.blogspot.com/
Futures are currently still trying to find
direction as they as they are only slightly lower at the moment. The Wall
Street Journal reports that Secretary of Treasury, Timothy Geithner, will tell
a congressional panel today that Fannie
Mae (FNM) and Freddie
Mac (FRE) won't be allowed to "return to a pre-crisis
structure" that rewarded shareholders with big profits, but ultimately
burdened tax holders with massive losses. In the ongoing saga between Google (GOOG) and China, CBS News
reports that, in response to GOOG's decision to stop censoring the Internet for
China by shifting its search engine off the mainland, the country has now
accused GOOG of violating promises it made regarding filtering its searching
service. Shares of GOOG are relatively unchanged in pre-market trading,
although Baidu.com (BIDU)
is trading higher by 3%. On the earnings front, Walgreens (WAG) reported Q2 earnings and revenue below
consensus. WAG shares are currently trading slightly lower... In international
news, Greece is again in the headlines, stating that it wants a European
solution to its debt crisis and expects a positive result from the EU on March
25-26. Germany and its EU partners are in disagreement over financial support
for Greece, whose debt load is seen hitting 120.4% of gross domestic product
this year. Chancellor Angela Merkel continued to rebuff calls for a support
deal this week. Reuters has reported that China will likely run a trade deficit
of over $8 bln in March, which would make it China's first monthly deficit
since April 2004. However, this is expected to be a one-time blip, rather than
the beginning of a new trend. Surging domestic demand has grown faster than
exports, which have been bogged down by a tepid worldwide recovery.
In overseas trading, the MSCI
Asia Pacific Index closed unchanged in mixed trade. In Japan, the Nikkei closed
-0.5% as the market played catch up after being closed yesterday. Shares of All
Nippon Airways plunged 6% after the airline more than doubled its annual loss
estimate. But Toshiba ended 3.5% higher on news it was in talks with a company
backed by Microsoft Chairman Bill Gates to jointly develop advanced nuclear
reactors... The Hang Seng closed +0.3% in Hong Kong, giving up some earlier
gains as investors took profit in the afternoon session on worries mainland may
further tighten liquidity through a rise in bank reserve ratios. Exporters
outperformed on expectations overseas demand for their products would rise as
the global economy recovered, dealers said... In mainland China, the Shanghai
Composite closed -0.7% after it failed to breach a key technical resistance
level, while investors cashed in gains from small-cap shares that had recently
outperformed a market rebound... The Kospi closed +0.5% in South Korea as
Samsung Electronics settled +1.0%. Construction issues rallied amid order
expectations after local media reports South Korean builders were likely to win
a significant portion of an estimated $6.6 bln order from Saudi Arabia... In
India, the Sensex closed +0.2% rebounding from their steepest drop in six
weeks, amid optimism that spending will drive demand, limiting the effect of
the central bank's decision to raise interest rates... In Europe, the major
markets there are trading with gains today as Great Britain's FTSE is up about
0.40%, Germany's DAX is higher by 0.15%, and France's CAC is also up 0.40%. Of
note, Britain's consumer price inflation fell a half point in Feb. to 3%,
although it remained above the government's annual target of 2%.
The taxes that fund the new Health Care Bill:
(Bloomberg) -- President Barack Obama
said on the campaign trail in October 2008 that he wanted to “spread the wealth
around.” With Obama on the verge of signing sweeping health-care overhaul
legislation, he’s about to do just that.
If the final version of the
legislation passes the Senate, high-income investors will pay higher Medicare
taxes, tax breaks for out-of-pocket medical deductions will be curtailed, and
it will cost insurance companies more to pay executives millions of dollars.
Those levies will help fund expansion of Medicaid services for the poor and
subsidize health insurance to cover millions who don’t currently have benefits.
“It’s very clear that taxes are
levied on the wealthy and the benefits will spread across the entire income
distribution, with a lot going to expanded Medicaid distribution and expanding
health insurance,” said Roberton Williams, an economist at the Tax Policy Center, a
Washington research institute backed by the Urban Institute and Brookings
Institution. “One couldn’t claim he didn’t keep that promise” to “spread the
In all, the bill would generate
$409.2 billion in additional taxes by 2019, according to an analysis by the congressional Joint Committee on Taxation, a
nonpartisan agency. The bill also imposes about $69 billion more in penalties
for individuals and businesses who don’t meet mandates to buy insurance,
according to the Congressional Budget Office, another nonpartisan agency.
Higher Medicare Taxes
Most of the revenue would come
from higher Medicare taxes on about 1 million individuals earning more than
$200,000 and about 4 million couples filing jointly who make more than
would for the first time apply Medicare taxes to investment income received by
these households, beginning in 2013. The 3.8 percent rate would apply to
unearned income such as realized capital gains, dividends, interest, rents and
royalties. It wouldn’t apply to other income subject to income taxes, including
interest from municipal bonds and retirement accounts such as 401(k) plans
until funds are withdrawn.
Obama’s budget proposes to allow
the existing 15 percent tax rate on dividends and capital gains to rise to 20
percent in 2011 for the same high-earners. Layering a 3.8 percent Medicare tax
on top of that would mean a new top rate on dividends and capital gains of 23.8
percent. The top tax rates on interest and rental income would rise to as high
as about 44 percent, assuming other Obama tax increases on
high-earners are enacted.
The bill also increases the
individual’s share of Medicare tax currently imposed on salaries starting at
$200,000 for individuals and $250,000 for couples to 2.35 percent, from 1.45
The combination of the new
Medicare taxes and Obama’s budget proposals, if they were in place this year,
would cost a married couple with a household income of $5 million an extra
$287,100 in taxes, according to analysis by the consulting firm Deloitte Tax in
The Medicare taxes superseded an
earlier Senate proposal to tax high-value employer-provided insurance coverage,
dubbed “Cadillac plans.” That 40 percent excise tax was delayed until 2018,
when it would begin to apply to benefits over $10,200 for individuals and
$27,500 for couples.
Those thresholds would be indexed
to inflation, which grows at a slower pace than the cost of health care,
meaning more employers would likely face the levy over time.
Other provisions likely to affect
higher-income individuals would scale back tax preferences associated with
paying out-of- pocket medical expenses. Starting in 2013, Americans under 65
won’t be able to deduct medical expenses until they exceed 10 percent of
income, up from 7.5 percent now; retirees would keep the lower threshold.
The bill in 2011 places new
restrictions on what can be purchased using special savings accounts funded
with pre-tax dollars including health savings accounts. Improper withdrawals
from the accounts also would be hit with a new 20 percent tax.
And the legislation for the first
time would place a $2,500 limit on what can be contributed to
employer-sponsored flexible spending accounts, another type of account funded
with pre-tax dollars that can be used to pay for medicines, co-payments, and
other expenses. Employers currently set their own limits, typically between
$3,000 and $5,000 in the absence of a government cap. This change would cost an
average worker about $625 in tax savings, according to WageWorks Inc.,
a San Mateo, California, company that administers 1.5 million accounts.
Consumers who frequent tanning
salons would pay a 10 percent excise tax, and those who buy devices such as
wheelchairs would pay a 2.3 percent excise tax. Drugmakers may pass on a $3
billion annual fee. Insurance companies would be denied deductions when they
pay their executives over $500,000.
Under the reconciliation bill
that is now before the Senate, individuals who don’t purchase insurance would
be subject to a fine of $325 in 2015 and $695 in 2016. Individuals may be
subject to a charge equal to as much as 2.5 percent of their income in 2016, if
the total is greater than the flat payment.
Employers with 50 or more workers
would pay $2,000 per worker if they don’t offer health insurance. The
legislation offers a small business tax credit to help pay for employer-
Companies also would face more
scrutiny from the Internal Revenue Service for using tax shelters.
The NAR reports: February Existing-Home Sales Ease with Mixed
Conditions Around the Country (http://www.calculatedriskblog.com/)
Existing-home, which are
finalized transactions that include single-family, townhomes, condominiums and
co-ops, slipped 0.6 percent nationally to a seasonally adjusted annual rate of
5.02 million units in February from 5.05 million in January, but are 7.0
percent higher than the 4.69 million-unit pace in February 2009.
Total housing inventory at the end of February rose 9.5 percent to 3.59 million
existing homes available for sale, which represents an 8.6-month supply at the
current sales pace, up from a 7.8-month supply in January. Raw unsold inventory
is 5.5 percent below a year ago.
1 Euro = 1.3482 U.S. dollars
and Meadowlarks arrived.
We saw a male ring neck pheasant on our farm for the first time in twenty years.
European stocks edged higher, though investors remained cautious ahead
of the U.K. budget and the European Union summit later this week. Oil gained 34
pennies to $80.95. Gold was up $5 to $1106.
were higher all day with the major measures up 1%. Breadth was 2/1 to the good
and volume was moderate. The bulls remain in control and continue to climb the
wall of worry.
March 22, 2010
The picture is of Katie and friends
entering Texas, 3 states down and five to go. Of course Texas is going to last
Tuesday the tour heads 74 miles
from Ft. Hancock to Van Horn, Texas
Van Horn a town of 2500 folks, known
for the famous
Threemile Mountain and Fivemile Mountain.
In late 2006, the Wall Street
Journal reported that Jeff Bezos,
founder and CEO of amazon.com, had acquired 290,000 acres (1,200 km2) of land 25 miles (40.2 km) north of Van Horn
to house his fledgling space tourism company, Blue Origin. As of 2008[update],
Blue Origin had been expected to start commercial operations as early as 2010,
aiming for 52 launches per year from the Van Horn, Texas facility. As of March
2010[update] however, Blue Origin and Bezos "have been very secretive
about" the plans for the Van Horn facility for the past five years, having
granted no interviews with news media since a single interview with the Van
Horn Advocate in early 2005. In early 2010, NASA awarded Blue Origin US$3.7
million to work on an advanced technology, which detaches a crew cabin from its
launcher if the shuttle malfunctions."
Health Care passed. Most stuff
like the mandated buying of insurance doesn’t’ take effect until after the
presidential election in 2010. What a strange coincidence.
(MarketWatch) U.S. stock futures
pointed to a weaker start Monday with the insurance and pharmaceutical sectors
in the spotlight as the House of Representatives passed a health reform bill,
while continued jitters around Greek finances and India's rate tightening also
played a role. Greek and Irish banking stocks paced a three straight drop for
European equities, while Asian stocks fell in the first reaction to India's
rate hike on Friday.
Our sentiments exactly:
Investor Sentiment: Going Forward
In hindsight, the best strategy
has been to "set it and forget it" - buy at the bottom in March, 2009
and let it ride. I am sure that is what everyone did! Going forward, the best
strategy remains as it has been since October. It will be important to exercise
patience and buy at the lows and sell at the highs to capture any profits from
this market. While buying low and selling high is always a good policy, it is
particularly important here. Extremes in bullish sentiment, as we are seeing
now, imply that a price move is either nearing its end or the ascent of prices
is surely to show. This is our expectation 85% of the time. The other 15% of
the time or what I like to call "it takes bulls to make a bull
market" scenario, the market will continue meaningfully higher despite
increasing bullish sentiment. We saw this in 1995, 2003, and 2009 when the
markets were coming off of long periods of underperformance. I am not banking
on this time being different.
European bourses recovered after
U.S. stocks turned higher. Gold lost $10 at $1095 and Oil gained pennies to
opened lower then rallied for the rest of the day into the close. With no
horses in the race we just watched. Breadth was positive and volume light.
St Joseph's Day 2010
women ride 88 miles to Las Cruces, New Mexico on Saturday after their mountain
climb today to Kingston, New Mexico, population 25. Hopefully Saturday’s ride
is all downhill. Sunday they ride into Texas where they will spend the next 20
days. Their Sunday night stop after a 66 mile ride is El Paso followed by 47
miles on Monday to Fort Hancock.
Las Cruces 58/31;
El Paso 66/40;
Fort Hancock 78/46
The economy is
recovering but so have the markets over the last year. The S&P 500 is 72%
higher than it was a year ago. At that time we commented that market conditions
didn’t warrant a market level as low as it was and that we would hold stocks
until they recovered to more reasonable levels. And we did. When the S&P
500 recovered to the 900 level we moved to cash. We missed the next 15% move.
At year end after the major market measures had pulled back 9% we reestablished
positions. Having gained 8% and more in accounts since mid December we have
again chosen to return to cash since we think the greed/reward ratio tips
have been flat (job losses = job gains) for the past two months but the
employment that is now available is at significantly lower salaries than that
of jobs lost. And with the turmoil in individual state budgets even the
salaries and benefits of government employees and/or the number of employed are
going to be reduced. The stimulus was too little and directed incorrectly but
it was enough to stave off disaster. And with Social Security and Pension
payments plus Medicare and other government programs a steady stream of
spending –that was not available in the 1930s-continues to flow into the
economy and will probably prevent any relapse into recession.
holding at 10% the psychology of individual on the line workers probably entertains
a little less fear of layoff. The recovery of stock portfolios and
stabilization of housing prices, albeit at lower levels has created complacency
in the markets. The rally in the last 12 months has been inexorable but not
frantic. That has been a positive. But it is our take that at some point a
correction of more that 9% will occur. We are content to have recovered and
survived. We will leave the possible last 5% move higher before a significant
pullback to those younger and more nimble than we.
Davy Crockett R.I.P.: http://www.nytimes.com/2010/03/19/arts/television/19parker.html?hpw
(Yahoo) In Europe, stories
related to proposed financial support for Greece continue to come across news
wires, but any clear or official resolution remains absent. As for corporate
news, Britain's Lloyds Banking Group (LYG)
reported that it expects to post a profit in 2010, since provisions for bad
assets are not as large as previously forecast. The news has helped lift other
banking issues and supported a 0.7% gain for Britain's FTSE. Financial issues
are also leading France's CAC, which is up 0.5% at the moment. BNP Paribas,
Societe Generale, and Credit Agricole currently lead the list of top
performers. In Germany, the DAX is up 0.4%. Deutsche Bank (DB) is a leader among advancing issues,
which outnumber decliners by 3-to-1.
In Asia, Japan's Nikkei concluded
the week with a 0.8% gain as its advancing issues outnumbered its decliners by
4-to-1. The broad-based advance helped the Nikkei finish the week on a positive
note and solidify a modest weekly gain of 0.7%. Kyocera (KYO), Canon
(CAJ), Honda Motor (HMC),
and Sony (SNE) were
primary sources of strength in the latest session. According to reports,
Samsung Electronics predicted a strong 2010 and said it is aiming for
double-digit sales growth from last year's record high. Hong Kong's Hang Seng
had a more modest gain of 0.2% in its final session of the week. That helped it
secure a weekly gain of 0.8%. Bank of China and China Construction Bank were
primary sources of strength in the final session of the week. However, HSBC (HBC) was a key laggard. In
mainland China, the Shanghai Composite closed Friday with a 0.7% gain and a
1.8% weekly gain.
(WSJ) China's Geely said talks to
acquire Ford Motor's Volvo unit have hit a snag because of unspecified delays
at Ford, but added it still expects the deal to be completed.
We’ve heard this before:
(WSJ) A potential spike in bad
debts as a result of a government-backed lending surge is likely to be the
biggest challenge for China's banks in the next few years, but lenders should
be able to keep the problem at a "manageable level," Standard &
Poor's Ratings Services said.
Bad to worse:
Shares of Palm (PALM) dropped more than 15%
in pre-market trading after issuing a revenue forecast for the current quarter
that was far below market expectations. The company's inventory of its latest
so-called smartphones has built up at wireless carriers and management expects
future sales to be weak until it can clear out the channels. The company said
its fiscal third-quarter loss narrowed to $18.5 million or 13 cents a share,
from $95 million, or 89 cents a share, a year earlier.
We decided to
eliminate our final two positions and go to all cash. We sold Ford for a profit
and Boston Scientific for a scratch profit/loss.
Financials are lower because
Goldman lowered its forecast for 2nd quarter bank profits by 155.
The drop in financials ahs soured the entire market. Today ends Quintuple
Headline: Fed must identify banks
that needed bailout funds, appeals court says. http://www.bloomberg.com/apps/news?pid=20601087&sid=aUpIaeiWKF2s
(NYT) Arizona on Thursday became
the first state to eliminate its Children's Health Insurance Program when Gov.
Jan Brewer signed an austere budget that will leave nearly 47,000 low-income
children without coverage.
The Arizona budget is a vivid
reflection of how the fiscal crisis afflicting state governments is cutting
deeply into health care. The state also will roll back Medicaid coverage for
childless adults in a move that is expected to eventually drop 310,000 people
from the rolls.
State leaders said they were left
with few choices because of a $2.6 billion projected shortfall next year. But
hospital officials and advocates for low-income people said they were worried
that emergency rooms would be overrun by patients who had few other options for
care, and that children might suffer enduring developmental problems because of
inadequate medical attention.
Read more: http://swampland.blogs.time.com/2010/03/19/underplayed-story-of-the-day-arizona-drops-childrens-health-care-program/#ixzz0iecjH8FE
The other side of the coin: Why stocks could continue to rise with the
S&P 500 reaching 1225:
(Bloomberg) The Standard & Poor’s 500 index has
entered an “air pocket” of little resistance as it pushed to a 17-month high,
according to analysts at Instinet, who say the benchmark could extend its
The area of little resistance
extends to between 1,180 and 1,200, where prices may keep rising even with low
volume, said Instinet’s New York-based chief market technician John Schlitz.
The benchmark index for U.S.
stocks broke out of a chart pattern known as an inverted head and shoulders in
July, generating a price target of 1,225, Schlitz said in a telephone interview
on March 17. That’s 5.1 percent higher than the S&P 500’s closing level of
1,165.83 yesterday, and could signal the measure will advance to about that
“Should the index eventually
reach” 1,225, “we expect significant resistance to develop,” Schlitz said. The
61.8 percent Fibonacci retracement level of the bear market resides within 10
points of that level, he said.
Fibonacci analysis is based on a
formula developed by 13th century mathematician Leonardo da Pisa, known as
Fibonacci, who discovered the sequence while studying the reproduction rate of
rabbits. Analysts use the indicator to determine levels where buy and sell
orders may be clustered. Fibonacci ratios include 23.6, 38.2, 50, 61.8 and 76.4
The S&P 500 has recorded just
one loss of more than 0.4 percent since Feb. 8. The S&P 500 closed above
its daily mid- range in 23 of the 26 trading days during that span, Instinet
said in a note co-written by Schlitz.
Stocks ‘Muscle Higher’
An “underlying sense of caution
is generating intraday sell-offs which--although ultimately unsuccessful--are
taking some of the pressure off the short-term overbought conditions,” Schlitz
wrote. “That, together with light overhead resistance, is allowing the market
to muscle higher on low volume.”
U.S. stocks rose March 17,
sending the S&P 500 to its highest since September 2008, after a drop in
producer prices supported the Federal Reserve’s assessment that the economic
recovery isn’t stoking inflation. The benchmark slipped less than a point
The S&P 500 closed at
1,150.23 on Jan. 19, the highest level since October 2008, and then plunged 8.1
percent through Feb. 8 on concern over deficits in European nations including
Greece and speculation that the Fed will need to rein in emergency stimulus
measures as the economy improves. The index has since recovered that loss and
extended its rebound since the March 9, 2009, lows to 72 percent.
Technical analysts observe price charts
to forecast resistance levels, or ceilings restricting further price increases,
and support levels, or floors limiting declines. The trading patterns and
prices are used to predict changes in a security, commodity, currency or index.
Oil dropped $1.67 to $80.53 and
Gold closed at $1105 down $22. European stocks closed mostly lower, as concern
about Greece's fiscal situation rose again. The euro weakened on the dollar, 1 Euro = 1.3529 U.S. dollars.
major measures opened higher but reversed in the first hour of trading and were
lower for the rest of the session. Breadth was 2/1 negative and volume was
light for a Quarterly Witching day.
18 March 2010
Tomorrow, Friday, Katie and friends ride over the Emory Pass in New
Mexico which is the highest spot on their ride. The temperatures in Sliver City
from where they are leaving and Kingston, NM, their destination, are expected
to be in the 60s and
but temps in the mountains may be
cooler depending on the clouds. We thought her ride on Wednesday was her last
mountain ride but we were wrong. But tomorrow’s 48 mile ride is the end of the
mountains and it’s all downhill to the Atlantic Ocean from there.
Kingston was the largest silver mining town in New Mexico in 1880’s. The
population grew to 7000 men and some women, children and Chinese people. Jack
Sheddon discovered a rich lode of silver ore in 1882. Kingston quickly became a
boom town with a bank, 22 saloons, 14 groceries, 3 hotels, 3 newspapers, a
brewery, gambling halls and much more. Here is some current information about
Kingston - it's pretty accurate since I live here. Today Kingston is a tiny
village of about 25 residents - one blink and you will miss the turn to the
entrance of the village. The Spit & Whittle Club, the nation's oldest
continuously-active social club, dates to 1888 is still having a meeting in the
old schoolhouse every month. You can still see some of the historical buildings
and a fire bell in town. Kingston is a ghost town on the foothill of beautiful
Gila National Forest. We are happily living here and enjoying life in this
environment with the spirits.
crocuses are up and the tulip and hollyhock greens are also showing. Spring is
on the way but snow is predicted for Saturday.
(YAHOO) The Consumer Price Index
for February was flat; a 0.1% monthly increase had been expected. Core prices
increased 0.1% month-over-month, as expected. The February figures followed
January's 0.2% monthly increase for headline CPI and a 0.1% monthly decrease
for core CPI. Meanwhile, initial jobless claims for the week ended Mar. 13
totaled 457,000, which is on par with the 455,000 initial claims that had been
expected and down 5,000 from the prior week. Continuing claims totaled 4.58
million, which is greater than the 4.52 million continuing claims that had been
expected. Continuing claims for the prior week were upwardly revised to 4.57
Most Asian markets declined Thursday, with Japanese exporters dragged
lower as the euro weakened against the yen following a report that Greece may
seek financial help from the IMF. The Nikkei was off 1.0%.European markets were
quiet and mixed at midday.
We completed our selling today by eliminating Huntington Bank and Sprint for scratch profits. We also
sold half the Ford in most accounts
for a 30% profit and as a discipline sold half our Boston Scientific position for 10% or less loss. That leaves us
with small holdings in Ford and BSX in most accounts and 95% cash. Our take is
that the world is not ending but stocks seem ahead of themselves and the
economic outlook. We made enough money for clients to live on this year and we
would rather be on the sidelines watching for now.
Diane Swonk, chief economist
Mesirow Financial: CPI Subdued, Jobless Claims Still Somewhat Elevated
The Consumer Price Index came in unchanged for the month of
February, with declines in energy prices offsetting a slight increase in food
and some of the core indices. Vehicle prices increased, as they did in the
Producer Index. Once again, the vehicle sector is hardly a hotbed of inflation.
In general, inflation not only remains contained, but
continues to decelerate from its pace of a year ago. Moreover, that trend is
expected to continue, given the large role that housing plays in inflation
measures. This should reassure the inflation hawks that inflation is tame and
not a near-term problem. However, it also underscores how weak the recovery
Indeed, jobless claims edged slightly lower to 455,000 in
the most recent week. This is still elevated, especially given the fact that
weather is no longer a major distortion to the data. Moreover, ongoing claims
remain extremely high, underscoring the difficulty for the already-unemployed
to find a job.
The Bottom Line: The economy lost momentum in the first
quarter - a critical time for the recovery. The best bet is that we muddle our
way into spring and even start to generate some jobs along the way. Economic
conditions will feel a little bit better as we move from 2010, through 2011,
and into 2012. There is no going back, however, and the road ahead is rocky and
uncharted. We are cutting a new path which is fraught with both danger and
opportunity. The key is to find the opportunities, and if the financial reform
proposals are any indication, we will see whole new industries arise as
financial firms stake out their territory and adapt. History doesn't tell us
where the jobs will come from - just that they will come.
Attention Hank and Uncle Alan:
North Korea executed a former senior official last week as punishment for the
country's botched currency reform, a news report said Thursday. In November,
North Korea redenominated its currency as part of efforts to lower inflation
and reassert control over the country's nascent market economy. However, the
measure reportedly worsened the country's food situation by forcing the closure
of markets and sparked anger among many North Koreans left with piles of
worthless bills. Pak Nam Gi, the ruling Workers' Party finance and planning
department chief who spearheaded the currency reform, was executed by a firing
squad in Pyongyang last week, South Korea's Yonhap news agency reported, citing
unidentified sources. Pak was accused of ruining the nation's economy in a
blunder that also damaged public opinion and had a negative impact on leader
Kim Jong Il's plan to hand power over to his youngest son, Yonhap said.
Loan Performance: January Home Price Index Shows Narrowing Annual Decline
National home prices, including
distressed sales, declined by 0.7 percent in January 2010 compared to January
2009, according to First American CoreLogic and its Loan Performance Home Price
Index (HPI). This was a significant improvement over December’s year-over-year
price decline of 3.4 percent. Excluding distressed sales, year-over-year prices
declined in January by 0.4 percent; while in December the non-distressed HPI
fell by 3.3 percent year-over-year. Compared to a year ago, the month-to-month
rate of decline is lessening – in January 2009, the HPI showed the largest one
month decline in its more than 30-year history. On a month-over-month basis, the
national average home price index decline accelerated, falling by 1.9 percent
in January 2010 compared to 0.8 percent in December 2009, indicating the
housing market still remains weak.
(Bloomberg) -- Ebullio Capital Management
LLP’s commodity hedge fund slumped more than 86 percent last month because of
losses in industrial metals.
Assets under management fell to
$1.47 million, from $42.3 million in November, according to the company’s
February report to investors. The Southend-on-Sea, England-based fund pledged to
honor requests from investors to return money after “quite substantial”
redemptions in February and March.
forced the fund “to liquidate and/or cancel parts of the physical book and
liquidate some long-held speculative positions, mainly in LME non-ferrous
metals,” Ebullio founder Lars Steffensen wrote in the report, referring to the
London Metal Exchange.
European stocks closed mostly lower, as concern about Greece's fiscal
situation rose again. The euro weakened on the dollar, while oil fell 86
pennies to $82.15 and gold was flat at $1126.
major market measures closed mixed with the DJIA and NAZZ slightly higher and
the S&P 500 slightly negative. The DJIA has been up 8 days in a row.
Breadth was negative and volume was light.
St Patrick’s Day 2010
Katie’s phone died and it has taken a few days to replace
it. Thus there have been no posts on her blog.
Katie sent this e-mail to us last night:
Headwinds up to 20 mph
on Monday and 30 mph yesterday. Couldn't go faster than 7 mph on
flat. Made the 78 miles on Monday but only made 65 of 75 mile route.
couldn’t get in before dinner because of time change. Most of group didn't
finish either day. Big climb today. Consolation is short mileage.
Hopefully Thursday she will have time to learn how to use
the new phone, a droid, for a post. But she keeps riding on and today she and
her cohorts are spending the day climbing 4000 feet to cross the Continental Divide. This is the last
major climb for the ride and tomorrow is a well deserved rest day for the
(Wikipedia) The Continental Divide of the Americas, or merely the Continental
Divide or Great Divide, is the name given to the principal, and largely
mountainous, hydrological divide of the Americas that separates the watersheds
that drain into the Pacific Ocean from (1) those river systems that drain into
the Atlantic Ocean (including those that drain via the Gulf of Mexico or the
Caribbean Sea), and (2) along the northernmost reaches of the Divide, those
river systems that drain into the Arctic Ocean. There are other continental
divides on the North American continent; however the Great Divide is by far the
most prominent of these because it tends to follow a line of high peaks along
the main ranges of both the American and Canadian Rocky Mountains, at a
generally much higher elevation than the other divides.
(Yahoo/Finance) Stock futures in
the U.S. are still slightly higher this morning. In Europe, Britain's FTSE is
up 0.4% at the moment. Mining stocks are strong as BHP Billiton (BHP),
Xstrata, and Rio Tinto sport gains. Shares of RTP were
actually downgraded by analysts at Societe Generale. In economic news,
employment data for the U.K. came in better than expected, which has bolstered
the British pound. The pound was also helped by the details of minutes from the
last Bank of England meeting, during which policymakers voted unanimously to
keep monetary policy unchanged. Germany's DAX is currently up 0.8%. Siemens
is a leader for the second straight session. Reports indicated that
the engineering giant plans to revamp its information technology unit to
prepare it for a possible sale or public offering. In France, the CAC is
currently up 0.5%... ArcelorMittal is outperforming, but Sanofi-Aventis
has slipped amid news that the World Health Organization is conducting
a probe into a vaccine from Sanofi. In Asia, the MSCI Asia Pacific Index
advanced 1.5% to an eight-week high, while Japan's Nikkei tacked on 1.2% to hit
at an eight-week closing high. The Bank of Japan eased policy in move thought
to be an attempt to prevent the yen from rising. The central bank doubled
the amount available under its short-term lending program to 20 trillion yen
from 10 trillion yen. In corporate news, Elpida Memory was a strong performer
after the Nikkei business daily said Elpida is expected to return to a
hefty profit for its current fiscal year. Tokyo Electron
While we were away market
meandered higher. Investors’ Intelligence has 46% bull and 21% bears in its
latest weekly report.
(MarketWatch) Wholesale prices
fell a larger-than-expected 0.6% in February after seasonable adjustments, with
energy prices falling 2.9%, the Labor Department reported. This is the largest
decline since last July. The producer price index has risen 4.4% in the past
year, the government said. The core PPI - which excludes food and energy prices
- rose 0.1% in February, more than expected. Core prices are up 1.0% in the
past year. Economists surveyed by MarketWatch expected a 0.3% fall in the
headline PPI and a 0.1% decline in the core rate.
Members of the Organization of
the Petroleum Exporting Countries have agreed to keep the cartel's production
quota unchanged at 24.845 million barrels a day, as expected, according to
media reports on Wednesday citing delegates. OPEC is holding a meeting in
Vienna. An official announcement is expected later on Wednesday.
(WSJ) Air-safety regulators are
ordering U.S. airlines to install new software on Boeing 777s to keep the
jetliners from possibly running off the end of runways, a mandate that could
ultimately affect more than 800 planes world-wide.
In a safety directive released
Tuesday, the Federal Aviation Administration ordered the fix to prevent
problems when the autopilot system is inadvertently on while a Boeing 777
aircraft is rolling down the runway just before takeoff.<
For a price:
(WSJ) A package of 165
condominiums in downtown Orlando, Fla. was sold for $25.9 million at an auction
there Monday, the auctioneer, Fisher Auction Co., said.
The winning bid compared with a
minimum of $20 million set before the auction of units at a building called the
Vue at Lake Eola and shows that investors are pouncing on what they see as
bargains even in glutted condo markets like Orlando.
The winner among the nine
registered bidders was Condo Developer LLC. Michael Messersmith, a
Chicago-based lawyer representing that firm, said it was owned by a family
trust but he declined to identify the family. The owners of Condo Developer are
interested in acquiring more condo developments in large metropolitan areas
across the U.S., Mr. Messersmith said.
The winning bid works out to
about $125 per square foot. That compares with an original price of $350 to
$450 on the condos several years ago, said Jeff Morris, a managing director at
Jones Lang LaSalle, a broker that wasn't involved in the sale.
The 35-story building contains
375 condos, of which 210 already had been sold. The package sold Monday was all
the remaining condos plus a vacant retail space of about 8,000 square feet on
the ground floor.
The developer of the building,
Vue-Orlando LLC, spent about $100 million to construct the tower, opened in
2007, and owes about $53 million to lenders, according to Scott Shuker, a
lawyer for the developer. The banks forced the developer into bankruptcy
proceedings in November.
Mortgage Applications Decrease in Latest MBA Weekly Survey: http://www.calculatedriskblog.com/
The Market Composite Index, a
measure of mortgage loan application volume, decreased 1.9 percent on a
seasonally adjusted basis from one week earlier. The Refinance Index decreased
1.7 percent from the previous week and the seasonally adjusted Purchase Index
decreased 2.3 percent from one week earlier. The refinance share of mortgage
activity increased to 67.3 percent of total applications from 67.2 percent the
previous week. The average contract interest rate for 30-year fixed-rate
mortgages decreased to 4.91 percent from 5.01 percent, with points increasing
to 1.30 from 0.82 (including the origination fee) for 80 percent loan-to-value
(LTV) ratio loans. This is the lowest 30-year fixed-rate observed in the survey
since mid-December of 2009, yet the effective rate was unchanged from last week
due to the significant increase in points.
dropped like a
rock on Monday when they reported that they had to suspend sales of a heart
device because they hadn’t made the proper FDA filing. We bought more shares on
the drop because the shares are at a multi-year low and we don’t think (hope)
that they can mess up any more than they already have. We also sold our Natural Gas ETF after receiving a K1 for 2009 from
the company. We thought UNG was a normal ETF and hate dealing with K1s. Since
the K1 reported $0 there is no effect on 2009 tax returns.
We placed the money in Boston Scientific.
In the spirit of selling when we can, not when we have
to we are moving to 85% cash. We sold GE,
Nokia, Nvdia, Dell, and Alcoa for
nice percentage gains. We sold Goodyear
and Deutsch Telekom for scratch profits.
Model Portfolio is double where it was last year at this time. The Model is up
almost 9% for the year and at its all time high.
Large accounts are up 7% to 9% for
the year and smaller accounts are plus 10% and more. The S&P 500 is within
3% of our target.
European stocks rose, helped by
S&P's remarks that it no longer considers a downgrade of Greece's credit
rating to be imminent. Oil ended up 95 pennies at $82.55 and Gold lost $2 to
major market measures were up all day and managed to hold most of their gains
to finish 1/2% higher. Breathe was 2/1 to the good as the financials were strong
and volume was light. Thursday and Friday are Quintuple Witching days so expect
16 March 2010
15 March 2010
Ides of March Portfolio Update
12 March 2010
We will be traveling Monday and Tuesday and so the next post will be on
Wednesday St Patrick’s Day.
phone died in the Arizona desert. Her stop on day 7 at Salome was interesting
but there were no phones or computers or much else there and so she was unable
to post. Today she and Kelle arrive in Phoenix. She will post as soon a she
can. Saturday the women ride 53 miles to Apache Junction followed by a 56 mile
ride on Sunday to Globe, Az. Monday they move on to Safford, AZ in an 83 mile
ride followed the next day by 75 miles to end the day in a new state at Lordsburg,
New Mexico. A St Patrick’s day ride of 47 miles through the tail end of the
Rocky Mountains will end at Silver City, NM after which they will spend the
evening celebrating and take the next day Thursday off. The weather promises to
and in the 70s in Arizona and the 60s in New
Mexico with a 20% chance of
Neither snow nor rain etc will
keep the American shopper from shopping. (MarketWatch) U.S. retail sales posted
an unexpected gain in February despite falling car demand amid trouble at
Toyota and fierce blizzards that crippled the East Coast for days. Retail sales
rose 0.3% last month compared with January, the Commerce Department said.
Excluding the car sector, all other retail sales rose 0.8%. With the Super Bowl
early in the month, sales at electronic store soared.
(Reuters) - Women's clothing
retailer AnnTaylor Stores Corp reported a surprise
quarterly profit on Friday, helped by tight inventory management and improved
The retailer, which operates its
namesake Ann Taylor chain and the more casual, less expensive LOFT stores, said
net income was $41 million, or nil per share, compared to a loss of $375.6
million, or $6.66 per share, a year earlier. Excluding restructuring charges,
the company earned 5 cents per share. Analysts, on average, were expecting a
loss of 1 cent per share, according to Thomson Reuters I/B/E/S. Net sales fell
about 3 percent to $469.1 million. Same-store sales fell 0.6 percent, as a 2.1
percent increase at LOFT stores helped mitigate a 7.3 percent decline at Ann
Taylor. For the current first quarter, AnnTaylor expects total net sales of
$445 million, above analysts' average estimate of $443.7 million.
For the full year, AnnTaylor
expects total sales in 2010 to rise, helped by a return to same-store sales
growth at both of its chains. It expects total store square footage to decline
3 percent this year, as it plans to close about 72 stores and open 30.
(Yahoo/Finance) 8 AM: U.S. stock
futures continue to point to a higher start. Meanwhile, Europe's major bourses
are firmly higher amid news that eurozone industrial production during January
spiked 1.7% month-over-month. That exceeded the call from economists for a 0.6%
increase. Britain's FTSE is currently up 0.4%. Royal Bank of Scotland (RBS),
Lloyds Banking Group (LYG), and Barclays (BCS)
are up solidly. In Germany, the DAX is currently up 0.9%. Deutsche Post is a
primary leader. The stock stopped its two-day slide after UniCredit Research
upgraded the name. Meanwhile, France's CAC is up 0.6% at the moment. Valeo is
among the top performers. In Asia, the MSCI Asia Pacific Index tacked on 0.3%,
while Japan's Nikkei closed 0.8% higher. Exporters gained ground amid
speculation that the Bank of Japan may take additional steps to ease monetary
policy after Japanese Prime Minister Hatoyama called for firm steps to
stem the yen's strength. The comments precede central bank meeting next week. Hitachi
(HIT) advanced after its incoming president said he has no plans to
pursue additional capital raising and that the company must return to profit at
any cost. Honda Motor (HMC) gained after the Nikkei business
daily reported the automaker's CR-Z hybrid sports car is drawing unprecedented
demand. In Hong Kong, the Hang Seng slipped 0.1%. However, Sun Hung Kai
Properties gained after it forecast a stronger-than-expected first-half profit.
In mainland China, the Shanghai Composite fell 1.2%. Banks weighed on the
Retailers have had
a nice run in the last few weeks and we want to lock in some profits and so we
sold ANN and AEO for nice gains, Chico’s for a not so much gain as well as INTC and HAIN for solid gains. We also
sold AT&T for flat to more than the dividend gain. We sold VZ for twice two quarters and more of
dividend gain. We want to raise cash in accounts and selling these two is the
easy way to do it. We don’t understand why these two issues haven’t moved higher
but we would rather keep our more volatile holdings right now while getting
back to 40% invested and selling these two issues accomplishes that.
European stocks closed lower as
investors fretted about potential tightening of monetary policy in China, while
lackluster U.S. economic data weighed on Wall Street. Gold ended down $6 at
$1102 and Oil was $81.13 down 90 pennies.
The stock market measures ended
flat on Friday in light trading. The DJIA was up slightly and the NAZZ and
S&P 500 were down slightly. Breadth was flat.
11 March 2010
72/50 and the coast2caost crew ride a mere 67 miles on to Phoenix on
Friday with clear warm weather ahead for at least the next few days.
Spring is here as the redwing blackbird
males arrived this morning warbling to stake out their territory for the females
that will follow. The snow is melting and the fog hangs low over the remaining
snow piles as ugly March gives promise of nicer times to come.
action suggests the pullback from the run up is upon us. As long as it doesn’t
turn into a route (always the caveat) this correction will be healthy for a
further advance to our target of 1250 on the S&P 500 by May.
The reason the
talking heads and wire services are giving for the pullback is that traders are
worried about Chinese inflation. Say What? How about the markets being up a
gilllion days in a row on light volume with a rest needed as the more likely
(WSJ) --British oil giant BP PLC said Thursday it bought into a diverse and
broad deepwater exploration portfolio that includes assets off the shores of
Brazil, Azerbaijan and the U.S., in a $7 billion deal with U.S. independent oil
and gas producer Devon Energy Corp. The deal gives BP a greater footprint
in two of its core areas--the Gulf of Mexico and the Caspian Sea--and its first
entry into Brazil's prolific offshore basins.
was just doing his civic duty and will probably refuse any cash reward.
HSBC account data theft affects 24,000 accounts. http://dealbreaker.com/
The bank was just kidding when it
said previously that “less than 10 clients” were affected after a former HSBC
computer specialist stole client data from the bank which he handed over to
French tax authorities.
Why is it that the supposed socialist Obama folk have the backs of the
financial titans on Wall Street?
(WSJ) Geithner (Treasury Timmy) has warned the European Commission that its
proposals for more restrictive regulation of alternative fund managers could
affect cross-border investment, demonstrating how the controversial European
Union directive could have transatlantic ramifications.
Europe wants to regulate hedge
funds and other financial entities to prevent what occurred last year but Trusting Timmy is afraid the markets
will collapse. Of course he and his Congressional allies also think that making
hedge fund managers pay regular income tax and Medicare tax on their individual
billions in earnings would hamper the system also. The remarkable reality is
that the hedge funds get all this protection from a tax rates all the rest of
us have to pay for a mere pittance –for them- of political contributions.
Hooray? U.S. foreclosure filings
rose 6% in February from a year earlier, the smallest increase in four years.
(WSJ) The U.S. trade deficit
narrowed to $37.29 billion in January, the Commerce Department said. A 1.7%
decline in imports outpaced a 0.3% drop in exports as the volume of oil imports
hit its lowest level in more than a decade. Separately, the number of idled U.S.
workers applying for jobless benefits fell by 6,000 to 462,000 last week, the
Labor Department reported, but total claims lasting more than one week rose and
the four-week moving average of new claims also climbed.
The bank stocks are not rolling over with the rest of the
markets. That is mitigating this morning’s downdraft. It is probably the result
of traders’ dawning understanding the Senate fiancé bill is to the likening of
the banks. It should be since the banks wrote it.
We bought another tranche of Huntington
Bank, our only bank stock. It is speculative and remains a manageable
position of portfolios.
(WSJ) Verizon Wireless will have its first next-generation 4G handset in
mid-2011, about six months earlier than the company had said before. The
carrier could have a phone that runs on Long Term Evolution, a type of
high-speed wireless technology, three to six months after it launches the
service, Anthony Melone, chief technology officer at Verizon Wireless, said in
an interview. The company expects to launch the service in some markets by the
end of the year. The move is a key step in making faster, next-generation
networks useable by consumers. Earlier uses will involve data cards for
laptops. It will be some time before full coverage is available, however, and
the first LTE phones will feature dual chipsets so they can work on Verizon's
existing mobile-phone network.
The gods are not happy with Chile: Three strong earthquakes rattled
Chile's central-south on Thursday, minutes before Sebastian Pinera was sworn in
as the country's new president.
The first aftershock, one of the
strongest since a massive 8.8-magnitude quake devastated large swaths of
Chile's Maule and Bio Bio regions, was magnitude-7.2, according to the U.S.
We were interested in this article for what the panel expected 7th
graders to know. We didn’t have equations and rational numbers (whatever
they are-as opposed to irrational numbers?) until high school. We don’t think
we could explain the concepts now.
(NYT) A panel of educators
convened by the nation’s governors and state school superintendents proposed a
uniform set of academic standards on Wednesday, laying out their vision for
what all the nation’s public school children should learn in math and English,
year by year, from kindergarten to high school graduation. The new proposals
could transform American education, replacing the patchwork of standards
ranging from mediocre to world-class that have been written by local educators
in every state. Under the proposed standards for English, for example, fifth
graders would be expected to explain the differences between drama and prose,
and to identify elements of drama like characters, dialogue and stage
directions. Seventh graders would study,
among other math concepts, proportional relationships, operations with rational
numbers and solutions for linear equations. The new standards are likely to
touch off a vast effort to rewrite textbooks, train teachers and produce
appropriate tests, if a critical mass of states adopts them in coming months,
as seems likely. But there could be opposition in some states, like
Massachusetts, which already has high standards that advocates may want to
Germany and France launched a
proposal that calls for European trading in credit default swaps to be
conducted on transparent exchanges and subjected to minimum holding periods.
Again we note that the population
of Greece is 12 million while the population of California is 36 million. The
population of Illinois is 12 million and yet the fear mongers seldom mention
that the financial crisis in California and/or Illinois is going to bring down
the world financial system. We actually are more worried about California and
Illinois and would like to see the $100 billion a year being spent in Afghanistan
being spent in the states of the U.S. but then Congress and the White House
find it more politically palatably to spend for a war that for a severe
News to some folks (men & women) we know:
Sex Life Ends at 70 as Health Declines, Study Says (Update1)
By Andrea Gerlin
March 10 (Bloomberg) -- The
average person’s sex life ends by the age of 70, according to a report
published today in the British Medical Journal. Men age 30 have an average of
35 years of sexually active life remaining, compared with 31 years for women,
researchers at the University of Chicago’s department of obstetrics and
gynecology estimated after reviewing a survey of 3,000 people. A separate
survey of older people showed that by 55, men have an average sexual life
expectancy of 15 years and women can expect 10 more years, the researchers
found. People in very good or excellent health were almost twice as likely to
be interested in sex as people in poorer health, according to the study. Men
lost more years of sexual activity as a result of poor health than women, the
researchers said. That may motivate men to pursue healthier lifestyles, they
said. “Translation of expectations about the duration and quality of sexually
active life may, at the individual level, influence important health behaviors
to promote or prolong sexual functioning, such as adherence to medical
treatment or maintenance of a healthy lifestyle,” the researchers wrote. In
statistics, projections of how long people will live vary according to age.
Life expectancy increases as people reach middle age because they have survived
risks that earlier in life reduced their chances of making it to old age. The
team led by Stacy Tessler Lindau, used data from a 1995-1996 survey of 3,000
men and women between ages 25 and 74 and a 2005-2006 survey of 3,000 men and
women between 57 and 85. Men were more likely than women to be sexually active,
report a having a good quality sex life and be interested in sex, according to
the study. The gap was largest among 75- to 85-year-olds. About 40 percent of
men in that group were sexually active, compared with 17 percent of women, the
researchers found. The study was funded by the University of Chicago and the
U.S. National Institutes of Health.
European stocks closed lower as
investors fretted about potential tightening of monetary policy in China, while
lackluster U.S. economic data weighed on Wall Street. Gold ended at $1107 down
$1 and Oil was $81.86 of 30 pennies. 1
Euro = 1.3674 U.S. dollars, 1 Japanese yen = 0.011048 U.S. dollars
Bank stocks holding kept the major measures in check after an initial
down opening and in the final hour the big boys and girls must have decided to
go home long for the day. Thus the major stock measures were higher on the
session and breadth improved from 3/2 negative early in today’s trading to 3/2
positive at the close. Volume was moderate.
10 March 2010
This ☺ picture
of Katie was taken before she began her 2000 foot climb on Day 2 of her ride. (She
was also smiling afterwards.) Tomorrow’s (Thursday) ride is 57 miles to
at which time she will meet up with our daughter Christine (Kelle) for a one
day ride for the both of them to Phoenix. Christine then leaves the ride to fly
to Costa Rica for Spring Break with special friend Gerald. Rush is not going
along. The bike riders and Katie especially will be happy for the sunshine and
Phoenix promises 70 degree weather for them on Friday.
Bluebirds and migrating starlings arrived. (Wikipedia- After a
number of misguided attempts to introduce starlings to North America, perhaps
60-100 starlings were released into Central Park, in New York City, in 1890 and
1891, by an acclimatization society headed by Eugene Schieffelin. Their goal
was to introduce all birds mentioned in Shakespeare's works. The entire North
American population, now numbering more than 200,000,000, descended from these
(MarketWatch) European shares continued the week's muted moves, with
gains for mining stocks and some financial firms helping push the region's main
indexes slightly higher. Major Asian indexes ended mixed after trading in a
tight range as investors looked toward crucial economic data due this week,
while Chinese stocks snapped a three-day advance amid concerns about policy tightening.
The dollar is lower against the
euro at $1.36 and higher against the yen at 90 yen.
Bulls are higher at Investors Intelligence at 44% up from
42% last week and Bears are lower at 23% from 24%.
(Bloomberg) -- Hedge funds that
trade currencies are taking hits from politicians casting them as speculators
out to sink the euro and push Greece into insolvency. They are also losing
Macro funds, so named because
they try to profit from macroeconomic trends, fell 1 percent in the first two
months of the year, according to data compiled by Chicago-based Hedge Fund
Research Inc. Brevan Howard Asset Management LLC, Europe’s largest hedge-fund
firm, Moore Capital Management LLC and Tudor Investment Corp. were among those
reporting fund losses.
The euro dropped 4.8 percent
against the dollar in January and February, while the British pound tumbled 5.8
percent and the cost to insure Greek government debt rose by a third through
the beginning of February. Still, macro managers said the lack of sustained
moves in markets they favor, such as developing- country stocks and
commodities, made it difficult to profit.
Bond underwriters handling the administration-backed Build America
bonds have collected fees topping $1 billion. The fees the banks are
earning on these bonds are 50% greater than the fees they normally earn.
Contrast the love the Congress has for the large investment banks with the
protection it gives to consumers:
(NYT) A Consumer Bill Gives
Exemption on Payday Loans: Senator
Bob Corker, the Tennessee Republican who is playing a crucial role in bipartisan
negotiations over financial regulation, pressed to remove a provision from
draft legislation that would have empowered federal authorities to crack down
on payday lenders, people involved in the talks said. The industry is
politically influential in his home state and a significant contributor to his
campaigns, records show.
The Senate Banking Committee’s
chairman, Christopher J. Dodd, Democrat of Connecticut, proposed legislation in
November that would give a new consumer protection agency the power to write
and enforce rules governing payday lenders, debt collectors and other financial
companies that are not part of banks.
Late last month, Mr. Corker
pressed Mr. Dodd to scale back substantially the power that the consumer
protection agency would have over such companies, according to three people
involved in the talks.
Mr. Dodd went along, these people
said, in an effort to reach a bipartisan deal with Mr. Corker after talks had
broken down between Democrats and the committee’s top Republican, Senator
Richard C. Shelby of Alabama. The individuals, both Democrats and Republicans,
spoke on condition of anonymity because they were not authorized to discuss the
Under the proposal agreed to by
Mr. Dodd and Mr. Corker, the new consumer agency could write rules for nonbank
financial companies like payday lenders. It
could enforce such rules against nonbank mortgage companies, mainly loan
originators or servicers, but it
would have to petition a body of regulators for authority over payday lenders
and other nonbank financial companies.
Consumer advocates said that writing
rules without the inherent power to enforce them would leave the agency
On our afternoon walk yesterday we thought of the cost of
the War in Afghanistan. U.S. taxpayers are spending about $80 billion out of
pocket per year and with future cost of veterans’ health care and other
benefits the cost is at least $100 billion per year. The population of
Afghanistan is 12 million give or take. If the average Afghan family average 3
people that means there are 4 million families. The U.S. could offer sanctuary
to 2.5 million Afghan units (more than half the population) and pay
$40,000 per year to each unit and still spend less that the war is
costing per year. Those refugees could be allowed to buy the
foreclosed houses taking care of another problem. And no more
troops would die in a useless cause.
American Eagle shares have
continued last night’s rise, currently up 95 cents, or 5.5%, at $18.10,
following a better-than-expected Q1 forecast this morning.
AEO said Q4 revenue rose 7.3% to $972 million, beating the average $969
million estimate, and yielding profit per share of 33 cents, in line with
estimates. Same-store sales rose 5%, almost double the rate analysts were expecting
and gross profit as a percentage of sales increased, year over year, from 34%
For this quarter, the company sees profit per share of 15 cents to 17
cents, better than the 15 cents analysts have been projecting.
Last night, the company said it would close its “Martin” group of 28
stores, after the division continued to lose money, boosting the stock in
after-hours trading by more than 5%.
We switched KBE
with a $1 profit to Deutsch Telecom
with half our money left to add to cash. Bank stocks are higher on
takeover rumors. Our guess is that this pop in bank stocks will let the
Treasury try to sell part of its Citi
stake. Citi is trading close to $4
per share. The Treasury owns its billions of shares at $3.25. With a close over
$4 a secondary at $3.75 is just around the corner.
European stocks closed higher,
with an upbeat session on Wall Street providing support after
stronger-than-expected economic data from China and the U.S. Oil ended at
$82.02 up 40 pennies and Gold was down $15 at $1107.
major measures closed slightly higher on Wednesday with the S&P 500 up and
The DJIA lower. Boeing was up $2.50 in the DJIA while 20 of the thirty issues
were lower. AIG was up $3.40 AIG as a hot issue is not positive. Breadth was plus
and volume light.
9 March 2010
Wednesday the 10th the bikesters will head for Salome, Az. ☺
The ride for Katie and her cohorts is 64 miles. Weather
Where is the warm weather?
AZ, La Paz
County, AZ Zip code population (2000): 2,266   Estimated
zip code population in 2008: 2,870 http://www.azoutback.com/salome.htm
RV Parks, Open Lands, and the Airpark Fly-In Communities are big draws to
the area. Thousands of acres of natural desert and wilderness are protected
from development - giving residents and visitors the opportunity to off-road,
rockhound, hike, explore, and wander through the Outback. Thousands of winter
visitors / snow birds each year enjoy the mild winters, and the remote
Charles H. Pratt, with the help
of Dick Wick Hall and his brother Ernest, established Salome in the fall of
1904. Dick Wick Hall named the town after Mr. Pratt's wife "Salome".
The Post Office of Salome was established April 14th, 1905, and later moved to
the current townsite in 1906. It is very hard to travel through the town of
Salome without seeing mention of Dick Wick Hall, his famous frog, and the stick
figure of the dancing Mrs."Salome" Pratt. Dick Wick Hall, co-founder
of Salome, became famous for his writings, his imagination and his pet frog ~ and
according to Mr. Hall ~ Mrs. Salome Pratt took off her shoes and danced across
the hot sand that burned her feet. Thus, the town became "Salome ~ where
she danced ~ Arizona." You can usually see her pictured on several of the
buildings in town, right along with paintings of ~ "That Salome Frog"
and a few saguaro cacti. So if you travel through, don't be shy about asking
questions or taking pictures - happens all the time. Visit the Dick Wick Hall page
for additional history and information regarding this famous humorist - and
don't miss the annual Dick Wick
Hall Days Celebrations.
Turnaround Tuesday is upon us and
given that the markets have been meandering higher the last 6 days a rest and
recharge is probably in order. (MarketWatch) Most Asian markets ended higher Tuesday, as Shanghai and Hong Kong
shares rose after an upbeat forecast from China Life Insurance Co., while China
Southern Airlines Co. jumped on plans to raise funds through a private
placement. European shares marked the one-year anniversary of multi-year lows
with mild losses on Tuesday, as worries about Greece and earnings-related
weakness from EADS and Deutsche Post weighed. Oil has backed down to $80.45
overnight and Gold is down $7 as the trading day in the land of milk and honey
All the better to make more folks resistant to antibiotics:
(MarketWatch) Health care giants Merck & Co. and Sanofi-Aventis
said Tuesday that they will combine their animal-health divisions in a 50-50
joint venture that will create the world's biggest seller of veterinary drugs.
France's Sanofi-Aventis said it's exercised an option to combine its Merial
division with Merck's Intervet/Schering-Plough arm.
wants to do what Obama and Treasury
Timmy are too timid to attempt:
(WSJ) German Chancellor Angela Merkel called for fast action against
credit-default swaps Tuesday, as European Central Bank Governor Christian Noyer
said (CDS) should be traded through
clearing houses under the control of a supervisor. "Clearing houses
should be set up in each of the largest currency zones where CDS are
traded...under the control of each zone's supervisors," Mr. Noyer said at
a press conference in Paris. The clearing should "take place at conditions
that would make the recourse to the central bank possible in case of
need," Mr. Noyer said.
The EU also wants to ban short
selling which is a mistake since without shorting there is no discipline on
bullish investors. Shorting only on upticks worked for 70 years.
(WSJ) The European Union's
executive arm said on Monday it is preparing proposals that could lead to the
creation of a bailout fund for financially troubled euro-zone countries.
The comments—coming a day after
German Finance Minister Wolfgang Schäuble said in a newspaper interview he
backed a plan for a European institution with "comparable powers of
intervention to the International Monetary Fund"—signal that Greece's
financial problems are speeding efforts to address important failings in the
While members share a currency
and a central bank, they have no institution that can rescue countries in
trouble or enforce rules to limit budget...
From the BLS: Job
Openings and Labor Turnover Summary
There were 2.7 million job openings on the last business day of January
2010, the U.S. Bureau of Labor Statistics reported today. The job openings rate
rose over the month to 2.1 percent, the highest the rate has been since
February 2009. The hires rate (3.1 percent) and the separations rate (3.2
percent) were unchanged in January.
The internet is greeeeeeeeat:
(WSJ) The Securities Investor Protection Corporation on Tuesday issued a
warning about a group masquerading as another investor protection group in an
apparent attempt to lure in victims of Bernard L. Madoff. In a press
release, SIPC highlighted
the site of the “International Securities Investor Protection Corporation,”
which mimics the design of its own site. The so-called “I-SIPC” group calls on
Madoff victims to submit their claims, with assertions like the purported discovery of $1.3 billion of Madoff assets found in
Its claim form asks investors for their Madoff case claim number, as
well as copies of their most recent brokerage account statement.
How to make lawyers rich:
(WSJ) Goldman Sachs Group was sued on Monday by a large union pension
fund that accused the Wall Street investment bank of overpaying its executives,
The International Brotherhood of Electric Workers fund filed the
lawsuit in Delaware Chancery Court, seeking to recover money for the company on
behalf of other shareholders.
It seeks to stop Goldman from allocating roughly 47 percent of 2009 net
revenue as compensation, saying such allocations “vastly overcompensate
management and constitute corporate waste.”
The lawsuit also wants Chief Executive Lloyd Blankfein and others in
management, rather than shareholders, to be responsible for charitable
contributions that Goldman is making, Reuters said.
Just how bad was last year for dairy farmers?
Average price received for
milk was in the $11 to $12 per hundred pound range. The cost to produce one
hundred pounds of milk is generally in the $15 -$16 range. To put that into
perspective, if you take the price farmers received for their milk during the
great depression and adjusted that for inflation, it would come to $40 - $60
per hundred. Imagine yearning for the good old days of the great depression.
Cisco (today announced a major advancement in Internet networking
-- the Cisco® CRS-3 Carrier Routing System
(CRS) -- designed to serve as the foundation of the next-generation
Internet and set the pace for the astonishing growth of video transmission,
mobile devices and new online services through this decade and beyond. With more than 12 times the traffic capacity
of the nearest competing system, the Cisco CRS-3 is designed to transform the
broadband communication and entertainment industry by accelerating the delivery
of compelling new experiences for consumers, new revenue opportunities for
service providers, and new ways to collaborate in the workplace.
(MarketWatch) Sprint Nextel jumped more than 5% Tuesday after a top
executive said the company plans to cut debt faster and hinted that quarterly
revenue could grow in 2010 for the first time in four years. Chief Financial
Officer Bob Brust made his remarks Monday afternoon at an investors’
Matt Taibbi: Shorting
credit risk means a lower price for protection. Zero implies zero risk. The
higher the basis points, the higher the implied risk. When U.S. credit default
swaps were first introduced, the
price of protection was around two basis points. According to Bloomberg, the
price for five-year protection was around 38 basis points (per annum) on
Friday. But the price in the over-the-counter market — where this stuff
actually trades — was almost double or around 75 basis points.
most traders in U.S. credit default swaps don’t think the U.S. will default any
time soon, why are they trading U.S. credit default swaps? They are speculating
on price movements the way a day trader buys and sells stocks to speculate on
stock price movements.
Tavakoli: Washington Must Ban U.S.
Credit Derivatives as Traders Demand Gold.
I’d like someone to explain to me how trading a credit default swap on
a U.S. Treasury note isn’t gambling. This is purely betting on crowd behavior —
after all, nobody really thinks the U.S. will default.
It is weird enough living in a country where a man can legally own an
arsenal of machine guns, but his neighbor growing a pot plant will send a team
of DEA agents kicking his door in with a no-knock warrant. But this goes even
beyond that. If I go online today to HaveNoLifeAndBetOnSports.com and bet fifty
dollars on the Bucks against the Celtics tonight, I’m a criminal. But some
gazillionaire firm in New York can legally bet against the United States of
America in unlimited amounts in a trade that has nothing to do with anything,
but a guess about how many other people will make the same bet.
So the Israelis are insulted
that after 14 months in office, Barack Obama has yet to come and visit them. Yet
Bush went almost
his entire term before he visited Israel, and did we ever hear them
bitching about being insulted between January 2001 and January 2008? Nope. http://www.theleftcoaster.com/
(AP) -- Nvidia Corp.
shares rose Tuesday after a Raymond James analyst said chip supplies are tight
and Wall Street is underestimating the maker of graphics chips.
Nvidia "remains a
controversial name in the near term," Hans Mosesmann wrote in a note to
investors. He said the stock "presents an opportunity as the Street
appears to significantly underestimate the momentum in new products for
2010" as well as "upward movement in gross margins."
-- In California’s Napa Valley, producer of the most expensive U.S. wines, 2010
may be a vintage year for foreclosures
as the industry is squeezed by falling land values and a consumer shift to
cheaper brands. As many as 10 wineries and vineyards in Napa will change hands
in distressed sales or foreclosures this year and next, up from none in 2008,
according to Silicon Valley Bank. In a bank survey of vintners, 7 percent called
their finances “very weak” or “on life support.” “We have 250 vintner clients saying this
downturn is the worst in 20 years,” Bill Stevens,
manager of the bank’s wine division in St. Helena, California, said in an
interview. “Anybody who was late to the party won’t have staying power.”
Gold finished at $1122 down $2.
Oil was $81.50. European stocks
recovered earlier losses to finish mostly flat, as positive U.S. stocks offered
support despite continuing concerns about the euro zone's sovereign debt crisis
Wonder if Mustard was a Colonel? ☺
Robert Mustard, Jr., the man
accused of shooting two men at a Dallas office building on Monday morning, was
apparently trying to get his revenge on a financial advisory firm that he
believed had lost all his money. According to the Fort Worth
News, when Mustard approached his financial adviser, Richard Smith,
66, and his son, Chris, 39, in their office yesterday, he accused them of
taking "all my money," before opening fire with a 45-caliber weapon.
Mustard shot the
elder Smith in the legs and his son -- who fled down an escalator
into the lobby -- in the neck. With blood "gushing from both sides of his
neck," witnesses told the AP that the younger Smith begged bank employees
and customers for help: "He was screaming and crying," said Abraham
Achar, who was visiting his friend at the United Texas Bank on the first floor.
"He said, 'He shot my dad.'" When police arrived, Mustard was still
on the premises, authorities said.
Police shot at -- but missed -- the gunman, a disbarred lawyer, who then
barricaded himself in an office and shot himself in the head.
The major measures were higher most of the
day but the big boys and girls began their games in the final hour and the DJIA
lost its gain of more than 60 points to move into negative territory. But once
the sell programs ceased the major measures moved up to close mildly positive
on the day. Breadth was flat in light trading.
8 March 2010
Katie dips her back
bike wheel into the Pacific Ocean on March 5. Tuesday is a rest day which is
needed after climbing 4500 feet on Friday and Saturday to breast the Sierra
Nevada Mountains in the rain and riding 90 miles today to Blythe. Riding 233 in
the first four days is not a blithe activity ☺.
Greece is saved (maybe) and
markets around the world are higher until the big boys and girls decide to
attack another weak European country by blowing out the CDS (Credit Default
Swaps) on the underlying sovereign debt of the target country.
(yahoo.com) this morning's
mood remains subdued as participants sit on strong gains of more than 3% from
last week -- the S&P 500 advanced in all five sessions, including an
incremental gain midweek. Though there haven't been any economic items to act
as catalysts ahead of the opening bell, there have been a few noteworthy items,
including news that AIG
(AIG) has divested another chunk of its business in further merger and
acquisition activity. This time the insurance giant has offloaded its American
Life Insurance Company to MetLife
(MET) in a $15.5 billion deal. Shares of AIG are up 4.2% to $29.27 each in
premarket trade and MET shares are up 4.3% to $40.55 per share in premarket
trade. In other corporate news, Hewlett-Packard
(HPQ) revised lower its previously announced first quarter earnings to $1.07
per share. Its stock price is down 0.7% to $51.66 per share in premarket
action. Meanwhile, the dollar remains a focal point of market participants; the
greenback is currently down 0.3% against competing currencies.
(Bloomberg) -- Emerging-market
stocks rose to a six-week high, currencies of commodity-producing nations
strengthened and oil and metals advanced as Greece and Dubai moved closer to
resolving their debt woes. The MSCI Emerging Markets Index climbed 1.3 percent
at 12:47 p.m. in London, while Greece’s ASE Index
gained 1.4 percent. The gap between Greek and German two-year notes narrowed 19
basis points to 359. Futures on the Standard & Poor’s 500 Index fluctuated
between gains and losses. The Australian and New Zealand dollars strengthened
against the U.S. currency and the yen, and oil increased as much as 1.1 percent
in New York. French President Nicolas
Sarkozy said the euro region is ready to rescue Greece should the
government struggle to fund Europe’s biggest budget deficit, while former
Federal Reserve Chairman Paul Volcker
said the challenges posed by Greece’s debt aren’t “insuperable.” Dubai World,
the state-owned holding company that’s trying to renegotiate about $26 billion
of debt, will present a plan to creditors this month, said three bankers
familiar with the negotiations.
From James Sterngold at
Bloomberg: ‘On the Edge’
Banks Facing Writedowns After FDIC Loan Auctions (ht jb)
A Federal Deposit Insurance Corp.
plan to auction more than $1 billion in assets seized from failed banks next
month ... may trigger write downs that weaken lenders nationwide.
The auctions may have wider
repercussions. Of the $50.4 billion in loans seized from failed banks currently
held by the FDIC, 63 percent involve participations by other lenders, according
to data provided by agency spokesman Greg Hernandez.
“These banks can’t believe that
the regulator they pay to protect them is going to sell these loans to someone
who can flip them and cause them serious losses,” said Robert Reynolds, a
lawyer at Reynolds Reynolds & Duncan LLC in Tuscaloosa, Alabama, ... “Our
banks just cannot believe they’re being treated in a way that ultimately hurts
the FDIC’s insurance fund, because some of them are right on the edge.”
“We have a number of banks
teetering on the edge, and we don’t need this problem,” [John J. Collins,
president of Community Bankers of Washington in Lakewood, Washington] said in
"This problem" is many
small and regional banks are carrying loans above market value. The FDIC
auction will establish market value, and that will probably lead to significant
losses for many banks - and more bank failures.
Last year’s market.
Despite the lack of economic and
corporate data, European stocks closed mostly flat as concerns about Greece
receded. The dollar weakened. Earlier, Asian markets closed mostly up 1% and
more. Oil ended up $23 pennies at $81.70 and Gold lost $12 to $1122.
The major stock measures were mixed all day and closed that way in
light trading. Breadth was slightly positive.
5 March 2010
KatieCoast2Coast March 6 and Katie is off to Jacumba,
California 45 miles
50/38 (warmer in the land of milk and honey).
March 7 and she rides to Brawley, California 67 miles
March 8 and it gets real, 89 miles to Blythe, California.
But they get the next day off.
Blythe is in the desert on the California, Arizona border.
Centuries ago, prehistoric cultures living along the Colorado River created
gigantic figures on the surface known to archaeologist as
"Intaglios." Also known as the Blythe Geoglyphs, archaeological
dating suggests that these particular features are about 1100 years old. Since
then, the Colorado River-dwelling Mojave peoples occupied the
The city of Blythe was named for English
developer/financier Thomas Blythe, who first came here in 1877 and established
primary water rights on the Colorado River. It was incorporated on July 21,
1916. Blythe came to California hoping to turn the Colorado River Valley into
another Nile River Valley. For the most part, he succeeded.
Modern irrigation methods have allowed the desert to become a rich farming and
recreational area. Some mining still occurs in the Palo Verde Valley.
Six miles north of Blythe is the site of the original
Blythe Intake, where the first legal claim for Colorado River Water was made.
Water was transported from here to the nearby, desert Palo Verde Valley which
is now lush farmland.
One year ago tomorrow the Markets
made their decade low in a huge sell off that cleared the air. In hindsight the
bottom seems obvious. At the time it was scary, scary, and scary. Since then
the major market measures have doubled and the fear of those days has again
been replaced by greed. We try not to forget as we go about our daily trading.
We must admit that we felt a lot better this morning when we awoke than we did
a year ago.
Our market outlook remains positive with an
expectation of another 10% rise in the S&P 500 to 1250 before a major pull
back. Markets like gridlock in Washington. The Employment report was a loss of 36,000 jobs for the month of
February which was below expectations. And the news was greeted positively by
the markets both here and overseas. January job losses were revised to down
26,000 from the first reported down 20,000 numbers. The unemployment rate is
Stocks in Japan climbed on
reports the Bank of Japan could take further easing measures. Europe stocks
rose in midday trade, putting the market on track for six straight days of
European shares jumped Friday to
stretch a winning run to six sessions after a report painted a much
better-than-expected picture of the U.S. jobs market. Gold $1132 and Oil ended
at $81.75. The euro was $1.36.
The major measures were higher all day and closed on their
highs up 1% with the S&P 500 ending above the important 1130 level at 1138. Breadth was 5/1 positive and volume was
moderate. The wall of worry is losing height. Six days up suggest that either Mean
Monday or Turnaround Tuesday is probable to skim the froth.
4 March 2010
Katie’s Bike tour begins Friday AM and goes 32 miles
from the Pacific Ocean in San Diego to Alpine California which is still in San
Diego County. Weather forecast is 59/45.
Asia was lower overnight and
Europe is mixed a midday. U.S. futures are flat as the trading day begins. Gold
is down $3 and Oil is touching $81.
The euro is $1.36. According to the WSJ http://seekingalpha.com/article/191964-hedge-fund-euro-probe-should-look-for-media-manipulation
the Justice Department is investigating
collusion among hedge to drive down the value of the euro versus the dollar.
Ten years ago the value relation was the inverse of today and folks were saying
the euro would never rise in value. As long as there are traders there will be
fluctuations. Hedge funds can control a lot of things, but currency values are
not one of them.
(MarketWatch) European shares
pulled off early lows to trade broadly flat, with the European Central Bank and
the Bank of England both keeping rates on hold. Asian markets closed mostly
lower, with Japan's Nikkei 225 closing down over 1%, with export-related stocks
among the fallers.
U.S. stock market futures held
broadly flat Thursday as data showed a fall in initial jobless claims and as
productivity figures were revised higher, with Coca-Cola, Boeing and Walt Disney in focus after receiving
U.S. nonfarm businesses were more
productive in the second half of the year than previously reported, slashing
hours by 1.3% even as they boosted their output by 2.5%, the Labor Department
reported. In the fourth quarter, productivity increased at a 6.9% annual rate,
revised up from 6.2%. In the third quarter, productivity was revised higher to
a 7.8% annual rate from 7.2%. For all of 2009, productivity increased 3.8%, the
most in seven years.
Thursday that a key sales figure rose past analyst expectations last month and
reiterated its fourth-quarter outlook. The company said sales at stores open at
least a year rose 6 percent in the four-week period ending Feb. 27. Analysts
surveyed by Thomson Reuters forecast an increase of 2 percent. Sales at
stores open at least a year are considered a key measure of retailer
performance since they measure growth at existing stores rather than newly
opened ones. Total sales for the period rose 6 percent to $188 million, from
$177 million in the same period last year. American Eagle maintained its
fourth-quarter adjusted profit outlook, which it previously raised based on its
sales performance in January. The retailer expects earnings in a range of 32
cents to 33 cents per share, excluding possible investment security or store
impairment charges. Analysts predict fourth-quarter earnings of 33 cents per
share. Analyst estimates typically exclude one-time items. The company is due to
announce fourth quarter results next Wednesday.
The share price sold off $1 on the news- our guess is either
an analyst downgraded the stock or that traders were disappointed in that the
fourth quarter estimate wasn’t’ raise again as it was several weeks ago. We bought shares for accounts on the drop.
Women's apparel retailer Coldwater Creek posted a smaller quarterly loss that missed
estimates by a penny, but said it expects to improve merchandise margins this
year as the company looks to revamp its offerings and adjust price points.
We didn’t like the report (profits are promised but not
until next fall) and sold for a 20%
profit. We are more comfortable with our positions in the ANN, AEO and CHS.
gas stockpiles fell less than expected last week, the government said Thursday.
The Energy Department's Energy Information Administration said in its weekly
report that natural gas inventories held in underground storage in the lower 48
states dropped by 116 billion cubic feet to about 1.74 trillion cubic feet for
the week ended Feb. 26. Analysts expected stocks to fall between 128 billion
and 132 billion cubic feet, according to a survey by Platts, the energy
information arm of McGraw-Hill Cos. The inventory level was 1.2 percent above
the five-year average of about 1.7 trillion cubic feet, and 3.9 percent below
last year's storage level of about 1.81 trillion cubic feet, according to the
government data. Natural gas prices dropped 10.2 cents, or 2 percent, to $4.655
per 1,000 cubic feet on the New York Mercantile Exchange.
The Natural Gas
ETF is on its all time low and is priced at only a 1% premium to NAV. As the
price of oil continues to rise we would guess that Natural gas should
eventually stabilize. Of course we have been wrong before but the disconnect
doesn’t make sense to us. Whatever, we are buying the UNG ETF in larger/
aggressive accounts for a trade.
NAR: Pending Home Sales Down; Severe Weather Impacting
The Pending Home Sales Index, a
forward-looking indicator based on contracts signed in January, fell 7.6
percent to 90.4 from an upwardly revised 97.8 in December ...
“We will see weak near-term sales followed by a likely surge of existing-home
sales in April, May and June,” [Lawrence Yun, NAR chief economist] said. “The
real question is what happens in the second half of the year."
In the week ending Feb. 27, the advance figure for seasonally adjusted
initial claims was 469,000, a decrease of 29,000 from the previous week's
revised figure of 498,000. The 4-week moving average was 470,750, a decrease of
3,500 from the previous week's revised average of 474,250. The advance number
for seasonally adjusted insured unemployment during the week ending Feb. 20 was
4,500,000, a decrease of 134,000 from the preceding week's revised level of
European shares closed lower after amid mixed U.S. economic data and a
further easing of the Greece fiscal crisis. The euro slipped to $1.35 against
the dollar and oil closed at $80.02 and gold fell $4.
The U.S. sold its warrants to purchase shares of Bank of America stock for $1.5 billion, the most Treasury has
earned from selling warrants in a single institution.
The major measures
closed mildly higher ahead of the Employment Report at 7:30AM tomorrow. Breadth
was positive and volume light.
Nice story from chicagotribune.com. Not all news is bad.
Amazing Grace: Lake Forest
secret millionaire donates fortune to college
Woman who lived frugally donates $7 million to alma mater
By John Keilman, Tribune reporter
Like many people who lived through the Great Depression, Grace Groner
was exceptionally restrained with her money.
She got her clothes from rummage sales. She walked everywhere rather
than buy a car. And her one-bedroom house in Lake Forest held little more than
a few plain pieces of furniture, some mismatched dishes and a hulking TV set
that appeared left over from the Johnson administration.
Her one splurge was a small scholarship program she had created for
Lake Forest College, her alma mater. She planned to contribute more upon her
death, and when she passed away in January, at the age of 100, her attorney
informed the college president what that gift added up to.
"Oh, my God," the president said.
Groner's estate, which stemmed from a $180 stock purchase she made in
1935, was worth $7 million.
The money is going into a foundation that will enable many of Lake
Forest's 1,300 students to pursue internships and study-abroad programs they
otherwise might have had to forgo. It will be an appropriate memorial to a
woman whose life was a testament to the higher possibilities of wealth.
"She did not have the (material) needs that other people
have," said William Marlatt, her attorney and longtime friend. "She
could have lived in any house in Lake Forest but she chose not to. … She
enjoyed other people, and every friend she had was a friend for who she was.
They weren't friends for what she had."
Groner was born in a small Lake County farming community, but by the
time she was 12 both of her parents had died. She was taken in by George
Anderson, a member of one of Lake Forest's leading families and an apparent
friend to Groner's parents.
The Andersons raised her and her twin sister, Gladys, and paid for them
to attend Lake Forest College. After Groner graduated in 1931, she took a job
at nearby Abbott Laboratories, where she would work as a secretary for 43
It was early in her time there that she made a decision that would
secure her financial future.
In 1935, she bought three $60 shares of specially issued Abbott stock
and never sold them. The shares split many times over the next seven decades,
Marlatt said, and Groner reinvested the dividends. Long before she died, her
initial outlay had become a fortune.
Marlatt was one of the few who knew about it. Lake Forest is one of
America's richest towns, filled with grand estates and teeming with luxury
cars, yet Groner felt no urge to keep up with the neighbors.
She lived in an apartment for many years before a friend willed her a
tiny house in a part of town once reserved for the servants. Its single bedroom
could barely accommodate a twin bed and dresser; its living room was
undoubtedly smaller than many Lake Forest closets.
Though Groner was frugal, she was no miser. She traveled widely upon
her retirement from Abbott, volunteered for decades at the First Presbyterian
Church and occasionally funneled anonymous gifts through Marlatt to needy local
"She was very sensitive to people not having a whole lot,"
said Pastor Kent Kinney of First Presbyterian. "Grace would see those
people, would know them, and she would make gifts."
Groner never wed or had children — the sister of one prospective groom
blocked the marriage, Marlatt said — but with her gregarious personality she
had plenty of friends. She remained connected to Lake Forest College, too,
attending football games and cultural events on campus and donating $180,000
for a scholarship program.
That allowed a few students a year to study internationally, including
Erin McGinley, 34, a junior from Lake Zurich. She traveled to Falmouth,
Jamaica, to help document and preserve historic buildings in the former slave
port. The experience was so satisfying that she is trying to get Lake Forest to
create a similar architectural preservation program.
"It affected my (career ambitions) in a way I didn't expect,"
But Groner was interested in doing more, so two years ago she set up a
foundation to receive her estate. Stephen Schutt, Lake Forest's president, knew
of the plan for the past year, but had no idea how large the gift would be
until after Groner passed away Jan. 19.
The foundation's millions should generate more than $300,000 a year for
the college, enabling dozens more students to travel and pursue internships.
Many probably wouldn't be able to pursue those opportunities without a
scholarship: 75 percent of the student body receives financial aid, Schutt
But the study and internship program is not the end of Groner's legacy.
She left that small house to the college, too. It will be turned into living
quarters for women who receive foundation scholarships, and perhaps something
more: an enduring symbol that money can buy far more than mansions.
It will be called, with fitting simplicity, "Grace's
3 March 2010
Oil is $80 and Gold $1141 as the
trading day begins. Asian and European markets were higher overnight.
ADP reported this morning that
private-sector payrolls drop 20,000 in February, the fewest in two years. This
report precedes Friday’s Monthly Employment Report which is the next number on
which the big boys and girls are focused.
(WSJ) Ford Motor Co. surpassed General Motors Co. in sales last month for the first
time in at least 50 years, presenting a new headache for the
government-owned car maker as it struggles to return to profitability. ...Ford
said it sold 142,006 cars and light trucks in the U.S. in February, 43% more
than a year ago—and 471 more than GM. While Ford's results were boosted by
sales to rental-car companies and other fleets, it was the first time since at
least 1960 that Ford outsold its larger rival except for two months in 1998
when GM was hurt by strikes, according to Edmunds.com, an automotive data
provider. GM's February sales rose 11.5%, to 141,535 vehicles.
To complete our wireless exposure we added shares of Sprint to most accounts. It is the
cheapest and also the worst of the four major wireless providers in the U.S. Our
guess is that consolidation will lead Deutsch
Telecom (T Mobile) to acquire Sprint.
DT could pay twice the current price and still be buying Sprint at half the
value the markets currently give to AT&T
and Verizon’s wireless operations.
Diane Swonk, Chief Economist Mesirow Financial
March 3, 2010
Precursor to Friday Employment
Report Not Encouraging
Today's ADP report, which is a precursor to the employment
report for February, showed a decline of 20,000 in February - the smallest
decline since early 2008, but still negative instead of positive. Moreover, the
ADP report is less sensitive to weather-related losses than the report that
will be released on Friday by the government, and hence, is understating (by as
much as 100,000-200,000) the losses we will see in the official data for
Separately, the government started hiring for the 2010
census during the month, which means that private sector job losses were even
greater. The blow to construction was particularly large, especially once you
add weather-related disruptions back into the equation.
On the bright side, manufacturing employment looks like it
may have posted its second monthly gain. Production has picked up as
inventories have fallen even below lackluster demand in recent months, and now
must be replenished.
The Bottom Line: Firing continued to outpace hiring in
February, but the pace of layoffs is clearly abating, and we are close to a
tipping point. Increased hiring associated with the census, and the catch-up
from weather delays in February, virtually ensure a RISE in employment in
March. An economy that must rely upon census hiring and better weather to
produce employment gains, however, is not exactly something to pop champagne
corks over. Indeed, preliminary data suggest that the economy is losing instead
of gaining momentum in the first quarter - an uncomfortable but predictable
reality, given the ravages of the financial crisis.
We repurchased shares of the Money Center Bank ETF (KBE) in many accounts.
Flagstaff Arizona is on the main
Santa Fe RR route from the west coast to the east. There are five RR crossings
in town and the city has finally won a long fight to have the train whistles
silenced as the trains pass those five crossings. The article in the Flagstaff
paper is here:
An economically interesting
sentence in that article is: A Burlington
Northern Santa Fe Railway official said during the ceremony that currently 60 trains pass through town, down
from a peak of 125 trains per day a few years ago before the recession.
From the Institute for Supply Management: February 2010 Non-Manufacturing ISM Report On
"The NMI (Non-Manufacturing
Index) registered 53 percent in February, 2.5 percentage points higher than the
seasonally adjusted 50.5 percent registered in January, indicating growth in
the non-manufacturing sector. The Non-Manufacturing Business Activity Index
increased 2.6 percentage points to 54.8 percent, reflecting growth for the
third consecutive month. The New Orders Index increased 0.3 percentage point to
55 percent, and the Employment Index increased 4 percentage points to 48.6
percent. The Prices Index decreased 0.8 percentage points to 60.4 percent in
February, indicating an increase in prices paid from January. According to the
NMI, nine non-manufacturing industries reported growth in February.
Respondents' comments vary by industry and company about business
Employment activity in the non-manufacturing sector contracted in February for
the 26th consecutive month. ISM's Non-Manufacturing Employment Index for
February registered 48.6 percent. This reflects an increase of 4 percentage
points when compared to the seasonally adjusted 44.6 percent registered in
Nonfarm private employment decreased 20,000 from January to February
2010 on a seasonally adjusted basis, according to the ADP National Employment Report®.
The estimated change of employment from December 2009 to January 2010 was
revised down, from a decline of 22,000 to a decline of 60,000. The February
employment decline was the smallest since employment began falling in February
Two large blizzards smothered parts of the east coast during the
reference period for the BLS establishment survey. The adverse weather had only
a very small effect on today’s ADP Report due to the methodology used to
construct it. However, the adverse weather is widely expected to depress the
BLS estimate of the monthly change in employment for February, but boost it for
March. Therefore, it would not be unreasonable to expect the BLS estimate for
February (due out this Friday) to be less than today’s ADP Report even though
the BLS estimate will include the hiring of temporary Census workers not
captured in the ADP Report.
Note: ADP is private nonfarm employment only (no government jobs).
Rep. Patrick McHenry (R-NC) introduced
a bill yesterday that would bump Ulysses S. Grant -- our 18th president and
Civil War hero -- from the $50 bill in favor of Ronald Reagan -- our 40th
president and Republican hero.
Oil gained $1.12 to close at
$80.80 and Gold finished at $1140 up $3. European
stocks rose, boosted by a fresh set of austerity measures from Greece and
better-than-expected U.S. private sector employment data. The euro gained
against the pound.
The major measures were mixed small the close. The DJIA was down 10
points and the S&P 500 was up 1 point. Breadth was positive and volume was
2 March 2010
1 March 2010
We will be
traveling tomorrow and so the next post will be on Wednesday March 3.
Happy Casimir Pulaski Day.
Casimir Pulaski Day is a holiday
observed in Illinois
on the first Monday of every March in memory of Casimir Pulaski (March 4, 1745
– October 11, 1779), a Revolutionary War cavalry officer born in Poland as
Kazimierz Pułaski. He is known for his contributions to the U.S. military
in the American Revolution by training its soldiers
For more http://www.polishamericancenter.org/Pulaski.htm
Asian and European markets were
higher overnight. Oil has an $80 handle and Gold is at $1115. Copper is strong
on the Chile earthquake.
(Marketwatch) European shares advanced overall on the first day of
March, although Prudential shares and sterling slumped after the London-based
insurance giant announced a large-scale rights issue to partially fund the
purchase of American International Group's Asian operations.
Asian markets rose Monday as resource stocks advanced after a
massive earthquake in Chile raised expectations of higher prices for copper.
U.S. stock futures rose Monday as a slate of merger activity,
including the sale of American International Group's Asia operations, greeted
the new month and consumer spending rose in January.
Merrill Lynch unit upgraded oil giant BP to buy from
neutral on Monday. "The recent sell-off in the market opens a compelling
valuation opportunity," the broker said.
Britain's Prudential plc said it's going to buy AIA, the Asia operation of American International
Group, for $35.5 billion in cash and stock. Prudential will sell $20
billion in discounted shares to existing holders to fund the deal which will
give it leading positions in seven countries with highly complementary products
and distribution channels across the region. Prudential intends to seek a dual
primary-listing on the Hong Kong Stock Exchange.
Real consumer spending increased a seasonally adjusted 0.3% in
January to the highest level since May 2008 in a further sign of a modest
economic recovery, the Commerce Department estimated Monday. Adjusted for
inflation, real spending on goods increased 0.8%, while spending on services
remained anemic, rising 0.1%.
semiconductor sales in January rose 47.2% to $22.5 billion from $15.3
billion a year earlier, according to data from the Semiconductor Industry
Association Monday. Sales were up 0.3% from $22.4 billion December, the
association added. "January and February of 2009 were the low point of the
industry downturn as the semiconductor industry and electronics manufacturers
quickly responded to the global economic recession," said SIA President
George Scalise. "We are currently seeing strength across a range of demand
drivers for semiconductors, including personal computers, cell phones,
automobiles, and industrial applications," he added.
From the BEA: Personal Income and Outlays, January 2010
Personal income increased $11.4
billion, or 0.1 percent, and disposable personal income (DPI) decreased $47.6
billion, or 0.4 percent, in January, according to the Bureau of Economic
Analysis. ... Personal consumption expenditures (PCE) increased $52.4 billion,
or 0.5 percent.
Real PCE -- PCE adjusted to
remove price changes -- increased 0.3 percent in January, compared with an
increase of 0.1 percent in December.
Personal saving -- DPI less
personal outlays -- was $367.2 billion in January, compared with $467.9 billion
in December. Personal saving as a percentage of disposable personal income was
3.3 percent in January, compared with 4.2 percent in December.
Krugman on the need for financial
Many opponents of the House version of banking reform present their
position as one of principle. House Republicans, offering their alternative
proposal, claimed that they would end banking excesses by introducing “market
discipline” — basically, by promising not to rescue banks in the future.
But that’s a fantasy. For one thing, governments always, when push
comes to shove, end up rescuing key financial institutions in a crisis. And
more broadly, relying on the magic of the market to keep banks safe has always
been a path to disaster. Even Adam Smith knew that: he may have been the father
of free-market economics, but he argued that bank regulation was as necessary
as fire codes on urban buildings, and called for a ban on high-risk,
high-interest lending, the 18th-century version of subprime. And the lesson has
been confirmed again and again, from the Panic of 1873 to Iceland today. ....
That said, some Republicans might, just possibly, be persuaded to sign on
to a much-weakened version of reform — in particular, one that eliminates a key
plank of the Obama administration’s proposals, the creation of a strong,
independent agency protecting consumers. Should Democrats accept such a
I say no.
There are times when even a highly imperfect reform is much better than
nothing; this is very much the case for health care. But financial reform is
different. An imperfect health care bill can be revised in the light of
experience, and if Democrats pass the current plan there will be steady
pressure to make it better. A weak financial reform, by contrast, wouldn’t be
tested until the next big crisis. All it would do is create a false sense of
security and a fig leaf for politicians opposed to any serious action — then
fail in the clinch....
PMI at 56.5% in February. Down from 58.4% in
January, and up from 54.9% in December.
From the Institute for Supply Management: February 2010
Manufacturing ISM Report On Business®
Economic activity in the
manufacturing sector expanded in February for the seventh consecutive month,
and the overall economy grew for the 10th consecutive month, say the nation's
supply executives in the latest Manufacturing ISM Report On Business®.
The report was issued today by
Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™
Manufacturing Business Survey Committee. "The manufacturing sector grew
for the seventh consecutive month during February. While new orders and
production were not as strong as they were in January, they still show
significant month-over-month growth. Additionally, the Employment Index is very
encouraging, as it is up 2.8 percentage points for the month to 56.1 percent.
This is the third consecutive month of growth in the Employment Index. With
these levels of activity, manufacturers are seemingly willing to hire where
they have orders to support higher employment."
ISM's Employment Index registered
56.1 percent in February, which is 2.8 percentage points higher than the
seasonally adjusted 53.3 percent reported in January. This is the third month
of growth in manufacturing employment, and the highest reading since January
2005 (58.7 percent). An Employment Index above 49.8 percent, over time, is
generally consistent with an increase in the Bureau of Labor Statistics (BLS)
data on manufacturing employment.
As noted, any reading above 50
European stocks rose, supported
by a surge in mergers and acquisitions news but sterling sank to a ten-month
low against the dollar. Oil ended at $78.79 down 8 pennies and Gold was $1117
The major measures closed higher
with the S&P 500 up 11 at 1115. Breadth was 3/1 to the good on the NYSE, a
bit less on the NAZZ, and volume was light.
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Summary of Business Continuity Plan