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| 05:59 PM |
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Beauty and the Beast: Chile, Ukraine and the PIIGS
Wall Street Strategies submits:
 You know it says a lot when a country that has lived with communism and socialist economics votes against arguably the most attractive politician on the planet in favor of a platform that includes tax cuts to pull it out of recession. Of course, the outcome of the election in the Ukraine could go on for days, but I think that it speaks volumes, and I bet we will see sweeping election shifts in Europe as these nations come to grips with the fact that there is a limit to how much governments can do through borrowing and taxing its citizens and businesses into submission. The vote counting continues, and there will be legal maneuvers, but the message is clear...there is nothing sexier than lower taxes. Complete Story » |
| 05:51 PM |
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What U.S. Investments Does China Like?
Jim Trippon submits:
China went on a U.S. buying spree last year, or so says the New York Times. In a gushing story, the Times revealed that China’s sovereign wealth fund “quietly snapped up” more than $9 billion worth of shares last year in some of America’s biggest corporations, including Morgan Stanley (MS), Bank of America (BAC) and Citigroup (C). Also on the shopping list were some of America’s most famous global brands, including Apple (AAPL), Coca-Cola (KO), Johnson & Johnson (JNJ), Motorola (MOT) and Visa (V). Complete Story » |
| 05:41 PM |
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AMR: An Airline Stock Setting Up to Fly Higher
Jamie Moye submits:
There is a price for everything, and if you think the market is headed higher than AMR Corporation (AMR) could be a stock to consider. Airline stocks are always a lousy long-term investment, though they do have their moments. The chart below shows that AMR Corporation has traded on an historical price to sales ratio range of 0.05 to 0.3, and currently is trading on a ratio of 0.1. That is to say, an investor is buying $1 of sales for 10 cents. But, of course, some would say that even that is too much! Complete Story » |
| 05:37 PM |
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Indexing in an 'Inefficient' Market
James Picerno submits:
Since the first index fund was launched in the early 1970s, the concept of passive investing has come a long way in terms of earning respect. For broad U.S. equity mandates in particular, finding supporters of active management is getting tougher in the 21st century. And among those managers who claim to mint alpha relative to broadly defined benchmarks, such as the Russell 3000 and MSCI U.S. Broad Market Index, many track records look a lot less impressive after adjusting for size (market cap) and style (value). But the case for indexing isn't nearly so persuasive in other asset classes, or so the skeptics argue. In emerging markets, for instance, the argument is that equity trading is less efficient compared to the U.S. and so the opportunities for minting alpha are higher. Complete Story » |
| 05:33 PM |
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Amor Fati: Moving Toward Our Maximum Regret
Marc Chandler submits:
The risks are asymmetrical. Many of the world’s national economies, in various stages of recovery, are still highly dependent on government support. While it is possible that the combination of aggressive fiscal and monetary policy responses have put the economies on a strong growth path, there remains a much greater risk that as the stimulus is removed the economies stagnate or worse. Aborted recoveries are rare. They are the exception that proves the rule. Despite the gallons of ink spilled on prognostications of a “double dip” or a “W” shaped bottom, there have only been two in U.S. history—the Great Depression and the early-1980s Reagan-Volcker recession. They seem to be products of a policy error, like removing a splint too early from a broken bone. Because fiscal and monetary policy options seemed largely exhausted addressing the recent crisis, to be hit with another one now would be particularly ominous and ruinous. History Doesn’t Repeat but Sometimes Rhymes If the first rule for policy makers is to do no harm, the second is to minimize the maximum regret. Everyone wants to avoid the downward spiral of world trade, for example. Many, if not most, countries, contrary to their pledges, have ventured a bit down the economic nationalist path. However, the biggest disruption to trade was not so much a function of policy, but of the disruption to the capital markets in general, and trade finance in particular. In addition, the very globalization that characterizes modernity combines two key elements that magnify the impact of a drop in a nation’s output. First, it further develops and extends the division of labor that Adam Smith explored in The Wealth of Nations in his tour of a pin factory. Second, by exploiting a number of technological improvements in transportation and communication, the different functions or elements of that extensive division of labor can be strewn across the world where it makes political and/or economic sense. Milton Friedman illustrated this by recounting how a pencil is made in Free to Choose. Few products are made wholly in a single country. A decline in demand is felt through the extensive global supply chain. The point is that the world experienced a downward spiral in trade but not as a result of a Smoot-Hawley type of trade war. Most of the protectionist actions adopted recently appeared well after the downward spiral in trade began. It is Political Economy If the disruption of trade this time was not so much a product of human agency, the same cannot be said for the pressure to remove the fiscal and monetary scaffolding of the economy. To be fair, there were some libertarians and economists from the Austrian School who were opposed to the scaffolding in the first place. But no responsible policy makers in any country advocated such a do-nothing course. By and large the fiscal and monetary efforts were seen as an issue of necessity, and in most countries they found support from the center-right to the center-left. There does not seem to be much public outcry to rein in fiscal policy now; quite the contrary. Labor markets throughout the industrialized and developing world seem to have plenty of slack. Unemployment rates may not have peaked. What recoveries have taken place appear anemic by a range of metrics compared with past recoveries. There was a tremendous amount of apparent wealth destroyed and a major dose of economic insecurity injected. If anything, there seems to be clamor for the various governments to do more, especially in terms of providing economic security and helping to create jobs. Nevertheless, there appears to be increasing pressure on policy makers to rein in fiscal policy. Bond Vigilantes vs. Democracy The pressure appears to be coming from what used to be called bond vigilantes. The phrase is attributed to the Wall Street economist Ed Yardeni who is said to have coined the phrase in 1984 to describe fixed income investors who protest the (expansionary) monetary or/and fiscal policies of a government. There is a tremendous supply of sovereign bonds that will be brought to market this year—several trillions of dollars worth. Countries are competing with each other to secure funding for their budget deficits, as well as the private sector, which still have access to only limited-functioning financial disintermediaries (banks and other financial institutions) and have been forced to raise funds in the capital markets directly. There is a limited, though still large, pool of savings that the debt managers compete for. The managers of those savings, Yardeni’s bond vigilantes, were collectively and broadly chastised for mispricing risk in the run-up to the crisis. They are being more discriminating now and this has forced interest rates higher, and dramatically so for some weaker sovereign credits. In the post-crisis financially scarred world, the managers of savings have the ambrosia that is in much demand. As the over-subscribed reception to the recent Greek and Spanish bond auctions demonstrate, the vigilantes have not declared a capital strike, but they have demanded a greater risk premium (not just from these two countries but from the weaker credits generally). In recent weeks, numerous countries appear to be almost tripping over themselves to appease the vigilantes, by reducing their budget deficits. However, there could be profound consequences if the braces are removed before the economic foundation is in place. Life Blood Nearly all policy makers share two key interests: lay the foundations for a sustainable economic recovery and unwind the emergency facilities and spending. There appeared to have been a consensus, giving more weight to the former than the latter this year. The bond vigilantes have instigated a disruption of that consensus much to the chagrin of the popular will. Indeed, those countries that capitulate the most to the vigilantes are likely to experience the most social push back. Stay tuned. Ironically, the effect of the bond vigilantes and the social resistance may be similar insofar as the economic impact is negative. Ultimately what is at stake is the how the costs (broadly understood) of the bailouts and stimulus are going to be distributed, not just in terms of classes, but also sectors, industries and countries. This is taking place along another potent but yet somewhat less personal of a force. Like a victim in a trendy vampire show, the life blood of the two largest economic regions, the US and Europe, is being sucked out. Money supply, measured by the ECB’s M3 has collapsed. In January 2009 it was growing at a 6% year-over-year pace. By the end of the year it was contracting at a 0.2% pace. It was contracting in both November and December. The next report is due January 25th and even if one is not a monetarist, the situation is worrisome. It has been lost in the light of the preliminary 5.7% Q1 US GDP, but in the Fed’s statement there appeared what seems like the first official recognition of the ongoing contraction in bank credit. The FOMC implies that this is being offset by improved financial market conditions. We thought so too. But the capital markets are fickle and given the surge in volatility and the general deterioration of market conditions (should it persist), the risk is that it no longer is sufficient to offset the contraction in bank credit. Even if this is just a normal market correction, it could stall the economies at a crucial time. The real tragedy is not what is happening in Athens, as painful as the adjustment promises to be. Rather, the real Greek tragedy is that we are running quickly, even if not irrevocably yet, into precisely that which we wanted to avoid the most. Disclosure: No positions Complete Story » |
| 05:25 PM |
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Is Copper's Reversal a Cause for Concern?
Calafia Beach Pundit submits:
 Early in January I posted a chart of copper prices with the title "Dr. Copper says the patient has recovered." I noted that the huge rebound in copper prices was a good sign that the global economy had recovered from its slump and was rapidly returning to health. Since then, copper prices have fallen about 15%, commodity prices in general have slumped, and so have equity prices. The shorthand version for what has happened in the past month is a reversal of the "carry trade:" risk assets are down, and the dollar is up. Fear is up too, with the VIX bouncing from the teens to the mid-20s. Concerns over Greece and the stability of the EU are likely catalysts for the recent bout of nerves, but so too is the sudden rise of populist attacks on big banks (see my friend Don Luskin's article in today's WSJ on the subject), concerns that Fed and some other central banks are preparing to tighten monetary policy, and the fact that numerous countries, including the U.S., are being forced to confront the problem of out-of-control budget deficits brought on by profligate public sector spending practices. Complete Story » |
| 04:56 PM |
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Google Buzz Social Network: 150M Plus, Just to Start
Andy Beal submits:
Well, Google (GOOG) just launched Google Buzz and it’s going to be tied into its existing Gmail user base–all 150+ million of them! Complete Story » |
| 04:56 PM |
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RioCan: Disappointing Results Pummel the Canadian Shopping Center REIT
Market Blog submits:
By Simon Avery
Complete Story » |
| 04:43 PM |
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Is Google Targeting Microsoft's SharePoint with Buzz?
 Larry Dignan (ZDNet) submits: Google (GOOG) launched its new social Gmail experiment dubbed Buzz and the “Twitter killer” comments will be a dime a dozen. But from an enterprise perspective, Google Buzz has a far larger target in mind: Microsoft’s SharePoint.
Complete Story » |
| 04:32 PM |
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Equities Update: Greece Rumors Lift Stocks
Brooks McFeely submits:
4:21 PM, Feb 9, 2010 --
Complete Story » |
| 04:28 PM |
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What's Bad for the Euro Is Good for the Dollar
Dr. Stephen Leeb submits:
We’re watching the problems in the European Union unfold and can only speculate how far the contagion can spread. The credit market is increasingly betting on turmoil in the E.U. as the spreads between the countries running high budget deficits, such as Greece, Portugal and Spain, have widened dramatically in recent weeks against those of the more fiscally responsible nations like Germany and France. The architects behind the E.U.’s monetary union failed to institute a mechanism for enforcing compliance with debt ceiling targets. So while the Greek delegation to Brussels promises the rest of the E.U. the country will behave itself, its track record, coupled with vocal political opposition at home raises serious doubts that any real progress will be made with its belt tightening. Complete Story » |
| 04:22 PM |
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Tuesday Options Recap: All Eyes on Europe
Frederic Ruffy submits:
SentimentStocks are higher late Tuesday following a round of positive stock news and optimism that European regulators will help bail out beleaguered credit markets. While the major averages opened higher, the rally really gathered momentum midday amid conflicting reports European governments are poised to help support some troubled credit markets, including Greece. Meanwhile, Caterpillar (CAT) opened higher and is leading the Dow with a 5.7% rally after Morgan Stanley upgraded the stock to Overweight. Coca Cola (KO) also helped after the beverage maker reported revenues that surpassed analyst estimates. KO is up 3.2% and one of 28 Dow stocks moving higher. Only 2 are lower and the industrial average is up 172 points. With 45 minutes left to trade, the NASDAQ added 28. Trading is active. In the options market, for example, approximately 6 million puts and 6.4 million calls traded (a ratio of .94, compared to a 22-day average of .83.) Complete Story » |
| 04:20 PM |
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Today in Commodities: All Eyes on the Dollar
Matthew Bradbard submits:
All eyes will be on the US dollar as the risk aversion trade and news whether a bailout will or will not happen out of Europe continues to be the driving force. As noted in our commentary Monday we expect some type of resolution and the flow of money that went into Treasuries and the dollar last week to find its way back to equities and commodities. Now for the trades: Oil put in an impressive showing today closing virtually 3% higher. We would still suggest waiting for the inventory number this week before committing fresh capital. We should have some new suggestions in the coming sessions. RBOB was higher by 2%; clients are long June call spreads anticipating a trade back near $2.15/2.20. Natural gas could go either way; we will look at longs closer to $5 and shorts closer to $6. In the middle of the range we have NO interest. Indices are rallying; we expect 1084 and then potentially 1100 in the S&P. On that we will be buying clients June 1000 puts. Today’s price $1800, we will be working limits for less in the coming days. Complete Story » |
| 04:13 PM |
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Lexmark: Buy in Before Dell Does
Brendan Wagner submits:
OK, to be fair, it might not be Dell (DELL) that buys Lexmark (LXK), but someone sure should. The chart below compares the money needed to buy printer-maker Lexmark at a 30% premium to its current stock price. Except for Epson, the buyout would amount to just a fraction of these companies' cash hoards, that are currently earning next to nothing in interest. It makes the most sense for Dell or HP (HPQ) to buy them, but I put the others in there too -- why not? It'd be a better use of cash. Complete Story » |
| 04:09 PM |
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Yahoo Not Pleased With Google Buzz’s Buzz
TechCrunch submits:
By MG Siegler
Complete Story » |
| 04:05 PM |
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Three International Bond ETFs for Europe’s Bounce Back
Michael Johnston submits:
Investors have historically embraced international diversification in their portfolios as a way to smooth out volatility and reduce overall risk. But the last two years have shown that the benefits of such diversification aren’t what they once were. A meltdown that began in the U.S. mortgage market quickly spread throughout the world, sparking countless complaints about how Wall Street’s greed and excessive risk taking set off a chain of events that sent stock markets plummeting and unemployment rates soaring around the globe. In recent weeks, U.S. investors have found themselves on the other side of that relationship, as concerns over tightening monetary policy in China and a potential debt crisis in Europe have sent global equity markets sharply lower. Continuing a trend that has emerged over the past two years, it has been the world’s developed economies that have struggled the most in the current environment. The current crisis in Europe has focused primarily on Greece, which faces mounting deficits amidst declines in tax revenues and huge spikes in government spending to ward off a double dip recession. The country’s budget deficit has swelled to 13% of GDP–well above the 3% limit imposed for euro-zone countries. Complete Story » |
| 04:00 PM |
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Will Amyris Be Next to File for an IPO?
Greentech Media submits:
By Michael Kanellos IPO fever is gripping greentech, and rumors are circulating that Amryis, the company that made synthetic biology a household word, could be one of the next to file. Complete Story » |
| 04:00 PM |
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Why the VIX Outlier Range Is Worth Watching
Moby Waller submits:
The CBOE Volatility Index (VIX) has long been utilized for judging both investor sentiment as well as market timing. It can clearly show times of both "panic" and "complacency" by the crowd, which is often late to the party and/or marks a turning point. Take a look at this longer-term VIX Daily Chart below: (Click to enlarge) Complete Story » |
| 03:56 PM |
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McDonald’s: 81 Straight Months of Same-Store Sales Growth
RetailSails submits:
For a company that analysts thought had long ago saturated the market, McDonald’s (MCD) continues to show why it’s the best run quick-service restaurant chain in the world. Even as growth in the U.S. has stagnated over the past few months, the company was able to post an incredible 81st consecutive month of positive same-store sales growth in January. (Click to enlarge) Complete Story » |
| 03:54 PM |
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Upcoming Greentech IPO Scorecard: Tesla, Solyndra, Codexis
Greentech Media submits:
By Eric Wesoff According to a study by Ernst & Young, 53 companies filed paperwork to hold initial public offerings in Q4 2009 -- the highest number of new registrants in a single quarter since 2007. That means that there are more deals in the IPO pipeline than there have been for more than two years. And a number of those IPOs happen to be high-profile offerings in the greentech sector. Complete Story » |
| 03:52 PM |
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Buy the Euro, Sell the Yen?
Ralph Shell submits:
The new year has brought some surprises for yen traders. The Financial Ministry leaned on the Bank of Japan, convinced them that deflation and a tepid recovery were the big problems, and low rates and expanded money supply were the answer. What could be a more ideal set up for the yen to be the lending currency for the carry trade? Well planned trades often give way to changing world events. The markets concern about the size of the Greek debt, and the ability to service this debt grew, and fear of the sovereign debt in Spain Portugal and Ireland emerged. Speculators even began to question the sanctity of the Euro, annoying European Bank President Jean-Claude Trichet. Complete Story » |
| 03:49 PM |
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Economic Jolt: Job Openings and Labor Turnover, December 2009
Sold At The Top submits:
Today, the Bureau of Labor Statistics released their latest monthly read of job availability and turnover (JOLT) showing that, on a year-over-year basis, private non-farm job “openings” declined 24.82%, job “hires” declined 9.44%, job “layoffs and discharges” decreased 12.85% and job quits declined 16.68%. Job “openings”, the reports most leading “demand side” indicator, has now declined on a year-over-year basis for 28 consecutive months. Complete Story » |
| 03:48 PM |
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More Slow Times Ahead for Video Game Stocks?
Ockham Research submits:
It has been an interesting and generally very tough year for stocks related to the video game industry, and yesterday’s guidance from game-maker Electronic Arts (ERTS) cast more doubt on the near term future for the industry. Electronic Arts is one of the titans of the game industry with arguably the most successful franchise of sports games, such as Madden. These games are hugely popular and attract scores of gamers to buy each new edition on an annual basis. EA reported earnings for the fiscal third quarter of $.33 per share or 2 cents better than Wall Street expected. However, analysts have greatly lowered their estimates over the last few months due to weakness in the sector. More importantly, Electronic Arts issued guidance for the next half year (fiscal fourth and first quarters) that was far worse than analysts had expected. For the current quarter, EA Complete Story » |
| 03:41 PM |
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The Greek Bailout and Trading the Big Rumor
Bob English submits:
Only this morning we wrote:
Complete Story » |
| 03:40 PM |
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Putting a Dollar Value on Buzz
Andy Beal submits:
Generating buzz—getting people talking about our products or even advertising on their own—is the goal of many ad campaigns today, even television commercials. (Case in point: the Super Bowl.) Online, buzz seems to be the Holy Grail: going viral, getting evangelists, having people talking/Tweeting/friending/following you. But assigning a value to that can be hard. We’re driven to assign an ROI to social media, but we’re having a hard enough time even monitoring success. General Sentiment, a sentiment analysis company, has come to the rescue. Using media prices, they’re looking to answer the question “How much would it have cost to attract the same media exposure through traditional advertising?” And they’re putting a $ sign in front of it. Complete Story » |
| 03:36 PM |
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Is Dow 10,000 Still a Meaningful Threshold?
Market Blog submits:
By David Berman You can forgive investors for shrugging at the sight of the Dow Jones industrial average crossing the 10,000-point mark on Tuesday. Aside from the fact that the 30-member index is not representative of the U.S. stock market or that psychological thresholds are really just round numbers, investors have seen Dow 10,000 more times than they can probably remember. Complete Story » |
| 03:31 PM |
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If Google Wave Is the Future, Google Buzz Is the Present
TechCrunch submits:
By MG Siegler
Google (GOOG) has a problem. Despite having their hands in just about everything online, they’ve never been able to tackle what is a key part of the fabric of the web: social. Yes, they have Orkut and OpenSocial, but no one actually uses them. Okay, some people use them, but not in the meaningful social ways that people use Facebook or even Twitter. Today, Google may have just solved their social problem. Complete Story » |
| 03:23 PM |
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Steel Prices Remain Strong Heading into Spring
Michelle Galanter Applebaum submits:
The Advance/Decliner Index is our effort to quantify the anecdotal price information we find in our every day reading about global steel price trends. We also are looking at relative prices in the U.S. versus abroad in our attempt to gauge international price pressure/opportunities heading our way. Advance/Decliner Index Eases Our Advance/Decliner Index fell to 81% from 89% last week, declining for the second week in a row but posting the seventh consecutive week above 80%, as some shakiness in global strength is somewhat mitigated by a robust week out of China. Our China index soared from 50% to 85% this week as concerns about tight credit and high inventories have died down. The Chinese market is still very quiet leading up to the New Year holiday beginning next weekend, so we believe some volatility in the China index stems from a low number of data points. China’s Surge Returns; Flat-Rolled Posts Another Strong Week China posted six price increases, followed by Pakistan with five, Turkey and India with four and the US with three. The UK, Malaysia, Columbia, Egypt and Brazil had two increases, while Iran, Vietnam, Italy, the Dominican Republic, Japan and Europe had one price hike apiece. There were two price cuts in India and Vietnam, while Malaysia, the CIS, China, Italy and Turkey each saw one decline. Flat-rolled products had 16 price increases, followed by rebar with six, plate and pipe with five each, while semi-finished steel had four and beam posted two price hikes. Rebar had four price cuts, followed by Flat-rolled with three and semi-finished steel with two price declines. Relative Domestic Prices Start Strong in February US prices continue to move up with particular strength in rebar and HRC relative to their peer groups thus far in February. US rebar prices are up 11% from January and have posted increases relative to China and Europe where prices have slid modestly lower, and versus Japan where prices are up 7.8% after falling 6% the month before. Plate prices rose another 5.4% so far in February, and are up relative to China and Europe where prices are up slightly. Absolute HRC prices in the US have risen 13% after increasing 8% last month, and are up sharply relative to China and Europe where prices slightly fallen slightly, and up relative to Japan where prices have risen 6.8%. Domestic beam prices began February flat at $675/ton and are up relative to Europe where prices have fallen 2% and down relative to China and Japan where prices are up 1%, and 6.2%, respectively. Outlook With the exception of beams, where domestic prices are struggling to compete with low-priced imports and market conditions show no signs of life, domestic prices have continued their January surge into February as raw material costs remain high, inventories are low and the demand outlook for the spring continues to improve. We expect to see even further pricing strength with the Chinese market regains its footing after the New Year holiday. Disclosure: N/A Complete Story » |
| 03:18 PM |
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Intrawest: Still Scrambling to Pay Off Creditors
Streetwise Blog submits:
By Boyd Erman It's looking more and more likely that Intrawest ULC will avoid an embarrassing foreclosure auction right in the middle of the Olympics, which take place in large part at the company's flagship Whistler resort. Complete Story » |
| 02:50 PM |
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Gulfmark Offshore: Cheap Drilling Play
R. Scott Raynovich submits:
Gulfmark Offshore Inc. (GLF) is now officially a cheap stock, trading at a trailing twelve months P/E of 5, and a forward P/E of 9. Deepwater offshore drilling is one of the biggest growth segments in the energy sector, with new discoveries being found very deep under the sea. The company supplies offshore support for energy drilling operations. It is an innovative company, ranked #35 on the Forbes Best Small Companies list. The company has grown revenue 60% since 2006, and it has grown earnings more than 200%. This year, business has slowed down, but if the global economy is indeed picking up, I would expect increased demand for offshore drilling services. Complete Story » |
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