November 2008
57 posts
Black Friday Results Positive?
Yahoo Finance is carrying the AP story, Early data shows strong Black Friday shopping:
The holiday shopping season got off to a surprisingly solid start, according to data released Saturday by a research firm. But the sales boost during the post-Thanksgiving shopathon came at the expense of profits as the nation’s retailers had to slash prices to attract the crowds in a season that is...
Connecting Dot
I was looking for some articles about the retail results from Black Friday and how things were going to be worse from here, when I realized that I don’t need a complicated chain to demonstrate that this will be a bad Christmas for retailers. There’s only one relevant data point: gift cards. CNN Money has the article (this is an old article) Fewer gift cards this holiday season:
...
Can't Keep the Market Down
If you are a bull, today gave you a lot of reasons to be happy. The market had every reason to go down today. The futures were down off of horrible economic data. Yahoo Finance has the AP story 4 new reports reveal battered economy:
The government released a quartet of reports Wednesday that paint a bleak picture of the nation’s economy: Jobless claims remain at recessionary levels,...
Terror News in Mumbai
I was taking a nap on my parents’ couch when I heard about several apparent terrorist attacks in Mumbai, India. Google news has the AP Story Several wounded in Mumbai shootings:
Police say several people have been wounded in a series of attacks by terrorist gunmen at seven sites in Mumbai, including two luxury hotels.
A.N. Roy, a senior police officer, says several people have been...
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Gallows Humor: GM
I found this earlier today, but really couldn’t think of anything clever to say about it. The article pretty much says it all. Yahoo is carrying the AP story Ban on GM employee stock purchases is extended:
General Motors Corp. workers will be unable to buy GM shares through two employee savings programs indefinitely because the plans’ administrator believes additional investments...
Some Perspective
My cousin is a welder. I’ve seen some of his work and trust me, he’s quite talented. He’s a genuine hands-on kind of guy. He has a high-school education, and makes roughly 20 bucks an hour (if you’ve seen how fast and consistent he works, you’d understand how cheap that is). He does collect overtime pay, which is fairly consistent. He doesn’t know terms like...
Fed Bails Out ABS Market
Holy crap. The Fed does in fact sneeze at numbers in the hundreds of billions. Hoping to give the markets a one-two punch, they announced another huge waste of taxpayer money today. Bloomberg reports, Fed Commits $800 Billion More to Unfreeze Lending:
The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.
...
“A bailout was necessary — but this bailout is an outrage: a lousy deal for the...”
– Paul Krugman — A very good summary of the Citigroup bailout.
Home Sales, Prices Down
Bloomberg has the story U.S. October Existing Home Sales Fall 3.1% to 4.98 Million Pace:
Home resales in the U.S. dropped in October and prices fell by the most on record, signaling a deepening housing recession going into 2009.
Purchases of existing homes declined 3.1 percent last month to an annual rate of 4.98 million units, less than forecast, the National Association of Realtors said...
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Citigroup Bailed Out
Proving that there’s no time like the present to throw good money after bad, the government managed to get the Treasury, FDIC, and the Fed to all sink money into Citigroup. Bloomberg has the story, Citigroup Gets Guarantees on $306 Billion of Assets:
Citigroup Inc., facing the threat of a breakup or sale, received $306 billion of U.S. government guarantees for troubled mortgages and...
GM Bankruptcy a Mistake?
Aww, crap. Yves over at Naked Capitalism makes the case against a GM bankruptcy in The Ill-Considered Problem of a GM Bankruptcy. You should read it.
Now, why I still disagree: While there is a discussion of the consequences of a bankruptcy, there’s no discussion of the consequences of a bailout. Car dealers are going to lose their jobs even if a bailout happens. Cars aren’t selling....
Watch Citigroup
This is stock market entertainment. It’s like some kind of freaky side show going on. It’s like a train wreck or a pile-up full of people you hate. Look at the high volume. It’s like every trader ran up to Pandit and delivered a swift kick to the happy sack. From this announcement, though, it’s clear Pandit’s pair is solid steel.
I decided to one-up my stupid Ford...
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GM to Sell Private Jets
I can’t find an article, but CNBC just had a “breaking news” banner at the bottom of the screen. GM is selling 2 of their private jets. I’ll update this with a link when I find one.
UPDATE
Here’s the first article I found on the web: GM To Sell Two Private Jets Amid Criticism. I was beginning to think this was a bogus release.
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Ron Gettelfinger Flew Commercial
I asked Hilker if he knew how the UAW representative got to Washington. He didn’t, and asked me to tell him when I found out. First, I had to remember his name (my research skills are amazing). Then, I had to google it (see? Amazing!). Turns out, his name is Ron Gettelfinger, and he flew commercial. Reuters has the bit of trivia in the story Auto execs’ private flights to Washington...
One Question
“Did you sh*t your pants?” That’s the question of the day. Some of the talking heads on TV called today a capitulation moment. Well, if you crapped yourself, congratulations, that was capitulation. Most likely, you didn’t. Despite the close being an 11.5 year low for the S&P, I still don’t smell capitulation. I took some profit today. Unfortunately, that means...
Shenanigans
Nothing is as ridiculous to me as hearing a talking head on TV claim that UAW has made significant concessions. I call shenanigans. What UAW calls a concession is that there will be a 50% pay cut and significant benefit reductions for new hires… starting next year. Workers will still get paid a full salary to not work. The auto industry is shrinking, not expanding. New hires are not the...
Philly Fed Index Bad
From the Philadelphia Fed November 2008 Business Outlook Survey:
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from -37.5 in October to -39.3 this month. This index, which fell a dramatic 41 points last month, is now at its lowest level since October 1990. Evidence of weakness was also seen in the other broad indicators this...
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Unemployment Drives Futures
Unemployment is at a 16 year high. Initial claims are up 25,000. I disagree with the “unexpected” part of the next headline, but Yahoo Finance carries the AP story, Jobless claims jump unexpectedly to 16-year high:
New claims for unemployment benefits jumped last week to a 16-year high, the Labor Department said Thursday, providing more evidence of a rapidly weakening job market...
Woah! Slow Down, S&P
I’m not a technical trader by default. I’m all about fundamentals, not just for specific businesses, but also for the macro-economic picture. I know a few things about technical trading. I wrote technical trading software for a well-known hedge fund (as far as hedge funds can be well known). I enjoy day trading. The truth is, however, that I’m not very good at it by myself (my...
Paraphrasing Mulally
Ford’s CEO (Alan Mulally) just said that when he gets the bailout, we can expect “laser focus” on all vehicles (small, medium, and large/SUV), on everything (production costs, quality, environmental impacts, etc). Perhaps “laser” wasn’t the best metaphor for saying he needs to improve everything in every imaginable way. Still, that drives home the point: The...
Paraphrasing CNBC
Given that the auto executives are trying to fight a PR battle to sway American support for a bailout, what does it say about their commitment to cut costs when they fly into DC on a private jet?
CPI Record Drop
First, the story. Yahoo is carrying the AP story Consumer prices drop record 1 percent in October:
Consumer prices plunged by the largest amount in the past 61 years in October as gasoline pump prices dropped by a record amount.
The Labor Department said Wednesday that consumer prices fell by 1 percent last month, the biggest one-month decline on records that go back to February 1947. The...
“A government that wages war on the price system is a government itching to lose...”
– Llewellyn H. Rockwell, Jr.
White Trash Sophistication
My father just became a man of discerning tastes. As of today, he officially only drinks Belgian beers. The official press release: InBev Completes Acquisition of Anheuser-Busch. Unfortunately, the link isn’t working for me. Here’s the excerpt from the web page:
InBev (Euronext: INB) announced today that it has completed its acquisition of Anheuser- Busch (NYSE: BUD), following...
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So Long Yang
Yahoo is dumping Yang. Here’s the AP story carried by … Yahoo (HA!): Yahoo to replace Yang as CEO, ending rocky reign:
Yahoo Inc. co-founder Jerry Yang is stepping down as chief executive, ending a rocky reign marked by his refusal to sell the Internet company to Microsoft Corp. for $47.5 billion — more than triple Yahoo’s current market value.
The change in...
Bad Investment Advice
This is a rant.
Yahoo Finance has this article, sponsored by Fidelity: Retirement Investors Turn to Bonds for Balance. The headline says “bonds.” The article says “Bonds Funds.” See the difference? That extra word means a world of “fuck you.”
This is important. In fact, it is one of the few times I’ve heard Suze Orman say something that made me think,...
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Market Non-Movers
Here’s two important news items that would move markets normally, but are having little impact today. This supports my hypothesis that the markets are distracted by the automakers.
First, AP via Yahoo Finance, Target plans price cuts despite lower 3Q earnings:
Target Corp. said Monday it will aggressively cut prices to give consumers bargains during the holiday season, even as weak...
Citi Moving in the Right Direction?
There’s no doubt that the big investment banks are in a process of de-leveraging. Cutbacks are going to be a necessary step for survival. Goldman has recently become a bank holding company, subjecting themselves to tighter regulatory controls. They’ve also announced they are going to skip high-level executive bonuses this year (Bloomberg story here). Citi just anounced a fairly...
Screw You Sharebuilder
I just logged into my sharebuilder account. The first 15 stock tickers listed in my account are all positive. “Maybe my portfolio doesn’t track the S&P all that well,” I thought. “That means my hedging strategy is wrong.” But, no. All of the quotes are wrong. They are all yesterday’s close prices. The options quotes are correct, so this isn’t a...
Day Trading Opportunity
I didn’t realize that Paulson was making a statement today. Forget what I said about today being a hard day to day-trade. Let’s see if our treasury secretary can keep everyone’s favorite day trade going. Remember, sell before he talks and buy right before the end.
I don’t think I’m going to make that play today unless the market is a little higher. Still, it’s...
Yay Firefighters, Boo Freddie and Retail Numbers
Santa Barbara is still on fire, but I cannot see flames by simply walking outside. We’ve had help from many outside fire departments. I think every fire department within 100 miles responded. That includes a large portion of LA, so that’s a lot of fire fighters.
Freddie Mac now has negative equity after record losses. They’ll be tapping the taxpayer for $13.8 billion. Bloomberg...
This House is on Fire
Well, not mine. But I can walk outside and see the fire. Air quality here is terrible.
We’re so civilized in Santa Barbara, we call it the Tea Fire. Actually, that has to do with where the fire started (above the “Tea House”). 70 mph wind gusts have been measured now. That would be 4 mph short of “hurricane strength” winds. So we have “tropical storm...
Impressive
Today the market ended with an impressive rally after creating new intraday lows. The reversal was quite amazing. Selling pressure simply evaporated, and buyers stepped in. When I lack a good explanation for market behavior, I stay out of the market. This rally was not driven by the battle between Wal-Mart and Intel/Unemployment. This wasn’t driven by the silly congressional hearings on...
WatchTalk Is Cheap the Market Isn’t Says Invesco’s Garnick: Tech Ticker, Yahoo! Finance — A point of view worth considering
That's Also Bad
S&P just broke to the downside. New intraday low.
Nasdaq Makes New Low
A new intra-day low was established by Nasdaq. This is negative, if anyone is fuzzy on their indicators.
Boo, Jobs. Yay, Wal-Mart
The aftermarket trading was down yesterday. Today, the unemployment report came out, and the numbers were poor. However, Wal-Mart made a positive statement about holiday sales, which was good enough for anyone looking for positive news. Sentiment is so negative right now that good news is guaranteed to surprise to the upside. There’s also the fact that yesterday was a low close, and people...
Intel to my IRA: Screw You!
Bloomberg is carrying the story, Intel Cuts $1 Billion From Sales Forecast Amid Slump:
Intel Corp., the largest computer-chip maker, lowered its fourth-quarter sales forecast by about $1 billion amid “significantly weaker” demand across its entire product line. The shares dropped 6.8 percent in late trading.
Revenue will be $9 billion, plus or minus $300 million, and profit...
More Electronics Woes
Circuit City had to declare bankruptcy before the holiday shopping season. Those shopping for gift cards will probably be looking to other stores. These days, everyone seems to be favoring WallMart over stores like Best Buy. This hasn’t escaped Best Buy, who just slashed forecasts today. Bloomberg has the story Best Buy Cuts Annual Profit, Sales Forecasts on Slump:
Best Buy Co., the...
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DHL Ships Out
All DHL Express shops are going to close in the US. That’s 9,500 jobs. Here’s the AP story, via Yahoo Finance: Deutsche Post to cut 9,500 jobs in US:
Deutsche Post AG will close all of its DHL Express service centers in the U.S., cut 9,500 jobs there and eliminate U.S.-only domestic express shipping by land and air, the company said Monday, citing heavy losses and fierce...
US Government to Taxpayer: Screw You!
Remember the AIG bailout? The government took 79.9% of AIG and had all of their assets as collateral for a loan that had a punitive interest rate. Well, the government decided it didn’t want to get the best possible deal for the taxpayer. Instead, more taxpayer money is going into the pit that is called AIG. We aren’t just giving them more money, we’re giving them better terms on...
Stimulus Package, Chinese Edition
China announced a huge stimulus package. I’m going to defer to Yves at Naked Capitalism and the post: China Announced $586 Billion Stimulus Plan. It’s worth reading.
I wanted to point out a critical difference between China and the US. The US has a huge national debt. We don’t have huge pools of money. China has obscene reserves, so their stimulus package doesn’t...
GM Results Terrible
The street was expecting “Head-spinning” numbers from GM. CNBC reports General Motors Posts Loss Far Bigger Than Expected:
General Motors posted a biggest [sic] than expected loss for the quarter, the latest US auto maker to report dismal results.
The adjusted loss was $7.35 a share, well more than analysts estimates of $3.70. Revenues were $37.9 billion, below estimates,...
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Ford Results Terrible
Let’s take a brief look at Ford while we wait for GM’s report at 10:30 ET. Bloomberg reports Ford Has $2.98 Billion Operating Loss as Sales Plunge:
Ford Motor Co., with U.S. sales shredded by the worst financial crisis since the Great Depression, posted a third-quarter operating loss of $2.98 billion and said it used up $7.7 billion in cash.
The per-share operating loss of...
October Payrolls Down 240,000
From the BLS, Employment Situation Summary:
Nonfarm payroll employment fell by 240,000 in October, and the unemployment rate
rose from 6.1 to 6.5 percent, the Bureau of Labor Statistics of the U.S. Department
of Labor reported today. October’s drop in payroll employment followed declines of
127,000 in August and 284,000 in September, as revised. Employment has fallen by
1.2...
Payday Loans Illegal in Arkansas
NYT reports Top Arkansas Court Rules Against Payday Lenders:
In a 6-to-0 decision, the court said the fees permitted under the 1999 Check Cashers Act were really triple-digit interest rates. The State Constitution limits interest rates on loans to 17 percent.
…
Even before Thursday’s ruling, the number of payday lenders in the state has dwindled in response to threats of...
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Steel a Bargain at Half the Price
Just a warning: This whole post exists only because I wanted to use that title.
US Steel (X) and Arcelor Mittal (MT) have both had their share prices crushed. The two stocks have actually tracked each other fairly well. Both steel companies appear to be well run companies. Still, things are not good for steel right now. There’s a lot of downside potential remaining.
I think steel...
Don't Forget Denmark
Denmark just cut rates.