SEARCH THIS SITE ARCHIVE August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007 April 2007 March 2007 February 2007 January 2007 December 2006 November 2006 October 2006 September 2006 August 2006 July 2006 June 2006 May 2006 April 2006 March 2006 February 2006 January 2006 December 2005 November 2005 October 2005 September 2005 August 2005 July 2005

RECENT ENTRIES Random Observation Flashback from 1998: NYT: Commodities' Price Slide Victimizes Economies of Several Nations Medtronic Earns 72 Cents a Share PPI Rises at Fastest Rate Since 1981 More Troubles on Wall Street From the Halls of Academia JNJ Hits New High The Nasdaq Lauches for New Indexes The Plunge of Gold Continues A 400,000% Return SYNDICATE THIS SITE

Is it me or is everyday either a good day for commodities and commodity stocks and a rotten day for financials and value stocks, or an awful day for commodities and commodity stocks and a good day for financials and value stocks?

Posted by Eddy at 1:04 PM | Permalink

On December 10, 1998, the price for oil reached a low of $10.72 a barrel. That was the lowest price since 1986, and it turns out, it was the beginning of a huge turnaround for the price of crude.

So the low prices were good news, right? Well, not exactly. The New York Times was able to find the downside: Market Place; Commodities' Price Slide Victimizes Economies of Several Nations:

Victimizes?

What worries analysts now is that the recent decline is a signal that prices will not turn around soon.

Matthew J. Sagers, the director of the energy service of Planecon, a consulting group specializing in the former Soviet Union and Eastern Europe, said the consensus on oil prices ''is that we are going to be here for several years.''

Mr. Brainard and other analysts argue that an extended period of lost economic growth and lower governmental revenues stemming from the drop in commodity prices will raise the pressure on many already troubled governments and economies. That could intensify investor concern and weaken currencies. To defend those currencies, central banks would have to raise their interest rates -- which would mean even slower growth.

The impact on Russia, for example, has been stark. The country's $87 billion in 1997 exports included $21.9 billion in oil, $16.4 billion in gas and $14 billion in metals -- about 60 percent of the total.

But the prices of every one of these commodities have fallen sharply and are still declining. The price of platinum, for which Russia is the second major supplier, has dropped almost 12 percent just since July. The price of oil plunged 36 percent -- from around $22 a barrel in October 1997 to around $14 in August -- and has fallen another 23 percent, to $10.72, since November.

At the time, Kofi Annan approved oil sales to Iraq for "humanitarian goods," which apparently including several palaces for Saddam. According to a CNN article from 1998:

But Benon Sevan, executive director of the program, turned down Iraq's request to improve its telecommunications system, saying Baghdad had not answered an October 30 letter requesting information on the subject.

Annan's endorsement also excluded $20 million to upgrade Iraq's banking system, a new item Baghdad had not previously discussed with the United Nations, according to a letter Sevan sent to Iraq's outgoing U.N. ambassador Nizar Hamdoon.

Mr. Sevan unfortunately couldn't be with us today. It turns out that according to the Volcker Report, he was taking cash bribes from Saddam.

Posted by Eddy at 11:39 AM | Permalink

This morning, Medtronic (MDT) posted adjusted fiscal first-quarter earnings of 72 cents a share which topped Wall Street’s forecast of 69 cents a share. For last year’s Q1, the company earned an adjusted 62 cents a share, so that’s an impressive increase. Revenues rose 18.5% to $3.71 billion. Sales for its spinal biz rose 33%. Revenue outside the U.S. grew by 24% and accounted for nearly 40% of all revenue.

This is the latest is a string of good news for the company. A few weeks ago, the board increased the quarterly dividend by 50%. In May, the company said it expects earnings-per-share for 2009 to range between $2.94 and $3.02. After today’s report I wouldn’t be surprised to see that range revised higher. If Q2 earnings come in at 70 cents a share or better, than I think MDT should easily earn $3 this fiscal year.

Here's a look at MDT's sales and earnings for the past several quarters:

Quarter...........EPS.............Sales
Jul-01............$0.28...........$1,455.70
Oct-01...........$0.29...........$1,571.00
Jan-02...........$0.30...........$1,592.00
Apr-02...........$0.34...........$1,792.00
Jul-02............$0.32...........$1,713.90
Oct-02...........$0.34...........$1,891.00
Jan-03...........$0.35...........$1,912.50
Apr-03...........$0.40...........$2,148.00
Jul-03............$0.37...........$2,064.20
Oct-03...........$0.39...........$2,163.80
Jan-04...........$0.40...........$2,193.80
Apr-04...........$0.48...........$2,665.40
Jul-04............$0.43...........$2,346.10
Oct-04...........$0.44...........$2,399.80
Jan-05...........$0.46...........$2,530.70
Apr-05...........$0.53...........$2,778.00
Jul-05............$0.50...........$2,690.40
Oct-05...........$0.54...........$2,765.40
Jan-06...........$0.55...........$2,769.50
Apr-06...........$0.62...........$3,066.70
Jul-06............$0.55...........$2,897.00
Oct-06...........$0.59...........$3,075.00
Jan-07...........$0.61...........$3,048.00
Apr-07...........$0.66...........$3,280.00
Jul-07............$0.62...........$3.127.00
Oct-07...........$0.58...........$3,124.00
Jan-08...........$0.63...........$3,405.00
Apr-08...........$0.78...........$3,860.00
Jul-08............$0.72...........$3.706.00

Posted by Eddy at 9:54 AM | Permalink

Ah, it seems like old times. Not only is the Cold War coming back, but today’s report on producer prices indicates that wholesale inflation is at its highest level in 27 years.

The PPI jumped 1.2% last month which is more than double what economists were expecting. Even if you strip out food and energy and just look at the “core rate” wholesale inflation still rose by 0.7% or more than three times the 0.2% expected by economists.

For July, wholesale energy prices jumped by 3.1 percent following a 6 percent gain in June. That increase reflected big jumps in the price of natural gas, home heating oil and liquefied petroleum gas, which offset a 0.2 percent dip in gasoline costs.

Food prices rose by 0.3 percent in July after a 1.5 percent surge in June. Beef prices jumped by 7.4 percent, the biggest increase in nearly four years. Milk prices shot up by 5 percent, the biggest gain in a year, while soft drink prices rose by 2.4 percent, the largest increase in four years.

Excluding energy and food, the 0.7 percent rise in core inflation reflected big gains in the prices of passenger cars and light trucks, pharmaceutical preparations and plastic products.

Naturally there’s a bit of a lag to these numbers and the dramatic sell-off in oil prices will most likely be seen in next month’s report.

Posted by Eddy at 9:29 AM | Permalink

Part 1:

Part 2:

Part 3:

From Equity Private.

Posted by Eddy at 2:07 PM | Permalink

Finally!

A New Value-Weighted Total Return Index for the Finnish Stock Market 1912-1969

Posted by Eddy at 1:50 PM | Permalink

I really like the stock of Johnson & Johnson (JNJ). Few companies have been as stable long-term winners as JNJ. A few months ago, I said it was a good buy, especially under $60. Just recently, the shares finally took out their 2005 high. The company reported good earnings again last month. JNJ now sees 2008 EPS coming in at $4.45 to $4.50 which is almost certainly too low.

Here’s a look at JNJ’s stock (blue line, left scale) and earnings (gold line, right scale with EPS projection in red). The two lines are scaled at 16-to-1.

Posted by Eddy at 1:11 PM | Permalink

The Nasdaq has announced that it's launching four new indexes; biotech, coal, steel and precious metals.

If anyone needs me, I'll be shorting biotech, coal, steel and precious metals.

Posted by Eddy at 11:42 AM | Permalink

A few weeks ago, I wrote about the recent peak in gold prices and said that we're never quite sure if we're in a bubble until it's over. Perhaps one of the best signs that we're in a bubble is that people will refuse to acknowledge that we're in a bubble. If that's any indication, the commentors on my post at Seeking Alpha definitely should have clued us in that gold was headed for a big fall.

Bloomberg reports this morning:

Gold may fall for a sixth straight week, the longest slide in four years, as a strengthening dollar erodes the precious metal's appeal as an alternative investment.

Twelve of 21 traders, investors and analysts surveyed from Mumbai to Chicago on Aug. 14 and Aug. 15 advised selling gold, which last week fell to $792.10 an ounce in New York, capping an 8.4 percent drop for the week that was the biggest in 25 years. Eight respondents said to buy, and one was neutral.

Gold, priced in dollars, generally moves in the opposite direction of the U.S. currency. Gold is down as much as 25 percent from a record $1,033.90 reached on March 17. The last time the metal fell for six straight weeks was in May 2004.

If you have some time for a little cheap entertainment, this link will take you to the Yahoo Message board posts for Cisco’s stock on March 27, 2000. That was the highest day for the hottest stock of the era. These posters are so madly in love with their stock it’s almost funny. Absolutely no criticism is allowed. Just look at the posts. They have a religious intensity to them.

To scroll through the posts, just click on the > symbol right by the time stamp.

Posted by Eddy at 11:20 AM | Permalink

Floyd Norris asks, “Has a Penny Stock Become a Big Company?"

In my opinion, the short answer is no. If any company is serious about its business and its future, it has no business being listed on the pink sheets. Any real company has nothing to fear from full disclosure. Multimedia Kingpin Tim Sykes makes his living doing nothing but spotting phony pink sheet stocks that have no reason business outside of issuing daily press releases.

The longer answer, however, is that yes, a very smaller number of stocks that have fallen to less than $1 per share have gone on to become real companies.

In early 1985, Apco Argentina (APAGF) traded for as little as 12.5 cents (or an 1/8 back then). The stock has since split 4-for-1 (last November) so it was even less than that. It's now worth about $27 a share,

A better example is Mylan Labs (MYL). That stock was going for 75 cents a share in 1976. Since then it’s split 11 times (one 5-for-4, four 2-for-1 and six 3-for-2) for a total of 227.8125 for 1. Which means that adjusted for splits, the stock was going for less than one-third of a penny per share. Mylan is now going for $13.72 which is about half what it was five years ago. Still, that’s a nice 400,000% return from its low.

(H/T: Paul K.)

Posted by Eddy at 11:06 AM | Permalink

Ugh.

Inflation reached a 17-year high last month, fueled by high gasoline and food prices, all but assuring that the Federal Reserve will keep interest rates at their current level for the time being.

Consumer prices were 5.6 percent higher last month than they were in July 2007, a brisker pace than economists had expected, the Labor Department said on Thursday.

That was the sharpest annual increase since January 1991, as Americans paid more for clothing, food, transportation and recreational products.

The news was distressing for investors and the stock markets initially fell on the report. The major exchanges recovered, however, and the Dow Jones industrials up more than 80 points in early afternoon trading. Investors returned to buying financial stocks, taking advantage of a sector that has fared poorly in recent sessions. The broader S.&P. 500-stock index was up 0.46 percent. Wal-Mart also reported a better-than-expected rise in quarterly profits, but the discount retail giant also issued a gloomy sales forecast for the rest of the year. In addition, crude oil prices continued to fall, dropping below $113 a barrel.

The overall Consumer Price Index, considered the benchmark gauge of domestic inflation, rose 0.8 percent in July. Economists had forecast a rise of half that rate. In June, prices rose 1.1 percent, the second highest monthly pace in 26 years.

Posted by Eddy at 4:09 PM | Permalink

From its peak in 1980, if the price of gold had kept pace with total return of the Wilshire 5000, today gold would be worth over $21,000 an ounce.

Posted by Eddy at 6:42 PM | Permalink

He lost
It all
So screwed
he is
Oh no!
Must tour
A-gain
Ha Ha
Dumb Ass

Say it ain’t so
Where did it go
One Point Five Mil
See you in Court

Na, na, na, na…..

Posted by Eddy at 4:25 PM | Permalink

I'd really like to buy T. Rowe Price (TROW) but I think it's about $10 too expensive here.

Pretty sweet chart tho.

Posted by Eddy at 12:06 PM | Permalink

In terms of relative performance, these have been great times for the Buy List. Yesterday, Sysco (SYY) added 4% on good earnings news. Typically, this is one of the most stable large-cap stocks on Wall Street. For Q2, Sysco earned 55 cents a share, three cents more than estimates. Last year, Sysco netted 49 cents a share so the company is growing well.

Posted by Eddy at 11:17 AM | Permalink

I'm up 27% in three weeks since my last purchase of Nicholas Financial (NICK). It takes patience but the market is not efficient. The stock is still going for less than 80% of book.

Posted by Eddy at 10:43 AM | Permalink

August 11, 2008

The Arts

A listing of credits on April 28, 1960, with a theater review of “West Side Story” on its return to the Winter Garden theater, misstated the surname of the actor who played Action. He is George Liker, not Johnson. (Mr. Liker, who hopes to audition for a role in a Broadway revival of the show planned for February, brought the error to The Times’s attention last month. )

Posted by Eddy at 10:54 AM | Permalink

Supply and Demand continues to work its magic:

Retail gasoline prices have fallen for the 24th straight day, a AAA survey of gas station sales showed.

The national average price for a gallon of regular gas are down more than 7 percent from the record high of $4.114 on July 16, CNNMoney.com reported Sunday.

Even with gas prices falling, Friday's national average price is more than $1 higher than it was a year ago.

In Alaska, the state with the highest prices, drivers pay an average of $4.63 a gallon, the AAA study found. Oklahoma and Missouri have the lowest gas prices, at $3.58 a gallon.

Diesel, meanwhile, is up nearly 55 percent from last year's levels. The national average price for diesel fuel fell Sunday to $4.557 a gallon.

The AAA study is based on data from credit card swipes at 85,000 U.S. fuel stations.

Posted by Eddy at 10:45 AM | Permalink

Michael J. McCarthy aka "Large" has been fired from his job as a Citigroup trader for running his blog, Take A Report.

"This employee was terminated for behavior that violated the firm's code of conduct and policies," Citigroup spokeswoman Danielle Romero-Apsilos said. McCarthy, a vice president, declined to comment on his departure from the New York-based bank. Financial industry regulatory records show he's been at Citigroup for seven years, most recently trading shares of utility and power companies.

"It's a little over the top," said Barry Ritholtz, director of equity research for New York-based Fusion IQ, who has looked at the site and has his own financial blog at www.bigpicture.typepad.com. "I can see why a conservative bank is not going to be happy with it. It's funny as hell."

Posted by Eddy at 1:08 PM | Permalink

Through today, the Buy List is down -10.39% while the S&P 500 is down -13.78%. Neither figure includes dividends. The daily volatility of the Buy List is 7.17% greater than the S&P 500.

Posted by Eddy at 10:47 PM | Permalink