Archive for January, 2008

  • Earnings from Stryker and Danaher
    , January 24th, 2008 at 9:39 am

    After the close yesterday, Stryker (SYK) reported earnings of 66 cents a share, which was a 20% jump over last year. For 2008, the company forecasts earnings-per-share of $2.88. That means the stock is going for a P/E of 23.2. Stryker finished its seventh straight year of double-digit sales growth.
    Danaher (DHR) reported earnings of $1.12 a share (excluding charges), which also matched expectations. The company expects Q1 EPS of 84 cents to 89 cents, and $4.30 to $4.40 for all 2008. That gives them a P/E of about 17.

  • Editors at MarketWatch Keeping It Real
    , January 24th, 2008 at 9:35 am

    You can already see Murdoch’s influence.
    (Via ValleyWag)

  • Bullpen IPO
    , January 23rd, 2008 at 3:49 pm

    Randy Newson, a rookie relief pitcher with the Cleveland Indians, is having an IPO.
    Of himself.
    He’s selling 4% of his future earnings. There are 2,500 shares so you can buy 1/62,500th of Newson’s future earnings for $20.
    (Via Marginal Revolution)

  • Buy at 10, Sell at 3
    , January 23rd, 2008 at 3:44 pm

    I have to admit that this is getting fun. The bears are getting smushed.
    The saying “buy on rumors, sell on news” should be replaced with “buy at 10, sell at 3.” These intra-day moves are huge. Would you believe the Dow is now positive for the week?
    Both Harley-Davidson (HOG) and Bed Bath & Beyond (BBBY) are doing well today. I’ll have more in a bit, but the Buy List is again ahead of the broader market. Stryker (SYK) reports after the close. Danaher (DHR) reports tomorrow and Harley-Davidson (HOG) follows on Friday.
    I’m still amazed at the surge in the bond market. The five-year got to 2.4%. The 10-year note bounced off 3.3%. Wow, even after yesterday, the Fed is still above the 10-year.

  • Another Rough Day
    , January 23rd, 2008 at 9:43 am

    The market opened much lower again today, but the real action is in the bond market. Rates are plunging. The three-month T-bill just broke below 2% and the 10-year is below 3.5%.
    The Fed’s 17 interest rate hikes are being undone in front of our eyes.

  • Good Day for Us
    , January 22nd, 2008 at 4:37 pm

    Our Buy List was down -0.21% for the day compared with a -1.11% drop for the S&P 500. Until late in the day, we were in the black. The Buy List has again outperformed the S&P 500 for the year. And like last year, we’ve done it with less volatility.
    Here’s how the S&P 500 did today.

  • Wall Street Rocked By Panic Selling!
    , January 22nd, 2008 at 4:24 pm


  • What the Fed Wants to Do
    , January 22nd, 2008 at 1:23 pm

    I find myself in the unfamiliar position of defending the Federal Reserve. Please bear with me because this is strange for me but what they did today was exactly what they should have done. In fact, they should have done this a few weeks ago after the December jobs report.
    I hear a lot of talk today about how the Fed is bailing out investors. Please. That misses the point. The Fed is not all powerful. Hard to believe but it’s true. In reality, they’re another player in the game. They’re just the most powerful.
    The Fed isn’t panicking, nor is it trying to bail out investors—it’s in a fight with a bond market that’s refusing to cooperate. That’s where the panic is. Try to think of it from the Fed’s point of view. The central bank is ultimately here to protect the banking industry. The irony is that the Fed isn’t trying to bail out stock investors, it’s really catching up with a bond bubble, where people have made too much money.
    Before today’s cut, the five-year T-note was 160 points below where the Fed Funds is. If you were a bank, you have zero reason to generate new loans. Just plop all your money in a long-term bond fund and you’re fine. The Fed can’t let that happen.
    The five-year note is now well below the CPI. I know I’m beginning to sound like a broken record, but this problem is getting worse. Keep your eye on the Rydex Inverse Government Long Bond Strategy (RYJUX). It’s designed to double the moves of the T-bond market in the opposite direction.

  • Fasten Your Seatbelts!
    , January 22nd, 2008 at 7:56 am

    7:56 am: I’m going to abandon traditional blogging today in favor of quick updates. The market will open 90 minutes from now and the Dow futures are currently off 546 points, the S&P 500 futures are off 66 points and the Nasdaq futures are off 75 points.
    8:00 am: A 0.75 rate cut? That’s what traders think. The futures indicate that traders now think there’s a 72% chance that the Fed will cut by 0.75%. The rest are looking for a 0.50% cut.
    The Fed meets next week, but don’t be surprised to see a cut today.
    8:10 am: Paulson is speaking right now. UnitedHealth (UNH) reported earnings, 92 cents a share up from 84 cents last year. This matched the Street’s forecast. For 2007, UNH earned $3.42 a share. For 2008, they’re looking for $3.95 to $4 a share.
    8:15 am: Wachovia’s Q4 net income plunged 98%. The stock is off 40% since the market peaked. Scary to think this used to be on our Buy List.
    8:18 am: Like 1987? Mark Hulbert thinks so. I don’t buy it.
    8:19 am: For you Fibonacci enthusiasts, 2008 is eight years after the 2000 top, five years after the 2003 bottom, 21 years after 1987 and 34 years after the 1974 bottom.
    8: 20 am: The Fed cut by 0.75! We’re now at 3.5%. This is the biggest cut in 23 years. Here’s the statement:

    The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3-1/2 percent.
    The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.
    The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.
    Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.
    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Eric S. Rosengren; and Kevin M. Warsh. Voting against was William Poole, who did not believe that current conditions justified policy action before the regularly scheduled meeting next week. Absent and not voting was Frederic S. Mishkin.
    In a related action, the Board of Governors approved a 75-basis-point decrease in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Chicago and Minneapolis.

    8:45 am: The Dow futures are now down 376. Cramer is saying that Bernanke won’t last long. Rick Santelli just called out Cramer as being a big-time bull. Cramer asked, “have you seen my show?”
    8:50 am: My favorite headline of the day: Yahoo May Cut 700 Jobs as Growth Slows, Person Says. Doncha love that sourcing? A Person. The article says, “according to a person with knowledge of the plans.” I don’t understand how YHOO got over $30.
    9:08 am: The Bank of Canada just cut rates as well. The opening bell is just 22 minutes away. Things got so bad in India that the exchange shut down. I said on CNBC last year that the Indian market was vastly overvalued.
    9:14 am: It’s not all hopeless. Johnson & Johnson (JNJ) just reported earnings of 88 cents a share, excluding charges. The Street was looking for 86 cents a share.
    9:19 am: Remember, a lousy stock market crash always mean a recession. It usually does, but 1987, for example, was an exception.
    9:20 am: Two analyst at Bernstein just upgraded six retailers, including Bed Bath & Beyond (BBBY). It’s about time!
    9:22 am: CNBC has Maria is Davos. It’s snowing there and she’s all bundled up. Too cute, she kinda looks like the little brother in Christmas Story (Randy?).
    9:28 am: Here’s your data point for the day. The yield on the S&P 500 is close to the five-year Treasury. The five-year (^FVX) is at 2.66%.
    9:30 am: Ding Ding Ding Ding Ding Ding Ding Ding
    9:32 am: Some members of the New York Giants rang the opening bell. There’s a metaphor in there somewhere.
    9:32 am: All 30 Dow stocks are down. The Dow is down 431. Only two S&P 500 stocks are up, BBBY and IACI.
    9:38 am: The S&P 500 is at 1278. We’re where we were in mid-2006.
    9:41 am: The Dow is down 366.
    9:45 am: Now there’s talk of another rate cut coming at the meeting at the end of the month. There are still decent earnings out there. Precision Castparts (PCP) just beat by a penny.
    9:53 am: Well, it looks like this has been greatly overrated. The Dow is now down 260. The S&P 500 is off 2.2%. That’s really not a huge move. In the last 10 years, the S&P 500 has had 22 days where it dropped by more than 3%.
    9:59 am: The Volatility Index, the VIX, is back above 35. Since 1990, the market is positive when the VIX is below 22.66. Here’s my post from two weeks ago on how volatility impacts the market.
    10:02 am: At Real Money, James Althucher points out an interesting trade. Harrah’s (HET) is going private at $90 a share. The stock is at $88. If you short it and the deal is pulled, you can make a lot. If you’re wrong and the deal goes through, no biggie. You’re out $2. The private equity offer is from Apollo and TPG.
    10:23 am: Bank of America’s (BAC) earnings were down 95%. For Q4, the bank earned a nickel a share, down from $1.16 last year. Revenue dropped 31%. The Street was all over the place, but the consensus was for 18 cents a share. These results included LaSalle which BAC bought last year.
    10:24 am: The European markets are improving on the rate cut.
    10:28 am: It’s a rally! The Dow is closing in on 12,000. Sheesh, Dow 11700 was so 30 minutes ago. Where have you been?
    10:31 am:, one of the best financial sites, seems to be down.
    10:32 am: “A Whiff of Panic…” As usual, Barry has some sharp comments. As a rule of thumb, I’m usually 500-1000 points more bullish that Barry.
    10:39 am: No Dow 12,000 for now. We seem to have hit a wall at around 11,950.
    10:42 am: Historical footnote. It was 28 years ago yesterday that gold peaked at $875. That evening Jimmy Carter gave a rather downbeat State of the Union.
    10:44 am: Not to show off, but our Buy List is down just 0.49% today. OK, I guess that is showing off.
    10:52 am: Apple (AAPL) reports after the close. I don’t own it, but a good report could give the market a nice shot in the arm. The Street consensus is for $1.62 a share. People I’ve talked with say that’s way too low. We shall see.
    10:56 am: The small-caps are holding up much better than the rest of the market. I wouldn’t be surprised to see many small-cap indexes close in the black. There’s an old saying on Wall Street, “if you can’t sell what you want, sell what you can.”
    11:04 am: The banks love Bernanke. Citigroup (C) is now up for the day.
    11:10 am: We’re back over 12000. Interestingly, money isn’t coming out of the short-end of the yield curve, but it is at the long-end. I still can’t believe the 10-year T-bond is below 3.6%. Now that’s a bubble.
    11:15 am: How’s this for a crazy market? Two weeks ago, Bed Bath & Beyond (BBBY) gave us a nasty earnings warning. The stock dropped 4.4% on 18 million shares in volume. Today it’s rallying on an upgrade and Fed rate cut to above where it was before the warning.
    11:17 am: CSX (CSX) reported blow-out earnings. In other news, the Oscar nominees have been announced.
    11:24 am: In about a week, Nicholas Financial (NICK) will report earnings. This is a fascinating micro-cap stock. The stock is going for about $7 a share, which is 50 cents below book value. I won’t make a guess as far as its earnings, but I’ve been very impressed by NICK’s management.
    11:26 am: The Buy List is now positive for the day, up 0.55%.
    11:29 am: IIVI profit triples.
    11:37 am: Reuters lists the intermeeting Fed cuts since 1994. UBS sees the Fed going to 2.25%.
    11:37 am: How’s this for a turnaround? Ambac (ABK) is up 31%, 40% above its open.

  • This Is Why I’m Not a Trader
    , January 22nd, 2008 at 12:48 am

    Warning: The F bombs reach Big Lebowski levels.

    Welcome to the world of futures trading. I’ll try to translate what’s going on. It looks like he’s long 10 E-mini futures contracts of the Russell 2000, that’s what the ER2 means. They’re traded almost all day on the Globex. The contract was, at the time, down about 24 points. So he’s out about $24,000. But it’s possible that he put up as little at $68,000.
    In other words, he’s so fucking fucked right now it’s un-fucking-believable.
    Update: Bess Levin calls him a fake.