Archive for January, 2008

  • Discover’s Horrible Spin-Off
    , January 18th, 2008 at 10:05 am

    Last month, Morgan Stanley’s CFO, Colm Kelleher, said “If you were to normalize our business and take out this $9.4 billion charge, you would see that we had a record year across the whole enterprise.”
    In other words, if you ignore the losses, we’re doing quite well. Somehow, the market wasn’t terribly impressed. Since July, Morgan’s stock has plunged from $70 to $45.
    But here’s the thing, their performance is even worse if you recall that Morgan spun-off Discover Financial Services (DFS). I’m usually a big fan of spin-offs, but Discovery has been a disaster. Since its July debut at $26, shares of DFS have plunged to $13 today.

  • CEO of the Princeton Economics Department
    , January 18th, 2008 at 6:31 am


    Notice that GS ticks down a penny when she mentions it, then up a penny when he corrects her. Score one for EMH.
    (Via Mankiw)

  • Quote of the Day
    , January 17th, 2008 at 5:57 pm

    Ben Bernanke on growing up Jewish in South Carolina:

    Being a member of a minority taught him about discrimination and prejudice. “There was more than one request to see my horns,” he said years later.

  • Dow -309.95
    , January 17th, 2008 at 5:23 pm

    Wow…that sucked.
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  • The Ballad of Jim Cramer
    , January 17th, 2008 at 3:30 pm


    That’s really good. I like the catchy tune.

  • The Bond Bubble Grows
    , January 17th, 2008 at 2:08 pm

    The five-year T-note (^FVX) is under 3% today. Six months ago, it was going for 5%. Notice how you never hear the media talk about “irrational exuberance” or “runaway bubbles” in the bond market. Bond traders are always assumed to be right.
    This is obviously theoretical, but if I ran a bank, I’d rather short the five-year note than borrow at the Fed Funds rate.
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  • Earnings from Amphenol and Clarcor
    , January 17th, 2008 at 11:20 am

    Two earnings reports from Buy List stocks to pass along.
    Amphenol (APH) had a great report but the stock is pulling back this morning. For Q4, APH earned 55 cents a share, three cents more than the Street was expecting. Last year, APH made 43 cents a share for Q4. Even better, the company gave good guidance going forward:

    For 2008, the company expects a profit between $2.18 and $2.25 per share on revenue between $3.1 billion and $3.18 billion. Last year, profit reached $353.2 million, or $1.94 per share, and sales hit $2.85 billion.
    Analysts project earnings of $2.22 and revenue at $3.13 billion, according to Thomson Financial.
    “We are cautiously optimistic (Yuck! I hate the phrase! – EE) about continuing improvement in the short term and very confident about the long term outlook for continued growth and profitability,” the company said in a statement.
    For the current quarter, Amphenol anticipates net income of 50 cents to 52 cents per share and revenue between $740 million and $755 million.
    Analysts expect a profit of 51 cents per share and revenue of $741 million.

    Personally, I was looking for a little better guidance than what we got. Although, APH had a pretty strong run from August to December, so maybe it’s simply profit-taking today. Assuming $2.22 a share for 2008, that’s a P/E of 16.5, which isn’t bad for APH.
    After the closing bell yesterday, Clarcor (CLC) reported earnings of 53 cents a share.

    For the quarter ended Dec. 1, Clarcor earned $26.7 million, or 53 cents per share, compared with $26.7 million, or 52 cents per share, for the same quarter in 2006. The company had fewer shares outstanding in the recent period.
    Analysts polled by Thomson Financial expected income of 51 cents per share.
    Sales rose 2.4 percent to $238.3 million from $232.6 million in the year-ago period.
    Operating margins were 16.8 percent in both periods. Clarcor said foreign currency fluctuations improved the recent quarter’s sales by $6 million.
    For the full year, Clarcor earned $90.7 million, or $1.78 per share, compared with $82.7 million, or $1.59 per share, for 2006. Sales rose to $921.2 million from $904.3 million the year before.

    The company also said that it expects 2008 EPS of $1.85 to $2.05 (sheesh, kinda wide range). The Street consensus is for $1.92.
    Here’s a spreadsheet of Clarcor’s results for the past few years.

  • The Education of Ben Bernanke
    , January 17th, 2008 at 8:07 am

    Behold! Roger Lowestein’s 8,000 word article on Ben Bernanke. Here’s a very small sample:

    Bernanke grew up in the small town of Dillon, S.C., at the tail end of the segregation era (in high school he wrote a schoolboy’s novel about whites and blacks coming together on the basketball team). His father and his uncle ran a local drug store. Folks trustingly called them Dr. Phil and Dr. Mort. Ben, who skipped first grade, was obviously smart from the get-go. He played the saxophone, just as Greenspan did, and waited tables two summers and worked construction another. The Bernankes were observant Jews, and Ben’s folks fretted when he got into Harvard that if he strayed from home he might wander from his religious teachings. It was never a risk. Judaism is important to Bernanke, though, as with other personal subjects, he does not discuss it. As a doctoral candidate at M.I.T., he blossomed into a star, and at the tender age of 31 he received a tenured position in the economics department at Princeton.
    His academic research was steeped in the increasingly sophisticated discipline of econometrics, which uses computer models to simulate (and predict) the economy. By contrast, Greenspan often relied on his hunches. The difference is partly generational, but Bernanke is clearly more comfortable working with mathematical formulas than with anecdotal examples. (One looks in vain in his Depression writings for stories of banks that failed or of workers who lost their jobs.)

  • “The first thing we do, let’s kill all the lawyers”
    , January 17th, 2008 at 7:14 am

    Retirees claim Morgan Stanley broker gave bad advice
    ROCHESTER, N.Y. (AP) – A group of investors is suing Morgan Stanley, claiming a broker gave them bad financial advice when he persuaded them to retire early from Eastman Kodak Company and Xerox Corporation.
    In a lawsuit filed today in state court, seven former employees maintain that they were promised ample savings for early retirement by broker Michael James Kazacos. They say the savings never materialized and many of them are now almost broke.
    The lawsuit seeks more than $$140 million in compensatory damages and class-action status. It claims the retirees were persuaded to retire beginning in the late 1990s and told they could live off the returns their money would generate if invested with Morgan Stanley.

  • Market Hits New Low
    , January 16th, 2008 at 4:24 pm

    The S&P 500 closed today at 1373.20, the lowest close since November 3, 2006 which was the Friday before the mid-term election.
    July 1, 1999 was the first time the S&P 500 closed above this level.