Archive for 2009

  • Small Stocks, Big Dividends
    , June 12th, 2009 at 10:13 am

    Barron’s scanned for small stocks that pay generous dividends. They looked for stocks that have raised their dividend over the last five years that have market caps between $800 million and $3 billion. They also knocked out financial stocks or stocks with too much debt.
    Here’s what they found:
    Flowers Foods (FLO)
    Owens & Minor (OMI)
    South Jersey Industries (SJI)
    ABM Industries (ABM)
    Universal (UVV)

  • Morning Links
    , June 12th, 2009 at 8:49 am

    BlackRock to become world’s biggest money manager
    Google’s CEO on Bing: “They do this about once a year.”

    Parking Space In Boston Sells For $300,000
    Volkswagon’s sales rose in May; suck on that recession
    OPEC says worst appears to be over for oil market

    Lehman to pay Barclays $6 million for its own desks and chairs
    Citigroup Bailout Pays Taxpayers Three Times as Much as S&P 500
    Roubini: Is Eastern Europe On The Brink Of An Asia-Style Crisis?
    A.I.G. Balks at Claims From Jet Ditching in Hudson

    World Bank Predicts Deeper Economic Contraction

  • Volcker says US growth possible this year
    , June 12th, 2009 at 8:44 am

    Here are some interesting comments from the always interesting Paul Volcker:

    Global financial markets are starting to heal and the U.S. economy could begin to grow again this year, but a strong recovery is unlikely, said President Barack Obama’s top adviser Paul Volcker.
    “An expectation of some growth late this year and next in the United States seems reasonable,” Volcker, a former Federal Reserve chairman who leads a panel advising Obama on economic recovery, said in a speech Thursday at a conference of global bankers in the Great Hall of the People, the seat of China’s legislature.
    However, “a really strong recovery, typical of most recessions, seems unlikely,” he said. “Rather, it is going to be a long slog, with continuing high levels of unemployment.”
    The slump also is easing “most clearly” in Britain, trailed by other European economies, with less evidence of recovery in Japan, Volcker said. He said a “healing process” seems to be under way in financial markets.
    Volcker cautioned that U.S. growth depends on stimulus spending and “years of deficit spending far beyond past peacetime experience lie ahead.” However, he said inflationary pressures were unlikely for some time to come. That could allow greater leeway to combat the downturn by expanding the money supply.
    The legendary Volcker, 81, served as Fed chairman in 1979-87, when he tamed raging inflation, though at the cost of painful interest rate hikes that triggered a recession. Obama named him in November to lead the Economic Recovery Advisory Board.
    Volcker expressed no enthusiasm for initiatives under discussion in Washington, including regulating bankers’ compensation. He said there is “ample justification” for public anger at pay practices that were “wildly excessive” and encouraged risk-taking at the expense of stability. But he warned against too much political involvement.
    “It is far better that individual and professional groups come to grips with these matters than heavy-handed and inflexible regulation or legislation,” he told members of the Washington-based Institute of International Finance, a global association of bankers.
    Volcker said there is a “strong case” for reviewing so-called “fair value” rules that determine the value of assets of banks, insurers and other institutions. He said efforts to enforce “mark-to-market” rules on assets fueled confusion and uncertainty.
    But he said that while more international consistency is required in accounting standards, politicians should avoid excessive involvement.
    “Political bodies in Europe and the United States or any other country are simply not the appropriate venue for reaching well-considered judgments that can be enforced internationally,” he said. “We need a bit patience,” he said, as the International Accounting Standards Board carefully reviews the rules.
    Volcker expressed support for a global currency, which he called “the ultimate logic of a globalized financial system.” China and Russia have called for such a currency to replace the dominant dollar, but Volcker gave no opinion on any individual proposal.
    He said governments should take steps to limit the possibility of bailouts of financial institutions, possibly by making clear that traditional savings banks will receive deposit insurance while those in riskier businesses are excluded.
    “A presumption of government protection and support for financial institutions outside the ‘safety net’ should be avoided,” he said.
    But Volcker also defended the role of hedge funds, which some blamed for increased market volatility in late 2008. Some U.S. lawmakers are discussing proposals to increase oversight on such funds, which have an estimated $2.5 trillion in assets but operate mostly outside government supervision.
    “Hedge funds and private equity funds have an entirely legitimate role to play in providing liquidity and innovation in our capital markets,” Volcker said. “I do not believe they need to be so closely supervised and regulated as depository institutions.”

  • Phoney Rally Continues
    , June 11th, 2009 at 3:25 pm

    The fraudulent short-term bear market rally that’s being propped up by the New World Order is now three months old.
    image821.png
    There’s still 30 minutes to go before the bell but the market made another post-March high today. The high point was 43% above the March 6 intra-day low of 666.79.

  • Barney Frank Runs Away from Tough Questioning
    , June 11th, 2009 at 10:02 am

    Barney Frank was just on CNBC. I’ve started a game of watching at what point Frank goes into his overly dramatic routine that he’s being interrupted and not allowed to answer the question. He does this all the time.
    Fortunately, this time he was up against Mark Haines who doesn’t put up with his nonsense. I don’t think Congressman Frank understands that he’s not the chairman everywhere in the world. It’s pretty sad: You put a gavel in some people’s hands and it goes to their heads.

    The fun begins at 4:50. Haines asked a perfectly reasonable question. In Frank’s response, he asks Haines a question (two actually) to which the anchor responded. This set Frank off.
    Frank has perfected this gimmick. He’s given a question that he doesn’t want to answer so he goes off on a tangent and simply filibusters. When the interviewer tries to get him back on topic, he acts outraged.
    I think a reasonable person could call this interrupting. Personally, I wouldn’t. It’s simply part of the give-and-take of any conversation. Still, if Frank were truly interested in addressing the question he could respond with a firm “I’m getting to that,” or about a hundred other ways. Instead, he erupts and brings the conversation even further from an answer — and gets to play the victim to boot.
    Congressman Frank is a bully pure and simple and today he was put in his place.
    I’ll see if I can find clips of his previous antics. Here’s one from yesterday: 6:22 on June 10

  • S&P 500 Inches Away from Passing Gold
    , June 11th, 2009 at 9:55 am

    The S&P 500 is currently just shy of the price of the gold. If they cross, I believe this will be the first time since April 17 that the S&P was higher than gold.
    You can score one for the technical analysts because the two lines seem to be eying each other. April 17 was the only day since the inauguration that gold closed below stocks.

  • Something to Think About
    , June 10th, 2009 at 7:55 pm

    The suitor forced on Chrysler is named after a word meaning “authoritative and arbitrary command.” The term comes from the Latin fiat meaning “let it be done.”
    (HT: Gary Alexander)

  • Taleb Watch
    , June 10th, 2009 at 11:48 am

    I think folks are beginning to catch on to what I and others have been saying for a long time—Nassim Taleb is fantastically overrated. He was on CNBC this morning:

    The Obama administration’s attempts to fight the financial crisis with more cash is like treating a bad tooth with Novocain instead of a root canal, Nassim Taleb, author of “The Black Swan,” told CNBC Wednesday.
    The main problem is the level of debt, and Taleb compared the authorities’ efforts with those of a not very skilled pilot who is trying to land a Concorde on a narrow strip, between an ocean of deflation and a mountain of hyperinflation.
    “These people failed us, they’re going to fail us again,” Taleb told “Squawk Box.”
    “They tell the banks to lend more but have less leverage,” and expect people to go out and consume while unemployment is rising, he added.
    “The way to restart everything is restructuring, conversion of debt into equity, convince people that debt is not good,” Taleb said.
    “Do not delay a root canal,” he added. “Don’t do piecemeal solutions to a problem that is fundamental.”
    “The solution is there, convert debt to equity. Usually it happens with Chapter 11, let’s do it faster, and across the board,” Taleb said.

    So China is to take an equity stake in the U.S. government?

  • Peter Schiff on Jon Stewart
    , June 10th, 2009 at 8:27 am

    Peter Schiff appeared on Jon Stewart’s show last. Unfortunately, it was a softball interview and Stewart bought the now-disproven line that Schiff was right. Dan Gross recently referred to Stewart as the most relevant financial reporter on television. He wasn’t last night.

    The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
    Peter Schiff
    thedailyshow.com
    Daily Show
    Full Episodes    		 Political Humor Newt Gingrich Unedited Interview

  • Home Depot Raises Guidance
    , June 10th, 2009 at 8:13 am

    Interesting news out of Home Depot (HD) today. The company raised FY 2009 earnings guidance. Or more accurately, they said the earnings decline won’t be as bad as they originally thought.
    Last year, HD earned $1.78 a share. In May, the company said that it expects to see EPS fall by 26% and sales to fall by 9%. That translates to full-year earnings of $1.32. Today they said to expect EPS to fall by 20% to 26%. A 20% drop works out to $1.42 which is slightly above Wall Street’s consensus of $1.40.
    Make no mistake, this isn’t great news but it’s not awful and all the news until now has been awful. HD’s earnings peaked in 2007 at $2.83 a share so we’re going to see earnings fall in half—so has the stock price.
    At its current price, I wouldn’t say Home Depot is a good buy, but it’s not unreasonable to see year-over-year earnings increases within a few quarters. If there’s more good news from HD, it could be a good buy before the end of the year.