Author Archive

• Time to Ditch the Extra-Point?
  Eddy Elfenbein, December 2nd, 2008 at 10:23 pm

  Extra-points are getting out of hand this year. The PAT success rate is normally very high, but this year it’s reaching absurd levels. Through week 13, only 3 extra-point attempts failed out of 884 tries. That’s a success rate of 99.66%. Sheesh, that’s even higher than Ivory Soap.

  Sorry, but anything that consistent isn’t a game anymore. To put it in context, the number of missed PATs is down by about 90% from 20 years ago. Remember, football is a game. That means it’s supposed to be, you know, fun to watch. Well, 99.66% ain’t fun to watch. It’s a mockery of sports. The PAT has become a useless play that could only cause injuries.

  So should we just get rid of it? Nah, it’s been around forever, so let’s try modifying it.

  How about moving the extra-point line back? Well, let’s look at the data. In the 20 to 29-yard range, kickers have made 203 of 206 attempts this year for a 98.54% success rate. I’m assuming that’s a median attempt of 24.5 yards, meaning the line of scrimmage is about the 7 or 8. Remarkably, that lower success rate is still higher than the league’s extra-point success rate until 15 years ago.

  One idea would be to move the PAT line back to, say, the 10-yard line. Of course, that would make a two-point conversion much harder. The problem is that the 2-point conversion already can’t compete from the 2-yard line. The success rate runs at 44% which makes it inefficient compared to the 1-point try. The 2 is only used when it has to be. (Do the one- and two-point attempts have to take place at the same place? Hmmm. For simplicity’s sake, I’d say yes).

  Here’s a look at the percent of missed PATs going back to 1974 when the NFL moved the goalposts to the back of the endzone. I should note that there have been some rule changes. For example, running “leaps” by the defense were banned in 1984. Cool to watch but probably a bit dangerous.

  

  The rule change I’d support wouldn’t be to move the extra-point line back, but moving it in a little bit. Perhaps to the one-yard line, or maybe the four- or five-foot line. That would make the 2-point try more competitive while having no impact on the 1-point try. Just like in economics, it’s all about incentives.

  Update: Brian Burke has more. He says to narrow the goal posts.

• Hoofy and Boo Win an Emmy
  Eddy Elfenbein, December 2nd, 2008 at 10:10 pm

  Congratulations to everyone at Minyanville:

  Minyanville Media, the fast growing financial information and entertainment company, today won a Business and Financial Reporting Emmy for its animated news show “Minyanville’s World in Review with Hoofy and Boo.”
  The show was honored by The National Academy of Television Arts and Sciences, in the New Approaches to Financial Reporting category for its groundbreaking weekly show starring the animated icons of finance, Hoofy the Bull and Boo the Bear.
  “It is a humbling honor for us, to be recognized as a leader of business news reporting,” said Minyanville Founder and CEO Todd Harrison. “We continue to do our part in helping narrow the gap between what people know about managing their money and what they need to know,” he added.

• Victoria Secret Model Gets all Pottymouth on CNBC
  Eddy Elfenbein, December 2nd, 2008 at 3:35 pm

  Sorry for the commercial intro. The clip starts at 16 seconds.
  
  Here’s the clip with Victoria Secret’s CEO. Later, Michelle Caruso Cabrera asks who “did the lovely tease for us.”

• 10-Year Yield Drops to 50-Year Low
  Eddy Elfenbein, December 2nd, 2008 at 12:49 pm

  The yield on the 10-year Treasury fell below 2.7%. That’s lowest on the daily records which go back to 1962. The monthly records go back further so it’s the lowest since 1955.
  
  With the S&P 500 currently around 845, this means that index only needs to get to 1073 over the next ten years to beat the Treasury bond. That doesn’t include dividends and the yield on stocks may be higher than 2.7%. (Some in the media have said that the S&P’s yield is already above long-term Treasuries, but I’d rather see how dividend payouts fare in the coming months before I’d say it’s true.)

• Kudlow on the Recession
  Eddy Elfenbein, December 1st, 2008 at 4:06 pm

  From December 5, 2007:

  The Recession Debate Is Over
  There ain’t no recession.
  Today’s ADP private jobs survey of 189,000 could produce a 200,000 non-farm payroll job gain for November. I don’t know — these wacky BLS numbers are subject to huge revisions. But the ADP was a huge number. In fact, jobs seem to be picking up major steam from their August low, rising in September and October. And now I’m expecting a good increase in November to be reported by the BLS this Friday.
  Plus, profits are stronger than people seem to understand. The ISMs are fine. Productivity, reported out today, soared to over 6 percent annually in the third quarter. That’s the best productivity number in four years for output per person.
  On top of that, business inflation is zero. Flat. Nada.
  The recession debate is over. It’s not gonna happen. Time to move on.
  At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). The Bush boom is alive and well. It’s finishing up its sixth splendid year with many more years to come.

• Want to Know About Hedge Funds
  Eddy Elfenbein, December 1st, 2008 at 2:43 pm

  Donald MacKenzie in the London Review of Books has a long article on hedge funds:

  You could walk around Mayfair all day and not notice them. Hedge funds don’t – can’t – advertise. The most you’ll see is a discreet nameplate or two. An address in Mayfair counts in the world of hedge funds. It shows you’re serious, and have the money and confidence to pay the world’s most expensive commercial rents. A nondescript office no larger than a small flat can cost £150,000 a year. Something bigger and in the style that hedge funds like (glass walls, contemporary furniture) can set you back a lot more. It’s fortunate therefore that hedge funds don’t need a lot of space. Two rooms may be enough: one for meetings, for example with potential investors; one for trading and doing the associated bookkeeping. Some funds consist of only four or five people. Even a fairly large fund can operate with twenty or fewer.

• Investing During a Recession
  Eddy Elfenbein, December 1st, 2008 at 2:24 pm

  Today, the NBER made news by saying the recession officially started in December 2007. This is the fifteenth recession since 1926.
  Of the 82 years from the beginning of 1926 through 2007, 182 months have been in recession which is about 18.5% of the time. During those 182 months, the stock market fallen at an annualized rate of 9.6% (including dividends and inflation).
  Of the 802 months of expansion, the stock market has risen at an annualized rate of 11.3%.

• NBER: Recession Began in December 2007
  Eddy Elfenbein, December 1st, 2008 at 1:42 pm

  I was wrong. I thought the National Bureau of Economic Research would date the beginning of the recession in May of 2008. The committee today pinpointed December 2007.
  I understand that selection since that’s when employment peaked. The reason for my later date was that GDP numbers continued to look decent through the second quarter. I didn’t think the committee would “overrule” that data, but I guess they did.
  NBER Announces December 2007 Peak in Economic Activity
  Next question: When will it end?
  

• Gasoline Down for 75 Straight Days
  Eddy Elfenbein, December 1st, 2008 at 12:04 pm

  The plunge continues:

  Gas prices fell for the 75th consecutive day on Monday, and sold below $2 a gallon in all but three states and the District of Columbia, according to a daily survey of credit-card swipes at gas stations.
  Gas prices slipped 0.5 cents to a national average of $1.82 a gallon, the cheapest price since January 2005, according to Monday’s survey from motorist group AAA. That price is $1.24 less than what gas cost on the same day last year.
  Gas prices have fallen by more than 55% since hitting a record high of $4.114 a gallon on July 17. Concern about falling fuel consumption in the midst of the current economic crisis has driven the price of oil, a main component of gasoline, down more than 65% since July.

  

• Profiting off the Liquidity Preference
  Eddy Elfenbein, December 1st, 2008 at 11:14 am

  One aspect of this market that I find fascinating is the dramatic yield spreads between short-term Treasury yields (^IRX) and just about everything else. Short-term Treasuries have one major benefit over all other securities and that is their safety. No matter what happens, an investor can be very confident that the U.S. Treasury will pay them back. The Feds, after all, own the printing press.
  But what we’re seeing recently is being caused by another advantage of Treasuries and that is their liquidity. The Treasury market is one of the most liquid markets in the world. If need be, Treasuries can be dumped at a moment’s notice for something else. That factor is drawing lots more buyers. The short-term T-bill continues to trade as inches above 0%. Going further out, the 10-year Treasury is now down to 2.8%.
  There’s an opposite reaction going on in less-liquid assets. I think this is partly why micro-cap stocks like Nicholas Financial (NICK) are so cheap. There’s an illiquidity discount. In other words, you can’t easily sell when no one is willing to buy. We’re also seeing nearly ridiculous yields for junk bonds.
  There are a number of junk bond ETFs. For example, the PowerShares High Yield Corporate Bond (PHB) is yielding 13.8% based on its most-recent monthly dividend payment.
  I think we saw a similar “gravitational pull” during the dot.com bubble. When sock puppet companies were going for over 100 times dreams, many high-quality REITs were paying dividends over 12%. The problem was the REITs had kept going down and the dot.coms kept rallying. It seemed as if the breaking point had already passed.
  Here’s a look at BAA corporate yields, which still isn’t junk, compared with short-term Treasuries.
  
  One advantage of the liquidity preference would be for the government to issue massive amount of short-term T-bills at their regular auctions. The proceeds could be used to by high-yielding preferred stock is locked-up companies. That way we could use the liquidity premium to the taxpayers’ advantage.
  Arnold Kling has more.