Leucadia National To Pay Dividend
Posted by Eddy Elfenbein on December 6th, 2010 at 6:30 pm

After a three-year hiatus, Leucadia National (LUK) will return to the ranks of dividend payers.

The company just announced that it will pay a dividend of 25 cents per share, “payable on December 30, 2010 to record holders of Leucadia common shares on December 17, 2010.”

The company had paid year-end dividends of 25 cents per share in 2006 and 2007, but it hasn’t paid anything since.

Mad Men on the Brain
Posted by Eddy Elfenbein on December 6th, 2010 at 3:23 pm

From a newspaper in the greater New York area:

Because of an editing error, the Evening Hours column last Sunday misidentified a guest shown with Jon Corzine at Richard LeFrak’s 65th birthday party. He is Lloyd Blankfein, not Lloyd Blankenship.

(HT: Felix)

What’s In the CYC?
Posted by Eddy Elfenbein on December 6th, 2010 at 12:56 pm

The S&P 500 is trading in a tight range today just below Friday’s close of 1,224.71. That was the highest close since November 5th when the S&P 500 finished at 1,225.85 which was the highest close in 26 months.

The Morgan Stanley Cyclical Index (^CYC) did indeed close above 1,000 on Friday. The CYC finished the week at 1,000.95 which was its highest close since May 20, 2008.

In today’s trading, the cyclicals are again leading the market. Stocks like Freeport-McMoRan Copper & Gold (FCX), ConocoPhillips (COP), Baker Hughes (BHI), Caterpillar (CAT), Occidental Petroleum (OXY) are at or near 52-week highs today.

Since I make so much reference to the CYC, here’s a look at the 30 stocks in the index:

Ben Bernanke on “60 Minutes”
Posted by Eddy Elfenbein on December 6th, 2010 at 11:35 am

I continue to be a big fan of Ben Bernanke. I’ll grant you that he doesn’t have the most commanding screen presence, but he’s very smart and he can explain things clearly.

The problem with being the Fed Chairman is that every syllable you utter is dissected beyond reason. Bernanke’s “100% answer” (7:36) is getting a great deal of attention today. I recommend downplaying that and instead listening to the overall substance of what he’s saying.

Pundit Review Radio
Posted by Eddy Elfenbein on December 6th, 2010 at 11:08 am

I’ve been a big fan of Kevin Whalen’s Pundit Review radio show for a long time, so it was an honor to be invited on the program last night. We talked about several fun, uplifting topics like the U.S. economy, the Irish economy and the state of the Boston City Council.

You can hear the interview here.

Reynolds American Rallies on Bizarre Press Release
Posted by Eddy Elfenbein on December 6th, 2010 at 10:51 am

Let me begin by saying that I’m a fan of Reynolds American (RAI). I like the stock and I especially like the current dividend yield of 6.1%.

However, the stock is rallying today on the news of a very strange press release. The company has announced that it’s raising its dividend target from 75% of earnings to 80% of earnings.

The title of the press release is: “Reynolds American Increases Target on Dividend Payout to Further Enhance Shareholder Value.” Yes, but raising the dividend payout has zero impact on shareholder value. It just changes how shareholders are paid. (Note, for example, that this headline is flat out wrong.)

The company isn’t boosting its dividend right now (shareholders got an increase recently when the stock split). They’re merely making a small adjustment to what they plan to pay. If RAI’s earnings fall, so will its dividend. If the earnings rise, so will its dividend. The payout ratio has zero bearing on the share price.

Reynolds currently pays a dividend of 49 cents per share. That comes to $1.96 per share per year. If that’s 75% of projected earnings, then the board sees EPS coming in at $2.61. At an 80% payout rate, the dividend would then be about 52 cents per share. I’m assuming the new payout ratio won’t be in effect until next year when the new dividend is announced. The last dividend increase was announced this past October. Today’s “news” barely qualifies to be a footnote.

Shares of RAI are up today while most of the market is down. I’m happy to see the stock rally, but today’s news does nothing to build shareholder value.

Morning News: December 6, 2010
Posted by Eddy Elfenbein on December 6th, 2010 at 6:24 am

Treasuries, Dollar Rise on Prospect of Fed Buying; Euro Weakens

Stock Index Futures Dip

Bank of Ireland Soars as Flowers Still Eyeing Irish Assets

Yuan Climbs Ahead of European Talks on Bolstering Bailout Fund

Eurozone Officials Call for Pan-European Bonds

Britons to Spend $786 Million Online in `Mega Monday’ Splurge

Pending Home Sales Rebound 10.4% in October

Tax Fear May Move Bonuses Earlier

Groupon Rejects $6 Billion Offer from Google

Qatar Buys Hochtief Stake as ACS Bid `Far From Over’

Rio Tinto in Talks on $3.5 Billion Bid for Riversdale

Fred Says Invest in The Mess…I Say Invest in the Grind

The Cyclical Index Closes in on 1,000
Posted by Eddy Elfenbein on December 3rd, 2010 at 12:11 pm

The Morgan Stanley Cyclical Index (^CYC) has rallied very strongly over the past two days. It’s closing in on 1,000. The CYC hasn’t closed above 1,000 since May 20, 2008.

To give you an idea of how strongly the cyclicals have rallied, the index was at 283.04 on March 9, 2009. It’s up more than 250% in just 21 months. If the Dow had kept pace, it would be at 23,000 today.

The Post-Employment Economy
Posted by Eddy Elfenbein on December 3rd, 2010 at 8:37 am

The November jobs report just came out and it was terrible. The economy created just 39,000 jobs. A total of 50,000 private sector jobs were created while 11,000 government jobs were lost. The unemployment rate rose to 9.8%.

These numbers are well below expectations. The Street was expecting 150,000 new jobs and 175,000 new private sector jobs.

Private companies, which have been hiring since the beginning of the year, added 50,000 jobs in November. Most of those increases came in the form of temporary help, where 40,000 jobs were added, and in health care, with an additional 19,000 jobs.

Retail jobs declined by 28,000 in November, while manufacturing, which had showed some strength earlier in the year, lost 13,000 jobs. Government jobs dropped by 11,000 in the month.

Included in the latest report were revisions from previous months. The agency now says that the economy added 172,000 jobs in October, instead of the 151,000 jobs previously reported. September was revised to a loss of 24,000 jobs from a loss of 41,000.

Since the recession ended, the economy has lost 101,000 jobs.

Morning News: December 3, 2010
Posted by Eddy Elfenbein on December 3rd, 2010 at 7:30 am

Peripheral Risk Premiums Fall on ECB Bond-Buying

Retail Sales Jump 6% in November

Jobless Claims Increase

Payrolls Probably Rose in November as U.S. Economy Grew

Crude Oil Ends at 25-month High on Dollar, US Data

Shift in China’s Monetary Policy Stance Aims to Promote Sustainable Growth

Cross Section of Rich Invested With the Fed

Walter Energy Seals $3.3 Billion Western Coal Buy

Aeropostale Shares Continue Slide After 3Q Results

Big Lots Profit Misses Street, Cuts Q4 Outlook

Talking Small Business Recovery at WSJ