• Dow Breaks 11,000
    Posted by on October 8th, 2010 at 12:16 pm

    This headline also could have worked on May 3, 1999. At the time, gold was at $285.

  • 95,000 Jobs Go Bye-Bye Last Month
    Posted by on October 8th, 2010 at 10:16 am

    The economy lost 95,000 jobs last month. Unemployment held steady at 9.6%. The real jobless rate, however, jumped to 17.1%.

    The steep drop was far worse than economists had been predicting. Most estimates expected a loss of only a few thousand jobs.

    “September’s U.S. payroll report adds to the evidence that the recovery is losing what little forward momentum it had,” said Paul Ashworth, senior United States economist at Capital Economics.

    While total government jobs fell by 159,000, private sector companies added 64,000 jobs last month. The unemployment rate, which measures the percentage of workers who are actively looking for but unable to find jobs, stayed flat at 9.6 percent.

    A broader measure of unemployment, which includes people who are working part-time because they cannot find full-time jobs and people who have given up looking for work, rose to 17.1 percent from 16.7 percent in August.

    Of the loss in government jobs, 77,000 were temporary Census Bureau employees while 76,000 worked for local governments. State governments lost 7,000 jobs, as well.

    Splitting out the decimals, the unemployment rate dropped from from 9.642% to 9.579%.

  • Morning News: October 8, 2010
    Posted by on October 8th, 2010 at 7:47 am

    Prepper Mania: Retail Behemoth Costco Offers Survival Food Packages

    Universal Travel Group: The Auditor Resigns Edition

    Told Ya So: The Currency Volume Bubble in Full Bloom

    How Speed Traders Are Changing Wall Street

    Gold Hits Our $1350 Target; Now What?

    Summary of Third Quarter EPS for S&P 500 Stocks by Sectors

    Wall Street Futures Mixed Ahead of Jobs Report

    UAE Says BlackBerry Dispute Resolved Before Deadline

    Technology Replaces Banks as Better Dividend Bet for Investors

    Japan’s Cabinet OKs $61 Billion Economic Stimulus

    U.S. Companies Buy Back Stock in Droves as they Hold Record Levels of Cash

    CHiPs Star Charged by SEC for Kickback Scheme

  • In Tarpum Memoriam
    Posted by on October 8th, 2010 at 12:07 am

    Now that the spigot phase of TARP has come to an end, Felix Salmon has some wise words. Personally, I have conflicting feelings about TARP. It was an awful thing to do and I hate, hate, hate how it was done, but ultimately…yes…it was necessary and the right thing to do.

    Felix writes:

    TARP might have arrested the global panic for long enough that Bernanke’s policies had time to start working, but that’s about it.

    That’s about it? I think that was TARP’s most important accomplishment—it gave us time. The ballgame changed once people knew there was some sort of backstop even if it was a dysfunctional one.

    Let’s take a step back and remember that it wasn’t until 30 years after the Great Depression that Milton Friedman untangled what really happened. Policy makers have to move a lot faster than that. To paraphrase Donald Rumsfeld, you save the banking system with the policy makers you have.

    The key yardstick to measure the effectiveness of the TARP program is, in my opinion, the TED spread—and make no mistake, that improved dramatically. Yes, I fully understand that the improved TED spread may have simply correlated with TARP and not have been caused by it. I get that.

    The problem is that we don’t have a petri dish to run the economy through 5,000 different scenarios. Perhaps at some point in the distant future, some young economist will put all the pieces together and conclude that TARP was a terrible mistake. Until that happens, I see TARP as being 1 for 1.

    I’m surprised at much of the outrage that people have about TARP. Not that it isn’t outrageous, but what the hell did they expect? When the market crashes, why do we expect policy makers to behave more reasonably? Of course they’re going to be craven and inefficient! That’s why they’re policy makers.

    Felix blames TARP for “generating a broad-based mistrust of institutions: the government and the financial-services industry certainly, and the judicial system possibly as well.” Well…in my book, that’s a good thing.

    The most recent estimate is that TARP will cost the taxpayers $29 billion. Let’s remember that last year, Goldman Sachs (GS) paid taxes of $6.4 billon, plus they kicked in another $2.5 billion so far this year. Should that be included in TARP costs? I don’t know; maybe, maybe not. But I do know that Goldman and many other banks are still in business, employing people and paying taxes. Without TARP, it’s quite possible they wouldn’t be.

    In the end, I hope we never, ever have to do another TARP. But I’m pretty sure that my hopes won’t be the deciding factor.

  • When Is the Best Time of Day to Buy Stocks?
    Posted by on October 7th, 2010 at 4:43 pm

    Here’s a quick quiz for all investors: What’s the best time of day to buy stocks?

    Ha! It’s a trick question, the best time isn’t during the day. Believe it or not, the stock market, in aggregate, has done horribly during the trading day over the past 18 years.

    This is one of the most stunning statistics about investing: the market’s entire gain—and then some—has come when the exchange is closed (the difference from the closing bell and the next day’s opening bell).

    Obviously the transaction costs of buying and selling each day would eat your shorts, but the moral of the story is clear.

    The great MarketSci blog has the deets and this chart:

  • Coolest Stock Chart You’ll See All Day
    Posted by on October 7th, 2010 at 2:21 pm

    Over the last 30 years, Eaton Vance (EV) has beaten the S&P 500 so badly that the latter looks like a flat line in comparison.

    Thirty years ago, you could have bought one share of EV for four cents. That’s adjusted for a 128-for-1 split. Before the financial crisis hit, the stock got as high as $50 per share. Today it’s around $30.

  • More on the Gold Model
    Posted by on October 7th, 2010 at 12:20 pm

    I want to thank everyone who has responded to my post yesterday on gold. One of the things I heard most often was a desire to see a longer-term chart. Fortunately, Jake at EconomPicData has taken the model and made a very long-term chart.

  • The Onion: Something About Tax Cuts Or Earnings Or Money Or Something In Recent Economic News
    Posted by on October 7th, 2010 at 11:59 am

    The Onion has the story:

    WASHINGTON—Some sort of tax cut or earnings or money or something was reported in economic news this week in further evidence that a lot of financial- related things have been going on lately.

    According to numerous articles and economics segments from major media outlets, experts on banks and such have become increasingly concerned over a new extension or rates or a proposal or compromise that could signal fewer investments, and dollars, and so on.

    The experts confirmed that the stimulus has played a role.

    “This is a clear sign of a changing cycle,” some top guy at one of the big banks in New York said of purchasing power parity or possibly rate of return during a recent interview on CNN. “Which isn’t to say that a sustained drop in wages couldn’t still occur, even if the interest paid on reserves is lowered.”

    “In short, it’s possible but not probable that growth could outpace our initial expectations,” added the banking guy, who went on to say other money things, too. “It depends on investor sentiment.”

    The man, who also apparently mentioned the Nasdaq, the Dow, and the Japan one at some point or another, talked for a really long time about credit or reductions or possibly all these figures, which somehow relate to China.

    Greece was also involved.

    An analyst from Citigroup or Citibank announced on Monday that the Federal Reserve System is doing too much, while the Fed has failed to accomplish its goals to increase inflation or interest, which are different things. In addition, he was critical of the Fed’s efforts to regulate the Bernanke.

    “There might be a light at the end of the tunnel, but right now the markets are still struggling,” the man who was wearing a blue suit and red tie said about some special money tunnel. “At this point, though, it’s too early to say.”

    The head Treasury person, whose name sounds like Guyver or Meisner, appeared on every major network this week, either to assure Americans that everything was better or was going to get better or was never going to get better. Some other guy argued that it has never been that good. During interviews, the Treasury guy was observed on several occasions smiling or wincing.

    According to a recent issue of The Wall Street Journal, there are currently a bunch of columns filled with a wide variety of numbers, letters, and symbols.

    Geithner—that is the Treasury guy’s name.

    Another expert, Lawrence Kudlow, who hosts the CNBC program The Kudlow Report, was upbeat over the amount of points available in the industrial average or pleased with where the percentages were at.

    “It’s simple, actually, because the current dividend yield is equivalent to the most recent full-year dividend divided by the current share price,” Kudlow said really quickly. “And that’s basically the situation we’re in now, for better or worse.”

    Paul Krugman, New York Times columnist and 2008 winner of the Nobel Prize for something in one of those economics categories, acknowledged in an editorial this week that the SEC must work closely with the stock market, Wall Street, and the New York Stock Exchange to maintain the bulls, bears, and opening bells. Krugman also said something could spur lending or trading or budgetary measures.

    Although it has not been totally determined whether Krugman agrees with leading experts on assets or retail sales data or other fiscal things, reliable sources have confirmed that he has a beard.

    Time or Newsweek recently published a cover story on the recession or the government debt or incomes or GDP or something similar to that, but kind of focused on how it’s the fault of the rich, the middle class, and the poor.

    In addition, mutual funds, probably.

  • Dow Flirts with 11,000. Gets Number. Never Calls.
    Posted by on October 7th, 2010 at 9:59 am

    Good morning! The stock market is up again today on news that jobless claims fell. By the way, I shouldn’t say that’s the reason. I hate when the financial media lists the reasons why the market rises or falls. It’s more proper to say that the market is up and there’s news that jobless claims fell by 11,000 last week to 445,000.

    The report on jobless claims comes out each Thursday and I think it’s one of the least important economic reports. Make no mistake, the big news will be tomorrow’s jobs report. Economists expect that the unemployment rate climbed to 9.7% last month from 9.6% in August.

    After the opening bell, Alcoa (AA) will be the first component of the Dow to report earnings. I really don’t have any opinions for or against Alcoa, but it will be interesting to see how the market reacts. Pepsi (PEP) cut the top end of its full-year EPS estimate due to poor currency exchange rates. Wall Street had been looking for up to $4.16 per share. Pepsi said it will be closer to $4.12 per share. The stock is down about 3% today.

    The Buy List is trending higher this morning. AFLAC (AFL) broke $54 per share this morning. The stock is at its highest level since May. I’ve been very happy with this stock.

    Ryan Fuhrmann at TheStreet listed the 5 most undervalued stocks in the S&P 500 and he included Eli Lilly (LLY):

    Eli Lilly has severe top-line issues to deal with in the next few years, given nearly 60% of its drug sales are subject to patent expirations during the next seven years. However, this downside is more than reflected in the stock price and is a key reason I recently pegged the stock as big pharma’s most undervalued stock.(Read Big Pharma’s Most Undervalued Stock.) Better yet, management has committed to keeping the current dividend yield, which is about as high as you’ll find in the S&P 500 today. This should keep the stock as a dividend aristocrat for some time, and investors have a chance for big gains by picking up the shares.

    The stock currently yields 5.3%.

  • Morning News: October 7, 2010
    Posted by on October 7th, 2010 at 7:42 am

    German August Industrial Production Jumps More Than Forecast

    FOREX-Dollar Downtrend Gathers Pace; ECB in Focus

    G-20’s `Mega-Trend’ Interventions Risk Protectionist Reprisals

    Eurostar to Buy Siemens Trains in Bid to Counter Deutsche Bahn

    F.T.C. Accuses Tax Relief Company of Empty Promises

    Bank of England Holds Rates Steady

    China, U.S. Square Off over Yuan

    Asian Markets Down after Yen Hits New 15-Year-High

    Shopping Malls Crack Down on Teenagers

    The Bullhorn: Talking Cloud Stocks and Gold on CNNMoney