• Quote of the Day
    Posted by on March 2nd, 2010 at 11:11 am

    “I think failure is the only thing that works.” – Rick Santelli on CNBC moments ago

  • How Much Worse Can It Get?
    Posted by on March 1st, 2010 at 3:06 pm

    Spider-Man has just become unemployed.

    On Monday, Marvel said that in a plot line that begins in issue No. 623 of Amazing Spider-Man, Peter Parker — who has lately given up his gig at The Daily Bugle to become the official photographer of the mayor of New York — will lose that job and, potentially, his career as he becomes blacklisted throughout the city.

  • Unemployment Rate of Fed Governors Hits 42%
    Posted by on March 1st, 2010 at 2:32 pm

    Donald Kohn, the Vice-Chairman of the Federal Reserve, announced his retirement today.
    This is interesting because his retirement will bring the number of Fed governors down to four. There are supposed to be seven.
    President Obama and the Senate need to get on the stick. There are three vacancies to fill. Obama has only had one appointment so far plus reappointing Bernanke as Fed Chair which is a separate appointment.
    The Fed’s Board is not to be confused with the Federal Open Market Committee which makes decisions on interest rates. The FOMC has 12 members; the seven Fed Board members, called governors, plus five presidents of the regional Fed banks. The head of the New York Fed is a permanent member, the other presidents rotate.
    The idea of the Federal Reserve Act is that the bank presidents will always be outnumbered by the political appointees. Unless that’s done soon, the bank presidents will have a majority although Kohn can serve until there’s a replacement.

  • The Federal Reserve’s “Kid’s Page”
    Posted by on March 1st, 2010 at 2:09 pm

    I’m serious.

  • Bristol-Myers Squibb Looks Inexpensive
    Posted by on March 1st, 2010 at 11:17 am

    Bristol-Myers Squibb (BMY) has popped up on my radar screen as a decent value. The company had a lousy third-quarter earnings report, but the one for the fourth-quarter was pretty good. I was also impressed by their forward guidance.
    Here’s a look at the stock (in blue, left scale), earnings-per-share (gold, right scale) and dividend (black, right scale). The graph is scaled at a ratio of 16-to-1 so when the blue and gold lines cross, the P/E Ratio is 16; when the blue and black lines cross, the dividend yield is 6.66%.
    image909.png
    After the fourth-quarter earnings report, BMY said it expects EPS for 2010 to come in between $2.15 and $2.25 a share. As the rise in the gold line shows, that’s a pretty bold forecast. The future numbers for the gold line represent analyst estimates.
    Even if the stock trades at 14 times earnings by the end of the year, that would represent 26% growth. I’m not predicting that will happen. I’m just showing you how cheap the stock is relative to what the company expects.

  • Stocks Higher on Merger News
    Posted by on March 1st, 2010 at 9:50 am

    The stock market is up early today. The S&P 500 is above 1100 which is nice to see. The market is digesting some major buyout news. First, AIG is rallying on news that it’s selling its Asian unit to Britian’s Prudential for $35.5 billion.
    The German Merck is buying Millipore (MIL) for $6 billion. Millipore is a toolmaker in the biotech sector. Last week, Thermo Fisher (TMO) began the bidding war for Millipore and Merck seems to have ended it. Finally, MSCI (MXB) is acquiring RiskMetrics (RISK) for $1.55 billion.
    The market is also talking about the news that the board at Goldman Sachs (GS) has rejected a proposal on executive compensation from some of its shareholders, though I’m not familiar with the specifics of the proposal. One thing is certain: Goldman will be heavily criticized.

  • Tobin Smith on ChinaTel Group (CHTL)
    Posted by on February 28th, 2010 at 10:46 pm

    Tobin Smith, formerly of ChangeWave Research, now of NBT Equity Research has a new reseach piece on ChinaTel Group (CHTL). Full disclosure: I own 1,000 shares of CHTL:
    Strong Buy $7-$8 target 2011 (with new deployment schedule/pro-forma TBD)
    PIPE Funding: $3.01 price per share, $640M total, $1.33 billion private market value
    Tobin Smith, Chief Research Officer
    With no indication from ANY of the funding parties or CHTL of a change in the equity funding schedule, I want to change the focus of the CHTL discussion to the POST-funding scenario.
    I can report my conversations with The Isaac Organization that indicate a willingness on their part to accelerate their equity contribution amount prior to March 30/$10M schedule.
    Reports from those close to the Excel Era group indicate ZERO funding issues or delays. Minor correction: the founder and Chairman of Excel Era and its holding company is Charles WANG, not Li. The Wang family is a very old, very prosperous and very private group. I will have the pleasure of interviewing Mr. Wang in the very near future and will bring what I can to light about their company and its relationship with ChinaTel Group, Inc.
    The Isaac Group move is important in that WITH the $240M of new stock purchased by Excel Era and say $40-$50M from the Isaac Group before March 30, CHTL (by OUR estimates) will have MORE than enough capital in the bank to complete up to a 15 city simultaneous deployment over the next 12-18 months.

    Read more…

  • Ford Motor: My Stock of the Decade
    Posted by on February 26th, 2010 at 12:00 pm

    With two months already under our belt this decade, I decided to get a jump on things and announce that Ford Motor (F) is my Stock of the Decade. You heard it here first.
    Now you may be thinking this is a bit pre-mature. I understand, but lets it’s never too early to get on a good story.
    While every business journalist writes a new column every time someone at Goldman Sachs hiccups, they’re ignoring one of the most remarkable business turnarounds in recent history. Just 15 months ago, shares of Ford reached a low of $1.01. The stock is currently close to $12 today.
    Most impressive of all, despite a nasty recession Ford is actually making a profit. Not a big profit, but a profit nonetheless. More money is coming in then going out. These days, that’s something to notice. Also, Ford hasn’t taken a dime in bailout money.
    Not only has Ford made a profit in its last two quarters, but the company has beaten Wall Street’s earnings forecast for the last four quarters in a row. In November, Wall Street was expecting a loss of 12 cents a share. Instead, Ford posted a profit of 26 cents a share. That impressed Wall Street so much that they expected 26 cents a gain when Ford reported earnings again a month ago. This time, Ford said it made 43 cents a share.
    In 2006, the company unveiled its “The Way Forward” strategy designed to get the company moving again. Later that year, Bill Ford stepped down as CEO and Alan Mulally came in. Shortly after he joined, he bet everything—and I mean everything—on a gigantic $23 billion loan. They even had to put up Ford’s name as collateral. So far, it’s working. The company has slashed its workforce in half and shut down plants. Mulally sold off brands like Jaguar, Land Rover and Aston Martin and concentrated on smaller cars.
    Ford’s 7.45% bond due in 2031 had a yield to a maturity of 33.2%. Now it’s down below 9%. Still, Ford has a long way to go. Mulally said they won’t be solidly profitable until next year. But if all goes well, Ford could easily be a $20 stock.

  • Krugman on Core Inflation
    Posted by on February 26th, 2010 at 10:09 am

    Core inflation is one of those topics that people love to get angry about. I recently had a post mentioning that core inflation had its first substantial fall since 1982. When this was picked up by Seeking Alpha, several commentors wrote to say that of course prices are rising as anyone in the real world can plainly see.
    Paul Krugman writes that this misses the point of what core inflation tells us:

    First, let me clear up a couple of misconceptions. Core inflation is not used for things like calculating cost-of-living adjustments for Social Security; those use the regular CPI.
    And people who say things like “That’s a stupid concept — people have to spend money on food and gas, so they should be in your inflation measures” are missing the point. Core inflation isn’t supposed to measure the cost of living, it’s supposed to measure something else: inflation inertia.
    Think about it this way. Some prices in the economy fluctuate all the time in the face of supply and demand; food and fuel are the obvious examples. Many prices, however, don’t fluctuate this way — they’re set by oligopolistic firms, or negotiated in long-term contracts, so they’re only revised at intervals ranging from months to years. Many wages are set the same way.

  • Maxine Waters Attempts Monetary Policy
    Posted by on February 25th, 2010 at 11:57 am