• Slowest Eight-Year Economic Growth Rate in 50 Years
    Posted by on October 30th, 2008 at 1:03 pm

    With today’s third-quarter GDP report, the trailing 32-quarter GDP growth rate is 19.1% which is annualized at 2.2%. That’s the lowest since the quarterly records start in 1947.
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  • Headlines You Don’t See
    Posted by on October 30th, 2008 at 12:55 pm

    Market Watch Reports:

    Exxon Mobil breaks record with $14.8 billion profit

    Or another way of phrasing it:

    Exxon Mobil breaks record with $11.3 billion tax bill

  • Bear Market Rallies
    Posted by on October 29th, 2008 at 11:15 am

    Since the market broke one year ago, the Dow hasn’t been able to sustain one single bear market rally. The largest so far was an 11.2% gain from March 10 to May 2. With yesterday’s 10.9% gain, we might able to break that today.
    Bear market rallies are very typical in long down markets. The Dow lost 89% from September 1929 to July 1932, however it was anything but a straight line. There were five separate rallies of 23% or more. By “separate rally,” I mean that Dow lost everything it gained from the rally and went on to make a new lower. Think about that—each one was a false signal that the bad times were over.
    When the Nasdaq dropped 78% in the early part of this decade, there were four separate rallies of 24% or more. Three of the rallies were over 35%.
    Just a friendly warning for you.

  • WR Berkley and Fiserv’s Earnings
    Posted by on October 29th, 2008 at 8:55 am

    I have two recent earnings reports to pass along:
    WR Berkley (WRB) yesterday reported third-quarter operating earnings of 73 cents a share. That was two cents more than Wall Street was expecting. Unfortunately, it was down from the 93 cents a share it made in last year’s third quarter. This has been a difficult time for the entire insurance industry, but WRB is still going for less than eight times next year’s earnings.
    Fiserv (FISV) reported earnings after charges of 81 cents a share, which was two cents below Street estimates. Despite the miss, it’s an impressive increase over the 72 cents a share from last year’s third quarter. Fiserv’s stock is down very sharply in the past few weeks and it’s also going for just eight times earnings.

  • +889.35
    Posted by on October 28th, 2008 at 9:21 pm

    Today was the sixth-best day ever for the Dow. The fifth-best day came just two weeks ago yesterday.
    You know you’re in a different environment when you’re up 10% and it’s not even the best day of the month.

  • The Dow to S&P Ratio
    Posted by on October 28th, 2008 at 3:00 pm

    Leaving aside arguments over price-weighted indexes, the Dow has recently been doing better—or rather—falling slightly less dramatically than the S&P 500. The two indexes generally move in tandem, but divergences aren’t unusual and we’re seeing one now.
    The ratio of the Dow to the S&P 500 is now at a six-year high. As of today’s close, the Dow is 9.64 times the S&P 500. (This is, of course, index value and not the market value of the two indexes.)
    If this trend continues, the ratio could soon reach a 32-year high—and if the trend continues further still, the ratio could break 10.0 for the first time in 42 years.
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    If the Dow had performed as well as the S&P 500 since early 2006, it would be over 1,000 points lower today.

  • Consumer Confidence Plunges to Record Low
    Posted by on October 28th, 2008 at 12:13 pm

    Consumer confidence is now at the lowest reading since the survey started in 1967:

    The survey’s “confidence index” fell to 38 in October, down from 61.4 in September, on a scale where a reading of 100 represents the consumer outlook on the economy in 1985. Expectations for the future also reached an all-time low. The survey dates to 1967.

    I think it’s interesting that the stock market is reflecting consumers attitudes. Years ago, not many Americans participated in the market. Today, it’s a general barometer of consumers’ feelings.

  • Iceland Goes Full Volcker
    Posted by on October 28th, 2008 at 11:52 am

    The Icelandic Fed, and yes, there is such a thing, just raised interest rates to 18%.

    Iceland’s central bank has raised its key interest rate to 18% from 12% as it battles against financial collapse.
    The rise comes less than two weeks after Iceland cut rates from 15.5%.
    The central bank governor said the increase was part of its agreement with the International Monetary Fund, from which it borrowed $2bn (£1.3bn).
    Iceland’s prime minister said the country needed another $4bn in loans and had approached the European Central Bank and the US Federal Reserve.

  • Goldman Was Considering Merging with Citi
    Posted by on October 27th, 2008 at 10:58 am

    This is just frightening:

    Goldman Sachs CEO Lloyd Blankfein called Vikram Pandit, his Citigroup counterpart, last month to discuss a merger, in a dramatic example of the secret manoeuvring that preceded the government bailout of the financial sector. The call, made at the tentative suggestion of the regulatory authorities or at least with their blessing, was shortly after Goldman won surprise approval to convert itself into a commercial bank on Sept. 21. The conversation was brief as Pandit rejected the proposal at once. A deal would have been structured as a Citi takeover of Goldman. Seperately, The Telegraph reports Goldman Sachs could this week appoint its smallest number of new partners since its flotation, as the bank downsizes in the face of the financial crisis.

  • What’s America’s Most Overrated Product
    Posted by on October 25th, 2008 at 11:03 am

    Mart Nemko argues it’s the bachelor’s degree:

    Today, amazingly, a majority of the students whom colleges admit are grossly underprepared. Only 23 percent of the 1.3 million high-school graduates of 2007 who took the ACT examination were ready for college-level work in the core subjects of English, math, reading, and science.
    Perhaps more surprising, even those high-school students who are fully qualified to attend college are increasingly unlikely to derive enough benefit to justify the often six-figure cost and four to six years (or more) it takes to graduate. Research suggests that more than 40 percent of freshmen at four-year institutions do not graduate in six years. Colleges trumpet the statistic that, over their lifetimes, college graduates earn more than nongraduates, but that’s terribly misleading. You could lock the collegebound in a closet for four years, and they’d still go on to earn more than the pool of non-collegebound — they’re brighter, more motivated, and have better family connections.

    Of course, locking kids up in college does something very important: it reduces the labor supply. I remember reading in Road to Wigan Pier how the boys around 15 or 16 wanting to get into the mines. They thought staying in school was useless, boring and effeminate.