Madoff: A Real Criminal
Posted by Eddy Elfenbein on March 13th, 2009 at 9:25 am

I want to amplify Larry Ribstein’s point that Bernie Madoff is a real criminal.
Over the last few years, we’re seen trumped-up criminals, like people who didn’t properly account for their pay, get treated as if they were crooks. Well, Bernie’s the real deal. He knew that what he was doing was wrong, and he lied about it for years. He’s a thief pure and simple. I hope our government learns to understand the difference.

Bloomberg Gets the A for the Day
Posted by Eddy Elfenbein on March 12th, 2009 at 10:43 pm

Glad to see that someone in the media still knows how to moralize:

Madoff, in a dark blue suit and minus the baseball cap he’d favored when roaming the streets of his Upper East Side neighborhood, began speaking about his guilt. He started bilking his clients during the recession of the early 1990s, he said. Once he had a taste of it — by neglecting to buy securities his clients paid him for, for example — he just couldn’t stop himself.
“I cannot adequately express how sorry I am for what I have done,” he said. “I am deeply sorry and ashamed.”
His voice uninflected, his tone flat, he sounded about as ashamed and sorry as Hannibal Lecter.

The person who wrote that works for Mike Bloomberg. Irony!!

It Could Be Worse
Posted by Eddy Elfenbein on March 12th, 2009 at 10:39 pm

November 24, 2008
Russian analyst predicts decline and breakup of U.S.
March 12, 2009
Chuck Norris: “I May Run For President of Texas”

Bernie Goes Down, Market Goes Up
Posted by Eddy Elfenbein on March 12th, 2009 at 11:47 am

So we’re rallying on Bernie’s plea? Or maybe it’s one of those correlation/causation things I’ve read about.
I guess Bernie should have pleaded guilty several thousand points ago. If only someone had informed the Feds.
Esquire gives us a preview of Bernie’s new digs.

So Long Risk Premium
Posted by Eddy Elfenbein on March 12th, 2009 at 11:33 am

Bloomberg reports that long-term government bonds have outperformed the stock market over the last 30 years. The article quotes Douglas Cliggott, “Over the last 30 years there’s been no risk premium.”
Technically, the most common reference to the risk premium is stocks versus short-term T-bills. The problem is that the market isn’t that cheap when looking at long-term corporate yields (it’s not expensive either). What’s happened is that the spread between government and corporate debt has widened pretty dramatically.

The graph above shows the 10-year yield versus BAA debt. Clearly, folks have moved strongly away from risky assets. It’s not so much that the risk premium is gone, it’s that we’re in a T-bond bubble.

Good Retail News
Posted by Eddy Elfenbein on March 12th, 2009 at 10:58 am

There was actually good news in retail sales. Good, not great. Retail sales for February dropped by 0.1% last month which was slightly better than what analysts were expecting. The best news came from the revisions for January. That number was revised higher to 1.8% from the original 1.0%. It’s not great but let’s hope this trend lasts.
Interestingly, if you exclude car sales from the February numbers, then retail sales rose by 0.7%

Bernie Goes Down
Posted by Eddy Elfenbein on March 12th, 2009 at 9:49 am

Madoff pleas guilty:

Disgraced financier Bernard Madoff entered federal court in lower Manhattan this morning and pleaded guilty to all 11 felony charges lodged against him in involving one of the largest Wall Street Ponzi schemes ever.
He will now face the wrath of many of the investors who say he ripped them off to the tune of $50 billion dollars, as they will speak in court. The 70-year-old Madoff now faces a maximum prison term of 150 years.
Victims of the one-time Nasdaq chairman and one of Wall Street’s elite had been gathering at the courthouse as early as 8 a.m. Those alleged to be cheated by Madoff lost their life’s fortunes, charities lost their investments, school trusts were blown and at least two investors took their own lives.
The question now is whether Madoff will go right to jail or will he remain out on bail under house arrest in his $7 million Manhattan penthouse to await sentencing. Most victims, as expected, prefer the former.

See ya in 2159, Bernie.

Past Marchs and the Market
Posted by Eddy Elfenbein on March 10th, 2009 at 12:44 pm

It was six years ago tomorrow that the S&P 500 closed at its then low point of 800.73. Five months earlier there was an even lower low on October 9. The market’s high in 2007 also came on October 9.
It was on March 10, 2000 that the NASDAQ reached its highest close of 5,048.62.

Picking a Bottom
Posted by Eddy Elfenbein on March 10th, 2009 at 11:25 am

S&P recently said that the S&P 500 will have a slight earnings loss for the fourth quarter of 2008. This is the first loss ever for the index. However, AIG’s gigantic $62 billion loss knocks out $5.13 on operating earnings, so the other 499 made a small gain.
I’ve seen a lot of folks throw out numbers for a bottom in the S&P. Nouriel Roubini, for example, sees earnings for the index coming in at $50 for 2009. Using a multiple of 12, he places a target of 600 for the S&P. I agree on the $50 a share for earnings, but I’m inclined to see a higher multiple simply because that level of earnings would (hopefully) mark a trough.

Gasparino Interviews Cayne
Posted by Eddy Elfenbein on March 9th, 2009 at 2:12 pm

The G-Man lands an interview with Jimmy Cayne. If there’s a line on swear words, I’m taking the over:

I have to admit I’ve always liked Jimmy Cayne. I’ve always found him informed, charming, and really funny—he reminded me recently of the time he and I were in the Four Seasons restaurant at a party for the GOP convention and he spotted Al Franken and told him that Bill O’Reilly crushed him when the two debated face-to-face. “Remember me saying to Franken, ‘Hey you laid down. He made you look like an asshole.’”

It’s a good interview. I’m looking forward to Charlie’s book, The Sellout.