• Financials Fall to 3rd Place in S&P 500
    Posted by on June 11th, 2008 at 8:49 am

    Remember when the financials fell to second place in the S&P 500? It seems as if it was only a few days ago, which it, in fact, was. Well, now the financials are in third place.

    The market value of IT stocks surpassed financials last month for the first time since the tech bubble imploded at the start of the decade. And now, energy names top financials in the widely followed index for the first time since 1992.
    Worries over the health of the financial sector, which has suffered from bad bets on now souring mortgage debt, resulting tightness in the credit markets and a slowdown in corporate dealmaking, have dragged on the stocks of big names on Wall Street like Citigroup Inc. and Lehman Brothers Holdings Inc.
    As of Monday’s stock market close, financials had fallen 36.6 percent from their October 2007 highs, according to S&P figures. During the same time, energy stocks have gained 11.79 percent and IT stocks have posted a 9.57 percent decline.

    Kinda like Big Brown down the stretch in the Belmont.

  • Is the Dollar Coming Back to Life?
    Posted by on June 11th, 2008 at 8:11 am

    Could be. Here it is against the yen.
    dollaryen.png
    The greenback still has a long, long way to go.

    The dollar picked up momentum throughout the global session, rising to a three-month high of 107.43 yen while pushing the euro down to a three-session low of $1.5453. The U.S. currency had rallied for the second straight day after Federal Reserve Chairman Ben Bernanke downplayed recession risks in a speech Monday night. He repeated concerns about inflation that had led to a dollar rally last week when Mr. Bernanke tied those price pressures to the weaker U.S. currency.
    Foreign-exchange analysts said Mr. Bernanke’s new comments bolster the market view that the specter of dollar-supportive rate increases has now entered the picture.

  • Hedge Fund Manager Goes Missing
    Posted by on June 11th, 2008 at 7:47 am

    The weird story of Bayou hedge fund just got even weirder. Samuel Israel III, the head of the fund that lost $400 million, was supposed to begin his 20-year prison sentence on Monday. Except there was one minor problem—he never showed up.
    The police found his car on a bridge spanning the Hudson with a suicide note written on the car’s hood. Except there was one minor problem—no body has been found. According to the police, the bodies of people who jump off the bridge are found pretty quickly.

    Mr. Israel’s lawyers had sought a more lenient sentence, saying that he had numerous back operations and was addicted to painkillers. But that didn’t sway federal Judge Colleen McMahon. At his sentencing, she said: “He suffered from these ailments while he did the crime. He can deal with them while he does the time.”

    Something this tells me this story isn’t over.

  • Financial News You Can Use
    Posted by on June 11th, 2008 at 7:39 am

    From MP Dunleavey

    How to leave your husband

    Naturally, you don’t want to do anything rash.

    Take the time — two to six months — to plan an exit strategy that will protect your financial security. Surviving divorce is misery enough; you don’t want to suffer unnecessary financial hardship on top of it.

  • The Single Largest Consumer of Energy in the World
    Posted by on June 10th, 2008 at 12:58 pm

    It’s the U.S. military: Here’s a sample:

    Since the military’s war machines burns fuel at such intense rates, it becomes impractical to talk about consumption in miles per gallon. That is why fuel use in military applications is shown in “gallons-per-mile,” “gallons-per-hour,” and “barrels-per-hour.”
    Here are some examples: Flying gas-guzzling bomber B-52 burns about 3300 gallon per hour, flying gas stations KC-135 and KC-10 (aerial refueling tankers) burn on average 2650 and 2070 gallons per hour respectively. Famous F-15 and F-16 fighter aircrafts burn about 1580 and 800 gallons per hour respectively.
    Armored vehicles have very low fuel efficiency. For instance the Abrams tank can travel less than 0.6 mile per gallon of fuel, and Bradley fighting vehicle less than 2 miles on a gallon of fuel.
    High Mobility Multi-purpose Wheeled Vehicle (often called Humvee in military circles), which replaced World war II ear Jeep two decades ago, gets as few as 4 miles per gallon in city driving and 8 miles per gallon on the highway. In comparison, Ford’s Model T got 25 miles per gallon, and today a Ford Explorer gets 18 miles per gallon.

    I think it’s a bit hard on the military to complain of fuel inefficiency, but the numbers are interesting to consider.

  • Not Done Yet….
    Posted by on June 10th, 2008 at 10:20 am

    According to the futures market, the Fed may raise interest rates one more time. Not at the June meeting, but it could happen at the August meeting. According to the latest numbers, the futures market believes there’s a 40% chance that the Fed will raise rates by 25 points in August. The Fed Funds Target currently stands at 2%.
    image674.png

  • Scary Chart of the Day
    Posted by on June 9th, 2008 at 2:02 pm

    Percent change in borrowing from the Fed’s discount window.
    fed%20borrowing.png

  • Peering Inside Renaissance Technologies
    Posted by on June 9th, 2008 at 1:23 pm

    James Altucher looks inside Renaissance Technologies, the hedge fund firm that’s delivered 40% a year for many years. Surprisingly, the fund’s equity positions aren’t that obscure. James says that the bulk of the stocks the company holds subscribe to a very simple formula: stocks trading for les than $10 a share, enormous amount of cash, no debt and low market cap.

  • Buffett’s Bet
    Posted by on June 9th, 2008 at 12:47 pm

    Warren Buffett is betting a hedge fund that an investment in its family of hedge funds will underperform Buffett’s unmanaged investment in the S&P 500 over the next ten years. Both sides are putting up $320,000. The combined sum will go into zero-coupon Treasuries that will mature at $1 million ten years from now.
    I’m not so sure that’s a wise bet on Buffett’s part. If it were a large basket of hedge fund, then yes, I’d be all for it. But just one family, eh, I don’t know.
    Buffett’s major point is that hedge fund fees are insanely high. He’s right, of course, but there are plenty of folks willing to pay that sort of fee.
    Now, if there were only some place people could find market-beating advice (for two straight years) that’s completely free and has minimal turnover.
    Hmmm.

  • EMT Takes Another Blow
    Posted by on June 9th, 2008 at 11:03 am

    At this blog, I’ve long argued against the idea of efficient markets. Here’s more proof. On eBay, there was an auction for a $50 Target gift card.
    The winning bid: $55.71.
    Of course, this makes no sense. Neither does writing about efficient markets on a free blog.