• The Fed’s Charter
    Posted by on January 24th, 2008 at 10:41 am

    Just in case anyone’s curious, here’s what it says:

    FEDERAL RESERVE ACT
    SECTION 2A—Monetary Policy Objectives
    The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.
    [12 USC 225a. As added by act of November 16, 1977 (91 Stat. 1387) and amended by acts of October 27, 1978 (92 Stat. 1897); Aug. 23, 1988 (102 Stat. 1375); and Dec. 27, 2000 (114 Stat. 3028).]

  • Soros “The worst market crisis in 60 years”
    Posted by on January 24th, 2008 at 10:15 am

    Now celebrating 10 years of predicting the end of the world, George Soros takes a huge dive into the pool of confirmation bias:

    Everything that could go wrong did. What started with subprime mortgages spread to all collateralised debt obligations, endangered municipal and mortgage insurance and reinsurance companies and threatened to unravel the multi-trillion-dollar credit default swap market. Investment banks’ commitments to leveraged buyouts became liabilities. Market-neutral hedge funds turned out not to be market-neutral and had to be unwound. The asset-backed commercial paper market came to a standstill and the special investment vehicles set up by banks to get mortgages off their balance sheets could no longer get outside financing. The final blow came when interbank lending, which is at the heart of the financial system, was disrupted because banks had to husband their resources and could not trust their counterparties. The central banks had to inject an unprecedented amount of money and extend credit on an unprecedented range of securities to a broader range of institutions than ever before. That made the crisis more severe than any since the second world war.

  • Earnings from Stryker and Danaher
    Posted by on January 24th, 2008 at 9:39 am

    After the close yesterday, Stryker (SYK) reported earnings of 66 cents a share, which was a 20% jump over last year. For 2008, the company forecasts earnings-per-share of $2.88. That means the stock is going for a P/E of 23.2. Stryker finished its seventh straight year of double-digit sales growth.
    Danaher (DHR) reported earnings of $1.12 a share (excluding charges), which also matched expectations. The company expects Q1 EPS of 84 cents to 89 cents, and $4.30 to $4.40 for all 2008. That gives them a P/E of about 17.

  • Editors at MarketWatch Keeping It Real
    Posted by on January 24th, 2008 at 9:35 am

    You can already see Murdoch’s influence.
    (Via ValleyWag)

  • Bullpen IPO
    Posted by on January 23rd, 2008 at 3:49 pm

    Randy Newson, a rookie relief pitcher with the Cleveland Indians, is having an IPO.
    Of himself.
    He’s selling 4% of his future earnings. There are 2,500 shares so you can buy 1/62,500th of Newson’s future earnings for $20.
    (Via Marginal Revolution)

  • Buy at 10, Sell at 3
    Posted by on January 23rd, 2008 at 3:44 pm

    I have to admit that this is getting fun. The bears are getting smushed.
    The saying “buy on rumors, sell on news” should be replaced with “buy at 10, sell at 3.” These intra-day moves are huge. Would you believe the Dow is now positive for the week?
    Both Harley-Davidson (HOG) and Bed Bath & Beyond (BBBY) are doing well today. I’ll have more in a bit, but the Buy List is again ahead of the broader market. Stryker (SYK) reports after the close. Danaher (DHR) reports tomorrow and Harley-Davidson (HOG) follows on Friday.
    I’m still amazed at the surge in the bond market. The five-year got to 2.4%. The 10-year note bounced off 3.3%. Wow, even after yesterday, the Fed is still above the 10-year.

  • Another Rough Day
    Posted by on January 23rd, 2008 at 9:43 am

    The market opened much lower again today, but the real action is in the bond market. Rates are plunging. The three-month T-bill just broke below 2% and the 10-year is below 3.5%.
    The Fed’s 17 interest rate hikes are being undone in front of our eyes.

  • Good Day for Us
    Posted by on January 22nd, 2008 at 4:37 pm

    Our Buy List was down -0.21% for the day compared with a -1.11% drop for the S&P 500. Until late in the day, we were in the black. The Buy List has again outperformed the S&P 500 for the year. And like last year, we’ve done it with less volatility.
    Here’s how the S&P 500 did today.

  • Wall Street Rocked By Panic Selling!
    Posted by on January 22nd, 2008 at 4:24 pm

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  • What the Fed Wants to Do
    Posted by on January 22nd, 2008 at 1:23 pm

    I find myself in the unfamiliar position of defending the Federal Reserve. Please bear with me because this is strange for me but what they did today was exactly what they should have done. In fact, they should have done this a few weeks ago after the December jobs report.
    I hear a lot of talk today about how the Fed is bailing out investors. Please. That misses the point. The Fed is not all powerful. Hard to believe but it’s true. In reality, they’re another player in the game. They’re just the most powerful.
    The Fed isn’t panicking, nor is it trying to bail out investors—it’s in a fight with a bond market that’s refusing to cooperate. That’s where the panic is. Try to think of it from the Fed’s point of view. The central bank is ultimately here to protect the banking industry. The irony is that the Fed isn’t trying to bail out stock investors, it’s really catching up with a bond bubble, where people have made too much money.
    Before today’s cut, the five-year T-note was 160 points below where the Fed Funds is. If you were a bank, you have zero reason to generate new loans. Just plop all your money in a long-term bond fund and you’re fine. The Fed can’t let that happen.
    The five-year note is now well below the CPI. I know I’m beginning to sound like a broken record, but this problem is getting worse. Keep your eye on the Rydex Inverse Government Long Bond Strategy (RYJUX). It’s designed to double the moves of the T-bond market in the opposite direction.