• Greenspan Warns Redux
    Posted by on February 27th, 2007 at 9:46 am

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    Poor, Alan. He just can’t keep still these days. Now he’s causing trouble in China. The former Fed head spoke at a conference in Hong Kong. Naturally, no one could understand a word he said. Not that there’s an English-Chinese language barrier, but there’s a more difficult Greenspan-Coherence barrier.
    In any event, his speech didn’t go over well. The Chinese stock market got slammed today. The Shanghai Composite Index fell 8.8%. That would be like the Dow losing over 1,000 points.
    It’s the return of Greenspan Warns!

    Stocks Fall As Greenspan Warns
    Recession possible in 2007, Greenspan warns
    Greenspan warns of likely U.S. recession
    Greenspan Warns of Possible Recession

    So is it possible or is it likely?
    For more Greenspan Warns, see here, here and here.

  • Harley-Davidson Lowers Its 2007 Outlook
    Posted by on February 27th, 2007 at 9:23 am

    Due to the strike, Harley-Davidson (HOG) is lowering its outlook for this year:

    The company said it now expects earnings growth of 4 percent to 6 percent over 2006, when it posted a profit of $1.04 billion, or $3.93 per share. The company expects earnings growth to return to a rate of 11 percent to 17 percent in 2008 and 2009.
    Harley-Davidson said in January that it expected revenue growth of between 11 percent and 17 percent each year through 2009.
    Analysts polled by Thomson Financial forecast a 2007 profit of $4.33 per share and earnings in 2008 of $4.81 per share.

    This is unfortunate news, but ultimately, it shouldn’t have a major impact on Harley’s business. The shares will take a hit today, but I’d be far more concerned if Harley saw lower demand for its bikes.

  • James Simons on C-Span
    Posted by on February 26th, 2007 at 2:38 pm

    Here’s a clip of James Simons, the legendary hedge fund manager, at yesterday’s National Governors Association’s Winter Meeting. Simons is a former math professor and founder Renaissance Technologies which runs the Medallion Fund.
    I know he’s a genius and a multi-billionaire, but he still looks like he belongs on Seinfeld. Couldn’t you see him playing one of Jerry’s uncles or something? Maybe it’s me. Anyway, Simons begins speaking about nine minutes into the clip.

  • Fed on Hold for all of 2007
    Posted by on February 26th, 2007 at 10:57 am

    A new survey of economists shows that the Fed will stay on hold for much of the year. The National Association for Business Economics finds that:

    1. Growth in gross domestic product is now expected to average 3.1% over the four quarters of 2007.
    2. Headline consumer-price inflation will decline to less than 2.0% in 2007, largely as a result of lower oil prices. This would be the lowest inflation rate in five years.
    3. The “core” inflation rate, which excludes food and energy prices, is expected to hold steady at 2.3%.
    4. The nation’s unemployment rate should average 4.7% this year, only a tad higher than the 4.6% rate in January.

    I’m not so sure growth will be that strong. The fourth-quarter GDP will be revised on Wednesday, and everyone expects a major downward revision. The only question now is how bad will it be. I’m expecting around 2% growth. The original report pegged GDP growth at 3.5%. This could mean that the economy experienced three straight quarters of below-trend growth. Unless things change, I expect the Fed to cut interest rates sometime this year.

  • Giuliani Takes the Lead
    Posted by on February 25th, 2007 at 4:40 pm

    At Tradesports, the “futures” prices for Rudy Giuliani to win the GOP Presidential nomination just surpassed those of John McCain. Still, the futures market indicates that both candidates have less than a one-in-three chance of winning the nomination. Meanwhile, Mitt Romney is closing the gap but he has a long way to go.
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    On the Dems’ side, Hillary Clinton still had a big lead:
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    I think the markets may be underestimating Senator Obama’s chances. I have no special insight here; it just seems that way. I should add that my judgment in these matters is pretty bad.

  • Snow in DC
    Posted by on February 25th, 2007 at 4:30 pm

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  • A Euphemist Takes a Bow
    Posted by on February 25th, 2007 at 3:26 pm

    From the vaults of The New York Times:

    A EUPHEMIST TAKES A BOW
    October 21, 1981
    The Reagan Administration’s fiscal euphemist has been run to ground. He is Lawrence A. Kudlow, who says he coined ”revenue enhancement,” the euphemism for tax increase used by the White House last month.
    Mr. Kudlow, the chief economist of the Office of Management and Budget, is defiantly unrepentant. ”I gave them another one, ‘receipts strengthening,’ ” he boasted today.
    Mr. Kudlow, a smoothly fluent man of 34, said his career as a euphemist began in the drafting of the ”fact sheet” that the White House issued to explain its request for $3 billion more in tax revenues and $13 billion in budget cuts.
    Why didn’t the White House call a tax increase just that? ”There’s no better way to sell economic theory than by the euphemistic route,” he says.

  • 15 Get a Mac Ads
    Posted by on February 23rd, 2007 at 10:03 pm


    John Hodgman is brilliant.

  • Buy List So Far
    Posted by on February 23rd, 2007 at 6:46 pm

    Thanks to Donaldson, our Buy List eeked out a slight gain despite the overall market’s sell-off. For the year, the Buy List is up 3.36% compared with 2.32% for the S&P 500 (not including dividends).
    Here’s how our stocks have done year-to-date:
    Bed Bath & Beyond (BBBY) 11.73%
    Respironics (RESP) 11.10%
    FactSet Research Systems (FDS) 10.75%
    Jos. A Bank Clothiers (JOSB) 10.43%
    Amphenol (APH) 9.26%
    Donaldson (DCI) 8.47%
    SEI Investments (SEIC) 6.70%
    Graco (GGG) 6.69%
    AFLAC (AFL) 5.63%
    Fiserv (FISV) 4.33%
    Biomet (BMET) 2.71%
    Danaher (DHR) 2.25%
    Varian Medical Systems (VAR) 2.17%
    Fair Isaac (FIC) -1.25%
    UnitedHealth Group (UNH) -1.30%
    WR Berkley (BER) -1.68%
    Harley-Davidson (HOG) -2.07%
    Medtronic (MDT) -4.04%
    Nicholas Financial (NICK) -6.44%
    Sysco (SYY) -8.19%

  • Gold Vs. the Fed
    Posted by on February 23rd, 2007 at 1:11 pm

    B-Riz is in the Zone:

    In this corner, weighing 195 pounds, standing 5 foot 10, hailing from Washington D.C. via Harvard, MIT and Princeton, New Jersey, wearing the M1 green trunks, the Charlemagne of Currency, the prince of paper, the bearded bard of the Fed, monarch of monetary policy, Benjamin GOLDILOCKS Bernanke!
    And in the opposing corner, weighing 2046 metric tonnes — one ounce at a time — the shiny, precious, storehouse of value, the standard for monetary exchange, the most malleable and ductile of the known metals, that master of disaster, hailing from most of the world, that dense, soft, shiny, yellow metal, GOLD.