So Where’s the Value Premium?
Posted by Eddy Elfenbein on May 24th, 2012 at 1:16 pm

One of the cornerstones of finance is that value stocks are supposed to outperform the overall market over the long haul. But value stocks have had a terrible time over the last five years. Much of this is due to the rotten performance of financial stocks, which tend to crowd the value indexes.

Bear in mind, I’m not talking about overall performance, but I’m lowering the bar to just beating the market — and value stocks have failed.

Here’s a look at the Vanguard Value Index Fund (VIVAX) divided by the Vanguard 500 Index Fund (VFINX). If you bought the Value Fund at any time since December 2003 and held on, you would have lost to the broader S&P 500 Index fund.

In the last few weeks, there’s been a minor rebound for value, but we’re quickly losing it. We may establish a new relative performance low in the next few days.

High-Yield Checking Accounts
Posted by Eddy Elfenbein on May 24th, 2012 at 9:30 am

CNNMoney looks at the 10 highest-yielding checking accounts:

Rates on high-yield checking accounts continue to fall, but some banks and credit unions are offering deals that let you earn far more on your cash than many other banking products out there, according to Bankrate’s annual survey.

The average high-yield checking account earns 2.05% annually, down from 2.56% last year and 3.30% in 2010, according to Bankrate’s survey.

While high-yield accounts often make customers jump through more hoops — like requiring a certain number of debit transactions per month, online bill pay or direct deposit — it can be worth it. At an average APY of 0.06%, standard interest-bearing checking accounts pay barely enough to notice.

And high-yield checking account rates also handily beat the next best alternative for liquid cash: online savings accounts.

“For account holders who can routinely meet the monthly requirements, high-yield checking accounts are a no-brainer cash investment,” said Greg McBride, senior financial analyst for Bankrate.com.

You can see a list of the highest-yielding accounts at the original story.

This Morning’s Economic Reports
Posted by Eddy Elfenbein on May 24th, 2012 at 8:45 am

There were two important economic reports this morning.

The Labor Department reported that initial unemployment claims fell by 2,000 to 370,000. The only problem is that last week’s number was revised up to 372,000 from 370,000.

The durable goods report showed an increase of 0.2%. However, when we take out transportation orders, there was a decrease of 0.6%.

Morning News: May 24, 2012
Posted by Eddy Elfenbein on May 24th, 2012 at 8:21 am

Europe Shares Rebound After Sell-off, Caution Remains

UK Recession Deepens as GDP Shrinks

Drop in German Business Confidence May Portend Slowdown

China Manufacturing Activity Worsens: HSBC

Stock Futures Climb Ahead of U.S. Data

HP Rises as Profit, Job Cuts Buoy Optimism for Turnaround

Negative Equity Remains a Drag on Housing Market

Costco’s 3Q Net Income Rises, Sales Climb

French Yields Slump as Investors Seek Returns

The Biggest IPOs In American History

Tuesdays Have Been the Big Winner
Posted by Eddy Elfenbein on May 24th, 2012 at 6:11 am

Here’s a look at the stock market’s return by day of the week since April 15, 2011. If we took all the Mondays and put them together, the S&P 500 has lost 8.23%. But Tuesdays have been the big winner. The S&P 500 has gained 20.05% on the second day of the week.

On Wednesdays, the index has been down 7.72%. On Thursdays, it’s made a small gain of 3.66%. Then on Fridays, the S&P 500 has lost 5.23%.

The Cyclical Sell-Off
Posted by Eddy Elfenbein on May 23rd, 2012 at 11:04 am

Here’s another view of how badly cyclical stocks have underperformed since early February. The gold line is the S&P 500 while the black line is the Morgan Stanley Cyclical Index.

The non-cylical part of the market hasn’t been damaged too badly.

Moody’s Raises Ford to Investment Grade
Posted by Eddy Elfenbein on May 23rd, 2012 at 10:31 am

First Fitch raised Ford‘s ($F) debt to investment grade, now Moody’s has followed.

The upgrade allows Ford to enjoy lower borrowing costs and expands the number of potential buyers for its bonds.

It also represents a symbolic win for Ford, which nearly collapsed six years ago before mortgaging most of its assets to borrow $23.5 billion to finance a restructuring. Ford continued to use the Blue Oval icon and the other assets. The icon is stamped on the grill of Ford’s cars and trucks.

(…)

Moody’s cited Ford’s improved lineup of cars and trucks, limited use of incentives to spur sales, and much lower break-even point in North America for its decision.

In 2009, Ford could break even in North America if it sold 3.4 million cars and trucks. Now, that level has dropped 45 percent to 1.8 million in sales, according to Moody’s.

“We concluded that the improvements Ford has made are likely to be lasting,” said Moody’s analyst Bruce Clark.

Ford wants to cut its automotive debt to $10 billion by the middle of the decade as well as reduce the risk posed by its pension obligations.

Ford’s automotive debt was $13.7 billion in the first quarter. Last month, Ford said it would offer lump-sum pension buyouts to current white-collar retirees, a move that may lower its U.S. pension obligation by one-third.

Nigel Farge: Greece Should Leave the Euro
Posted by Eddy Elfenbein on May 23rd, 2012 at 8:43 am

100 Million Americans Without Jobs
Posted by Eddy Elfenbein on May 23rd, 2012 at 7:41 am

The national unemployment rate gets lots of attention, and lately more attention has been paid to the workforce participation rate since more Americans have given up looking for a job, but we can also see that an astounding 100 million Americans don’t have jobs.

Specifically, these are people who are part of the civilian over-16 non-institutional population who are either unemployed or not part of the workforce. According to the April jobs report, the number of jobless American stood at 100.9 million.

That’s an all-time record and it’s an increase of 26.2 million over the last 12 years. It’s as if we absorbed the entire adult population of Canada and not a single person had a job.

The numbers are staggering. The jobs-to-population ratio peaked 12 years ago. If we were to have the same ratio today, we would need 15.3 million more jobs, or 23.7 million fewer people.

(Note: The chart above is the Civilian Over-16 Non-Institutional Population minus the seasonally adjusted Civilian Workforce.)

Morning News: May 23, 2012
Posted by Eddy Elfenbein on May 23rd, 2012 at 7:14 am

U.S. Stock Futures Slide; CBO Warns Of Possible Recession

Germany Sells 2-Year, 0% Bonds Amid Greek Anxiety

Regulators, Investors Turn Up Heat Over Facebook IPO

Burberry Plans Retail Space Expansion As Profit Grows

US Stock Futures Drop Ahead Of Europe Summit

Lenovo 4th Quarter Profit Up 59%; Outpaces Industry Growth

Toll Brothers Swings To 2Q Profit On Fewer Writedowns, More Deliveries

Oil Boom Strikes Kansas

Euro Drops to 21-month Low as Break Up Risks Mount

Guessing Game Begins Over Next Treasury Chief

The Reformed Broker: It’s Worse Than We Thought….

David Merkel: Little Things are Important