Thursday, July 31, 2008
He could be right. I'm not so confident. He also thinks oil is heading lower which I agree with.
I'm not sure who has the capital to re-liquefy the rest of the financials given the Merrill slaying this week.
I'm outta here.
Wednesday, July 30, 2008
In it he argues that Treasury and Paulson need to get out of the way and let free market forces resolve the credit crisis.
That is not going to happen in full. As free market as America claims to be, there is an underlying need to think that some higher power is helping out when things go awry.
I agree with Todd. We should just get it over with.
Tuesday, July 29, 2008
The financials were weak yesterday and MER was down 11% on no real news. It turns out that the news was coming out after the market close - the MER news.
Somebody knew about it and traded it. I certainly hope that this is being looked into with the same energy as is being applied to the Lehman situation.
Several commentators seems to think that this may be the end/bottom. That would be nice but I'm not so sure how one could have any confidence in that conclusion.
Something that is bugging me is that the Singapore government had a Merrill-backed put on the stock they bought last time around and I was not aware of it.
With Merrill's stock now near $24 a share, that price protection would cost Merrill $2.5 billion, though Temasek agreed to plow that money into its $3.4 billion investment in the new stock."
Monday, July 28, 2008
It's a good product and concept (both) but their balance sheets have some issues.
Henry Blodget writes:
"after you back out all the non-core stuff, that means that the New York Times itself--the paper and the digital assets--are valued at about $750 million. That's less than half of what CBS just paid for CNET...
So how about it, Janet and Arthur? $1 Billion. More than a third of the current enterprise value of your entire company--just for the web site! You get to keep the paper, the building, the Red Sox, the Boston Globe. It's the deal of a lifetime!"
It is a valuable property. I am generally not in favor of companies breaking up to enhance shareholder value. There must be some synergies. But with traditional media valuations where they are and the decline in the non-digital ad business, it may be smart and funny.
The market looks flattish at the open. Quiet could be a good thing.
Buyout firm KKR is looking to go public. Yawn.
It looks like flat panel TVs are going to be cheap this Christmas. According to Morgan Stanley, display makers are cutting production due to high inventory levels.
Saturday, July 26, 2008
The Office of the Comptroller of the Currency, a division of the Treasury Department, revoked the charters of First National Bank of Nevada, based in Reno, Nev., and First Heritage Bank of Newport Beach, Calif. The FDIC was appointed receiver of both banks.
I'm a little worried about consumer confidence. Obviously.
I think the combined entity will raise some cash then go to zero. The common, that is.
By the way, one of my best friends in the whole world owns some terrestrial radio properties in Canada and he predicted this (not the merger, the busto eventuality) about 10 years ago.
I didn't get much sleep last night so I could be wrong.
Friday, July 25, 2008
The company's initial public offering of stock closed at $14.59 a share on the Nasdaq Stock Market, down from its offering price of $16.50."
Any deal from a major investment bank (in this case Credit Suisse and UBS) breaking price is a big deal. The stock is down another 20+% today to around $11.
Alternative energy plays have been understandably working as the price of oil moved higher.
GT Solar's IPO didn't. Part of the weakness can be attributed to fellow supply chain member MEMC, which lowered guidance this week, but one might conclude that investors' appetite for solar exposure is waning now that energy prices have declined, and oil is down another $2.50 or so today. It may also be that the market thinks there is more downside for crude for here.
Someone from Comcast read the entry and commented, offering contact info. Perfect, in my opinion, and the problem was subsequently fixed. Not necessarily as a result of my actions but it couldn't have hurt.
The New York Times today has an article about this phenomenon titled, "Griping Online? Comcast Hears You and Talks Back ".
The strange part of the article for me was that some people think this a a bad, big brother is watching kind of thing. You would have to be some kind of attention whore to complain about something online and not want help resolving it. Kind of like this guy:
Barack Obama gave a Kennedyesque speech yesterday in Berlin. That is surprising. He's not the president. He's not John F Kennedy. What the hell is he doing in Berlin? Why does everybody care so much?
A smart guy I know was speculating yesterday that Obama was the reason for yesterday's sell off. The better he sounds, the more popular he gets, the more real the idea that he will be the next president. The market weakness could be reflecting how bad his tax policy will be for American business.
Thursday, July 24, 2008
<----That (crude oil futures) is very good for equities of the non-energy variety.
Whether those in office are doing the right thing or not, the housing bill is doing wonders for the financials as the prospect of the mortgage market freeing up becomes more real.
Qualcomm reaches the holy land in its deal (finally) with Nokia. Amazon is executing.
It looks like the XM/Sirius deal is going to be approved. It will be nice to stop talking about it and let them suffer and raise more money as a team.
When I woke up this morning, both were down due to something that happened during the storm we had last night. It felt like 20 years ago - I has no idea what to do with myself.
I guess I need some new hobbies.
Wednesday, July 23, 2008
Tuesday, July 22, 2008
Sure there are exceptions; activist investors, corporate raiders, quarter end mark-uppers. But those are outliers. If you or I or a long-only Portfolio Manager buy a stock, we think and hope that it is going to go higher and if we don’t like what is happening at the company the most likely course of action is to sell the stock.
Jim Cramer from his perch at RealMoney continues his crusade to reinstate the uptick rule and enforce the ban on naked shorting. His article today titled “Shorts Are Not and Should Not Be Equal” highlights one very important construct, which revolves around the fact that for some portion of the hedge fund community, short selling not even close to being a spectator sport.
Sure, spreading false rumors, ganging up with your friends, asking deceptive questions of conference calls or manipulating research firms are all some form of illegal or unethical behavior but it happens. If there were no asymmetrical protections for companies against short sellers, only the common stock of the largest would not be at risk at some point. Hedge Fund assets were $2.7 trillion in Q1 08. Trillion. Cramer goes on to say:
“I think the shorts are now heavily favored because they can instill fear and panic that the longs don't have the ability to do. They can destroy businesses -- the ultimate goal -- and the longs can't.”
I’m not sure we need the uptick rule but this naked shorting has to stop. The idea that it is possible to sell more stock than a company has issued is lunacy.
Apparently he is having some problems with his wife. There are alleged other women, Madonna may or may not be involved. I don't really care because A-Rod is a baseball player.
Instead of ignoring the media frenzy currently surrounding his personal life, yesterday he took action. Did he hire a marriage counselor? Did he hire an attorney? Did he leave the team for a couple of days to try to reconcile with his wife?
Nope, nope and nope. He hired high-powered agency William Morris to polish his image, according to the WSJ. This is America. Image is everything
It's good to see David Faber making a cameo in Squawk Box in a regular anchor capacity. He tends to ask high-quality questions.
Wachovia's earnings are on the tape and they are dreadful.
Henry Paulson gets the stage again today. Let's see which Hank comes out to play.
They keep giving disappointing guidance. It's kind of stupid in the grand scheme of things.
The quarter that Apple reported last night was fine. Revenue grew 38%, Mac sales grew 41%, margins were good. Investors should be happy. Instead, Apple chooses to give guidance, and usually uses its guidance as a tool for keeping investor expectations at a reasonable level. Either that or they always think that business is going to suck next quarter.
The stock traded down 11% in the aftermarket last night, and this morning we have sound bites like to following:
High-octane stocks are usually volatile around quarterly reporting, and volatility in itself is not a terrible thing. If you were looking for an entry point into Apple, today could be it.
I'm wondering whether Apple should even bother giving guidance. Lots of high-quality companies don't, and they could avoid the following main street conversation that will be happening at every Schwab office today:
Ed: "Wow, Apple is down 10%."
Sam: "Did they report earning last night?"
Ed: "Yeah, they must have missed."
Sam: "Do you think the Yankees have a chance without Posada?"
Monday, July 21, 2008
Yahoo agreed to give Carl Icahn three Board seats to end the proxy fight, but that's all they ended.
In his statement, Icahn said he "believe(s) that the sale of the whole company or the sale of its search business in the right transaction must be given full consideration." I'm guessing he also believes that he should make a pile of money on his Yahoo investment, which he hasn't yet, so don't expect him to sit quietly while Yang and his boys "fix" the company.
Yahoo has proven that they can't compete with Google. Teaming with Microsoft was probably their best option from the get-go.
I wonder what Microsoft is thinking.
"Inevitably, stocks are more effective predictors of analyst behavior than the
analysts are of stock behavior. At times, it seems that Wall Street analysts are in the “multiple maintenance” business. When stock prices go up, estimates follow. When stock prices go down, estimates follow too."
Saturday, July 19, 2008
That was awesome. The golf course did an admirable job defending itself.
If Greg Norman wins today, it is going to be one of the most talked-about late career wowsers in professional sports history.
Friday, July 18, 2008
This is a bad joke with no end in sight.
YHOO is at $22. They could have sold for $33 or more. A huge premium. Even at $22 the stock is expensive.
Icahn isn't the problem. The problem is that they could have taken a huge premium for their shareholders and they didn't.
What exactly are they trying to convince their shareholders of?
Here's my question. Does Google care about quarterly results?
They don't give quarterly guidance. They certainly don't manage quarterly spending as if they care about earnings. I don't mean this to be critical. One of the worst things a company can do is make short-term mistakes for the sake of "making" a quarter. Google has had a long-term plan as far as I can tell and it has stayed on the top of its to-do list.
Despite the fact that Google continues to spend like a drunken sailor, both opex and capex, things are fine. The franchise is thriving and until there's a game-changing shift in the internet advertising market, they have won.
I wouldn't sell the stock today, especially down 10%+. If they aren't focused on quarterly results, maybe we shouldn't be either.
Thursday, July 17, 2008
Wednesday, July 16, 2008
"The Federal Deposit Insurance Corp. took over Pasadena-based IndyMac late Friday and has assured depositors that accounts with $100,000 held in a single name or $250,000 in a retirement account are safe. But many customers have said that when they checked their balances online, tens of thousands of dollars appeared to be missing. And when they went to branches in search of answers, they encountered lines hundreds of people deep and unhelpful staff members. On Tuesday, reports of unruly crowds brought police to branches in Encino and Northridge, although there were no arrests or injuries.
Noelle Gabay of Northridge, a budget analyst for the state of California, said FDIC officials acknowledged that she was owed $213,500 but provided her access only to $99,000. "My trust in the FDIC is gone," said Gabay, 49. "The question is now, where do we put our money? Do we buy a bigger mattress?""
No arrests or injuries. Oh good. U.S. Banks have done decades of work convincing the public that their money is safe. All that is at risk of unwinding very quickly.
Gee. Yesterday, the head of the SEC pulled off the regulatory piece de resistance of making something illegal that was already illegal. Or he did something else but nobody is sure what it was.
Now the SEC is going after Goldman Sachs and the question of whether Goldman or any of the other brokers had an unfair role in the stock price decline of Bear Stearns or Lehman. Goldman summarily denies it:
Goldman is scary good at what they do. If the Keysone Cops at the SEC find a hair out of place on Goldman, I'll be very surprised.
Tuesday, July 15, 2008
Naked short selling - shorting a stock without first borrowing the shares - is illegal. If it weren't, short sellers with deep pockets could knock any stock down to zero.
SEC Chairman Cox today said that it is now illegal to naked short primary dealers and GSE's (Fannie and Freddie). That was already illegal.
Then he said that the entire SEC hadn't yet ratified the decision, which is like saying that Congress thinks that murder may be illegal but they are going to vote on it tomorrow.
Erin Burnett doesn't get it or smells a rat but isn't getting anywhere.
The Senators' questions, for what it's worth, seem a little less self-interested for a change.
His position on U.S. banks' prospects today is so non-consensus that he is either dead on or may never live this down.
On RealMoney, theStreet.com's paid subscription site, he wrote the following:
Without this forbearance I see no hope for virtually every bank that has mortgage exposure from 2005 to 2007. "
I'm not buying the part about hobbling Yahoo as a competitor. In terms of search and advertising, the only competitor that Microsoft cares about is Google. Plus, Yahoo has been limping pretty badly for a while.
Is it in Ballmer's best interest to paint Yahoo management and Board as intransigent on not shareholder-friendly? Of course.
I actually don't think Ballmer has done a bad job to date on the Yahoo deal, other than not pushing ahead more quickly when it looked like he had a window to get the deal done. Now, whether the current back-and-forth is designed to sweeten the terms, it looks like the result for Microsoft will be the same. Game over.
Monday, July 14, 2008
One of my kids is doing track and field camp this summer - 2 nights per week from 6:00 - 7:30. We are paying good money for the privilege of our child being exposed to this coaching and exercise.
I had a busy day today but managed to get him there on time. Half the coaches showed up after we did. The coaches seem to be either young high school coaches or college students. There was an unneccesary pause toward the end while a couple of coaches had to break off and set up hurdles, which could have been done before practice started.
I have an annoying habit of never being late for anything. Maybe I'm an anomaly these days but it's not like it was a cocktail party.
I guess I'm asking too much. Well, not really. At least I don't believe I am. Is this a generational thing?
If we're meeting for a cocktail, go ahead and show up late. If I'm paying and you're getting paid, do me and everyone a favor and be there on time.
The government has promised that Fannie and Freddie will not go under, but that may take some heavy lifting. The Fed has guaranteed that either firm will be granted a line of credit or receive and equity investment if required. The stocks are going to rip today as the common is suddenly not worthless.
BUD finally agrees to get hitched to InBev. It took a while but props to them for getting another $5/share out of the deal.
The Feds are in the process of shopping Cali bank IndyMac this morning. Senator Chuck Shumer ironically stuck a fork in this one. According to the LA Times:
Schumer had sent letters to federal regulators, quoted in the Wall Street Journal, saying he was "concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers and that the regulatory community may not be prepared to take measures that would help prevent the collapse of IndyMac.""
Sunday, July 13, 2008
I have written before that I thought the original Microsoft deal was a good one for Yahoo shareholders and that they should accept.
They didn't, Icahn started getting involved, Microsoft went away and Yahoo was widely criticized for having blown it.
Fast forward to the last couple of weeks. Icahn is under water (SAI estimated his YHOO cost basis at $25/share with the stock around $23.50), and Microsoft is sniffing around again.
The offer this weekend consists of Microsoft taking the search business and Icahn taking the rest, selling assets, claiming he will increase returns to shareholders, dump his stock,etc. There's no way that Yahoo would agree to this, and they didn't, because they don't want to be broken up in the first place. They are now willing to sell the whole company to Microsoft for $33, though.
Then Microsoft can keep the search business and let Icahn have the rest.
Friday, July 11, 2008
GE's quarter wasn't a disaster and the infrastructure business was strong. Absent a global recession, they look fine.
Citigroup is dumping its German retail operations in exchange for some much-needed capital.
BUD may agree to be taken over after all - after all of this hand wringing.
The futures are getting hammered, though. Oil is up again and nobody knows what to do about FNE/FNM.
The NY Times and others this morning are talking about whether our valiant government led by the Fed will push Fannie Mae and Freddie Mac into conservatorship and take over their loan portfolios. There is a debate over whether they should and what will happen to the common stock holders.
My view is that they might as well do it, and soon. The bad loans on the GSEs' books are implicitly guaranteed by the U.S. Government anyway. Orderly demise of any large institution is preferable to sudden implosion or death by water torture. And finally, putting these two to rest will help the mortgage market find a bottom - arguably leading to fewer future defaults in the system and a more healthy mortgage market sooner.
GE reports in 20 minutes. Not much is expected. In an unusual move, they announced before they reported this morning that they are selling their Japan consumer finance arm to Shinsei for $5.4 billion.
Thursday, July 10, 2008
Obviously this is a very tough time for equity investors.
June quarter earnings announcements have started without much fanfare and the financials continue to deal with headwinds. The Presidential race is very frustrating if you're a fiscal conservative.
I have a eerie feeling that none of this news matters much. I'm not sure whether something big and bad is coming or if we just need more time to figure out how big a hole we're in.
I'm off to a golf tournament. I'm sure a day away from the market won't hurt.
Wednesday, July 9, 2008
Dimon talked to Charlie Rose Monday night, and offered the following:
Tuesday, July 8, 2008
7/1/2008 11:56 AM EDT Yes and no. I agree with Dougie that Tuesdays often set bottoms and we should have a reflex rally at some point. But I think next Tuesday makes more sense than today.
Wicked smart and timely. And he stuck with the call through the dismal action this morning before the rip.
Pickens has been been betting on wind power of late so that will certainly be in the mix. Citing the U.S.'s precarious dependence on foreign oil, his initial media buy has been in the neighborhood of $10 million. It has been true that Americans will not be jawboned into conserving anything.
Does the average American know that oil demand has been growing more quickly than oil supply for years? Do they care? Would that have changed anything?
Pickens seems to be in favor of drilling everywhere viable in the U.S., and aggressively increasing the use of wind, solar and nuclear domestically.
Lots of people want "someone" to do "something" as long as the someone is not them and the something doesn't happen anywhere pretty or near their houses, beaches or schools.
Monday, July 7, 2008
Microsoft is back in the catbird seat. They have no reason to pay anywhere near their original offer and may be able to get only the parts of Yahoo that they want at a better price.
Icahn is in a tougher spot but he has a lot of skin in the game and is going to force the issue. If the Yahoo Board isn't already paying attention then they are in for a rude awakening, and I don't think a shotgun wedding with AOL is going to do the trick.
Yang and company had lots of ways that they could have orchestrated a better outcome than the one they're headed for. It's too bad.
I read a lot. Like many/most people, the percentage of what I read online as opposed to in print has been increasing. That said, I was an early adopter of the online thing. I have had a Wall Street Journal subscription since 1993, but have been reading it online exclusively since we moved to New Jersey in 1998. The last print straw for me was the New York Times. I have had that delivered daily until last week, when I cancelled the subscription. I used to subscribe off and on to Golf Digest, Esquire and Maxim but let those lapse years ago.
There are 2 reasons I cancelled the NY Times - the amount of recycling that our family generates, and the fact that I read it more online anyway. I assume that they are going to cut off my unlimited access online but haven't yet.
What I do miss already is the non-business stuff that I read because it was in a convenient spot - the Book Review, the Ethicist, Safire, movie reviews.... When I get up, I generally turn on CNBC then go to the web for news. I naturally gravitate to financial news. My question is whether I'm going to miss too much non-financial info by not having the blue bag delivered.
InBev is talking about turning hostile in its bid for Bud.
GM is desperately seeking a solution to the hole it's in.
NBC and some friends are buying the weather channel for around $3.5 Billion. Doesn't (almost) everyone have a computer?
CNBC/Gasparino thinks that Merrill will sell some or all of both their Bloomberg and Blackrock stakes. The more I think about it, the more I think that Google should buy the Bloomberg stake, and that Merrill should not sell the Blackrock stake. I guess I'm backing into the conclusion that if they do sell the BLK stake, their balance sheet is worse than consensus.
long MER, BUD
Saturday, July 5, 2008
On June 30, ScienceDaily printed an original article covering watermelon research done by and at Texas A&M’s Fruit and Vegetable Improvement Center. It's strange enough to me that someone outside a commercial watermelon operation is doing watermelon research. That there is a Fruit and Vegetable Improvement Center could be a story in itself.
According to Center head honcho Dr. Bhimu Patil, the study in question reveals among other things that watermelon contains lycopene, beta carotene and the star of today's show, citrulline, which the human body can convert to arginine.
“The citrulline-arginine relationship helps heart health, the immune system and may prove to be very helpful for those who suffer from obesity and type 2 diabetes,” said Patil. “Arginine boosts nitric oxide, which relaxes blood vessels, the same basic effect that Viagra has, to treat erectile dysfunction and maybe even prevent it.”
The reference to Viagra was almost incidental but for the last 2 days, online and on the tube, cable and network, all were running a variant of, "Is that a watermelon in your pants or are you just happy to see me?"
Like I said, slow news day.
Saturday, June 28, 2008
Fire Sale at Merrill?
The Financial Times is reporting that Merrill Lynch will decide between now and when it reports June quarter earnings whether it will dispose of its 20% stake in Bloomberg and its 49% stake in Blackrock.
I'm not really sure whether the FT got the scoop or if it was someone else. The NY Times today reruns the Bloomberg stake part of the story and credits the Post as first reporting the news yesterday.
It wasn't first reported yesterday. Are they afraid to admit they are so far behind? Did they just not bother checking?
Friday, July 4, 2008
UBS today announced that June quarter results will be close to break even, better than the large loss analysts were expecting. The stock traded up 8% after having declined 50% YTD. UBS will not need to raise new money now despite furhter write-downs according to today's report, but no details on this quarter's write-downs were given.
Meanwhile, Goldman Sachs opined today that European banks will need to raise an additional 60 - 90 billion Euros.
I don't think we're going to know where the end of this road is until we get there.
Federer, Nadal, Williams and Williams. They are all playing so well there was zero drama at Wimbledon this year.
I can't believe the Tour de France starts this week. Time flies.
Thursday, July 3, 2008
I guess it's obvious that I think that they think they're analysts. I agree that they spend a lot of time thinking about the markets. My main problem is that most of what they learn about the market they get from made-for-TV packaged commentary.
By the way, I'm not ignoring what happened in the market yesterday. It was ugly. Commodities got slaughtered. Financials hung in for some reason. Asia goes down every day. Oil is going to $150. I'm trying to figure it out.
Wednesday, July 2, 2008
The wave of negatives continues today as their head of investor relations said,
"Obviously there's a seasonal impact kicking in, but that's being greatly offset this year by the slowdowns in demand especially from markets in the U.S. and Europe. Emerging markets are still growing at a quite good pace, but sooner or later those emerging markets will be impacted. We envisage the seasonal pickup during the second half to be not as conspicuous as in normal years. We are bracing for difficult times going forward.''
Tough year we're having.
It will be interesting to see how the transition goes and whether they can pull it off. SBUX has only ever been a growth company. Growing quickly is difficult, but can mask a lot of sins and imperfections. SBUX's revenues have nearly tripled since 2002 without a down year.
SBUX has close to 6,800 stores in the U.S. Is it true that a few hundred are unprofitable and the rest can chug along just fine, or has their stranglehold on the expensive coffee market weakened? It's possible that tastes have changed.
There are two issues in my opinion. Can management shift from prioritizing revenue growth to prioritizing profitability? Have U.S. consumers had their fill of SBUX?
Tuesday, July 1, 2008
The S&P 500 is down 12.9% for the year.
I'm sure the folks at EBay are steaming as a French court yesterday ordered EBay to pay $61 million to LVMH for failing to block the sales of fake Louis Vuitton goods. EBay claims that they are already spending $20 million per year to combat counterfeit auctions. This is going in a very bad direction for EBay as there is really no solution. With millions of auctions going on they can't vet everything. If they are potentially on the hook for tens of million of dollars per brand/per country that they do business in they could really be behind the 8 ball.
Last night while I was asleep, Henry Blodget at SAI summed up the more recent goings on in the Yahoo fiasco. It's time for Yahoo to do something right.