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Posted
Apr 25 2008, 01:46 AM
by
Jon Markman
Rating:
Every frat house manager knows that if you want to end a party, you take away the keg. And that’s pretty much all you need to know about why the stock market is so sluggish this year.
The banks have sharply cut back on the credit they’ve allocated to hedge funds, making less money available to purchase stocks and bonds of all stripes. Less borrowing = less buying power. It's pretty simple.
The latest evidence of this action has come from reporters at the Financial Times, who say they’ve discovered that the most leveraged funds are now borrowing no more than five times their asset base -- down from at least 10 times their base six months ago. That means a $100 million hedge fund that was buying up to $1 billion worth of stocks a year ago now can only buy less than $500 million worth. That's a big difference.
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Posted
Apr 21 2008, 01:25 AM
by
Jon Markman
Rating:
Last week’s stunning 5% advance in the stock market is likely to have one consequence that credit-starved sensitive businesses won’t like: It has eroded the likelihood of further cuts in interest rates by the Federal Reserve when its Open Market Committee meets next week.
Despite a rise in joblessness, decline in housing activity and spate of bankruptcies, the futures markets and even dovish Fed governors are now expecting the central bank to stand pat for the first time in six months.
This is something of a shocker when you consider that the odds of a cut of a half percentage point were extremely high just two weeks ago. Now traders who bet on the likelihood of cuts don’t even consider it likely that the Fed will cut by a quarter of a percentage point. If the economy really is on solid ground now, just because stocks are up, it sure will be a surprise to businesses who are seeing more dramatic sales and profit declines than they can recall in years. We’ll learn more on Tuesday and Thursday mornings when existing and new-home sales data is released, and on Thursday afternoon when continuing jobless claims for April are released, but already the news from corporate America is grim.
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Posted
Apr 17 2008, 11:32 PM
by
Charley Blaine
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Hell hath no fury like investors who believed a data source that turned out to be wrong.
Just ask comScore, the Internet trafffic tracking company that suggested that growth in Google's domestic paid clicks were slowing. Lots of investors interpreted that to mean that Google's profit growth would slow (unless Google was collecting more money for each click). And that was one reason why, over the past eight weeks or so, Google's stock struggled.
Well, after Thursday's market close, Google said that its profits soared in the first quarter, and the stock jumped 17% to $525.96 in after-hours trading. And it appears that the Internet search giant was, in fact, getting more money for each click
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Posted
Apr 16 2008, 04:57 PM
by
Charley Blaine
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I'm not making this up. Apple's market capitalization is bigger than Citigroup's. The actual numbers at today's close were $135 billion for Apple and $123 billion for Citigroup.
This fact, which came courtesy of Barry Ritholtz's blog The Big Picture, struck me as, well, preposterous. Check these most basic of comparisons:
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Posted
Apr 10 2008, 03:53 PM
by
Jon Markman
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Watch out, Texas! Get back California, Louisiana and Alaska! North Dakota and Montana are on track to knock all of you off your high horses as the oil capital of the United States.
According to a government report published today that has stunned the energy biz, a thin layer of rock known as the Bakken Shale, located a couple of miles under the Badlands, holds up 4.3 billion barrels of recoverable oil, making it the single largest oil reservoir that federal scientists have ever assessed.
At today’s price of $110 per barrel, that puts the value at $475 billion, give or take a few bill, or more than enough to make people think ND stands for North Dallas. Or maybe that’s New Dhabi.
The U.S. Geological Survey only assessed the Bakken Shale in U.S. boundaries, so the full extent of the find, which stretches north into the Canadian provinces of Saskatchewan and Manitoba, will ultimately be larger. Already the estimate for “technically recoverable” oil – or that which is exploitable using current technology -- is 25 times higher than the last time the USGS surveyed the area, in 1995.
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Posted
Apr 03 2008, 05:53 PM
by
Jon Markman
Rating:
Bummed that you missed the skyrocketing advance of credit card vendor Visa when it debuted as a stock last month? The 50% move higher in the shares in the first few days paid for a whole lot of shopping sprees among shareholders, you can be sure -- and they could pay with cash, not plastic.
Well fret no more, because this crazy market is giving you another shot right now with the shares of the company behind a different credit card issuer: American Express. And the author of a brilliant new book about buying super-discounted stocks says this is one idea you should definitely not leave home without.
Vitaliy Katsenelson, a Denver portfolio manager whose cagey Active Value Investing was published last year, says Amex is one of the “cleanest” financial stocks you can buy right now, not to mention one of the cheapest. Its value is down, he says, because it is mistakenly lumped in both with banks and with companies that will suffer in a recession. He says that, to the contrary, Amex is in the virtually the same business as Visa and Mastercard, whose own shares are up a stunning 406% since they debuted in mid-2006: They just take fees from merchants and earn interest on cardholders’ balances.
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Posted
Mar 27 2008, 12:46 AM
by
Jon Markman
Rating:
If it seems like you are paying more for your cereal, beer and pizza lately, shake your fist in the direction of Pakistan, Uganda and Argentina, because a weird confluence of international events are combining to slash the world supply of wheat and boost prices. The downside of globalization is that a crop failure 10,000 miles away can lead to pricier brewskis here.
It's actually a lot more serious than that. The New Scientist magazine reports that a wheat disease that started in central Africa actually threatens to destroy most of the world wheat crop, leaving millions to starve. A fungus called Ug99 has already spread from Africa to Iran and is bearing down on Pakistan, according to the report. This is bad news because Pakistan and Punjab wheat is extremely important to the entire food chain of the densely populous plains of South Asia.
According to reports, scientists hope to slow the spread of Ug99 by spraying new forms of fungicide but the only real firebreak will come when agronomists are able to create Ug99-resistant strains of wheat over the next few years. The disease, which is said to be a super-strong strain of black stem rust, first came to light in Uganda in 1999 and has since ruined crops in Kenya, Ethiopia and Yemen. Now winds are expected to take the spores to Egypt, Turkey, Syria and Iran. Chinese scientists are said to be on a crash program to develop Ug99-resistant wheat strains before the disease ravages its already weakened croplands.
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Posted
Mar 26 2008, 03:23 PM
by
Charley Blaine
Rating:
The market's reaction to Oracle's third-quarter earnings was almost a classic "buy the hype, sell the news" event. Except that the hype turned out to be wishful thinking.
The stock had been shooting nicely higher since early March on the supposition that Oracle was going to deliver a blockbuster report today. From a March 4 closing low of $18.44, Oracle shares had jumped more than 14% to $21.08 on Tuesday as investors bet on a strong report.
But when the numbers disappointed, the market slammed Oracle, knocking the shares 8.2% to $19.22 in after-hours trading. The shares had finished off 0.7% to $20.94 in regular Nasdaq trading
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Posted
Mar 25 2008, 03:58 PM
by
Charley Blaine
Rating:
Al Copeland died on Sunday. You might not know the name. In Louisiana and certainly around New Orleans, he was about as well known as anybody both for the chicken you can get at Popeyes Famous Fried Chicken, the chain he started, and for his lavish, complicated and exuberant lifestyle.
He liked getting married. But all four of his marriages ended in divorce -- often acrimoniously. He liked Christmas. His house along Lake Pontchartrain in Kenner, La., was so lit up with lights at the holidays that airline pilots would use it to line up their approaches to the airport.
He liked fast cars and fast boats. He carried on a fun feud over the decor of one of his restaurants with no less than Anne Rice, the author of "Interview with the Vampire."
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Posted
Mar 21 2008, 12:04 PM
by
Bradley Meacham
Rating:
This post was written by MSN Money columnist Michael Brush:
When Visa went public this week it was no surprise that investors applauded the IPO as "priceless."
Though the bankers behind the deal priced Visa stock at $44 per share, it traded no lower than $55 Wednesday, its first day out. Then it closed above $64 on day two (Thursday).
Investors scrambled to buy Visa shares for three reasons. First, the company will continue to benefit from a broad-based worldwide shift to the use plastic to pay for stuff. Visa also has plenty of cost cutting ahead to boost profit margins.
Third, the deal was priced cheaply to move in a tough market -- which brings up another aspect of this IPO which was unsurprising. To get the stock at that heavily-discounted $44 per share ahead of the IPO, you had to have special connections inside the clubby investment banking network behind the IPO -- which was brought public by the likes of Goldman Sachs, Merrill Lynch and JPMorgan Chase. Mere mortals, a.k.a. regular investors, need not apply.
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