Posted by Paul Vignaon February 27, 2010 Economy, Markets /
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You know that scene in “Close Encounters” when Richard Dreyfuss makes a giant Devil’s Tower sculpture in his living room? Well, I swear I’ve got the Grand Tetons on my front lawn. I have a mountain of snow six feet high running the length of my front yard, parallel to the driveway. It’s absolutely unreal. Anyhow, a lot of things go through your mind when you’re endlessly shoveling snow (I think I’ve been out there six times in the past two and a half days,) so in no particular order, here are some of the things I’ve been thinking about:
- I am going to be shoveling snow for the rest of my life.
- The U.S. should promise tariff-parity with any nation with which we trade. There’s no more refinancings to be done. We’re going to have to dig out of this mess the old-fashioned way, by making stuff and selling it. That’s the only way we’re going to generate the tens of millions of jobs needed to get the country back on its feet. And we’re going to have to find markets for it all.
Now you always hear that U.S. workers make too much. But wages haven’t grown at all in a decade, and I bet adjusted for inflation they’ve barely grown in a generation (I know there’s a good table for this somewhere, just couldn’t find it quickly.) How overpaid could Joe Six-Pack possibly be anymore? It’s time to revive manufacturing.
- What idiots made the center of commerce, finance and politics the New York-Washington region? Why isn’t “New York” in Florida, or somewhere warm, where I could still have a job as a business reporter and not have to freeze and shovel snow? Who founded New York? The Dutch. God, I hate the Dutch.
Newswires’ Madeleine Lim and Kathleen Madigan discuss the conflicting details in US GDP and existing home sales data as well as the latest on Greece. Check it out – it’s Tomorrow’s News Today.
Sleepy session for stocks, with the major averages sticking to tight ranges and closing with marginal gains. Indexes spend the session flitting back and forth across the flat line. Snowy weather in the Northeast may’ve had something to do with the tedious, low-volume activity.
Not much of a send-off for February, which ends up a pretty good month for stocks with Dow Industrials advancing about 2.5%. Today consumer staples and utilities get slapped, every other sector ends positively, led by financials and industrials.
DJIA rises 4.23 to 10325.26, and Nasdaq Comp rises 4.04 to 2238.26. S&P 500 ends 1.55 higher at 1104.49.
Lots of meaty data to chew on next week, including personal income & spending, construction spending, ISM (manufacturing, services), February auto sales, ADP’s Feb payrolls estimate, Beige Book, factory orders, pending home sales, Feb nonfarm payrolls and January consumer credit.
- The smart phone market is “a waltz of elephants,” making it hard for standalone players, like Palm, to succeed, Henry Blodget says. “In order to have a chance, Palm’s products had to be so obviously superior to all available alternatives that people would hear about them and seek them out,” he says. “Alas, they aren’t.”
- For AIG, a $9 billion quarterly loss looks almost graceful. “”Depending on your perspective, the results were either a significant improvement compared with the same period a year ago or quite irksome indeed, given the $100m in bonuses paid to 200 AIG staff,” FT’s Alphaville says.
- Twitter’s ad platform may come sooner than you expect, MediaMemo blogger Peter Kafka reports.
- Jeremy Grantham’s early calls prove to be right, but also costly.’
- Lawmakers question the GMAC rescue. Gee, I wonder why. Three bailouts later, GMAC’s still the only bank where the government now owns a majority stake.
- Former BofA CEO Ken Lewis left with about $83 million in pension and insurance benefits, stock and other compensation, WSJ reports, citing a securities filing.
- “Rather than demonize the CDS market and blame it for Greece’s current woes, let’s place the blame firmly where it belongs — with Greece itself, and its profligate ways.” Reuters blogger Felix Salmon says.
- Madoff whistleblower book: Harry Markopolos claims he uncovered State Street fraud, had thoughts about killing Madoff
Posted by Steven Russolilloon February 26, 2010 Markets, Media, Technology /
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How do you like them apples?
Apple (AAPL) once again insists there are no plans for a dividend, instead preferring to sit on its enormous pile of cash for future opportunities.
Maybe it’s a prudent move, hard to be too cautious these days. Maybe it’s also a pride issue – some might say offering a dividend would no longer classify Apple as a growth company, a status it certainly wants to maintain.
Whatever the case, Apple still has nearly $25 billion in cash and short-term securities on its balance sheet and hasn’t indicated that its ready to go hunting for an acquisition anytime soon.
For the record, CEO Steve Jobs told shareholders at yesterday’s annual meeting that he preferred to “leave the powder dry” for possibly acquisitions and cash “will come in handy.”
Two more regional economic reports this week — yesterday’s Kansas City Fed February manufacturing survey, and today’s Chicago Business Barometer — show improvement, but the readings remain mixed enough to keep us skeptical that economic recovery is gaining any solid traction.
As we noted earlier, reports from Dallas and Richmond held some positives, but didn’t show evidence of much vigor in the rebound, and the latest reports have the same ups and downs.
Kansas City Fed’s manufacturing index improved to 19 vs 13 in January, and while production grew at durable goods plants in the district, growth “slowed slightly” in non-durables, “particularly for food, printing, and plastics and rubber producers.” Shipments and new orders indexes increased, but order backlog index fell into negative territory.
Employee index also fell back into negative territory after going positive in January, and new orders for exports fell to zero from 6 in January.
Investors had a lot to digest this morning after a slew of economic data crossed the tape, and another snow storm blanketed New York City.
4Q GDP was revised slightly higher, Chicago ISM (formerly PMI), which measures business activity, rose to highest level since April 2005 and consumer sentiment essentially held steady. But the big kicker was a plunge in existing home sales.
More than a foot of snow (and counting) covering NYC is likely contributing to the apathetic mood toward the market; DJIA has stayed within a roughly 80-point range from high to low so far.
While stocks are quiet, market observers are sifting through the data, and not terribly impressed by what they see. The GDP report suggests several reasons for caution, even as the economy grew at the strongest pace in more than six years, Barbara Kiviat writes at Time’s Curious Capitalist blog. About two-thirds of growth came from changes in inventories, not final sales.
“Demand for final products paints a much less rosy picture,” she says.
I’ll tell you what, this is one time when I might buy the weather excuse from anybody who offers it, especially if they’re from New Jersey. Because I’ve been out shoveling four times in the past 18 hours, and I’m still snowed in. Although, of course, I’m also online, so if, say, I was just dying to pick up that copy of “The Quants” I’ve been meaning to buy, I could just head over to Amazon and buy it.
Being online also means I can keep up on what’s going on outside my window, like in, say, Greece. And I’ll tell you what, it may not be as bad as when Clytemnestra killed Agamemnon, but it doesn’t look exactly good (in case you can’t tell, I’m running out of easy Greek-myth references.) Greece’s prime minister, George Papandreou, laid it out in an address to parliament, as Reuters relays:
“History confirmed our worst fears.”
“The damage is incalculable. It is not only financial or fiscal but also affects the position of the state …
“Our duty today is to forget about the political cost and think only about the survival of our country. Past policies make it necessary to proceed to brutal changes and reduce accumulated privileges.”
There was also a bit about the previous administration, and how badly it screwed things up. Either way, when the head of government starts talking about the survival of the country, you know things are bad (maybe it is as bad as when Clytemnestra killed Agamemnon.)
What he confirmed is that Greece is in a really, really tight spot, and while he pledged the nation would work out its own problems on its own, well, you can’t help but wonder. The Greeks pushed back an offer on two-year bonds, the Journal reported, and while they say an offer for 10-year bonds is still on for next week, that offer was supposed to occur originally this week.
I remember reading somewhere once, and maybe I’ve got this wrong, that Harry Truman’s attitude toward every problem was more or less, we’re gonna try this, whatever this was, and if doesn’t work, well, then we’ll try that. Less dogmatic and more pragmatic. He did have, after all, a sign on his desk that said “The buck stops here.”
I wonder if the groundwork’s being laid for a little bit of that in terms of the housing market. The administration’s efforts don’t seem to doing much besides slowing the inevitable aftermath of the burst housing bubble. January’s stunning new home sales report, the equally surprising existing home sales report today, the expectation of another record year of foreclosures, and of course the anemic results of programs like the HAMP, may have people starting to think about a new approach.
All of sudden I’m seeing more and more references to the HOLC, the Home Owners Loan Corporation, the Depression era government agencies that went around buying mortgages from bank, negotiating the terms with homeowners, and working to keep them in their homes with a mortgage they could afford. The source of it may be this article in the New Republic by Brad Miller, a Democratic Congressman from North Carolina.
Miller’s sympathetic to the administration, but makes it clear that current efforts just aren’t “making a dent” in the mountain of foreclosures. “What can the Obama administration do to alleviate this suffering? Turns out, it doesn’t need a new plan to modify mortgages, since there’s a very good old plan on the shelf.” Miller brings back the idea of the HOLC. It didn’t solve every problem, he notes — about 20% of the mortgagees still went into foreclosure — but it did alleviate a lot of the suffering, and by the time the last mortgage was paid off in 1951, it had turned a slight profit.
There are a couple of issues, off the top of my head. People overall put down much less on their homes these days than during the Great Depression, and loans back then were generally 15-year affairs. Also, a new HOLC would likely need hundreds of billions to fund it, with the ultimate payoffs decades in the futures. I don’t know that the citizenry has the stomach for that kind of thing right now.
A large, lingering snowstorm likely means skeleton crews on Wall Street and throughout the Northeast today, February’s final trading session.
Plenty of economic data to occupy investors this morning, including a second look at 4Q GDP at 8:30am; February Chicago ISM (formerly PMI) at 9:45am ET; Reuters/Univ of Michigan final Feb consumer sentiment reading at 9:55am; and January existing home sales set for 10:00am.
Thinner participation and month-end activity create a ripe environment for some volatile swings in the market today. S&P futures up 2.60; 10-yr slightly lower, yield at 3.65%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
The bridge that collapsed on Interstate 5 bridge over the Skagit River in Washington was listed as “functionally obsolete” and “fracture critical,” which means the whole sha-bang could come tumbling down if one major part fails. Click here to read the details from USAToday. This sort of thing shouldn’t be happening in a modern, developed nation. Barry LePatn […]
