Archive for December 2007

Jingle Bell: 12.31.07


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nycball.jpg(Ed Note: Well, this is it. Another year in the can.) Times Square Ball Goes Green (AP)
Fitting, given the year we’ve had that this year the big ball will don energy efficient LEDs. The most energy efficient solution would be no ball at all, but obviously that was never going to happen. Of course, compares to the staggering power consumption of TImes Square, the marginal difference of a green New Year’ ball is trivial, but it’s the message that counts. Altogether, the ball will costs $1.1 million to assemble, which, given the amount of attention and tourism it’ll bring in is well worth it.
Tracinda to Take 35% Stake in Delta (WSJ)
Big investment from Kirk Kerkorian in Delta… Delta Petroleum that is. We’ve never heard of it either, though the 35 percent stake will cost the firm $684 million, representing a 23 percent premium for the shares. A nice finish for the year for Delta (Petroleum) shareholders.
Existing-Home Sales Edged Up In November, but Still Weak (WSJ)
Mainly bad news on the home front, but a tiny dollop of good news, which is pretty rare these days. October sales of existing homes were actually revised up, and November came in ever so slightly above that. We were going to link to Barry Ritholtz with a note saying to check there for the inevitable tear down of these numbers, but alas even he can’t totally demolish the report, so it mast be halfway moderately vaguely decent. Still, he gets in some good shots at the NAR.
‘National Treasure’ holds No. 1 spot (LA Times)
We haven’t seen the movie, but the fact that this is dominating the box offices is great news for the future of the Republic. Also great news for the producers, since they’ve now got a bona fide franchise on their hands. Can’t wait for National Treasure 3-6.
As the Ball Drops, Dieting Companies Take Positions Nearby (NYT)
You probably gained a few pounds over the last week or so, no thanks to us, because we weren’t keeping your blood pumping as intensely as we usually do. Food also had something to do with it. Anyway, don’t let the diet hucksters feed you any nonsense. The key things: Fresh veggies, unadulterated meat and intense weightlifting. Stay off the treadmill and the sugar and you’ll be a-okay for the next 11.5 months.
Stocks Lower on Last Day of ’07 (AP)
If you’re reading this site today, the last thing you need is a link telling you what the market is doing. Hence we’re putting this last.

Jingle Bell: 12.28.07


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berkshirehose.jpgING to Sell Reinsurance Unit to Berkshire Hathaway (Bloomberg)
More buying activity from Buffett. Despite some of the troubles that General Re has caused its parent company, Berkshire Hathaway is upping its role in the reinsurance market, buying off a unit from ING for a modest $440 million. Among the areas ING is involved in include possible settlements for tobacco and asbestos claims. ING stil has a US-based reinsurance division that it may hold on to.
Buffett to Start A Bond Insurer For Cities, States (WSJ)
And not only is BRK buying, but it’s also entering new lines of business. At least it’s talking a good game. Sensing a moment, given the weakness in the major bond insurers, the company says it will enter that business, er, “seek permission” to enter it. Buffett told the WSJ that the company would commit “quite a bit of capital if we like the business.” So take that what you will. You really have to hand it to him. The man has dominated the holiday news cycle. All these big announcements on the slowest week of the year, when nothing’s going on. The media already loves Buffett, but in the absence of other stories, it’s been 24/7 Buffettvision. Well done.
Broadcast of Golden Globes Is in Doubt (NYT)
Sparing the thousands of viewers whose husbands and wives might’ve made them watch it, there’s talk that the Gold Globes — Hollywood’s least respectable award show — may not get broadcast. You know, there’s the whole writer’s strike going on, which sorts of casts a pall on any industry-related “festivities”. Now if they cancel the Oscars, that might be a big deal. But the Globes? That ranks somewhere below the Cable Ace awards in terms of credibility. We’d rather watch the Tony’s even if every Broadway score these days is nothing but a load of a-melodic half-talking/half-singing.
Amazon to Sell Warner Music Minus Copy Protection (NYT)
Amazon will start selling the entire Warner Music catalog as DRM-free MP3s, which is pretty cool. Whether it helps Amazon make gains against iTunes remains to be seen, but it’s hard to see the news as anything but an unalloyed good for the company.
Explaining CDOs, Overcollateralization Edition (Portfolio)
There’s some famous short story about a group of English majors who sit down over some wine and admit the one book that they’re ashamed not to have read. Actually, we don’t know whether this was a short story or a short film or a novel, or whether it never even happened in fiction. After all, we heard about it third hand from someone who’d claimed to have read it. Anyway, they all go around until one says that they hadn’t read Hamlet and the rest freaked out. That was just too much. Not having read For Whom The Bell Tolls was one thing. Hamlet was quite another. Anyway, in case you feel like that Hamlet-less English major, with respect to your knowledge of CDOs, Felix Salmon gives you a chance to catch up and join the gang.
Where is the Copper Market Headed in 2008? (MetalMiner)
Wouldn’t you like to know?

  • 27 Dec 2007 at 12:53 PM
  • politics

The Assassination of Bhutto: Why It’s Very Bad News

Moments after former Pakistani Prime Minister Benazir Bhutto’s horrific assassination was announced, equities futures began to move downward. People at trading desks immediately began to guess what this would mean across a variety of markets. We started getting e-mails from traders, market watchers and even a few readers who are in Pakistan now.
Reminders that we live in an unpredictable and dangerous world tend to unsettle equities markets, so the moves in the major indexes that followed were, well, highly predictable. But some readers wanted to know why this assassination should be viewed as bad news. It sounds cold hearted and ill-mannered to mention it but isn’t it possible that the death of the opposition leader in Pakistan could stabilize the country by eliminating a challenger to Pervez Musharraf? Isn’t Musharraf our man over there? As one reader put it, shouldn’t this be up arrow news?
The reason it’s terrible news is that Bhutto was actually a source of stability for the country. She was a reasonable and relatively US-friendly alternative to Musharraf. With her out of the picture, it’s unclear what direction the opposition to Musharraf will take. But what is clear is that the opposition will most likely strengthen and act with a greater sense of urgency. The world is slightly more dangerous this afternoon than it was when we went to bed last night.

Jingle Bell: 12.27.07


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The $50 Ticket: A Lottery Boon Raises Concern (NYT)
It’s pretty ludicrous for the government to crack down on all sorts of gambling, but then promote lottery tickets, which offer a terrible payout ratio.But that’s really obvious. An interesting trend is the growth of $10, $20 and $50 scratch off tickets. Naturally, it’s got the public-health types freaking out. If these more expensive tickets were causing players to play more scratch off, it would be an interesting study. But it’s also possible that the net amount spent is staying the same, and that people are opting to buy one $50 ticket, as opposed to ten $5 tickets. If the latter is the case, that’s just efficiency. Plus it’s a more concentrated rush. Anyway, in a few years, some academic will do a paper on this, and we’ll let you know what they conclude by linking to the abstract in an obscure journal.
Citigroup May Cut Dividend by 40%, Goldman Sachs Says (Bloomberg)
Citi shareholders counting on that fat dividend shouldn’t be, at least according to Goldman Sachs. The firm predicted the dividend would be slashed up to 40 percent, in an attempt to shore up capital. Then again, this is sort of old news. Citi’s dividend looks big because nobody thinks it will last. For most, it looks like a matter of when, not if.
Why isn’t E.W. Scripps a Raging Short? (Infectious Greed)
When the Home Depot opened in Manhattan a few years back, and the city flew into an orgiastic state, we realized that homemaking as pop culture had reached ridiculous proportions. Yes, faucets and lumber are nice, but come on. It’s a Home Depot. Not only was the housing boom to blame, but it also had to do with the endless stream of TV shows relating to building homes, remodeling, etc., that tried to make home ownership sexy. So now that the underlying force, the housing boom, has come to an end, what to make of home ownership as pop culture, and how is that an investment play? Paul Kedrosky likes shorting Scripps, the parent company of Home & Garden Television (HGTV), Food Network, DIY Network (DIY), each of which is filled with home-related content that could very well be at its peak. Just something to chew over.
Nokia Delays N-Gage Game Service for a Second Time (Bloomberg)
Shocking, really shocking.
Durable Goods Flat, Business CapEx Spending Falls (Big Picture)
Barry Ritholtz’s take on today’s punk economic data. Right up his alley.
‘Long-Short’ Funds Labor to Thrive (WSJ)
Several “long-short” mutual funds that promise hedged, market neutral returns have faired badly this year. Basically, they sound like the poor man’s hedge fund. And it sounds like you get what you pay for. Then again, by actually attempting to, you know, hedge, they’re probably more hedge fund than a lot of actual hedge funds.

Jingle Bell: 12.26.07


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warbuf.jpgBerkshire to Pay $4.5 Billion for Pritzkers’ Marmon (Bloomberg)
WaBu’s Berkshire Hathaway will spend $4.5 billion for a 60 percent stake in privately-held Marmon, a Pritzker-family held diversified services firm, whose businesses include hotels and rail services. Buffett describes Marmon as, “our kind of company.” Sounds true. Nothing too splashy or flashy. Just some good old Graham & Dodd style operations. Now wait for the spate of stories about how Buffett is back, along with big lists of companies in play.
Retailers hope post-Christmas sales can save the season (USA Today)
And there you have it. More analysis here from Barry.
Amazon.com Wraps Up Its 13th Holiday With Best Season Ever
On the other hand, if you’re Amazon.com, and you’re the biggest e-tailer in the world, then you had a good season. If there’s one statistic to keep in mind, this is it: “If you lined up all of the GPS units Amazon.com sold this holiday, they would make a trail from New York to Philadelphia; however, a new trail wouldn’t be necessary with the use of a GPS.”
Home prices post record drop (CNNMoney)
Well, it looks like were were premature in calling a bottom. Several months ago, we said home prices were due to rise, since the Realtors had dropped their bullish spin. That’s what you get for relying too much on contrarian indictors. Never again! Anyway, yeah, October. Record fall in house prices.
Luxury Air Travel: Still Not Proven (Felix Salmon)
On the decline of MaxJet.

  • 25 Dec 2007 at 4:27 PM
  • Holidays

Jingle Bells: A Very Different Kind of Opening Bell

Our economic education was somewhat unorthodox. Much of it took place in the basement of a library with moveable stacks, located not far the center of campus but very far, intellectually speaking, from the lecture halls where famous economists taught throngs of undergraduates to ignore what they know in favor of what could be depicted in graphs and equations.
We were helped along by a newsletter published by the Ludwig Von Mises institute, the foremost center for Austrian economics in these United States. Each year around this time our favorite edition of the newsletter was printed, the Christmas issue. It usually presented some contrarian take on a famous Christmas story. One year it might be the economics of Santa’s workshop. Another year the feature story was about the entrepreneurialism of shiny red noses. Another year about Scrooge’s generosity.
The folks who put together the newsletter now run both the Mises.org website and LewRockwell.com. We decided today to take a look at those sites. Sure enough, there was plenty of contrarian Christmas stories that we thought we would pass along.
We’ll start with Butler Shaffer’s “The Case for Ebeneezer.” He makes the case that Mr. Scrooge, who seems to have been a money lender of some sort, may not be quite the villain he is made out to be for much of Charles Dickens’ carol. In the first place, if Mr. Scrooge were not in the business he was in–lender money on the expectation of being repaid with interest–the lives of the people of London might have been far poorer. They needed money when they borrowed it, and Mr. Scrooge was willing to part with it for a time. If he was not willing to trust them with his money and if he was not accumulating wealth while practicing this generous art, they would have never had been able to avail themselves of the opportunities that allowed them to start and continue their own businesses and buy and live in their homes.
Lew Rockwell himself explains the economic lessons at the heart of the story of Bethlehem. Remember those wise men and their gifts of gold, frankincense, and myrrh? To hear the preachers of the gospel of poverty, who remind us always about the eyes of needles and camels, you might think that the holy family would have rejected these gifts as too extravagant. But that’s not the way it happened. “Far from rejecting them as extravagant, the Holy Family accepted them as gifts worthy of the Divine Messiah,” Rockwell writes. “Neither is there a record that suggests that the Holy Family paid any capital gains tax on them, though such gifts vastly increased their net wealth. Hence, another lesson: there is nothing immoral about wealth; wealth is something to be valued, owned privately, given and exchanged.”
And if Rockwell’s take strikes you as a bit too anti-Roman, we suggest you read Tom Fleming’s very different appreciation of Rome’s accomplishments. It reminds us of an oath we once took when joining a society of like-minded people while we were undergraduates, which included a plea that if we could not be saints (which was beyond the hopes of most of us in that room that night), then at least we could be like the Romans who made the world in which the first Christmas occurred.
You’ll hear a lot about how Christmas is ruined by rampant consumerism. Very few people bother to defend the common practice of buying and giving gifts but the practice continues on. Gary North explains why. “There is great value in satisfying the desires of consumers, a value that goes beyond the prices that consumers pay,” he writes. “Producers understand this. Consumers may not.” And you won’t want to miss North’s take on “It’s A Wonderful Life.”
So why are we back again on Christmas night, writing for the few of you who may still be reading? Well, we’re recovering from our Christmas feast and thinking about some of the most important people in our own lives: our readers, our commenters, our sponsors and our investors. You make it possible for us to do this wonderful work each day, and we’re grateful for that gift you give to us each day. It’s been a happy holiday season for us, and we hope it’s been merry for you. We’ll raise a glass to you tonight.

  • 25 Dec 2007 at 11:26 AM
  • Holidays

Merry Christmas!

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As Bess Levin noted on Friday, posting will be light this week. We didn’t post yesterday despite the half-day for most US exchanges. Frankly we don’t get paid enough to work on Christmas eve and our bosses are not Scrooge-y enough to expect us to. Tomorrow we will pick up publishing with a few updates throughout the day from the staff, and we’ll continue at that pace until the New Year. If you find yourself working through the holidays just remember that somebody has to work the desk and just resent that that somebody had to be you. We suggest you walk around the hallways, treat the trading floor like a putting green and otherwise act out your I Am Legend fantasies while no one else is around. You, our friends, are legends. At least today. And at least in your minds and ours.
For Thanksgiving, we wrote a guide to working through that national holiday that pretty much applies to all these kind of days. Read it here and remember that we’re thinking of you. Please feel free to carry on the discussion in the comments section. Check out the “recent comments” link to the left. Leave news updates, rumors, links and such in comments below.
Merry Christmas, gang. We’ll be back soon.

Write-Offs: 12.21.07

$$$ Bro, You’re A God Among Bros [TO]
$$$ Wall Street’s dirty little secret– EXPOSED. [DealBook]
$$$ Tim Sykes judges you. [Tim Sykes]

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