With the release of RC1, we’re in the final leg of development before the release of 2.7. 280 commits since beta 3 have polished the new admin UI (including new menu icons created by the winners of our icon design contest) and fixed all known blocker bugs.
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The Securities and Exchange Commission, which busts people regularly for insider trading, may have an insider problem of its own.
Two employees sent numerous e-mails from SEC computers about stock trades. Now, the commission is investigating whether they broke rules or accessed SEC information while they were making a high volume of trades.
Commission employees have also been investigated for viewing porn from SEC computers and running side businesses on the job. One employee used SEC computers, phones and printers to run his private photography business.
The bad behavior was listed in the SEC's semi-annual report to Congress, which is online at Footnoted's site here.
The news elicited a bit of crowing from Mark Cuban, whom the SEC has charged with insider trading:
It never crossed my mind that it would be legal for employees of the SEC to trade stocks. Not that they shouldn’t have rights to own whatever they want in a trust. They should. Trading individual stocks and bonds. Wow.
But, as Cuban notes, the SEC deserves credit for looking critically at itself -- and going public with its findings. Every government agency should be doing the same thing.
As Kim mentioned, the big brains over at the National Bureau of Economic Research just announced we're in a year-old recession. This could actually mark the beginning of the end for this ugly period of economic history.
As I wrote in October, one of the strongest predictors of when a recession ends is it being officially recognized. Maybe the realization of just how bad things have become acts as a cathartic event of sorts -- marking a low point in sentiment that can only be improved. The recovery normally begins within months.
History dating to 1857 suggests this recession will probably last 17 to 18 months from peak to trough. One particularly nasty outlier is the economic contraction following the Panic of 1873, a period known as the Long Depression that lasted 65 months -- nearly 22 months longer than the Great Depression.
The situation in 1873 is eerily similar to the one we face now, and could portend a much longer downturn: Massive credit expansion backed by real estate, fancy new investment instruments, a rising low-cost economic powerhouse, and a dramatic tightening of interbank lending which led to a contraction in general credit availability.
For the optimists: Assuming the current recession is of average length, the happy days of normal economic activity will return along with the warmth of summer in June or July. As a leading indicator, the stock market should begin to turn a few months prior to the actual economic recovery. February would be good time to roll back into pro-cyclical investments and reduce exposure to safe havens like U.S. government debt and gold.
For the pessimists: According to Scott Reynolds Nelson, a professor of history at the College of William and Mary, "the Panic of 1873 demonstrated that the center of gravity for the world's credit had shifted west — from Central Europe toward the United States. The current panic suggests a further shift — from the United States to China and India."
Although economic policy and international coordination have improved greatly since those post-Civil War years, the possibility of a protracted downturn mirroring the Long Depression cannot be ruled out. If this is the case, then we face another four years of economic misery. Plan accordingly.
Feel free to comment below. I can be contacted at anthony.mirhaydari@live.com
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Surprise! We're officially in a recession
We didn't learn the lessons of 1907
In case anyone wasn't sure, we are now officially in a recession. That's according to the National Bureau of Economic Research, which met on Friday and determined that the current recession began in December 2007.
It may have not seemed like a recession at the time. That's because the U.S. hit a peak in economic activity during that month. Employment was at a high, and other indicators, such as manufacturing and production, were also approaching peaks. But the long slide down began then.
It's pretty clear now that we are in a recession, but experts weren't sure exactly when it began. The bureau's report gives a definite starting point. And signs point to a more severe recession in the Midwest -- in fact, it could be as bad as the recession of 1981-1982, according to professors at Creighton University.
On top of all this is word that U.S. manufacturing is contracting at the fastest pace in 26 years.
Investors are reacting to recession concerns by flocking to treasuries, but now treasury yields are so low that fund managers "have little chance of offering anything but subpar returns in 2009," according to Bloomberg.
Airlines are reacting to the recession by cutting capacity. Airlines have already cut seating capacity by 10%, and may cut another 8%, according to Blomberg.
So when will the recession end? We won't know until we're long out of it. Economists will have to analyze several months of indicators to pinpoint the moment when the economy started expanding again.
In fact, we could already be out of the recession now. The typical postwar recession has lasted 10 months. But it sure doesn't feel like the economy is in expansion mode these days.
Apple slashed some prices for Black Friday, but not any more drastically than it has in the past. Yet another sign that the company thinks it's going to cruise through the holiday season.
And Apple has good reason to be confident. Analysts are pessimistic about retail sales in general, but note that Apple's seeing great sales so far -- the iPod Touch was even out of stock at Amazon, which normally has enough iPods on hand to fill a football stadium.
That's causing optimism to bubble that even in this dour shopping climate, Apple, at least, is going to have a solid holiday quarter. A Kaufman Bros. analyst checked with distributors and stores and found that Apple had strong Black Friday foot traffic. Another analyst did the same thing and thinks sales were even up slightly from last year.
Analysts seem to be sticking with projections that sales could hit $10 billion this quarter, which would be slightly better than last year's holiday period (Apple has given a range of $9 billion to $10 billion). Despite the good news, Apple shares are dragging in the overall gloomy market Monday, falling 3% to $90.21.
Which computer maker will have a tough holiday? Probably Dell. Analysts checking in with Best Buy stores found that none of the sales staff there were recommending Dell computers. And Dell is still struggling to get a good foothold in retail stores, after years of a go-it-alone sales strategy.
Shoppers favor Hewlett-Packard computers over Dell by a five-to-one margin, according to an analyst at Thomas Weisel Partners.
Related reading:
Apple could beat the Street next year
Calling for an Apple share buyback
Dell moves away from 'build your own PC'
Is Dell PC 'best friend' material?
The gaming sector has been under a lot of pressure this year. Hotel rates have fallen due to a drop in demand, along with numerous capacity additions.
Las Vegas, in particular. has never seen such a dramatic reversal of fortune. I've been in Vegas this fall; not a day goes by that I don't hear about the downturn in casino business and associated layoffs. Lately, fear that casino companies like Las Vegas Sands may reorganize in Chapter 11 have come to forefront.
The mood is obviously very downbeat and raw, but the question for investors is whether or not the casino business is worth investing in right now, at these very depressed levels. The key to answering it ies in the balance sheets of the gaming companies.
And when I look at the balance sheets of MGM, Sands, Boyd Gaming, and Ameristar, I see a lot of debt - and therefore a ton a leverage. When you look at the skyline of Vegas and still see the capacity additons of Wynn's Encore Hotel and MGM's City Center coming online, you can't help but see the deflationary forces continuing to build on hotel rates going forward.
This -- along with the private equity buyouts (huge debt outstanding) of the Harrah's and Station properties -- brings me to the conclusion that some casino operators are at real risk of going into Chapter-11 bankruptcy. Servicing all this debt in a town filled with overcapacity is the classic recipe for default.
But the casino industry isn't without oportunities. For example, International Game Technology has been working on some innovations for the game of blackjack. They have developed some side bets for players to bet on while playing the game in order to increase revenue for the casino operators. In this environment, any innovative way to increase revenue is a welcome idea.
Another area where investors might find opportunities is in the casino management business. In particular, the 300-plus tribal casinos have a need for consulting and management assistance in these trying times. because most of them aren't gaming experts. This opportunity won't help the large overlevereged casino operators, but it will help an array of smaller players, such as Ellis Gaming and Rotate Black. These smaller companies are nimble, and are able to consult with and offer management help to the smaller tribal operations in need of casino expertise.
All in all, the gaming sector might look attractive, because the stocks have come down so far, but I would be careful about the debt loads of the large casino operators, and would look for opportunity in the consulting/management side of the industry.
Top Stocks blogging partner Todd Harrison is founder & CEO of Minyanville.com. This post was written by Minyanville Contributor Mark Bloudek.
See also:
GM has plants in Mexico. Ford has plants in Wales, Germany, Turkey, and Spain. Chrysler has facilities in Canada. Almost all of their suppliers source and build key parts in countries around the world.
Most of the headlines about a shutdown of the US car companies focuses on the three million jobs which could be lost in the US and the hit to the tax base. Lost in the analysis is what happens overseas.
That may be an opportunity to find bailout money if Congress is loath to act.
According to FT, Sweden's government is considering loaning Volvo and Saab as much as $248 million. The companies are owned by GM and Ford.
The move on the part of Sweden raises the possibility that the money the US auto companies need does not all have to come from the US. If The Big Three were smart, they would be knocking on the doors of sovereign governments which stand to see their economies lose large numbers of jobs. Unemployment costs are expensive and raise the need for more taxes. People out of work hurt GDP as much in Spain as in the US.
American car companies are looking for $25 billion. Sweden seemed prepared to put up 1% of that. Pressed, it might put up more. In nations such as Mexico, the number of jobs at stake is greater. The same is true for many of the EU nations.
Detroit's blackmail is that if The Big Three close down, the ripple effect on the US economy would push the recession much, much deeper. That is not a situation which is unique to America. Detroit's troubles belongs to the world.
Perhaps the checks to save the US car industry will not all come from Washington. Those private jets don't have to be used to fly to meetings with Congress. They could be assigned to a round-the-world trip, barnstorming for dollars (or Króna).
Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.
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Detroit looks for money overseas
This post comes from partner site The Big Money.
Predictions of a weak Christmas appear to be overblown as shoppers this weekend hit the stores in force, the New York Times, Wall Street Journal, and BusinessWeek report this morning. Ah, but there's a catch. The reason for the better-than-expected start to the holiday shopping season can be pinned on "massive discounts like 'buy one get one free' sweaters at Gap Inc. stores, $200 iPod Touch music players from Amazon.com Inc., and 26-inch LCD TVs at Target Corp. sites for $299," the WSJ writes.
But there is an upside to all this discounting. The always-reliable American consumer is spending more than last year. "In a survey of 3,370 shoppers, the National Retail Federation estimated shoppers spent an average of $372.57 over the weekend, up 7.2% over last year's $347.55," the newspaper writes.
The NYT though sees "troubling signs in the early numbers." Yes, the bargains are luring in shoppers, but at what cost to retailers' bottom line? "The bargains that drove shoppers to stores were so stunning, analysts said that retailers—already suffering from double-digit sales declines the last two months—would probably see their profits erode even further," the NYT writes, adding that foot traffic trailed off on Saturday and Sunday after the initial blowout deals expired. BusinessWeek is equally pessimistic about retailers' outlook. "Sales growth was anemic," BusinessWeek writes. "Shopper Trak, a firm that follows mall traffic, reported that Black Friday retail sales totaled $10.6 billion, up 3% from a year earlier, compared with 7% growth for the same period in 2007."
Detroit's struggling automakers take another crack this week at filling their tanks with $25 billion in federal bailout money, but the Big Three are not heading to Washington with a unified blueprint for the future, the NYT writes. General Motors is likely to disclose it will need to significantly shrink its North American operation to survive. Ford, meanwhile, which is in a slightly more comfortable cash position, will propose making "more symbolic moves" like cutting executive pay, the newspaper writes. Chrysler will admit it needs to merge.
The WSJ reports that GM was working through the night with its board, hammering out specifics of the plea it will make to Congress this time around. After the rough handling two weeks ago, the automaker is not taking any chances. It is even building in a contingency that it gets turned down. "At the same time, directors—unlike chief executive Rick Wagoner—are also insisting that all options stay on the table, including a Chapter 11 bankruptcy filing, if a bailout doesn't come through," the newspaper writes.
Not surprisingly, the outlook for GM's and Ford's overseas units looks to be getting more desperate. According to the Financial Times, the two automakers "have approached Sweden’s government about financial aid for their loss-making Saab and Volvo brands." The newspaper writes that the government has been mulling an aid package of roughly $248 million to devote to the recovery of the auto lines. Still, even if the aid comes through, Ford and GM are poised to sell the lines off to the highest bidder, the FT adds.
What's the point of having a powerful cartel if the members won't act in concert? That's the conundrum facing Saudi Arabia as it tries to persuade Iran and Venezuela to cut crude production in order to protect a new OPEC "fair price" of $75 a barrel. "OPEC has a spotty record when it comes to managing oil supplies to maintain a set price band. Lack of compliance with production cuts has been a core theme throughout the organization's 48-year history," writes the WSJ. This time, as during the major oil glut of the early 1980s, some OPEC members are so addicted to their own oil revenue that they are loath to turn off the taps. Nevertheless Saudi Arabia will attempt to install new production cuts when OPEC meets in Algeria in two weeks' time.
"Microsoft is in talks to acquire Yahoo’s online search business for $20 billion," the Times of London reported over the weekend. Only problem is that no other media organization has been able to confirm these talks and the WSJ's "All Things D" site quotes Ross Levinsohn, a former president of Fox Interactive Media (and a purported key player in the deal), dismissing the report as "total fiction."
While some deal between the two Web giants is still on the cards at some point, the move by top investor Carl Icahn to increase his Yahoo holdings last week "should be enough of a reason for there to be no Microsoft-Yahoo search deal imminent, given Icahn would be more than well aware of it and buying up almost seven million Yahoo shares—now at historic lows—only days ago would smack of insider trading," writes the WSJ.
Finally, ever wonder how lawmakers and Washington, D.C., bean-counters decide on just how big a number to affix to a federal stimulus package? The NYT this morning provides a bit of insight. Warning: It's a depressing read. The logic is straightforward enough. "The size of a possible stimulus plan rises as the economy contracts," the newspaper writes. This means that when the economy shrinks at a quicker rate than expected (the size of the economy is decreasing at a rate eight times faster than it was this summer, for example, the newspaper writes), the larger the stimulus package that is required to offset the contraction. The goal for policy-makers now is to generate a large enough stimulus package to achieve "zero growth."
This post was written by Bernhard Warner and Matthew Yeomans of The Big Money.
So far this season, we have seen a mixed bag of earnings. Although, one obvious trend we have noticed is that many companies are guiding expectations lower for the next quarter. Fortunately, earnings are light this week and actually only a few worth noting. So, for this week, we will take a look at some of the important economic indicators coming out over the next few days.
While earnings and market news are both important, economic data is considered a general measure of our system's financial stability. Even as many of these indicators are lagging, since they look back at the previous month, they can provide us a with good indication of where our economy may be heading. Some of the most important pieces of information include Gross Domestic Product, The Consumer Price Index, Producer Price Index, Consumer Sentiment and most importantly the Unemployment figures.
Typically these numbers are issued monthly and the market will usually only react to substantial deviations from expectations. In fact, if investors have already priced in a disappointing outcome, the market may be muted following the data release. Let’s take a look at earnings and indicators coming out this week, what the market is expecting and the general outlook.
Monday, December 1st
Construction spending is to be released today. It is defined as the dollar amount of residential, non-residential and public expenditures for new construction. In the current environment this indicator is worth noting as it may "tip the hat" of when the housing / lending crisis may turn around. If we get a hint of an increase in construction spending, it could suggest that the real estate decline is finally leveling off. As depicted in the chart, since the end of January 2006, the year over year change in construction spending has been in a sharp decline. This month the market is expecting another decline of -.9%. and until credit begins to thaw, we do not expect construction spending to significantly increase.
Tuesday, December 2nd
Sears Holdings is expected to report earnings today and analysts are looking for a loss of $0.50 per share vs. $0.01 per share seen in the year ago period. The past five quarters of earnings per share growth have been negative and this quarter should be no different. With an expectation of dismal holiday sales, Sears may continue to suffer into the next several quarters. What was one billed as a great opportunity to profit from a retail giant with massive real estate holdings has now turned into a monumental disappointment. Management is continuing to search for ways to turn it around and regain profitability in a time when it may be next to impossible. (See my warning - Stock Valuation Sears in Focus)
Recommendation: HOLD / Stock Scouter = 7
Wednesday, December 3rd
Employment data is probably the the most important piece of information we will need to digest this week - absent another bailout. The first report will be the Automatic Data Processing (ADP) National Employment Report. This is a measure of non-farm private employment to which ADP provides payroll services. Last month we saw a loss of 157,000 jobs and it is expected that this month the number to will swell to 173,000. Increased unemployment only worsens the situation we are currently facing and will surely be an urgent agenda item for President-Elect Barack Obama's economic team.
Del Monte Foods is expected to report $0.12 per share vs. $0.14 per share reported during the same period a year ago. Although Del Monte Foods has fallen more than 60% over the past year, the company may show some signs of life into the next few quarters. This is because commodity prices have fallen from their obscenely high levels reached during the summer and that turn may help to increase profit margins, helping to bring them back on track to increased profitability.
Recommendation: BUY / Stock Scouter = 10
Thursday, December 4
Initial claims will give us another peek into the United States employment situation. If past data is any indication of what the future will bring, we are in for a significant increase in the number of new claims. As seen in the chart below, initial claims have been on the rise and are now approaching record levels. Corporations are continuing to lay off workers in an effort to stem losses and we do not believe this release will provide any indication that the economy is improving.
Recent intervention by Treasury Secretary Henry Paulson to support mortgage backed securities may eventually benefit Toll Brothers, but it is probably too early to tell. As you may imagine, we are not too excited about the reckless spending that we have witnessed over the past few weeks as the hangover awaiting our economy may be nasty. Even as the housing market crumbles, homebuilders will continue to build. Watch today for Toll Brothers to report earnings which are expected to come in at a loss of $0.39 per share as compared to a loss of $0.52 from the previous year. Even as this is a 25% annual increase, sales continue to decline and earnings projections for 2009 are negative.
Recommendation: HOLD / Stock Scouter = 6
Friday, December 5th
Finally, Friday is here and it is a big day for economic data. The highly followed and well regarded unemployment data released by the Bureau of Labor Statistics is expected to show a loss of non-farm payrolls approaching 300,000 and the unemployment rate should rise to 6.8%. If this is true, it will be the highest level of unemployment we have seen since the early 1990’s. President-Elect Barack Obama has made it clear that he is ready to combat this issue and has already set plans in motion to rescue 2.5 million jobs. Any positive surprise on this data could send the markets higher considering the massive amount of stimulus the government has recently pumped into the system and the actions taken to stabilize markets. However, this is not likely though anything short of a disasterous number could be considered progress.
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The Real bailout cost? $7.4 trillionAndrew Horowitz is a money manager and the founder of Horowitz & Company. He is also the author of the bestselling book, The Disciplined Investor . Check out his latest investment idea or listen in as he hosts, The Disciplined Investor Podcast.
