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Parsing The Fed

The WSJ notes the differences between today's Fed statement and that of December's:

"THE FED'S STATEMENTS reflect how the members of the central bank's Federal Open Market Committee perceive the economy. The slightest changes are scrutinized for clues about where interest rates may be headed. The Jan. 31 statement announced that the Fed was keeping rates steady at 5.25%, its fifth pause in a row after 17 increases in 17 meetings. The Fed's language reflected what it sees as a pickup in the economy, but reiterated that any rate increases will depend on new data."

Click below to see the fully parsed statement:

Sources:

Federal Open Market Committee
January 31, 2007
http://www.federalreserve.gov/boarddocs/press/monetary/2007/20070131/default.htm

Fed Holds Again
PARSING THE FED
Wednesday, Jan. 31, 2007
http://online.wsj.com/public/resources/documents/info-fedparse0701.html

Wednesday, January 31, 2007 | 06:15 PM | Permalink | Comments (8) | TrackBack (0)
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Mac Question

I have a Dell in the office, and at home, I have a G5 iMac -- ita about 2 years old, and it is the pre-Intel line (Motorola chip), with a 1.5G of ram.

Anytime I "push it" -- run a lot of apps at once, or any video or iTunes music, the internal fan spools up. It sounds like a 747 at JFK waiting for takeoff clearance. (Safari is an entirely different disaster, generating a spinning beach ball whenever I have a few windows open).

Its been like that since day one, and ts beginning to drive me a bit batty . . .

Any ideas about how easy it is to swap this out? Is this an ordeal, or can I do it myself (I've swapped ram and hard drives in the past)

Wednesday, January 31, 2007 | 12:45 PM | Permalink | Comments (24) | TrackBack (0)
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DJIA without a 2% One Day Decline

I have been meaning to post this since December, but never got around to it:  We're now at 930 or so trading days.

Courtesy of Birinyi Associates

Wednesday, January 31, 2007 | 10:30 AM | Permalink | Comments (34) | TrackBack (0)
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Busy Day!

Strap yourselves in:  We have quite a busy day ahead:

MBA Purchase Applications
7:00ET

ADP Employment Report
8:15ET

Employment Cost Index
8:30ET

GDP (advance)
8:30ET

Construction Spending
  10:00ET

NAPM-Chicago

  10:00ET        

EIA Petroleum Status Report
  10:30ET

FOMC Announcement
2:15ET

Farm Prices
3:00ET  

And a slew of earnings today, including Google after the close .

                                                   

via econoday

Wednesday, January 31, 2007 | 07:30 AM | Permalink | Comments (26) | TrackBack (0)
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Cash No Longer Trash?

It looks like we are going to get one of those "Sit around and wait for the FOMC" days. While we await the likely "Nothin' Done" verdict, it may be a good time to revisit an overlooked asset class:

Cash.

Currently, you can get near 5% (risk free principle) for cash. For many investors, that is an attractive alternative to risk in equities and long term commitments of bonds.

Note that these rates are not fixed, and may very well be appreciably lower in the event the Fed begins cutting (Best guess, later 2H, most likely). The primary risk of cash is missing the opportunity to lock in a higher rate if that happens. The flipside is CD rates will also go higher if the Fed tightens further.

Today's Journal has an article about the very subject: Interest-Rate Outlook Adds Luster to Cash. Here's a quick excerpt:

"Cash is regaining some of its sparkle. With the Federal Reserve widely expected to leave short-term rates unchanged today -- and well into the future -- many financial planners are recommending that clients put their extra money into short-term securities and high-yielding savings accounts to boost their returns.

That's a shift from last fall, when money managers were moving into longer-term investments to lock in still-favorable yields. Banks, too, are beginning to change course. After trimming yields on cash accounts last fall, some banks are bumping up rates again to lure new deposits.

Earlier this week, for example, HSBC Holdings PLC's online bank unit, HSBC Direct, boosted the promotional rate on its online savings account to 6% on new deposits until the end of April, from 5.05%.

Another advantage of moving to more-liquid investments: Doing so can give you the flexibility to quickly move into higher-yielding securities if and when interest rates start to move higher.

A raft of stronger-than-expected economic data and shifting rate expectations are spurring the move toward cash. Oil and gas prices have retreated, easing concerns over a slowdown in consumer spending. Sales of new homes increased in December for a second consecutive month, raising hopes that the worst of the housing downturn could be coming to an end. Meanwhile, the unemployment rate is still relatively low, and the manufacturing sector is proving to be healthier than expected."

Source:
Interest-Rate Outlook Adds Luster to Cash
With Fed Expected to Sit Tight, Financial Planners Steer
Clients to Short-Term CDs, High-Yield Savings Accounts
JANE J. KIM
WSJ, January 31, 2007; Page D1
http://online.wsj.com/article/SB117020547609893037.html

Wednesday, January 31, 2007 | 07:13 AM | Permalink | Comments (6) | TrackBack (0)
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Is Apple Setting CD Prices?

Last week, we noted that the Top 5 Amazon Music Sellers Are Under $10. (You can see their Bestsellers here and the sale junk here).

Now, we've long lamented the recording industry's stubborn refusal to be more price competitive with other forms of entertainment has hurt sales. The unit sales of discs have suffered from competition with DVDs, satellite radio, multiplayer games, blogging, and the internet in general.

A friend in the industry agrees that price has become key. He has an important position in the biz, and he anonymously explains what has been motivating these price cuts: Apple iTunes. The 99 cent song and the $10 album is the prime driver of the physical CD price cuts.

Read on:

The biggest thing driving prices to $9.99 is iTunes. Physical retailers are pressuring the labels downward on price (of course, Wal-Mart is the biggest culprit) because they don't want to be undercut by iTunes 9.99 on all single albums.  We're rapidly moving to a 9.99 world on the big sellers (the ones stocked in Target and Wal-Mart and Best Buy).

To accomplish this, I am told, particularly on new releases, the labels are doing what they historically did in the physical world and buying into "retail" programs -- in essence, paying for price and positioning or other marketing tools on Amazon by giving them functional breaks.  And you'll note that 3 of the four examples you cite are EMI releases (CBR, Norah, Beatles).  EMI is in such bad shape, they are doing whatever they can to move stuff.  And with Corrine's appearance on Oprah and with Norah out this week, they are pulling out all the stops to make these records big stories (CBR went from 26 to I think 4 on the chart, mostly as a result of Oprah).  The hope is that they can then go back up to normal price later with a "must-have" product.

The Shins record is on Sub-Pop so they likely have a lower suggested retail price anyway to begin with (probably $13.98) so it's not really that big a discount for an indie (likely only 10% off normal wholesale to get it down). Now Regina Spektor is a more interesting case.  She's basically an unknown artist and they're trying to get some traction by giving the record away (and they're doing this more and more on new/unknown artists).  So yes, there is pricing pressure, caused mostly by the success of iTunes and the falling physical sales market.  Without iTunes, the downward pressure would be substantially less.

I find it fascinating that all of the other economic competition to CDs we have mentioned -- DVDs, multiplayer games, internet, etc. have been unable to force the industry to lower prices, and so they have lost unit sales.  But iTunes, in the industry's own space, couldn't be ignored.

Great stuff, G. Thanks for the insight.

Tuesday, January 30, 2007 | 07:30 PM | Permalink | Comments (8) | TrackBack (3)
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WSJ Video

Of all the print media's dabblings with video, I find the WSJ/Barron's has done the best job technologically. The CNBC video feed can be nightmarish in its reliability and bandwidth consumption, Bloomberg uses WMP (blecch), and the NYT seems sometimes flash-based and sometimes WMV.

Whoever selected this system (Bill G.?) did it right. It works technically well -- much better than I've seen the competition do.

As to the question of when the entire model will be profitible, I assume this is a long term bet. Dow Jones, for example, has Marketwatch, Barron's and WSJ video, and they are recording and hosting a lot of video amongst the 3. It is really a bet on the future -- against the cable cos, but in favor of internet properties that are hosting/moving all this video around. The companies in this space are betting that eventually, much of video consumption -- be it on TV or on iPod like devices -- will be Net based.

Tuesday, January 30, 2007 | 02:30 PM | Permalink | Comments (0) | TrackBack (0)
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Days Since a 2% Decline

Instructive chart via Tickersense: It Has Been 928 930 days since the S&P 500 had a one-day 2% Decline. They also note that "the Dow Industrials have not had a 2% one-day rally in more than 500 trading days, either.” 

Jim Bianco adds: “Not only has the S&P 500 gone almost four years without a 2% down day, it has been seven months since it has corrected 2% at all!  This is the second-longest such period in 53 years.”

 

I frequently compare these markets to the last secular Bear Market, from 1968-1982. Note the cluster of these long no 2% corrections in that period also.   

Michael Panzner notes that "while the S&P 500 has not had a one-day sell-off of more than 2% since a 2.49% slide on 5/19/03 (930 calendar days ago), there have been four 2%+ rallies over that period."

Date S&P move
======= ========
6/29/06 +2.16%
6/15/06 +2.12%
10/1/03 +2.23%
6/16/03 +2.24%

These are indeed interesting times . . .

Tuesday, January 30, 2007 | 09:45 AM | Permalink | Comments (18) | TrackBack (0)
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Pundit Pile-on: NAR's David Lerah

Last week, we noted the absurdity of the housing commentary by the oft hallucinatory David Lereah (Existing Home Sales Are Fantastic!). It was a pundit pile-on: Marketbeat compared Lerah to Baghdad Bob, Minyanville noted "Existing-Home Sales Continuing to Stabilize In Terms of Plummeting." 

But you may have missed (it was late in the day) the biggest takedown of the lot: Marketwatch's Rex Nutting went postal on Lereah. Not via clever or snarky language (the way the rest of us hacks did), but with actual data -- and even more damning, with Lerah's own words.

Nutting writes: "Here's what Lereah was saying throughout 2006 and into 2007, and what the market was doing:"

January 2006

Lereah's forecast: "The market is in the process of normalization."

Actual sales: Fourth-quarter sales fell at an annual rate of 12.6% to 6.94 million annualized.

Lereah's post-mortem: "The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead."

April 2006

Lereah's forecast: "Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau."

Actual sales: First-quarter sales fell at an annual rate of 8.6%  to 6.79 million.

Lereah's post-mortem: "This is additional evidence that we're experiencing a soft landing."

July 2006
Lereah's forecast: "The market should even out just below present levels."

Actual sales: Second-quarter sales fell at an annual rate of 6% to 6.69 million. 

Lereah's post-mortem: "The market is stabilizing."

October 2006

Lereah's forecast: "We expect sales activity to pick up early next year."

Actual sales: Third-quarter sales fell at an annual rate of 22.2% to 6.28 million.

Lereah's post-mortem: "This is likely the trough in sales."

January 2007

Lereah's forecast: "The good news is that the steady improvement in sales will support price appreciation moving forward."

Actual sales: Fourth-quarter sales fell at an annual rate of 2.3% to 6.24 million.

Lereah's post-mortem: "It appears we have established a bottom."

>

Source:
Realtors' economist stayed sunny all year
Commentary: David Lereah saw bottom in first quarter, second quarter ...
Rex Nutting
MarketWatch, 5:31 PM ET Jan 25, 2007
http://tinyurl.com/2kdog5

Tuesday, January 30, 2007 | 05:30 AM | Permalink | Comments (17) | TrackBack (0)
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Most Popular Finance Blogs

I noticed earlier this morning that tons-o-traffic were heading this way via Valuewiki. It turns out they did an analysis of the  Most Popular Finance Blogs.

We fared pretty well, coming in after Herb and Seeking Alpha. According to Alexa, that makes us the highest trafficked, non MSM, non aggregator blog.

>

Here's their top 20:

1 blogs.marketwatch.com/greenberg TR: 53,449 (166 links from 63 blogs) A: 577
2 Seekingassholes.comTR: 2,734 (3,859 links from 683 blogs)  A: 5161
3 bigpicture.typepad.com/ TR: Unk A: 18,500
4 BloggingStocks.com TR: 595 (55,276 links from 1,558 blogs)  A: 18,588
5 www.fatpitchfinancials.com/links/ TR: 18,407 (838 links from 177 blogs) A: 86,000
6 TraderMike.net TR: 6,891 (2,542 links from 377 blogs) A: 96,000
7 247wallst.blogspot.com TR: 19,067 (3,381 links from 170 blogs) A: 100,000
8 www.howardlindzon.com/ TR: Unk A: 151,800
9 investorgeeks.com/ TR: 27,742 (411 links from 118 blogs) A: 210,000
10 tickersense.typepad.com/ TR: 45,277 (563 links from 74 blogs) A: 223,322
11 BillCara.com TR: 15,637 (840 links from 201 blogs) A: 226,231
12 antandsons.com/wordonthestreet.html TR:703,564 (10 links from 5 blogs) A:249,040
13 Footnoted.org TR: 12,952 (792 links from 243 blogs)  A: 250,000
14 jeffmatthewsisnotmakingthisup.blogspot.com/ TR: Unk A: 253,941
15 KirkReport.com TR: 105,571 (99 links from 32 blogs) A: 255,763
16 Gannononinvesting.com TR: Unk A: 258,880
17 randomroger.blogspot.com/ TR: 24,590 (891 links from 133 blogs) A: 281,838
18 stockmarketbeat.com/blog1/ TR: 41,307 (2,342 links from 81 blogs) A: 283,368
19 Maoxian.com TR: 29,668 (442 links from 109 blogs)  A: 295,000
20 www.crossingwallstreet.com/links.html

>

This reminds me of a few things I need to do:

• I can't seem to get Technorati's Claim Your Blog feature to work for the Big Picture (it works fine for essays & effluvia);

• I should update the "What's this blog about?" post; I suspect many readers are relatively new here  and may need some explnation as to what's this all about.

• Lastly, I need to create a disclosure doc to answer all of the usual questions I seem to get about stock positions, blog payola, editing, posting comments etc. 

>

Thanks Jon and Zac!

Monday, January 29, 2007 | 02:30 PM | Permalink | Comments (12)
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December 2008

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