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Showing posts from 2008

Auto Bailout vs. Bankruptcy

Here's the problem with bankruptcy: according to the best numbers I can find, legal and related fees for the UAL bankruptcy were approximately $300 million. Fees in the Enron bankruptcy were about $700 million. Fees for GM would certainly be in the billions. Unimaginable number of certified classes: sr. secured lenders, jr. secured, participants in revolver, unsecured, retirees, trade credit, dealers, spun-out parts manufacturers, each with lawyers and accountants.

So, those billions to legal fees have nothing to do with building better cars, becoming more efficient, funding retiree pensions and the like.

But the bailout option isn't much better. The unions will reluctantly play ball, dealer base will shrink and more managers will lose their jobs. But, what motivation do the retirees have to go along with anything? The only solution I see is for them to go back to work - but only get paid their pension benefit. And work might be washing cars in dealer lots...


As I posted here weeks ago - general agreement is emerging that the FASB/SEC's stuborn insistence on mark-to-market accounting, even if there is no market. (The FAS mandarins refused to consider the possibility that there could be a market freeze and no prices as they built their mathematical models.)

Well, widespread criticism now has a chance to get them to at least modify their position.

Louise Yamada

Louise Yamada is the doyenne of technical sotck analysts. She was recently on Bloomberg (available on the Bloomberg site) and fundamentally (ok - it is a pun) said that we are in a 13-16 year bear market. If I had followed Ms. Yamada's advice a few years ago, I would be a much richer man today.

I recommend that you watch the video.

I'm switching my 401(k) contributions to cash and near-cash investments until she declares the sructural bear market over.

So Who Wins?

Every recession plants the seeds for economic advantage in the future recovery.

In the very tough 1973-1974 recession, prices fell so low that it enabled the creation of the leveraged buyout industry. With many manufacturing companies in particular trading at 3-4 times cash flow, new market entrants like KKR, Forstmann Little and Dyson Kisner Moran came in and created gigantic wealth for themselves and early investors.

In the 1991-1992 downturn, engendered in part by the massive office space overbuilding funded by Savings and Loans (Resolution Trust Co, anyone?) made it possible for telcom and internet start-ups in Austin, San Jose, Northern VA, Boston's Route 128, Dallas, etc. to rent offices at a fraction of the cost had those communities not been overbuilt.

And the 2001-02 downturn gave us cheap fiber and bandwidth, and bargain-priced software to feed productivity gains in corporations everywhere.

So, where is the upside? At this moment, all that I can project with some confidenc…

Microsoft Stock Buyback

MSFT has announced a significant stock buyback - $40 billion as I recall.

In this economy, I view that as a big mistake. As stock prices plunge everywhere, the opportunity and flexibility afforded by a cash horde can't be overestimated.

Steve Ballmer - hold the cash buddy.

The most important job/investing rule

If you work for a company and the President, CEO or COO - especially if he is new to the company, says "we are going back to basics", update your resume' that day. Don't hesitate; begin networking for a new position, post on Monster/Hot Jobs/Career Builder, etc. as soon as you can prepare a competitive resume'. Your company is in big trouble and the leader most likely is clueless to the nuances of the market, competitors and internal capabilities.

If you own a stock and, in a presentation or earnings call, the CEO says "we are going back to basics", sell the stock, and give strong consideration to shorting it. Of course, by the time they are spouting that, the stock has probably already been pummeled.

Nub cigars

I ordered a sampler of the new, much-discussed and much-promoted Nub cigars.

From Oliva, the concept is that regular cigars have a sweet spot, generally in the middle, where it most richest and most flavorable. So, they attempted to develop short cigars (shorter than robustos) but rolled so that the entire cigar is the sweet spot.

I'm not too sure they succeeded. But I am sure that they are far stronger than I expected. Even the Cameroon wrapper, suposedly the mildest blend is one charged-up stick. I would only recommend to someone who likes them really, really strong...

Credit Crisis Exposed

Let's parse the credit crisis and explain what really happened rather than all the silly and illogical explanations bandied about.

There are actually multiple causes, not just simply one. Actually, we'll discover seven. Each type has its own backstory.

Start with Freddie and Fannie. While widespread fables attribute this to inadequate regulation, nothing could be further from the truth, or, to be direct, a dumber explanation. Fannie and Freddie were incredibly regulated - in fact, there was a regulator OFHEOthat had nothing to regulate but Fannie and Freddie. (As an aside, when you hear one of our outstaning elected officials say that this all happened because of inadequate oversight, just remember OFHEO. Your tax dollars were at work on oversight right there. Feeling better?)
Rather, F & F's demise, at enormous cost to the now-frequently-abused American taxpayer, was directly caused by a failure by the slimy gutless weasels we elected to run our government. F&F had…

My Dad - C. E. Morphis

Charles Eugene Morphis, 92, of Jonesboro, passed away on Monday August 18, 2008, at his home. He was born in Pocahontas TN on April 1, 1916, to Charles and Ida Morphis. Mr. Morphis was a manufacturer’s representative and habadasher with Langenburg Hat Company where he designed hats for stars such as Elvis, Charlie Daniels, Loretta Lynn among many others. He was a Mason and a former president of US Men's and Boy's Apparel Club. He was a sergeant in the Army and served in World War II and was awarded five battle stars. He was a proud patriot and a member of Walnut Street Baptist Church.

He leaves behind his two sons, Gene Morphis of Ambler PA and Gary Morphis of New Orleans LA; a daughter, Stephanie Wilbanks of Jonesboro; two brothers, Leonard Morphis of Selmer TN and Rayde Morphis of Pocahontas TN; two sisters, Maxine Firnhaber of Huntington IN and Sadie Foster of Pocahontas TN; seven grandchildren, Blane, Misty, Blake, Josalyn, Cree, Jillian and Dusty; and three great grandchil…

New links

A new conservative voice - Jake Bell - has joined the blogosphere with Jaxxe Ramblings. I'm going to label Jake a neocon - but you and he can judge and comment. He has posted his opening conservative manifesto.

And Russ Morphis, perhaps a touch less vociferous in his conservatism, but more than a touch more religious, has updated his site with pictures from his trip to Ecuador. He deserves your financial support.

IPOD Nano Freezing

How to unfreeze your IPOD nano.

OK - I'll accept that the IPOD series from Apple has been breakthrough technology. And Apple's persistance in continual improving the product has been impressive. However, these little gadgets aren't perfect, and the documentation isn't just inadequate, it is non-existent.

So, about half the time I'm on an airplane my IPOD freezes just before music starts to play. Here is what you do: hold the click button in the middle and press menu. You have to hold them for 10-12 seconds or longer. May take several attempts. But, eventually you will get the little Apple logo and it will reset.

Energy Policy

Much has been said and written over the last few months about energy independence as gasoline prices have starkly indicated how America has become a debtor nation, subject to the whims of the oil producing countries.
So what are the hallmarks of a energy policy that would deserve our support?

I submit that it should have four principles, it should:
-encourage every alternative.
-make a difference as fast as possible.
-depend upon private capital as much as possible rather than require funding from the over-stretched U.S. taxpayer.
-support free-market and price mechanisms.

Broad alternatives
To break our addiction to the crack cocaine of foreign oil, we are going to need to exploit all our energy options. Wind power has a number of advocates, and rapidly improving technology from blades to turbines. No government funding is really required; wind is finding investors. The Pickens' Plan deserves not only consideration, but quick action. Solar is moving along; is a long-time environment…

Bush - he's no conservative

In the ultimate final repudiation of the conservative movement, President Bush is leaving a $473 billion deficit - except that it is really at least $553 billion, since the Iraq and Afghanstan wars will cost at least $80 billion and, in the zany world of government accounting, those are not included.
Shortly after his first election, an editorial article in the Wall St. Journal called him a "big government conservative". I wish I could remember who wrote the piece. It stands out in my memory because there really isn't such a thing. Going back to the founding fathers, conservative thought has centered on small government; indeed, there were serious debates about maintaining a standing army because the risk to a republic was too high.
When President Lyndon Johnson supported the war in Viet Nam and the Great Society social programs, we called it guns and butter, and argued vehemently against it. Now that a so-called conservative has supported the exact same policy, our vo…

Obama: the Content-free candidate

Presidential Race #7

I had written McCain off.

His campaign has seemed dismal to me and not much of a message. Obama has been a rockstar campaigner (note Euro love fest tour).

However, the Democrats' stubborn clinging to an anti-oil, anti-anything practical concerning energy, policy may just be backfiring. We aren't so stupid as to believe drilling in Anwar and on the continental shelf means cheap gas forever; but it does mean we don't have to return to an agrarian society until clean coal, biomass, wind, and solar have critical mass. (I want to scream build nuclear power plants here but I'll likely be dead before the court cases would be settled).

The Obama campaign has been Marshall McLuhan based (the medium is the message) and therefor content-free. This may sound critical but it's not: content-free has prevailed over Biden, Clinton, Edwards, Dodd, etc. But it isn't so clear that it will continue to work against a real platform presented clearly and concisely.


Energy independence part 2

Beware the argument tactic of false choices. While it is really transparent, it is being used so frequently that someone must be convinced it is working. Example: Senator Shumer et al gave a press conference where they said they are going to continue to oppose offshore drilling because it detracts from real solutions like renewable energy.

No it doesn't

This is a false choice. We should pursue all the energy options. There are a number of solar companies, they've raised capital and generally on their way (although note environmental obstacles in previous post). I'm all for them. There are numerous investments in clean coal technology, some backed by the most successful venture capitalists ever. I hope they make it work. There are utilities that are seeking approval to build nuclear plants. They should be approved, and with legislation that restricts lawsuits so that plants can actually be built. Boone Pickens and others are building windmill farms. Good. Some of t…

Energy independence - it's hopeless

For a brief moment, I deluded myself into believing that our elected officials might take action and help make the U.S. more self-sufficient for energy. But recent developments have snapped me back to reality.

Environmentalism is the new religion, and it has either co-opted or swept all the old Western religions aside. (The Muslim world has yet to be converted). While Christianity has been banned from the U.S. classroom (as well as a large portion of Europe) young minds can be proselytized endlessly on preserving the environment - it is actually a core curriculum topic. Rachel Carson would be shocked to learn she created a movement that is likely to eclipse communism. And in what - a mere 46 years? It took hundreds of years for Christianity to spread across Europe.
The degree that organized Christian churches have been co-opted by this movement is equally impressive: note the propaganda, er...public service message by Al Sharpton and Pat Robertson (is it me, or does Robertson seem str…

Tony Snow RIP

I was a fan of Fox News Sunday from its earliest days. In part because there were real thinking conservatives on the panel, but equally important because it was civil discussion.

In a world of gotcha and wolfpack journalism, Tony Snow was the opposite. It was thoughtful civil discourse. I have nothing but admiration for the man: he always had a smile, he was never mean or nasty, and he wasn't ashamed of his faith.

May God bless his family.


Offshore drilling continued

Thanks to Michelle Malkin here is the voting list on the motion to allow offshore drilling:
Against (in straight party-line voting): Norman Dicks (WA), James Moran (VA), Maurice Hinchey (NY), John Oliver (MA), Alan Mollohan (WV), Tom Udall (NM), Ben Chandler (KY), Ed Pastor (AZ), and Dave Obey (WI), all Democrats.

For: Todd Tiahrt (KS), John Peterson (PA), Jo Ann Emerson (MO), Virgil Goode Jr. (VA), Ken Calvert (CA), and Jerry Lewis (CA), all Republicans.

This could have been an excellent issue for the Republicans in the fall, except that McCain is opposed to drilling in Anwar or opening up offshore drilling. Score one more for Obama, who may win this like Nixon beat McGovern if McCain continues to grow dumber (I'll comment in a different post about his view that the oil company profits are "obscene").

A key point is that the offshore part is really offshore: fifty to two hundred miles....

So, please join me in sending a personal letter to each of the individuals who voted fo…

Drilling for oil

To the astonishment of everyone I've spoken to, the House Subcommittee on Interior Appropriations voted to extend the ban on drilling for oil in areas that have been off-limits for over a decade.

To my even further astonishment, this seems to be more or less OK by McCain. (I wasn't even surprised that Obama's only view was that prices have gone up to fast rather than gradually - the environmentalists have embraced energy scarcity as a positive development...).

I'll publish a list of representatives voting for and against as soon as I can dig it out. I encourage you to write and congratulate the supporters and let the oponents know that they should reconsider.

Republican Party

Carly Fiorina is now Chair(person) of John McCain's campaign.

I've made a couple of modest donations to the campaign, and I probably will again. However, stop sending me those trumped-up phony surveys. If you want to know what I really think - or even care - send me a real survey. But not these made-up things supposed to rile me up: "Should we do everything we can to stop Democrats from weakening border security?"


We had the majority and a Republican President and you didn't do a damn thing for border security. You think I have no memory at all? The party got what it deserved - in fact what it worked hard for: it abandoned all its principles and as a result got thrown out.

Come up with a real plan you are prepared to go to the mat for and tell me about that. Don't give me a negative sell about how much worse the Democrats are going to be. Tell me about how much better you are going to be.

No more BS surveys.

energy independence

A friend of mine and I were talking about oil prices and the effects that imposed on the economy. I mentioned that I had sent letters to Senators and Congressmen beseeching them to streamline the process for commissioning nuclear plants. "Why nuclear" she inquired, "why not solar and wind?". Simple answer: the solar companies are doing fine on their own with new developments (thin film solar panels, etc.) making them more competitive, and the wind power folks are moving along and harder to stop (property laws give landowners - particularly in rural areas - a little more freedom of action). Nuclear, on the other hand, has been plagued by litigation from wide ranging groups including adjacent property owners, environmentalists, anti-growth groups, etc. Energy companies are now loath to even undertake development activities, given that they can expect 15 years or more of approval process and millions of dollars in legal fees. If we want to have power and reduce our d…


I had concluded early Sun. morning that I would sell my MSFT. I remained convinced that MSFT could spend $4 billion a year for the next ten years and take whatever market existed at that point from YHOO. So, in my view, an acquisition for $44 billion, a meaningless few thousand of which represents my MSFT stock position, was a giant waste.

I was pleasantly surprised - almost shocked really - to learn later on in the day than MSFT had called the whole thing off.

Steve B.: sometimes the best deals are the ones you don't make. This is one of those times.

A correction

I need to post a correction to my summary of Ed Rose's position on the election. In his words:
"Supporting Obama based on the fact that he is more likely to beat McCain whom I believe will destroy the Supreme Court (and the constitution) for decades.

I believe that while Clinton's Policies are probably slightly closer to McCain's in many ways, her Supreme Court picks will be much closer to Obama's in terms of being safely liberal. (i.e., not like Scalia who was recently quoted as saying "who ever said Torture was Punishment?")

So...First Choice: Anyone but McCain. So...Obama based on current thinking in terms of who can beat him...but also support Hillary.

I think the (R)s have done quite enough for the country for now. "

So, my interpretation would be that he is taking more of a pragmatic view than I concluded in my original post...

I'll post on my view on the economy shortly - which Ed and I discussed as well. He is more confident than I am in …

Noemie Emery's Weekly Standard Piece

Stay with me on this one: I'm going to bounch around a bit. First, for political junkies, Noemie Emery's ground breaking article on Hillary Clinton is a must read: follow this: Weekly Standard

This is a bit of a fascinating conincidence. I was talking to Ed Rose, CEO of Open Channel Solutions, overall smart guy and I think fairly described as a liberal. Ed surprised me by saying he was supporting Obama even though he wasn't sufficiently ready to "drive the bus", in part because he thought Hillary would be too much like McCain. (To my conservative friends, take a diffibulator minute). Part of his argument is that one of the things that matters most is the appointment of Supreme Court justices, and her appointees would be too moderate.

Since I voted for Bush last time largely for the same reason (us deficit hawks having no where else to go even though we've been thoroughly dissed) his logic was persuasive. With her "obliterate" speech she is clea…

No Steve No

To:Bill Gates and Steve Ballmer:
Please, please don't spend my money on Yahoo. Spend $4 billion per year for the next 10 years building something new and better. This has to now be an ego deal, not an economic deal. If you withdraw the bid, YHOO is a $15 stock.

You are too smart for this. Many times the best deals are the ones you don't make. This is one of those times. Don't spend my money on this.


PA Primary Retrospective

My estimates for Ms. Clinton's margin of victory were (slightly) optimisitc. I was at >10%. However, clearly strong enough performance to keep her comfortably in the race.

Next prediction - she wins Indiana; finishes within 3 points in NC. Heading for an interesting convention for a change. The Dems shouldn't be worried about that - will create much more interest in the convention, higher ratings, etc.

While I'm still the lonely conservative, I still think it is the democratic party's election to lose...

PA primary

The networks have now called the primary for Senator Clinton. So the only thing that remains is the margin. I'm still betting on an over 10 point victory.....prolonging the race, perhaps into the convention.

We'll know by morning.

She took a surprisingly belicose tone towards Iran this AM. Fine by me.

Our biggest foreign policy mistake of the last 25 years was not selling all the weapons our arms manufacturers could make to both sides when Iraq attacked Iran a few years ago.....but I digress from the primary.

Much more to come on this topic.

Stock chart links

It used to be easy to lind my blog posts to Stock

Recently it has been a mess- and the results are something difficult to link like the following post. If someone has a simple way to do it, please give me a comment....

Wal*Mart Breakout #2?

Wal*Mart is now trading at levels last seen in 2004.

Despite today's sell-off, Wal*Mart traded up a few more cents. My <"....">chart shows the latest technicals on a weekly chart. Next resistance at $58 and $60. However, with the broader indexes clearly now rangebound, it isn't clear that WMT can make much more of a move.

As always with any stock pick, do your own diligence

Pennsylvania Primary update

I'm guessing that Senator Obama has hurt himself worse than generally thought with the bitter and clinging mess.

I agree with his comment today that last night's debates wasted a lot of time at the start on relatively trivial issues. Nonetheless, my guess it that the real Obama was revealed in SF. He is a Harvard Law grad; he doesn't make any comments casually and choses his words carefully. That was real Barak recorded.

Pennsylvania Primary

While I'm now a registered PA voter, I can't think of myself as a Pennsylvanian. Probably has something to do with the number of places we've lived and the intensity of my current position; we haven't really done much to take advantage of the local area.
But Pennsylvanians will play a much larger role in selecting the Democratic nominee, and probably the next President, than anyone imagined just 90 days ago.
The recent gaffe by Senator Obama, combined with the widespread reporting of the comments by his minister, may give Senator Clinton a charge. I don't think the religious among us - whether small town or not - are going to feel too good that he thinks they cling to their religious beliefs do to bitterness. I'm far from an expert in this area, but it seems to me that Philadelphia has a large Catholic community. They probably don't feel particularly bitter either.
And most people I know who own guns own them because: they like to hunt; they like to shoot; th…

New smoothie recipe

For those of you, like me, with some cholestorol, blood pressure and the like problems, I've created my best new smoothie recipe yet.

One cup frozen blueberries ( I use the Target brand; they are just fine), one cup orange juice, one cup apple juice (the Mott's Natural Fresh Pressed works), one banana, a half cup of pineapple (the little plastic cups in the grocery fresh fruit section are perfect), one spoon of sugar and a cup of ice.

Blend until smooth.

China and Tibet

Why would China pick now bludgeon the Buddhists?

It simply makes no sense - one can only conclude that, like the old USSR in the summer on 1968, the Chinese government just doesn't care about world opinion. So to hell with the rest of the world, and to hell with the Tibetians.

If you stop and think about it, China's obsession with Tibet doesn't make any sense. It isn't like they had some potent army poised to invade China. It is a poor, isolated, largely mountainous place.

Absolutely nothing about it makes sense.

National Basketball Championship

I've put my grief behind me. The Memphis Tigers gave a fantastic account of themselves this year, winning more games than any other college team ever. The loss Monday night was painful, made more so by the way that it happened, with at least 5 chances to win it all. But it still can't hide a great season.

My congratulations to the players and coaches.

The best talent frequently doesn't win the tournament. I don't know if Memphis is better than Kansas from a talent perspective; I knew the teams were evenly matched. So, it wasn't an NC State vs. Houston, Villanova over Georgetown or Duke over UNLV. And one must recognize the Kansas players for making great clutch plays to fuel a very late rally.

Good job John Calipari, Derrick, Joey, Antonio, Robert, Chris as well as the bench players (subs or second team doesn't do them justice). I hope everyone who isn't a senior returns - but I won't blame you if you accept the outrageous NBA money....

Proxy Statements v2

My war on email proxies continues: Reynolds American: I just logged on to and requested a paper set of documents to be mailed to me. When they come, I'm voting against management. And it cost you for both proxyvote and the mailing cost. Got the message?

Final Four

One more time I have to congratulate John Calipari and the University of Memphis Tigers. A great performance, totaling controlling UCLA. Coach Cal obviously has them peaking at the right time. For us alumni and long time supporters it would be nice to see Chris Douglas Roberts and Derrick Rose return for one more season and attempt to match Florida's back-to-back wins. But, the call of the NBA is strong, so we'll see.

North Carolina deserved to lose simply because of Roy Williams' tie. Here is a guy who has got to be making $3 million a year. Roy: buy a Hermes, Kiton, a Zegna, something, but lose that thing.

Gates, Ballmer, Microsoft and Yahoo

MSFT leaked that they might pull its $40 billion offer for YHOO. Please! Does anyone think that MSFT shareholders are getting a good deal at that price?
Couldn't MSFT make MSN competitive if it spent $4 billion per year for the next 10 years?

FD - I own both stocks - I've held MSFT for a long time, and am very disappointed in this deal and the reduction in share price it created. And, thru the Legg Mason Value Trust, I own YHOO. Bill Miller, investment guru who runs the Value Trust, has been calling for a price increase from MSFT. Bill, MSFT is already paying too much....

Mssrs. Gates and Ballmer: pull the offer. YHOO goes to $15 at that point, so if you really have to waste shareholder money, at least waste less.....

Home builder stocks v2

OK - my homebuilder stock picks a few months ago was the single worst timing call ever for me. I toyed with adding to my position - which I should have done, but chickened out - I thought (and am still concerned) that one or more of my holdings could have gone bankrupt....

After the recent run-up, I'm still below my entry, but no longer gasping for oxygen. At least one is close to my purchase price -but it was here not too long ago and retreated. The better technical indicator is that two of my three homebuilders (HOV, CTX, KBH) are above both their 50 day and 200 day moving average, and weren't the last time they got close to my entries.

Given the snapback, I'll be happy with some sideways action for a while, just as long as we don't slip back

Proxy Statements

OK - Simple rant: if you send me one of those little forms to vote my proxy online and not a real paper proxy, I'm voting against management. I know I don't own enough shares to matter to any company I own stock in - but I might someday - so lookout.

I want an old-fashioned paper printeed proxy. I can carry them on a trip to read. I can take it out on my patio. I can make notes. If I have to log on to order it digitally, I'm going to do so, and then, when the paper copy comes I'm voting against management on every issue, and with even the most ridiculous, insipid gadfly resolutions.

You were warned.

Why the Republicans Should Support a Tax Increase

Yes, that's right - the Republicans should support a tax increase.

Why? First, we are getting young men and women badly injured in battle, and when they return,they should get the finest medical attention available anywhere, period. And we now know that some of the VA hospitals are second rate. That is unacceptable, and we should be prepared to pay more in taxes so that our fighting personnel get the best.

Second, the dollar is quickly becoming a trash currency. When the Euro was at 8- cents, the dollar was likely overvalued. But now that the Euro has ripped through $1.50 and climbing, our currency is resembling the peso of the seventies. The deficits don't matter crowd has been proven decisively wrong; a key reason the dollar has sunk is eight years of massive spending higher than tax revenue. Since Congress and the Administration have proven to be spineless on spending restraint, we must raise taxes to begin to pay the bill. Otherwise, the dollar continues to sink, oil prices … greed

The NCAA needs to tame its greed.

First, by insisting that all the other logos be displaced by their oversize greased monstrosity on the arena floors, they jepordized the health of numerous players who were sliding on the jumbo decal.

Second, they are shifting from the great basketball facilities throughout the U.S. - good enought say for the Mavericks or the Celtics, to makeshift arenas in football fields where one needs birdwatcher binoculars to see the floor.

Don't be a slave to the last $500,000 in ticket revenue; go back to facilities that seat a mere 20,000....

John Calipari

Congratulations to Coach John Calipari and the University of Memphis Tigers. He has the team peaking at the right time, with very impressive performances Friday night and Sunday.

If anyone has four extra tickets, I'm more than willing to pay to go to the Final Four....

Wal*Mart Breakout?

As you'll see on the chart link, Wal*Mart has been in a trading range for years. I've been a long-time holder of Wal*Mart - which hasn't be rewarding in a long time. During the years that Wal*Mart stock has been stuck, it has added dozens of billions in revenue and opened hundreds of stores in China.

Obviously, like most companies, it was overvalued in 2000, but while some have recovered to 2000 levels, Wal*Mart still trails.

The first chart shows the trading pattern with a defined trading channel....actually enough to short at $50 and cover in the lower 40's....the question is did the company breakout over the last few days? The penetration of $50 was done on good volume (note on the lower part of the chart) - an excellent technical indicator. From a fundie viewpoint, the company report positive - if small - same store sales for the Dec. and Jan. time periods while arch-rival Target was negative. And some old retail contacts tell me that Target store managers are u…

In Defense of Senator John McCain

The conservative talk show hosts - with the exception of Bill Bennett - have been excoriating John McCain.

A summary comment might be that they can't imagine how any Ronald Regan style conservative could possibly support McCain. Let's examine some of their complaints.

Sean Hannity, sounding like a paid political consultant instead of a radio and television personality, whines that McCain should have criticized Nancy Pelosi et al for their failure to support the troops fully, as opposed to criticizing Donald Rumsfield. This complaint would be risible except that is ineffectual. Let's reflect on what transpired. General Tommy Franks and Don Rumsfield had an impressive strategy for destroying the Iraqi forces and capturing Bagdad. From that point on, however, Rumsfield's performance deteriorated. Highly regarded General Anthony Zinni told everyone that holding the ground while rebuilding would take a minimum of 300,000 troops. Rummy wasn't having any of that, and Zinni …

Fred Thompson

Watching the Democrat primary in SC, I'll still disappointed that Fred dropped out. While he staked too much on SC, and I'm sure the campaign war chest was empty, so is Huckabee's, and likely McCain's as well. So, he might have made a dent in FL, where I sense Giuliani's campaign is sinking.

My guess: two man race between McCain and Romney after FL.

If Fred is interested (after all, Law and Order probably pays much better than government service) he could be Secretary of State, or head of Homeland Security. Of course Giuliani would be a strong Homeland Security head as well.

Bank of America - preferred stock

Bank of America joined the group of banks hosing existing shareholders with a mammoth - $12 billion- preferred stock issuance. With one $6 billion tranche paying a dividend effectively yielding 8% and the other $6 billion yielding 7.25% and some conversion features, us long-time common holders should expect slower dividend growth.

I actually think Ken Lewis is a good CEO and generally has done a good job. However, somewhere B of A started lowering its standards, or holding paper with poorly evaluated risk. We can only hope that a market eventually develops for the CDO's, CLO's or whatever toxic paper is on their balance sheet, and they reverse some of the write-offs.

Romney/Thompson dream ticket?

The role of Fred Thompson in yesterday's SC primary is as murky as his next step.

Did he divide the religious vote and thereby hand Huckabee a loss? Or would those votes, had he not been there, have gone elsewhere? My instinct is that more of those votes would have gone to Romney or McCain than to Huckabee. Fred comes across to me as the thinking person's conservative: thoughtful on positions, a sense of history, a Federalist, serious about the war on terror and prepared to take the long view on it. His addresses have content, not sound bites - which may, unfortunately, be a drawback in 2008.

Mitt is quickly seizing the stage as the most knowledgeable in the field on economics, growth and job creation. With a war still consuming dozens of billions, it isn't clear that the race will be won on voters' views of candidates job creation prowess. However, he gives off as much energy as Fred seems to absorb - Mitt's electron shell could power Fred.

So, Mitt may be drawing…

Zale Corp Update

The new CEO Neil Goldsmith at Zale must be wondering if he made the right decision. Richard Breeden's hedge fund Breeden Partners has amassed ownership of almost 18% of the company. Despite that buying supporting the stock, the price has dropped so severly I'm having a hard time drawing support lines on the chart ( click here for the Zale stock chart ).

I have felt that the company has been badly undermanaged for years and the board somewhere between asleep and derelict. With the collapse of the debt markets, the private equity guys are temporarily on the sidelines (but lenders will eventually emerge just like robins in the spring, but it may be a few years before they write many "covenant lite" commercial loans...). So, only strategic buyers and hedgies with a lot of cash are in the game - so they may get ZLC on the cheap....

South Carolina Primary

I just looked at the poll summary at RealClearPolitics . For those of us who think Fred Thompson is a strong candidate, the news isn't good. In every poll they list he is third or fourth. It is an interesting situation, and points out the difficulty in attempting serious dialog in an MTV environment. Mr. Thompson has been a strong voice in the war on terror, has a generally conservative record on spending, learned the risks of hubris and importance of keeping government small as a member of the Watergate team, and has a states' rights bent.

He clearly didn't leverage his early poll advantage, but that shouldn't be a fatal error. His speeches aren't in sound bites, and his gravitas shows on the campaign. But, the voters seem to prefer conservatism light....

I'll be watching the election results tonight to see if anything changes. I fear anything less than a second place finish might signal the end of his campaign.

The Canon

I just completed The Canon by Natalie Angier . It is a wide-ranging report on the developments in science, including molecular biology, geology, astronomy, chemistry and evolutionary biology, with some additional chapters on statistics and the scientific method.

It is excellent and I recommend it unconditionally. Her use of words, clever puns and phraseology is delightful, and bring humor and a spark to what could be dull subject matter. And she works at making the information understandable, if not to everyman, at least to the reasonably educated reader.

Her defense of evolution is a little lengthy and pedantic, presumably as a felt need to respond to the Creationist movement. Other than that one complaint, it is a fun read in addition to be highly informative. Grab yourself a copy and catch up on everything you've missed since your last science class.

Primary calendar

For you political junkies, the NH primary is Jan. 8, Michigan is Jan. 15, Nevada and SC (Repbulican) is the 19th. Note that the Democratic SC primary is the 29th. Also on the 29th is FL. On Feb 5th, there are 16 joint - e.g. Democratic and Republican - primaries as well as a handfull of primaries that are one or the other.

I'm hoping that the contest is serious a least until Feb 5. Having this thing wrapped after three or four relatively small states makes no sense.

FD: Pam and I made contributions today to two candidates (each of us could support the other if our first choice doesn't make it).

I encourage you to give to the candidate of your choice - particularly if it is one of the lesser funded ones-so they can get their message out.

John Edwards update

The talking heads are concluding that the Edwards campaign is over - projecting the Iowa results and saying that he bet everything on Iowa, lost and is out of funds.

While, or probably since, I think of Edwards as the most dangerous candidate, this isn't too disappointing to me. However, never underestimate the wealth of the trial lawyer community. After all, they have bankrupted over 50 companies with asbestos claims. Throwing in a couple of hundred mil wouldn't be a challenge for that crowd....

Iowa Caucuses

CNN has called Iowa for Obama and Huckabee. Thereby the Iowans have selected the two least qualified candidates running.

Let's hope that the election isn't over by the time NH is in, so that some states with larger populations get a chance to weigh in.

ZLC update

Betsy Burton is (apparently unceremoniously) out at Zale, while Neil Goldsmith, formerly of Children's Place, is in. Clearly Zale needs major help (see stock chart link below). Whether Mr. Goldsmith is up to the task remains to be seen. His resume' has too much department stores (the business of the past) and just a little specialty biz. In addition to a $925K base, Goldsmith got a tidy $800K signing bonus. Surprisingly, I can't find anything on Burton's package - I'm sure she got something as a going away present...

One must say, however, that the Zale board finally realized it had to do something as it watched steady deterioration in performance, earnings and shareholder value.

Presidential candidate John Edwards

In the January issue of Conde Nast Portfolio, writer Matthew Cooper takes the position that former Senator and Presidential candidate John Edwards is actually less liberal and more accomodating to business than his speeches would indicate.

Sorry Matt, I don't buy it.

He has repeated the "two Americas" speech too often to retreat if elected, and he'll be too beholden to his trial lawyer confrere's to give any breaks to business.

I say take the man at his word.

Benazir Bhutto

In a particularly astonishing bit of news, we've learned that no autopsy was performed on Ms. Bhutto's remains.

In a world of conspiracy theories, I would have thought that the investigation of any assasination would learn from America's experience with President Kennedy, and be painstakingly thorough, with thousands of photographs and peer reveiws by the world's best pathologists.

Instead, no autopsy. Weird, shocking, astonishing. In an area of the world where grudges are kept for centuries, this sets up 500 years of mistrust, suspicion, martrydom, coups, and revenge.