The Madoff disaster could not have been the only situation where a money management firm took advantage of suckers. The market has been too good over the last five years, and hedge funds have been too spectacular.
The SEC, finally stirred into doing its job, is beginning to uncover more unsavory activity.
The incoming Obama administration faces any number of sizable challenges. One thing the President-elect proposes is to spend $150 billion "over the next ten years to catalyze private efforts to build a clean energy future." That money is supposed to help create 5 million new jobs.
The new administration also proposes to increase the amount of electricity that comes from renewable sources from 10% in 2012 to 25% by 2025. Another laudable goal.
Retail stocks are in rally mode despite forecasts that a large number of stock chains could file for bankruptcy this year and more than 70,000 individual stores could close.
The move up may be due to a sense of relief that an economic stimulus package could help the economy later this year. The idea that retail would benefit from this in the near future is far-fetched. Unemployment, which often lags consumer confidence and GDP, could still move to 10% later this year.
Over the last five days, shares of Macy’s (M) are up 20%.
Following weak manufacturing data from Russia, China, and India, the Institute for Supply Management announced that US manufacturing measured by its PMI dropped sharply in December to 32.4 from 36.2 in November.
New orders dropped more sharply to 22.7, down 5.2 points.
The weakest sectors included textiles, paper products, transportation equipment, computer products, and chemical.
Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) won a $224 million bet that Florida would escape major damage from hurricanes this season. A few years ago, when hurricanes did hit the gulf coast, Berkshire’s bets were not profitable that year.
Dennis MacKee, a spokesman for the Florida’s State Board of Administration told Bloomberg the option agreement would have compelled Buffett to buy $4 billion of bonds to finance the storm recovery is set to expire today. Earlier Florida paid Buffett’s Berkshire Hathaway $224 million in return for his commitment to buy the debt if needed.
Almost every bit of news about the retail industry has been bad since the third quarter of last year. Some analysts believe that 72,000 stores could close in the US during the first half of 2009 and that several retail firms could go bankrupt.
Wal-Mart (WMT) has been the exception to that talk. Its same-store sales have been up most of the last six months. The company’s stock was only one of two components of the DJIA which moved higher in 2008.
Now analysts are trying to figure out whether the world’s largest retailer can repeat its performance in 2009.
It looks like we have our most likely candidates for the "Dogs of the Dow" for 2009. This is often misunderstood as an investment vehicle. These are the 10 highest dividend-yielding stocks out of the 30 DJIA components rather than the worst 10 of 30 DJIA performers from the prior year. When you go back and look, there are many of these which actually were among the worst performers. As of yesterday morning we had not seen any formal announcements as to which DJIA components were on this list, so do not be shocked if there are some changes. Also, another thing to consider is that the dividend "actuality" may change in many of these financial stocks as some announcements have already been made.
DJIA Component (Ticker) YIELD
Alcoa (NYSE: AA) 6.40%
AT&T (NYSE: T) 5.90%
Bank of America (NYSE: BAC) 9.70%
Citigroup (NYSE: C) 9.40%
DuPont (NYSE: DD) 6.50%
General Electric (NYSE: GE) 7.80%
JPMorgan Chase (NYSE: JPM) 4.90%
Merck (NYSE: MRK) 5.10%
Pfizer (NYSE: PFE) 7.20%
Verizon (NYSE: VZ) 5.50%
According to MarketWatch, "Worldwide sales of semiconductors fell 9.8% to $20.8 billion in November, from $23.1 billion a year earlier, the Semiconductor Industry Association said Friday. Sales in the month were 7.2% lower than the $22.4 billion reported for October, the SIA added. "
Douglas A. McIntyre
China can’t go into a recession. Its GDP has grown at close to 10% for half a decade. It is the largest supplier to the world. Its new middle class consumes products and services so voraciously that much of China’s manufacturing capacity is taken up by the needs of hundreds of millions of its own people.
But, the pace at which economic change can happen now has increased exponentially. A bank can go form being OK to failing in a week. A major industry such as the auto sector can go from being financially secure to being at the brink of bankruptcy in a matter of months. A century-old business like newspapers can begin to disappear in less than two years.
Experts keep saying that there is only so much bailout money to go around. That going around is getting bigger as states and municipalities try to figure out what to do as their tax revenues fall apart and the credit markets get so tight that they have to pay exorbitant interest rates for bond issues.
Several states including California, Florida, and Michigan have already hit the tipping point. It is likely that they will begin to cut essential services if they cannot come up with more cash.
According to Reuters, cities and states are facing shortfalls and potential defaults.
Reuters reports that the US steel industry is starting a "buy America" campaign.
Reuters reports that Fannie Mae (FNM) believes that IndyMac may owe it $1 billion.
Many markets in Asia were closed.
The Hang Seng rose 4.1% to 14,977. China Mobile (CHL) rose sharply on news of a 3G build out in the nation.
In Europe, the FTSE opened up .4% to 4,451. The Dax was up .7% to 4,844. The CAC 40 was up .8% to 3,243.
Data from Reuters and MarketWatch.
Douglas A. McIntyre
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