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Weekend Bookends

By

Random musings from the front lines.

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  • How many foreclosures has my own private bank seen in the past year?

    Given its aggressive growth in doubling deposit base to lend from over the past two years I was particularly interested. So I ask to sit and visit with the CEO and a different board member this week. The answer: "Not one." Good ole fashioned banking in growing communities where they sit and carefully measure the risk personally and keep it on their own books is alive and well… taking market share from its larger cousins doing just the opposite.

  • What is more vulnerable next week in the Florida sun: my Astros rotation or Macke's makeup foundation?

  • Would you like to super-subsidize that burger and high-fructose laced soda?

    Quietly tucked inside the US Department of Agricultural report this month was a clue to the next shortage which might be a big problem or profit depending on whether you're a fan of dinner or a cattle farmer, respectively. The chase for high priced crops has caused a game of musical chairs for farmers to substitute crops, but now they're pulling acreage out from under a new candidate by turning pasture land into crop rows in places like Missouri, the #2 cattle producer in the nation.

    There could be as much as half a million head of cattle reduced there next year as a result. The drive-through burger joint next year might have a few stalled cars, which might finally cause questions about whether the 5% of ethanol in my tank right now was worth it considering the update on that plan may come through loud and clear on the speaker, "That'll be $78 for your burger." The mistakes we're making right now will finally be part of the dinner time conversation when it changes dinner prices.

  • When did returning calls and doing what you say you'll do become a niche industry?

  • How bad is this P.R. problem going to be?

    The US Supreme Court unanimously upheld the right of workers to sue over losses in their 401(k) retirement-savings accounts in some circumstances. The ruling this week was praised by retiree advocates. "We're excited about it," says Rebecca Davis, a staff attorney with the Pension Rights Center in Washington.

  • Isn't it about time that a Personal Responsibility Center be formed?

  • What could possibly go right in the stock market?

    Admittedly an unpopular thought right now, this may be a clue by itself. My friends at Bespoke answered my question and we reviewed just how bad the New York Times Business Section Front Page Headlines have been in only three month's time.

    • Junk Bond Prices Hit Record Lows: Can it get much worse?
    • As Defaults Keep Rising, A Market Dies
    • Hoping for a Friendly Recession
    • Inflation is a Worry: Fed Chief Sees No Clear Need for Rate Cut
    • Memo to Banks: Deep Six the Dividends
    • Can Banks Survive a Recession?
    • A Costly Citicorp Move to Win Over Investors
    • Large-Scale Revamping is Expected at Merrill Lynch.
    • Citicorp Earnings Drop 38%
    • Ford Reports 78% Decline in Earnings. GM Sets Plan to Idle 16 Plants
    • New Wave of Job Cutbacks Hit Wall Street
    • Real Estate Woes Seen Worsening
    • Home Building Plummets
    • And Now a Blast from the Past: Stagflation!
    • Consumer Spending is Stalled
    • Bush Says the US May Be Near Recession

  • Word for word, exactly as they read when this chart began in 1990.


    Click to enlarge

  • But, can the market rally without financials?

    I'd note that in the chart above, the Financials made up only 10% of the S&P 500. And more recently if you had subtracted the Financials Sector from the index in 2007, the S&P 500 closed the year with a print of 1600 instead of 1488. To me, the better point this period offers, more than wondering if other sectors need the largest weighted sector in order to go up – they most certainly have not – is a reminder that deciding what not to own and when to sell is more important to performance than what to own and when to buy.

  • Are we so sure we are the capitalists in the US?



    Dr. Mark Perry, professor of Michigan's graduate school, shared his work on his thought-provoking blog. I often wonder how this potential is even debated in what would happen if the same were tried in the US (especially after spending hours with CPA's this week). In the meantime (for too long a time I fear) we are headed in the opposite direction which provides de-coupling policy trades as well.
No positions in stocks mentioned.
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