Farmers whose families have been working the land for generations should be called in to advise new Wall Street traders every year. Because in farm life is the hardscrabble reality of boom-and-bust cycles. When prices went sky-high for wheat, corn and soybeans over the past years, you did not see growers spending their wealth on fast pickup trucks and fancy overalls; no, they kept telling reporters and economists that this wasn't going to last.
They were right. Wheat, which had hovered for years around $4 a bushel, had risen to $10 and is now flattening at $5; less than the current cost in fuel, seed and fertilizer to grow it. Farmers like Jimmy Wayne Kinder, who held back their wheat hoping to sell at the top of the market, are "kicking" themselves, and demonstrating that they, too, have an emotional connection to their holdings and have trouble letting go even in the face of overwhelming evidence that it's time to sell. As the prices fell, farmers waited for a rebound that never came.
Farmland was hot, too, with speculative buyers purchasing Midwest real estate for prices nearing $1,000 an acre, the record set in the 1970s. Now they're back around $500 and farmers are recalling lessons the traders never have time to learn: patience. If automakers, mortgage lenders, and Wall Street firms could learn this lesson; scrimping and saving in the down economies but not behaving like kings in the boom times; perhaps bailouts wouldn't be required.
It's interesting, too, that the article doesn't mention another reality of the farmers' market forces; as demand for conventionally-grown wheat, corn and soy drops, demand for organically- and sustainably-grown meats, produce and grains is rising. I plan to stand in line at 9 a.m. Sunday morning with my three boys for the chance at paying $60 for an heirloom turkey raised by a farmer I know; I've cut out breakfast cereal and alcohol from my budget so I can pay more at the farmer's market. Perhaps the American economy isn't collapsing, but returning back to a more sensible place; where friendly, interdependent, local, sustainable economies thrive and the global economy is a distant memory.
This morning, BMY opened at $18.92. So far today the stock has hit a low of $18.12 and a high of $19.30. As of 12:15, BMY is trading at $18.60, down $0.68 (3.5%). The chart for BMY looks bullish and S&P gives BMY a positive 4 STARS (out of 5) buy ranking.
For a bearish hedged play on this stock, I would consider a December bear-call credit spread above the $22.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in four weeks as long as BMY is below $22.50 at December expiration. Bristol-Myers would have to rise by more than 21% before we would start to lose money. Learn more about this type of trade here.
TGT hasn't been above $45 since early September and shown resistance around $21.50 recently. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BMY.
Freddie Mac (NYSE: FRE) said today that it received a notice from the New York Stock Exchange (NYSE), warning that the mortgage firm could be delisted due to its rock-bottom share price. FRE has been trading below $1 for more than 30 days now, and must notify the exchange by December 2 whether it intends to rectify the problem.
If Freddie does decide to meet the NYSE's listing requirements, it will have until mid-May to address the share-price issue; if not, its common stock and preferred stock are subject to suspension and delisting. In a statement, Freddie Mac said it's "currently working with its conservator, the Federal Housing Finance Agency, to explore options relating to this deficiency and has not yet determined its response."
Earlier this week, Freddie's sister Fannie Mae (NYSE: FNM) received an identical warning from the NYSE. The troubled siblings hit the headlines for somewhat more respectable reasons earlier this morning, when the pair announced they would temporarily halt foreclosures during the holiday season.
After opening broadly higher this morning, FRE has fallen to a 6% loss at 46 cents per share. Sibling Fannie is faring better today; that stock is up roughly 9% at last check -- though today's gain takes the per-share price only as high as 36 cents.
Bloomberg is reporting that the global banking industry could lose 350,000 jobs by the middle of next year. That would be about 20% of the employees in the sector.
That level of unemployment represents an almost unimaginable human tragedy and one that might have been avoided in part if management at large financial house had not bet the bank on mortgage derivatives. But, that is water under the bridge.
The question which gets begged is where all of those people will go. Many bankers are not qualified for other high-paying jobs, which means they will stay unemployed for long periods or will face having to take significant cuts in their incomes. Either way, the shift will take a large toll on government services such as unemployment benefits. Let's not forget the lost taxes.
The destruction of the banking industry is a microcosm of what many happen across sector after sector if the recession bites hard. Autos may be the next domino to fall, but retail and hospitality won't be far behind it. Suddenly hundreds of thousands of jobs become millions, and, if things get especially bad, tens of millions.
Financial services is the canary in the coal mine. If the industry cannot fine some employment equilibrium it is bad for everyone.
The New York Times (NYSE: NYT) reported that its October revenue got beat up again. If anything, it was worse than some previous months this year, but it's papers are caught in the vortex of a failing industry. For the month, advertising revenue was down 16.2%. Internet revenue only rose in the single digits, so online sales are not going to save the company.
In an odd way, the drop in revenue was the relative good news because the company also cut its dividend by a very large amount. The payout was cut by 74% to $0.06 per share. To make matters worse, the stock sold off 10% to a 52-week low of $5.72.
NYT has debt that is due next year. Its papers in New England, led by the Boston Globe, are losing as much as 20% of their ad revenue each month.
The company is controlled by the Sulzberger family, which has been in charge for over a century. One of the reasons the brothers and sisters, aunt and cousins have supported management was for the rich payout they received each quarter. Now, that is going away.
With an unhappy family, the company may be in play. Perhaps Rupert Murdock might buy it. NYT would make a nice bookend for The Wall Street Journal.
Douglas A. McIntyre is an editor at 247wallst.com.
Reasons abound for security protocol surrounding cell phone records at the major carriers. Consumers just don't like hearing about privacy breaches. But as the presidential office moves into the wired age, for the first time a President-elect is a red flag going off in Verizon Communications (NYSE: VZ)'s face.
A personal cell phone account owned by Barack Obama (but that has been inactive for several months) was confirmed to have been accessed by "several" of Verizon's employees -- all of whom have been placed on administrative paid leave pending an internal investigation into which did so for a good reason.
While it's easy to imagine the thrill that might accompany viewing the phone calls of the President-elect (how many minutes to that number in Chappaqua, New York in June?), it's also easy to imagine the potential damage that could arise from such illegal access, both to Obama (or any candidate) and to the trust the public places in its cell phone carriers. Verizon is right to have taken action and made the news public; but the company should have put more preventative measures in place to ensure its sensitive customers' data was secure.
From a macroeconomic standpoint, the fiscal stimulus package can't get passed soon enough.
The Conference Board's index of leading economic indicators (pdf) fell 0.8% in October, with six of 10 components dragging the index lower. Economists surveyed by Bloomberg News had expected the LEI index to decline by 0.6% in October.
From April-October 2008, the leading index declined 2.4% or a negative 4.7% annual rate, compared to a 1.2% decrease or a negative 2.3% annual rate over the previous six months, the Board said.
Economist Richard Felson told BloggingStocks Thursday the October LEI data documents what many on both Main Street and Wall Street sense: economic conditions are worsening.
"The LEI data shows an economy that's slowing. The recession is getting worse, so look for more of the same regarding job lay-offs and downsizings, as well corporate revenue and earnings declines, and earnings guidance reductions," Felson said. "As it stands now, the economy is likely to remain in recession through at least end of the second quarter of 2009, which points to the need for federal fiscal stimulus, and other measures. The individual states are doing what they can to increase private sector demand, but many are cash-strapped themselves, facing budget deficits."
Yesterday, we were all surprised to see the Dow Jones Industrial Average fall back below 8,000. The Dow finished down 427 points to land at 7,997. In other words, just enough to freak people out at being below 8,000. Everyonenoticed that it hadn't been this low since 2003, nearly six years ago. In other words, if have you spent the last six years putting money away in your 401(k), depending on what dividends you got, you may as well have put your money in a money market fund.
We've got about 450 points to go in 2003. The lowest it got that year was 7,524 in March. In the olden days, 450 points on the Dow would seem like an improbable swing, taking weeks or months. Not so in highly volatile 2008. A 450-point-drop would represent about a 5% drop -- a higher percentage loss than it was just a few months ago.
After that, 2002 has a low of 7,286. To get there the Dow would have to fall 711 points or 8.8% from Wednesday's close. Once that happens, though, the floor drops out. I'm not talking about technical support here, just psychological and historical support. See, if the Dow drops below 7,286, then we're heading into 1997 territory. That's the last time the Dow was below 7,286. If it breaches that threshold, we're heading back to October, 1997, when the Dow was at 7,161.
If that happens, it would mean that a lot of the gains of the late 90s have been wiped out. An entire decade lost. It may be just a number and just psychological, but it will certainly bum me out.
What's the most-riveting statistic in this week's jobless claims report? Continuing claims, which surpassed 4 million for the first time.
Continuing claims rose 109,000 in the week ended November 8. Economists pay close attention to continuing claims because it provides them with a comprehensive indicator of long-term job market conditions.
Continuing claims have risen more than 45% in the past year, which is not good news for job aspirants or for corporate revenue and earnings moving forward, so says economist Peter Dawson.
"The 4 million continuing claims total means those laid off are having a hard time finding suitable, comparable employment. There are very few jobs available, which is the major reason behind the rise in the unemployment rate," Dawson said. "Further, without falling continuing claims, it's really hard for corporate revenue and earnings to increase, and of course the stock market's low level reflects this."
Meanwhile, U.S. initial jobless claims rose 27,000 to 542,000 for the week ended November 15, the U.S. Labor Department said. Claims for the previous week were revised to 515,000. Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 505,000.
Amazon.com Inc. (NASDAQ: AMZN) hit a 52-week low yesterday, a week after the online retailer saw a previous year low. Worries about this year's retail holiday shopping season have investors fleeing like rats on a sinking ship. Analyst Matt Nemer with Thomas Weisel lowered his Q4 earnings estimate on the retailer from $0.44 per share to $0.39 per share, while Barclays analyst Douglas Ammuth indicated that Q4 profit margins could shrink as price cuts go into effect.
Still, Amazon.com has one of the best chances to weather the consumer spending slowdown starting, well, yesterday. Almost everyone I know is already shopping for the holidays, and many are shopping online and are definitely searching out bargains. While the management of companies that run shopping malls in my area are considering bankruptcy, standalone retailers with strong brands and good customer perception appear to be doing fine. I'm left wondering how long that can last, though.
Amazon's shares have come back from the stratosphere and have settled into what could be considered a normal range. The company is making money, making profits and is very strong in almost every area in which it operates. It's the world's largest online-only retailer and unlike many other retailers, I've never seen the company say that it makes a huge percentage of its profit in the end-of-year holiday shopping season. All things considered, my guess is that Amazon.com will do fine this season. Not stupendous, but fine.
Online data measurement company comScore released on Tuesday October 2008 e-commerce figures, saying it was the slowest growth it has measured since 2001, when it has started tracking the data. After years of solid growth for online retailers (from double digits to single digits recently), October online retail sales grew at a measly 1%. When online retail growth comes to a screeching halt, with all those heavy discounts and free shipping, something's amiss.
Let's take a look at the last five months in online retail sales growth: 11% to 8% to 6% to 5% to 1%. Yikes. ComScore chairman Gian Fulgoni indicated that rising prices and unemployment rates combined with the psychological impact of the global economic situation has consumers frozen on many of their spending. It will be interesting to see what November's growth figure is like, even with the official start of the holiday shopping season.
ComScore's most significant figure was that spending for households that make below $50,000 per year has dropped off significantly, declining 3% in October compared to the month a year-ago. For households making $50,000 to $100,000, spending increased 1% in October, while households making over $100,000 increased spending to the tune of 14% in October. So, according to comScore, growth really did come to an almost complete stop for households earning less than $100,000. Will spending recover for this demographic for the next month and a half? Doubtful.
Sirius XM (NSADAQ: SIRI) faces a number of problems. Those caused the stock to drop to 20 cents yesterday, down from a 52-week high of $3.94.
Sirius is not only sitting on between $3 billion and $4 billion in debt. It has also never posted a net profit. There are still questions about whether its merger with XM Satellite will yield enough cost cuts to make the operation profitable.
But, none of those things are the final nail in the coffin. If one of The Big Three goes under, especially if it is GM (NYSE: GM), Sirius will lose one of its largest sources of new subscribers. Since some people who take the service drop it every month, which is normal attrition, those customers have to be replaced. For the company to grow, each month has to show net new additions which greatly outweigh cancellations.
Sirius cannot afford to lose its flow of customers from a major car maker. If it does, it debt service will overwhelm it, and finding new capital will be impossible. Who want to lend money to a company which is losing its most important sales pipeline?
If one is honest with oneself, she will recognize that the most exotic ingredients in her Italian-themed frozen foods are likely the plastic trays they're packaged in. A new recall for Lean Cuisine frozen chicken meals ("approximately" 879,565 pounds of them) offers the addition of one more exotic ingredient: "foreign matter," namely bits of hard plastic of unknown origin that caused at least one injury.
The company which packaged the products, Nestle Prepared Foods Company of Springville, Utah, is voluntarily recalling the products after several consumer complaints and the lone injury. The three meals that are part of the recall are the 10.5-ounce "chicken mediterranean" pictured here; 9.5-ounce "pesto chicken with bow-tie pasta" and 12.5-ounce "chicken tuscan." Further information about specific bar codes and sell-by dates can be found at the USDA Food Safety and Inspection Service.
While this is in no way a serious health risk, the enormous size of the recall and the timing -- coming in an environment in which budget-conscious consumers are beginning to question the true "convenience," nutritional value and safety of packaged food -- will be somewhat harmful for the convenience food industry as a whole. As someone who is taking a more cautious eye toward the food she is feeding her family, I have been asking questions such as, "if pieces of hard plastic weren't even recognized until consumers complained, what invisible ingredients have been slipping through without reparation or admittance?" In food, that what you can't see; and don't recognize for many years; is the most harmful of all.
When is a near double-digit decline in home prices viewed as a small victory? When you're the United States in late 2008 -- a nation grappling with its worst housing slump in decades amid signs of a deepening recession.
U.S. median home prices fell 9% in Q3 compared to a year earlier, to $200,500, the National Association of Realtors announced Tuesday. Prices fell in 120 U.S. metro areas, rose in 28 and were flat in four. California registers major declines
The largest decline in home prices occurred in California: the Riverside-San Bernadino area recorded a 39.4% decline, to $227,200; the Sacramento area, a 36.8% decline to $212.000; and the San Diego area, a 36% plunge to $377,300.
At the other end of the spectrum, prices rose 12.5% in Elmira, N.Y, and 8.7% in Decatur, Illinois.
Economist Peter Dawson said today's NAR statistics represents more, sobering data from the housing sector, but in the broader context the report is not as bad as the quarterly data implies.
"We're down 9%, but it's less than what most feared, so that's a positive development, sort of," Dawson said. "We've experienced so many jolting, double-digit price declines in home prices and other negative stats from the sector that anything less than the truly abysmal looks modest, and that's the case with the Q3 NAR data."
Medtronic (NYSE: MDT - option chain) shares are way lower today after the company posted a second-quarter profit of $571 million, or 51 cents per share. The company's adjusted profit of 67 cents per share missed analysts' estimates of 71 cents per share. MDT also lowered their fiscal-2009 EPS forecast by about 3% on both the high and low ends. None of this is helping the stock today. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on MDT.
This morning, MDT opened at $34.49. So far today the stock has hit a low of $31.25 and a high of $35.48. As of 12:30, MDT is trading at $32.24, down $4.18 (11.5%). The chart for MDT looks neutral and S&P gives MDT a 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a January bear-call credit spread above the $42.50 range.
Farmers whose families have been working the land for generations should be called in to advise new Wall Street traders every year. Because in farm life is the hardscrabble reality of boom-and-bust cycles. When prices went sky-high for wheat, corn and soybeans over the past years, you did not see growers spending their wealth on fast pickup trucks and fancy overalls; no, they kept telling reporters and economists that this wasn't going to last.
Reasons abound for security protocol surrounding cell phone records at the major carriers. Consumers just don't like hearing about privacy breaches. But as the presidential office moves into the wired age, for the first time a President-elect is a 
From a macroeconomic standpoint, the fiscal stimulus package can't get passed soon enough. 
Online data measurement company comScore released on Tuesday 
If one is honest with oneself, she will recognize that the most exotic ingredients in her Italian-themed frozen foods are likely the plastic trays they're packaged in. A new recall for Lean Cuisine frozen chicken meals ("approximately" 879,565 pounds of them) offers the addition of one more exotic ingredient: "foreign matter," namely bits of hard plastic of unknown origin that caused at least one injury.
When is a near double-digit decline in home prices viewed as a small victory? When you're the United States in late 2008 -- a nation grappling with its worst housing slump in decades amid signs of a deepening recession.
Stock picks and pans for troubled times: RIMM, ED, ISRG, GLW, LEA, SLB, GOOG ...
Is Berkshire Hathaway better than S&P Index?
Closing Bell: Torch Passing on a Friday Rally
