Lemonjello's intermittent skullduggery

[lemonjello]

The talking heads on TV call this a "mention". MA is up around 30% since my "mention".

I am REALLY BIG - but in a low body fat % way.

Send me your finest Ritz crackers and Cheese Whiz!

Here's a recent IPO that I'm looking at.

Mastercard - MA. These guys run a money machine.

Any thoughts?

The CEO just bought around $4.5 million shares and he's not alone.

MM will like their earnings-

http://investorrelations.mastercardi...016&highlight=

[Lyehopper]

The talking heads on TV call this a "mention". MA is up around 30% since my "mention".

I am REALLY BIG - but in a low body fat % way.

Send me your finest Ritz crackers and Cheese Whiz!

Nice "Mention".... Did you buy it?

[lemonjello]

more interesting housing stuff

nytimes.com

[lemonjello]

I thought you were gonna buy it!

Nice "Mention".... Did you buy it?

[ParkTwain]

nytimes.com

You know about ZILLOW.COM? Type in your home address, and see what Zillow thinks your home's worth. It knows how to do comps with homes recently sold that are "similar" to yours in your neighborhood, zip code, county, etc.

[lemonjello]

I've heard that zillow isn't very accurate at this point. A work in progress.

You know about ZILLOW.COM? Type in your home address, and see what Zillow thinks your home's worth. It knows how to do comps with homes recently sold that are "similar" to yours in your neighborhood, zip code, county, etc.

[lemonjello]

The Brits are watching

Check out these charts -

http://news.bbc.co.uk/2/hi/business/5303590.stm

The end of the American dream?
Analysis
By Steve Schifferes
...

The US economy has been generating strong economic growth over the past few years as it has come out of recession.

After growing at more than 3% a year in 2004 and 2005, the pace picked up to a blistering 5.6% annual rate in the first quarter of this year - although the pace has since then slipped back to 2.9%.

So far, though, little of that growth has translated into the hands of the average worker, according to new research from the Economic Policy Institute (EPI).

For real household incomes, the median point - the level at which half of households earn more and half less - has actually fallen over the past five years.

That marks a notable contrast with the 1990s, when the economic boom boosted both jobs and incomes.

The puzzle of economic expansion without significant job or wage growth has been troubling US economists and commentators of all political persuasions.

Slowing wages

"The unprecedented split between growth and living standards is the defining economic agenda of the day," says the EPI's senior economist, Jared Bernstein.

During the five years from 2000 to 2005, the US economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%.

Productivity - the measure of the output of the economy per worker employed - grew even more strongly, by 16.6%.

family incomes

But over the same period, the median family's income slid by 2.9%, in contrast to the 11.3% gain registered in the second half of the 1990s.

The wages of households of African or Hispanic origin fell even faster.

And new entrants to the labour market fared particularly badly.

Average hourly real wages for both college and high school graduates actually fell between 2000 and 2005, and fewer of the jobs they found carried benefits such as health care or company pensions.

The poor performance of the US economy in delivering fuller wage packets may be one reason why the public gives the Bush administration's such a low rating on economic policy.

According to the latest Gallup poll, only 37% approve of Mr Bush's handling of the economy, and 70% think economic conditions are getting worse, substantially worse figures than in 2004.

With mid-term elections to the House of Representatives and Senate - both, currently, held by Mr Bush's Republicans - due in November, the contrasts are concentrating minds in both main parties.

Where has the increase gone?

One way to comprehend what is happening is to look at the split between how much of the economy is won by profits and how much by wages.

The share allotted to corporate profits increased sharply, from 17.7% in 2000 to 20.9% in 2005, while the share going to wages has reached a record low.

Meanwhile, a large section of the workforce - the unemployed or those not seeking work - have not benefited from economic growth.

Unemployment has remained stubbornly high despite the economic recovery, with the latest figure at 4.7% compared to 4% at the end of 2000. Overall job growth in the first half of the current decade has been just 1.3%.

In the 1990s, job growth of some 12% goes some way towards explaining why prosperity in that earlier period spread down the income scale.

Rising inequality

Even for those with jobs, the fruits of economic growth have been more unequally distributed within the labour market.

The incomes of the top 20% have grown much faster than earnings of those at the middle or bottom of the income distribution. The income of the top 1% and top 0.1% have grown particularly rapidly.
...

[IIC]

I've heard that zillow isn't very accurate at this point. A work in progress.

It is very inaccurate. Example...my parent's house is valued at over 100 grand less than their neighbor's...yet they have the same size lot and my parent's house is 500+ sq. ft larger...There is nothing at the neighbor's that sets it apart...EXCEPT...it has been sold a couple of times in the last 15 years...My parent's bot their house in the 60's...I checked quite a few comps in different areas that I am familiar with and invariably the homes that had more recent sales were valued higher...I think it needs some work...Doug(IIC)

[ParkTwain]

Re: the Brits are watching

I think a clear and obvious hypothesis for stagnant wages, even in the white collar ranks, is the factor of increased immigrant participation in the economy. H1B visas in the high tech sector, foreign-born scientists and technicians who stay in America after gaining an American college degree, and of course below-market undocumented workers. All of these factors, combined with continuing productivity gains from increased automation and offshoring of previously high-paying technical and professional jobs, combine to suppress the "flow through" of economic benefits to workers.

I don't see any national news coverage of these phenomena, even among the national political reporters, as significant issues in explaining what is happening to wages in the overall economy. These results in the wage area are consistent with implementation of policies that are in the interests of the traditional Republican constituency (business and the wealthy). So those political interests are having success making policy in the Executive and Legislative branches, and that success can be measured in these aspects of the national economic performance. Lower taxes on the wealthy and on corporations, weaker regulation of many parts of the private sector, a policy of non-enforcement of hiring of undocumented workers (the money is spent instead on defense), etc., etc. We will see in the next set of elections whether a majority of voters believe that these are the preferred results.

[lemonjello]

reviewjournal.com

By ASLAM ABDULLAH

Special to the Review-Journal


The leader of al-Qaida in Iraq, Abu Hamza al-Muhajer, recently issued a decree to its supporters: Kill at least one American in the next two weeks "using a sniper rifle, explosive or whatever the battle may require."

Well, Abu Hamza al-Muhajer, I am an American too. Count me as the one of those you have asked your supporters to kill.

I am not alone, there are thousands of Muslims with me in Las Vegas, and many more millions in America, who are proud Americans and who are ready to face your challenge. You hide in your caves and behind the faces of civilians in Afghanistan and Iraq. You don't show your faces and you have no guts to face Muslims. You thrive on the misery of thousands of Muslim youth and children who are victims of despotism, poverty and ignorance.

During the past two decades, you have brought nothing but shame and disaster to your religion and your world.

You said you "invite you not to drop your weapons, and don't let your souls or your enemies rest until each one of you kills at least one American within a period that does not exceed 15 days with a sniper's gunshot or incendiary devices or Molotov cocktail or a suicide car bomb -- whatever the battle may require." I invite you to surrender, to seek forgiveness from God almighty for the senseless killing you and your supporters are involved in and repent for everything you have done.

You say that the word of God is the highest. Yes, it is. But you are not worthy of it. You have abandoned God and you have started worshipping your own satanic egos that rejoice at the killing of innocent people. You don't represent Muslims or, for that matter, any decent human being who believes in the sanctity of life. Many among us American Muslims have differences with our administration on domestic and foreign issues, just like many other Americans do. But the plurality of opinions does not mean that we deprive ourselves of the civility that God demands from us. America is our home and will always be our home. Its interests are ours, and its people are ours. When you talk of killing of Americans, you first have to kill 6 million or so Muslims who will stand for every American's right to live and enjoy the life as commanded by God.

By growing a beard, shouting some religious slogans and misquoting and misusing some verses of the divine scriptures, you cannot incite Muslims to do things that are contrary to our religion. Yes, you even fail to understand the basic Islamic principles of life and living. Islam demands peace in all aspects of life, Islam demands respect for life. Islam demands justice.

What you are doing in Iraq, Afghanistan, India or other parts of the world is anti-human and anti-divine. You are an enemy of Islam as much as you are an enemy of America. You must understand that God who entrusted you with life is the same God who spelled his spirit in every human being regardless of his or her religion or ethnicity or nationality or status. You are violating him.

We feel totally disgusted with your action and we condemn you without any reservation. Don't come to our mosques to preach this hatred. Don't visit our Islamic centers to spill the blood of innocents. Don't think that just because we share the same religion, we would show some sympathy to you. You are not of us. You don't belong to the religion whose followers are trying to live a peaceful life for themselves and others serving the divine according to their understanding. In our understanding of faith, you appear as anti-divine and anti-human. We reject you now as we rejected you yesterday.

There is nothing common between you and us.

We stand for life, you want to destroy it.

We accept the divine scheme of diversity in the world and you want to impose conformity.

We respect every human being simply because he or she is a creation of the divine, and you hate people based on their religion and ethnicity.

We support freedom and liberty and justice, and you promote bigotry, murder and strangulation.

You will never be able to find a sympathetic voice amidst us. Our differences with others will never lead us to do things that are fundamentally wrong in our faith, i. e. taking the lives of innocent people and killing others because they are different.

So on Sept. 11, when you will be hiding in your caves, we will be out in the streets paying tribute to those who you killed because you failed to see the beauty of life. We will condemn you once again the same way we have been doing ever since 9/11 because we are Muslim Americans.

Aslam Abdullah is director of the Islamic Soceity of Nevada.

[eliaskane]

I think a clear and obvious hypothesis for stagnant wages, even in the white collar ranks, is the factor of increased immigrant participation in the economy. [...]

I don't see any national news coverage of these phenomena, even among the national political reporters, as significant issues in explaining what is happening to wages in the overall economy.

Historically, fields like engineering were preferred by immigrants who wanted to get ahead. Read the history of any industry that depends on innovation. This goes back a century or more, for instance, to immigrants like Steinmetz and Tesla as key figures in the early days of commercial electric power.

Wage stagnation has gotten some serious press lately, especially since the Census Bureau report that just came out. I agree with your conclusion about whose interests are being served. It seems to me the country would be better off with a wage and income distribution more like, say, in the Eisenhower years. And the country would be better off for canceling the H-1B visa program and giving the people here on that ticket green cards instead. Then they'd turn into taxpayers and solid citizens instead of repatriating their money and expertise after a few years.

[lemonjello]

History doesn't repeat, but it sometimes rhymes - Twain

A few random thoughts on where we are now vis a vis the 1960's-70's-80's.

Economic historians please feel free to correct or contribute.

60's analog tech boom (electronics, chemicals) in stocks ran up and crashed.
90's digital tech boom (you know what) in stocks ran up and crashed. Check.

70's oil price skyrockets based on Arab/Israel conflicts.
00's oil price skyrockets based on Arab/Israel conflicts. Check.

70's US involved in a war in Vietnam with no apparent exit strategy.
00's US involved in a war in Iraq with no apparent exit strategy. Check.

70's US President Nixon alledgedly taking liberties with the law.
90'/00's US Presidents Clinton and W alledgedly taking liberties with the law. Check.

80's New Fed President Greenspan tries on the shoes of the great Paul Volker.
00's New Fed President Bernanke tries on the shoes of the now revered Alan Greenspan. Check.

80's stock indices plummet in a single day soon after Greenspan takes appointment.
00's stock indices ? soon after Bernanke takes appointment.

80's US car companies on verge of bankruptcy due to foreign competition.
00's US car companies on verge of bankruptcy due to foreign competition, etc. Check.

70's/80's House prices ramp and peak based on loose lending practices by S&Ls.
00's House prices ramp and peak based on loose lending practices by various entities. Check.

90's financial crisis created by S&L scandals and gubmint bailout, creation of RTC.
00's ?

70's/80's Disco.
90's/00's Rap. Check.

80's LBO activity heats up as companies go private.
00's LBO activity heats up as companies go private. Check.

80's stock prices bottom and start a multi decade bull market.
00's stock prices bottom and ?.

Isn't that interesting. Probably missed some.

[lemonjello]

The New Opium

barrons.com

MONDAY, SEPTEMBER 18, 2006


Investing in a Shaky World
Interview With Rudolph-Riad Younes,
Co-manager, Julius Baer International Equity Fund
By SANDRA WARD

TALK ABOUT WINNING WAYS. Since we started seeking his investment views in 2002, this head of international equity investing at Julius Baer has seen his stock picks in these pages appreciate 41.75% a year, on average, through the end of August, handily beating the benchmark MSCI EAFE index during the same period. Only five of his 31 stock picks underperformed, and their lackluster showing was more than offset by the commanding returns of the rest. And the portfolios that Younes manages along with his colleague Richard Pell haven't done too badly, either. Their flagship, Julius Baer International Equity Fund, has gained 17.5% annually, on average, the past five years and is up 21.9%, on average, in the past year, also easily beating the benchmark. No wonder, then, that the assets they manage have ballooned to $43 billion.

Barron's: Give us the Big Picture.

Younes: My favorite subject. Today's version of the opium trade continues.

And China is the new Britain?

China is providing the West and the rest of the world with very low credit and very low interest rates, which is creating addiction in the form of borrowing and spending and leading to hallucinations in the form of asset prices.

It seems to us this opium trade is going to last for a very long time, and it has implications on where we invest our money. The reason it is going to last so long is that U.S. corporations have a lot of leverage on politicians and on government decisions. They finance both political parties, and they're not strictly U.S. companies anymore, but global companies, and people tend to forget that. U.S. companies care about what is good for the global economy, not necessarily what is good for the U.S. economy.

The short electoral cycles in the U.S., in which every two years you have the full House up for re-election and one-third of the Senate being elected, exacerbates the problem. Everybody knows that monetary and fiscal policy takes about 12 to 18 months to have any affect on the economy and, while the opportunities are great for tactical decisions, they are terrible for strategic decisions.

So give an example of how multinational companies, by embracing a more global outlook, have not served America well?

Look at profits as a percent of GDP [gross domestic product]. Historically, it averaged about 5.4%, but today it has almost doubled to about 10.2%, way above its previous peak at 7%. That's exhibit A. That's happened as U.S. corporations have moved jobs offshore and Congress has let certain policies go on longer and longer than maybe they should.

Yes, but what about the argument that companies are more efficient and more productive?

We are so efficient that we don't do anything anymore, that's how efficient we are. We are so efficient we beg the Chinese to buy something from us. We are so efficient that debt to GDP is above 200%. We are so efficient that we have a trade deficit that is 7% of GDP. Even Turkey would be ashamed of that.


OK, so what are the implications of this on how you invest?

At the end of the day, money management is a combination of dogmatism and pragmatism. While we wait for our thesis to be proved, we are also trying to protect our investors and trying to find places where we can make money without dramatically being affected by the global picture. The big questions for us when we look at the market involve inflation and the direction of equities, bond yields and currencies.

Inflation is something there should be no debate about and somehow there is. As the Bank of England observed recently, our core inflation number should include energy because energy is affected by demand from China. The same way China is exporting deflation to us by manufacturing goods more cheaply, it is importing inflation through its demand for commodities and energy. Core inflation should also include house prices and other asset prices, rather than just rental equivalents, as is done now. Again that would change the inflation picture dramatically. If you consider headline inflation and include asset prices instead of rental equivalents, the true inflation number would be between 7% and 10%. The question is: If real inflation is 7% to 10%, why don't we see it in wages?

That's been a big mystery. What's your answer?

The reason we don't see wage inflation is not just because of China, but more importantly, because people used their houses as ATM machines, basically refinancing their houses and withdrawing equity. If your wages are not enough to support your spending, your house bills or your education, but you manage to get an additional loan against your house and use that loan to refurbish your house or pay for your children's education, then you are not going to complain and you are not going to go on strike and you are not going to be militant because you are not being paid enough money. Wages, plus equity withdrawal from your house, was enough to support your living standard. Once that sort of financing dries up for the consumer, we will see significant wage pressure.

Yet, I've been hearing concerns about deflation.

Deflation is not going to happen for a very simple reason: Deflation is a tax on the poor. If you look at the typical balance sheet of a U.S. consumer, he or she is long houses and has big loans. Deflation will bring their house prices lower, and it will make it much more difficult to pay their debts. So they will get killed on both ends. It ain't going to happen. On the other hand, if inflationary policies are pursued, house prices will go up, at least nominally, and making money on your house and paying your debt will become easier because you have inflated debt. So far, the bond market has not reacted to this reality.

But you expect it will?

Bond yields are very, very low. They are ridiculously priced, and the reason they are ridiculously priced is because the investors who decide the price are not driven by absolute returns. The biggest investors are the central bankers. Then there are the pension funds who need to match their liabilities. The funny part about these investors is that the lower they drive interest rates, the more bonds they need to invest in to cover their future liabilities. People should not be buying bonds.

People have been wrong on bonds for two years now.

How many got Nasdaq wrong? Again, if something is expensive or cheap it doesn't mean it is going to correct automatically. Could the long bond go from 4½% to 3%, yes, and there is nothing I can do about it. But we are talking about where value is, and bonds don't represent very good value.

And currencies?

You are not getting paid to own any of the major fiat currencies. Today's rates are very low. If you look at the five-year swap rates, the market is expecting short-term rates to be not much above today's level five years from now. The only thing consistently beating the dollar, year after year after year, has been the commodity index. That's a real battle.

And equities?

On the surface, the multiples are not a problem. Fifteen to 16 times forward earnings is not something to make anyone panic, although that's at the high end of the historical average. The problem today in the equity market is the level of profit margins. Margins are almost 100% above the historical average. If you think we are going back to the historical average, then you are talking about 30 times earnings. Add to that the global imbalances around the world, and equities are not a very safe place to be.

In the global equity market, two bubbles have not yet fully deflated: Nasdaq and Japan. Despite the rallies that occur in those sectors, in the long term, they are in a downward trend because they are still overvalued. Japan is at least 50% overvalued. If Korea were considered part of the developed world, as it should be, we would be replacing many of our Japanese names with Korean names because valuations in Korea are one-half to one-third their Japanese counterparts.
...

[lemonjello]

Whoop, der it is

More rhymes from Barrons.com

Why Risk Is Rising for LBOs
By TOM BURNETT

LEVERAGED-BUYOUT ACTIVITY IS RUNNING at a fever pitch. Bolstered by recent strong returns, the LBO funds that lead these acquisitions are expected to raise more than $100 billion in 2006, a record total that has helped drive overall merger volumes to heights last seen during the Internet bubble of 1999 and 2000. However, investors in LBO funds and shareholders of public companies getting a bid from one of these funds need to be aware of the increasing risks in this marketplace.

Among other challenges, these funds must cope with the fact that the Federal Reserve has raised short-term rates 17 times in the past two years, which means that vehicles like cash and short-term notes will become more attractive investment alternatives to LBOs. That could raise the pressure on managers to commit funds quickly to snag deals. Otherwise, investors may start clamoring for some of their money back, thus slashing the funds' management fees. Higher rates also usually raise a company's interest costs and cut its profit margins, making acquired companies harder to turn around.

That so much money is in the hands of so many eager deal makers competing for the same basic opportunities is also cause for worry. According to a private-equity trade group, the National Venture Capital Association, 88 LBO firms raised $25 billion in 2002; by 2005, 175 funds had raised $95 billion. In the first half of this year, $55 billion was raised by 73 groups, making it likely the $100 billion mark will be breached.

This intense bidding for deals increases the possibility that funds will overpay to take public companies private in a trickier environment. Higher prices also narrow the margin for error.

Debt-laden companies, especially if bought at high valuations, will have a harder time making meaningful progress against a tide of rising interest rates.

Already there are signs of strain. A review of regulatory filings by several pricey recent LBOs -- two retail chains and a tech company -- offers a peek at their deteriorating financial condition and lessons for investors.

One of these leveraged buyouts is Toys "R" Us, which was purchased by a group composed of buyout specialists who regularly raise LBO funds, Bain Capital and KKR, plus Vornado Realty Trust (ticker: VNO). At its July 22, 2005, close, the deal had an estimated value of $7.5 billion, equal to 29 times earnings. Like its rivals, Toys has been hit by problems, including lower consumer spending and higher gas prices. Wal-Mart's expansion (WMT) into toys has only deepened these troubles.

While Toys owned most of the real estate supporting its outlets, this cushion isn't big enough to allow the retailer to refinance its balance-sheet obligations, which have kept its operations under severe financial duress. On July 13, 2006, Fitch Ratings assigned a speculative rating of CCC+/RR5 to Toys' $1 billion senior secured credit facility, and later issued a "negative" outlook.

Toys' revenues in the fiscal quarter ended in April actually rose 12% from 2005 levels, and gross margin increased from $732 million to $833 million. However, interest expense of $130 million pushed it to a pretax loss of $132 million, up from a $67 million shortfall in the April 2005 quarter, when it was still publicly traded.

The losses continued in the July quarter, as interest expense of $129 million drove operating income of $11 million with a pretax loss of $113 million. The pretax loss for the six months ended July 29, 2006, was $245 million, compared to a loss of $83 million (excluding special charges) in the first half of fiscal 2005.

Goodwill 'N Things: A year after its LBO, textile retailer Linens 'N Things has less cash and equity and more debt and goodwill.

The negative impact of the LBO on the balance sheet is readily apparent. Cash assets declined from $1.85 billion on April 30, 2005 (pre-deal) to $664 million by July 29, 2006. In that same period, total debt increased from $2.43 billion to $7.05 billion. And Toys' equity disappeared, dropping from a positive $4.36 billion to a negative $888 million.
...

[lemonjello]

Any football fans out there?

Book excerpt from the Liar's Poker guy -


The Ballad of Big Mike
By MICHAEL LEWIS

I. Looking for the Next Anti-Lawrence Taylor

http://www.nytimes.com/2006/09/24/magazine/24football.html?_r=1&oref=slogin&pagewanted=print