Monday
Sep152008

The Cost Benefit of Higher Commodities

For the first time since January, we have reached the point where the year to date change in commodity prices should have a positive effect on the average American's wallet.  In the chart below we calculated the 2008 price change of the major food and energy commodities in the CRB index (Corn, Soy, Wheat, Cattle, Hogs, Oil and Natural Gas) and multiplied the changes by the annual per capita consumption of each item.  While this method may oversimplify the actual costs, it provides a good idea of how changes in commodity prices have impacted consumers wallets this year.

After peaking at an additional cost of $4.77 per person per day, year to date changes in commodity prices are now impacting the average American by acting as a net benefit of 2 cents per person per day.  While a 2 cent benefit is negligible, it sure beats paying an extra $4.77 per person per day.

Cost_of_commodities

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Monday
Sep152008

Fed to Accept Lower Quality Assets As Collateral

"Fed Loosens Standards on Emergency Loans" - NYTimes, 9/15

"In an obscure but highly important announcement late Sunday evening, the Fed said it would let Wall Street firms post as collateral much riskier assets — including equities, junk bonds, subprime mortgage-backed securities and even whole mortgages — in exchange for emergency loans through the Primary Dealer Credit Facility."

You think a Gregg Jefferies rookie card is worth anything in collateral?Jefferies_rookie_card  How about those old Beanie Babies?   Or maybe old Cabbage Patch Kids dolls?  Who knows what they'll take at this point.

Beaniebabieslg_2 Cabbagepatch

Monday
Sep152008

Oil? What's Oil?

With our financial system in turmoil, no one is paying attention to the fact that oil is down another $5 and change.  As shown in the chart below, after being up 51.38% at the start of July, the commodity is now down on the year.  As oil skyrocketed, so many companies lowered guidance recently after factoring in a large increase in energy costs.  With oil now back to break even for the year, corporate profits should benefit.

Oil2008

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Monday
Sep152008

Pre-Market Trading in Financials

For those interested, below we highlight pre-market trading prices for key financials (or what's left of them).  We'll report back at the end of the day with their closing prices.  Big down days like these in the current bear market have generally been met with buying after the initial gap down at the open.  It's going to be another interesting one today. 

Premarket_2

Saturday
Sep132008

Lehman Saga Works Overtime

If you thought Long Term Capital was a landmark chapter in Wall Street history, the current situation with Lehman will take up volumes.  With meetings at the New York Fed going late into Friday night, restarting on Saturday, and then scheduled to resume again on Sunday, saying that things are fluid is an understatement.  While different media outlets are reporting different stories, CNBC.com is reporting that Wall Street firms are pitching in $3 bln each to set up a 'bad bank' for Lehman's real estate assets. 

This would pave the way for a sale of the firm, and give the Street at least a temporary reprieve from the credit crisis.  As the article stresses, however, the plan is still being drafted, and the deal could collapse at any time.  Perhaps the most ominous part of the article is the line from an anonymous source who says that, "I'm thinking logically; if they do nothing it's Armageddon."

Updates:

Lehman to file for bankruptcy, B of A deal to buy MER at $29/share.

SEC urged to bring back temporary ban on naked short selling.

AIG looks for up to $40 billion in capital.

Oil drops below $100.

Friday
Sep122008

Down the Stretch They Come

In the race to see which Dow stock will be down the most this year, AIG has taken a clear lead this week.  While General Motors (GM), Merck (MRK), and Citi (C) have held the coveted honor at one point or another this year, AIG is really distancing itself heading into the final stretch of 2008.  As shown below, AIG is now down 77.7% on the year.  GM ranks second with a decline of 46.6%, followed by MRK (-41.7%), C (-38%), and then GE in fifth (-27.7%).  It will take a doozy for another Dow stock to beat AIG at this point, but if we've learned anything this year, it's that anything can happen in this market.

5worst_2

 

Friday
Sep122008

US Dollar Index

Today's intra-day decline of 1.37% in the US Dollar index would make it the 15th worst one-day decline for the currency over the last ten years.  However, as shown in the chart below, today's declines haven't even put a dent in the uptrend that has been in place for the currency since its rally began on July 15th.

Dollar912

Worstdollar_2   

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Friday
Sep122008

S&P 500 Financials

While some Financial stocks have been dealing with their fair share of turmoil this week, the sector itself hasn't had that bad of a week.  As shown in the chart below, while the sector has come in some this week, it's still well above its July and August lows.

Finlsec

Below we highlight the ten best and worst performing stocks in the S&P 500 Financial sector this week.  The moves in stocks on the downside look like they could be yearly changes.  Lehman is down the most at -77.8%, followed by AIG (-45%), MER (-36.4%) and WM (-36.3%).  Currently, 44% of stocks in the sector are up this week, and ZION is leading the way with a 9.28% gain.  Other winners this week include BK, WFC, BBT and CME.

Financialstocks

 

Friday
Sep122008

Bespoke's Investor Presidential Survey Inline With Real Clear's Average

The results from our Investor Presidential Survey this week have McCain leading Obama 48% to 45%, right inline with realclearpolitics.com's national average.  And as shown in the bottom chart below, McCain has now overtaken Obama for the lead in the Intrade "money where your mouth is" race.  Obama's Intrade contract peaked on July 15th at 68 and is now at 47.9, while McCain's contract has risen from 30 on 7/15 to its current price of 53.3.  It will be interesting to see if the momentum continues in both directions for the two candidates, or if McCain is now "overbought" and Obama is "oversold".

Obamamccain912

Intrade912 

Friday
Sep122008

Percentage of Stocks Above Their 50-Day Moving Averages

Even as the market has been tossed around this week, more than 50% of S&P 500 stocks are trading above their 50-day moving averages.  Below we highlight historical charts of this 50-day indicator for the S&P 500 and its ten sectors.  As shown, the two Consumer sectors are really keeping this market on its legs.  The Consumer Staples sector has 73% of stocks above their 50-days, while the Discretionary sector is up at 83%.  And surprisingly, the Financial sector ranks third at 69%.  Energy continues to bring the market down, and just 5% of stocks in the sector are above their 50-days.  And after staging a nice rally for parts of August, the Tech sector has pulled all the way back down to 27%.

Spx50day_2

50day41

50day42

50day43   

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Thursday
Sep112008

Bespoke's Paul Hickey on Bloomberg TV Today (9/12) at 7:30 am

Bloomberg_2 Bespoke's Paul Hickey will appear on Bloomberg TV at around 7:30 am on Friday (9/12) to discuss various characteristics of historical market bottoms.

To see Wednesday's interview on CNBC, please click on the image below:

Cnbc091008

Thursday
Sep112008

Positive Reversals

After opening down more than 1.5% in the morning, the S&P 500 managed to rally intraday and finish the day more than 1% higher.  While this type of volatility seems like normal now, reversals like today aren't too common.  Since 1987, there have only been 26 other days where the S&P 500 was down more than 1% at one point, only to finish the day at least 1% higher, and three of them have occurred this year.  The only other years where there were three or more of these type of reversals were in 1987 (3), 1990 (3), 1998 (5), and 2002 (6).  Judging by those years, it would be wise to keep your seat belts fastened,

Positive_reversals_091108

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Thursday
Sep112008

S&P 1500 Stocks With The Highest Short Interest

Yesterday's release of the bi-monthly short interest figures showed that short sellers trimmed their bets for the third period in a row.  As of August 29th, the average short interest as a percentage of float for stocks in the S&P 1500 declined to 10.7% from a peak of 11.9% on July 15th.  While the initial declines were attributed to the SEC's temporary short-term ban on naked short selling, the recent declines have come after the temporary order expired in August while the SEC was on summer vacation.

Short_interest_091108

Looking at individual stocks, there are currently 13 in the S&P 1500 which have over half of their float sold short, and one stock (JOSB) has more than 100% of its float sold short.  Interestingly, even with such a high level of short interest, JOSB has managed to show a YTD gain!  As one might expect, with the exception of Arthrocare (ARTC), which is in the Health Care sector, every other stock on the list comes from either the Consumer Discretionary or Financial sector.

Short_interest_stocks_091108

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Thursday
Sep112008

T. Boone Pickens Stocks Struggle

Judging by the performance of T. Boone Pickens' stock holdings at the end of the second quarter, it hasn't been a good couple of months.  While there's no telling yet what Pickens has done in his BP Capital fund this quarter, if he has simply done nothing, the fund's equity holdings would be down 32.26% since the end of June.  That's what happens when you run an energy fund and oil loses a third of its value in two months.  As shown, SD is down the most at 62%, followed by BZP, FWLT and KBR (all down more than 50% in the second half of the year).  Only one of BP Capital's holdings at the end of the second quarter is up this quarter, and it was the fund's smallest position (CLNE).  As we wrote earlier, who knows what Pickens has done with his holdings this quarter, but it's hard to imagine that he's not suffering some big losses.

Bpcap

Thursday
Sep112008

Investor Sentiment: Uncomfortably Numb

With the S&P 500 near its closing lows from July, one would expect negative investor sentiment to be nearing its prior highs.  However, in this morning's release of the weekly poll from the American Association of Individual Investors (AAII), bearish sentiment still remains below its highs from earlier in the year.  At the March lows, negative sentiment hit 59.15%.  At the July lows, bearish sentiment hit 58.14%.  Today, bearish sentiment came in at 54.88%.  Apparently, investors are becoming numb to the pain.

Aaii_bearish_sentiment_091108

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