The Kirk Report

A Timely Reminder Posted: 23 Feb 2009 03:27 PM CST <p>On such ugly day, it is always nice to be able to share a happy chart to serve as a timely reminder of why we're still in this game. Shares of <b>Nova Chemicals (<span id="ticker">NCX</span>)</b> soared <span class="green"><b>+285%</b></span> today on news of being acquired by the country of Abu Dhabi. <p><div style="margin-bottom:5px; margin-top:8px;" align="center"><img src="http://www.kirkreport.com/pictures/ncx_2_23_09.gif" border="0" alt="NCX" width="448" height="327"></div> <p>If you recall, <span id="ticker">NCX</span> was one of the <a href="http://www.kirkreport.com/login.html"><b>36 stocks</b></a> we're currently tracking due to their wide discounts from book value. <p>Apparently those with cash to spend in Abu Dhabi are running value stock screens these days. If the market is going to bottom, we need to see a lot more of the same as vultures go to work.

Read & Weep Posted: 23 Feb 2009 03:03 PM CST Wall Street awaits Treasury details Uncle Ben to the rescue tomorrow? While spending money like madmen, Obama aims to cut deficit by 2013 The financial engineers are at it again The real need for stable economic policies from Washington The economy needs coordination, not money from the government States face tough decisions How California became France Americans #1 fear Can talk of a depression lead to one? Recent economic data shows the recession is getting worse More red flags in credit markets Controlling swaps' risk is still vexing Greenspan's libor barometer Watch those credit card defaults Financial regulators will soon launch a series of stress tests Good news - this will be the last big week for earnings 5 things to watch this week A joint lie by the Treasury, Fed, & FDIC? Fed offers bleak economic outlook Just blame past Fed policy for this mess About that deflation risk Deflating the hype about deflation How about this - we need even more stimulus! With February almost in the can, all eyes on March The pain of mean reversion Do you realize that the Dow has finished the day higher only 36.7% of this time so far this year? Stock market pullback isn't just financial now Are you stumped by the re-test of the lows It's almost like 1929! It is different this time! Makeover calls get popular for the Dow Be leery of Dow Theory Dividend to earnings payout ratio Are valuations still expensive? What about that darn VIX? Feeling greatly depressed? Options traders are bracing for more financial curves Poor investor sentiment The bloggers stay bullish! Can you feel the hope? As stock losses loom, don't throw a hail mary Very interesting - new trends in trading More traders tap stock baskets for industry bets Defensive investors pile into gold and short-selling funds as markets tumble Investors rush into gold coins Gold primed to be mania asset The SKF wags the dog Q&A with Robert Rodriguez Obama's plan will help these industries Health care ETF's $140 billion dollar boost More newspapers file for Chapter 11 Positive vibes for airlines The benefit of a return to old-fashioned, bread-and-butter banking Manhattan's luxury real-estate market is rotting Foreclosure cases overwhelm Florida courts U.S. office vacancy rates jump 16.7% Roger Nusbaum's perspectives on the mortgage plan European leaders agree to double the IMF's resources and back more regulation Dubai gets a $10 billion dollar bailout More skepticism over the relative strength in China Some investors clean up as Eastern Europe totters Another timely lesson from Japan Sentiment around the world is staggeringly bad Sovereign wealth funds to stay passive Currency exchange rates by email The top 30 innovations of the last 30 years Many companies fail to write down ARS losses New York to retrain laid-off Wall Streeters Meredith Whitney moves on Slave labor at Burger King? A double discount at Loews Trading opportunities in biotech? 4 stocks for scaredy-cats 8 possible targets for Exxon's cash Keep tabs on this - China prepares to buy up foreign oil companies! Ponzi + Pyramid = Prepaid Legal Services Another look at ResMed Opportunity in the Treehouse? Top 10 banks....then & now Some reverse engineering to find what's working now On the other hand, the S&P 500 stocks that are the most oversold based on a 12-day moving average 26 S&P companies that have raised dividend payouts annually for 36 years in a row Four companies growing as economy stinks Three profit growers 11 bosses betting big on sinking ships Ten cash-rich, low priced turnaround stocks Looking for action? Some of the market's most volatile stocks Recent outperformers & underperformers John Loeb's 10 pieces of time-tested advice Just call me Mr. Flexible! Three ways to make money in a downturn The index funds win again! Find an ETF by category Contango's cost to Oil ETF investors Schwab plunge into ETFs may open floodgates Tough times for Buffett investors Fidelity's double down trade in Citi goes awry Are you investing/trading like the penguin or ostrich? End of 401(k) match sparks new strategies Some interesting psychology behind the Twitter phenomenon IRA Dos and Don'ts Mortgage help: do you qualify? How to pay off credit card debt in 10 simple steps Personal Finance = Personal Responsibility What millionaires want from brokerage websites Sign of the times - diversion safes fly off the shelves A couple of websites that will help you save money online - Shop It To Me & Retail Me Not Learn from your mistakes - 7 dumb things we do and 8 tricks to keep errors at bay Achieve your dreams despite pressures of work and family 13 things you must balance in your life "The greatest mistake you can make in life is to be continually fearing you will make one." - Elbert Hubbard

Bailout Backlash Posted: 23 Feb 2009 10:19 AM CST It was only a matter of time before someone decided to create a nifty bailout calculator: This calculator was developed by Right.org which also offers a petition for Americans to sign who are unhappy with these expenditures. Indeed, citizens across the USA are beginning to protest. * Traders aren't too happy either as efforts to block the new trader tax heat up. What interesting times we live in!

Q&A With Mebane Faber Posted: 23 Feb 2009 08:13 AM CST For February's Q&A, I've asked portfolio manager Mebane Faber to be our guest. His firm, Cambria Investment Management, focuses on quantitative investment strategies. Mebane is a frequent speaker and writer on investment strategies and has been featured in Barron's, The New York Times, Real Money, Seeking Alpha, and The New Yorker. I learned about him some time ago through his excellent blog, World Beta. Recently, Mebane also co-founded a new website - AlphaClone - which is focused on building portfolio clones based on the holdings of the world's top fund manager's. Finally, Mebane also has a new book coming out next month called "The Ivy Portfolio." Mebane is well-known in the investment world. His research paper, "A Quantitative Approach to Tactical Asset Allocation," has attracted a tremendous amount of positive attention as it outlines a very simple timing method that has improved returns versus a buy-and-hold strategy by reducing portfolio risk and trading frequency all while being invested in the market approximately 70% of the time. In this Q&A, we'll talk quite a bit about this approach and other perspectives I think will help you tremendously with your long-term investing and market-timing.....[READ]

End-Of-February Relief Trade Posted: 23 Feb 2009 08:09 AM CST Good morning. Premarket futures are showing a positive bias. Strength in overseas markets and news that the U.S. government plans to increase its stake but not fully take over Citigroup and other banks eased some of the nationalization fears we saw last week. In other news, investors are looking at the latest Chicago Fed Index, Treasury advisers have started lining up the biggest bankruptcy loan ever in case General Motors and Chrysler need it, and another survey of business economists remains bleak. We also have a fresh press release from the government regarding the new Capital Assistance Program. Premarket gainers: C, FITB, MS, BAC, WFC, JPM, GE, OCNF, NCX, BCS, DRYS, RBS, HST, BQI, ACAS, ALD, ICO, GNW, LVS, GEOY, EGLE, PALM, UAUA, SNAK, ZION, GERN, FSLR, ENER, & SOHU. Premarket losers: GOLD, UBS, CS, MT, WYN, NYT, AEF, HCS, HS, & BRKL Today we have the 10:30 Dallas Fed Manufacturing Survey and Fedpeak from both Lockhart (12:40PM) and Fisher (6:PM). Beyond the latest from the government and financials, the two big market movers this week will be durable orders and the GDP. Traders will also be watching for any hints of stability in the housing sector as new home and existing home sales reports are provided. While the Monday after expiration is often a negative day for the market, we're oversold enough here for a short-term relief trade. After that, things get much more difficult to figure out especially given the lack of clarity and confidence in the market, financials, and the government's plans. In the S&P 500, for example, we could rally up into the mid 800s and still not change the negative technicals so, while we have room for a profitable relief trade, we have a long way before the damage we've seen is repaired. Let's make it a great week!

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Wall Street Breakfast: Must-Know News

Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby

• Citigroup moves closer to Nationalgroup. Sources say federal officials and Citigroup (C) are in talks that could result in the government holding as much as 40% of Citigroup's common stock. Bank executives, who proposed the plan to regulators, hope the stake will be closer to 25%. If the discussions move forward, a significant portion of the $45B in preferred shares held by the government would be converted to common shares. The move wouldn't require additional taxpayer money, but would dilute the holdings of current Citigroup shareholders. The move could also put downward pressure on other banks' stocks on increased speculation that some troubled banks will accept similar arrangements. Citi's shares closed below $2 on Friday, an 18-year low, but are +12.8% premarket to $2.20 (7:00 ET).
• Massive bankruptcy loan in works, just in case,... Advisers to the Treasury have started lining up the biggest bankruptcy loan ever in case General Motors (GM) and Chrysler need it. Sources say officials are speaking to banks and lenders about arranging at least $40B in bankruptcy financing for the troubled automakers, though officials stress they are still trying to find a way to make restructuring work without bankruptcy proceedings and call these latest efforts part of their 'due diligence.' Advisers are also looking for ways to ensure that in the event of a bankruptcy, the government would be paid back before private creditors.
• ...and more requests for money. General Motors (GM) and Chrysler have told Canadian officials they need as much as C$10B ($8B) to stay afloat, more than twice their estimate from three months ago. Even with aid, GM plans to cut its Canadian workforce to 7,000 by next year from 20,000 in 2005. GM Canada's restructuring plan also warned its pension and healthcare benefits were unsustainable.
• Big-spending Obama wants to halve the deficit. Obama spearheaded the effort to approve billions of dollars in stimulus spending, but apparently cares about the deficit too. After inheriting a $1.3T deficit from the previous administration, equal to 9.2% of GDP, Obama is expected to promise to cut the deficit in half (to $533B) by the end of his first term. Measures to bring the deficit under control include letting Bush's tax cuts for the wealthy lapse, taxing hedge fund profits at ordinary rates and cutting spending for the war in Iraq. Obama will hold his first 'fiscal-responsibility summit' later today.
• Changes afoot at RBS. Royal Bank of Scotland (RBS) plans to cut costs by more than £1B ($1.44B) and will achieve some of the savings by scaling back its investment banking and reportedly cutting around 20,000 jobs. The bank's plan is still under wraps, but sources say RBS will split itself into two units over the next three to five years. One unit will include the U.K. and other 'core' businesses, while the second unit will hold operations that are less central to the lender. Sources say RBS is also working to put £200B of assets into a government insurance plan meant to protect lenders from potential losses, will withdraw from some countries in Asia and will discontinue certain product lines. An RBS spokesman declined to comment. Shares +17.3% premarket (7:00 ET).
• Yahoo plans overhaul. Yahoo (YHOO) CEO Carol Bartz is planning a company-wide reorganization that could be announced as soon as this week. The plan aims to make decision-making at the company quicker, and to streamline the appearance of Yahoo products by consolidating company-wide functions like marketing and product development into individual stand-alone groups. The changes underscore Bartz's belief in a more top-down managerial approach, and follow a pattern she set while CEO of Autodesk where she moved quickly to bring in new execs and more hands-on leadership.
• More newspaper bankruptcies. Philadelphia Newspapers LLC, owner of the Philadelphia Inquirer and Philadelphia Daily News, filed for bankruptcy yesterday as advertising sales continued to deteriorate. Journal Register Co., the owner of 20 daily newspapers, sought bankruptcy protection the day before, also because of 'slumping advertising revenues.' The filings are further indications of how hard the economic downturn has hit the newspaper industry.
• Vodafone looks to cut costs. Vodafone (VOD) is reportedly planning to cut hundreds of jobs in the U.K. to bring down costs and protect earnings. CEO Vittorio Colao is pushing managers to eke out more profit from existing operations. The measures will likely be announced tomorrow.
• Currency defense in Asia. Thirteen Southeast Asian nations, including Japan, China and South Korea, have agreed to pool $120B to be used to defend their currencies amid the deepening global recession. The amount is 50% more than the sum proposed last May. Thailand Finance Minister Korn Chatikavanij said a regional currency agreement is "one of our highest priorities" and vital to "ensuring market confidence in the Asian economies."
• Economists glum on outlook. A recent NABE survey of business economists shows the U.S. recession is expected to be the worst in over three decades. According to the survey, the economy will shrink by 1.9% this year and by a total of 2.8% in the current downturn. 2009 will see another 3.2M U.S. jobs lost, pushing unemployment to 9%. Eight out of ten economists predicted Obama's stimulus plan would provide a one percentage point bump at most to this year's GDP.

Earnings: Monday Before Open

• Garmin (GRMN): Q4 EPS of $0.93 misses by $0.05. Revenue of $1.05B (-13.9%) vs. $1.12B. (PR)

Today's Markets

• China and Hong Kong stocks posted solid gains Monday, but Tokyo lost ground after lender SFCG filed for bankruptcy, stoking concerns more companies will fail. Nikkei -0.54% to 7,376. Hang Seng +3.75% to 13,175. Shanghai +1.96% to 2,306.
• In Europe stocks opened higher and remain up at midday. London +0.2%. Paris +1%. Frankfurt +1%.
• U.S. stock futures have moved higher in the overnight session. Dow +1.1% to 7432. S&P +1.2% to 778.50. Nasdaq +1.2%. Crude +0.95% to $40.42. Gold -1.05% to $992. 30-year bond futures -0.65% to 126-25+.

Monday's Economic Calendar

• 8:30 Chicago Fed National Activity Index
  10:30 Dallas Fed Manufacturing Survey
  12:40 PM Fed's Lockhart speaks on U.S. economy
  6:00 PM Fed's Fisher speaks on the financial crisis
• Notable earnings before Monday's open: CPB, DDR, HMA
• Notable earnings after Monday's close: DTE, FST, GGP, HL, HTZ, JWN, MHK, OKE, WLL

Seeking Alpha editor Eli Hoffmann contributed to this post.

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