Filed under: Citigroup Inc. (C)

Amid concern that rising credit card defaults may be the next shoe to drop in the consumer crisis that began with the subprime meltdown, Citigroup (NYSE: C) is taking steps to protect itself in the United Kingdom [subscription required].

According to the Wall Street Journal, the bank’s Egg subsidiary, which offers credit cards in the region, has sent letters to 161 thousand customers telling them that starting in March, they will no longer be able to tap the company for credit. This amount to a one-time cancellation of about 7% of Egg’s customers.

A Citigroup spokesman told the Journal that “Egg is sorry that some customers are upset after receiving notification that it is ending their credit agreements. Egg has decided that it no longer wishes to offer credit to these customers after conducting a one-off, extensive review of its credit card book.”

It looks like the banks may be learning their lesson from the subprime mess: lending money to people who probably can’t pay it back is a poor business model.

Moves like this one should be seen as bullish for investors, because it shows that the banks are finally willing to put prudence over short-term profit. Loans with bad long-term prospects can juice up earnings for a little while, but in the long run, banks need them to be paid back.

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Filed under: Citigroup Inc. (C)

Amid concern that rising credit card defaults may be the next shoe to drop in the consumer crisis that began with the subprime meltdown, Citigroup (NYSE: C) is taking steps to protect itself in the United Kingdom [subscription required].

According to the Wall Street Journal, the bank’s Egg subsidiary, which offers credit cards in the region, has sent letters to 161 thousand customers telling them that starting in March, they will no longer be able to tap the company for credit. This amount to a one-time cancellation of about 7% of Egg’s customers.

A Citigroup spokesman told the Journal that “Egg is sorry that some customers are upset after receiving notification that it is ending their credit agreements. Egg has decided that it no longer wishes to offer credit to these customers after conducting a one-off, extensive review of its credit card book.”

It looks like the banks may be learning their lesson from the subprime mess: lending money to people who probably can’t pay it back is a poor business model.

Moves like this one should be seen as bullish for investors, because it shows that the banks are finally willing to put prudence over short-term profit. Loans with bad long-term prospects can juice up earnings for a little while, but in the long run, banks need them to be paid back.

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Filed under: Forecasts, Industry, Economic data, Commodities, Agriculture, Housing

A quick look at freight traffic via railroads indicates no surprising changes in our economic landscape. However, the numbers do reaffirm some interesting trends. Total rail freight volume for the fourth week of January 2008 was estimated at 32.4 billion ton-miles, a decrease of 1.2% from one year ago. Some of the decline is attributed to severe weather conditions early in the month, especially in the eastern states.

What bears special concern in the Association of American Railroads rail freight traffic report are the few categories of freight that are showing significant reductions in rail freight loading volume when compared to 2007. Coal coke, which is used mainly as an industrial fuel showed a major decline in loading volume of 36.8%. This could be due in part to a shifting away from hydrocarbon fuels. Lumber and wood products loadings declined by a significant 22.35%, which does not bode well for the construction and furnishing trades. Primary forest product loadings dropped by 19.9% which further indicates a slow start to the coming building season.

Continue reading AAR report on freight movement via railroads

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Filed under: Forecasts, Industry, Economic data, Commodities, Agriculture, Housing

A quick look at freight traffic via railroads indicates no surprising changes in our economic landscape. However, the numbers do reaffirm some interesting trends. Total rail freight volume for the fourth week of January 2008 was estimated at 32.4 billion ton-miles, a decrease of 1.2% from one year ago. Some of the decline is attributed to severe weather conditions early in the month, especially in the eastern states.

What bears special concern in the Association of American Railroads rail freight traffic report are the few categories of freight that are showing significant reductions in rail freight loading volume when compared to 2007. Coal coke, which is used mainly as an industrial fuel showed a major decline in loading volume of 36.8%. This could be due in part to a shifting away from hydrocarbon fuels. Lumber and wood products loadings declined by a significant 22.35%, which does not bode well for the construction and furnishing trades. Primary forest product loadings dropped by 19.9% which further indicates a slow start to the coming building season.

Continue reading AAR report on freight movement via railroads

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Filed under: Options

Buffalo Wild Wings(NASDAQ:BWLD) owns, operates and franchises 495 restaurants featuring chicken wings. BWLD is expected to report Q4 EPS on February 12. BWLD is recently down 61c to $24.74. BWLD call option volume of 740 contracts compares to put volume of 2,847 contracts. BWLD February 25 straddle is priced at $5.40. BWLD March option implied volatility of 80 is above its 26-week average of 56 according to Track Data, suggesting hedging for downside price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Options

Buffalo Wild Wings(NASDAQ:BWLD) owns, operates and franchises 495 restaurants featuring chicken wings. BWLD is expected to report Q4 EPS on February 12. BWLD is recently down 61c to $24.74. BWLD call option volume of 740 contracts compares to put volume of 2,847 contracts. BWLD February 25 straddle is priced at $5.40. BWLD March option implied volatility of 80 is above its 26-week average of 56 according to Track Data, suggesting hedging for downside price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Indices, Market matters, Money and Finance Today, Technical Analysis, S and P 500, Federal Reserve

Many financial stocks have been on a tear since the Federal Reserve’s surprise 75-basis point inter-meeting rate cut on January 22. For example, the KBW Bank Index — which has an equivalent exchange-traded fund, the KBW Bank ETF (AMEX: KBE) — has rallied 16.1%, beating the S&P 500 index by more than 10 percentage points.

Yet not all financial sub-groups have kept pace with the banks. For instance, after performing well in relative terms during the fourth quarter, insurers have stalled, with the KBW Insurance Index — which has an equivalent exchange-traded fund, the KBW Insurance ETF (AMEX: KIE) — more-or-less tracking the move in the overall market in recent weeks.

Continue reading Insurers poised for a bounce relative to banks?

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Filed under: Indices, Market matters, Money and Finance Today, Technical Analysis, S and P 500, Federal Reserve

Many financial stocks have been on a tear since the Federal Reserve’s surprise 75-basis point inter-meeting rate cut on January 22. For example, the KBW Bank Index — which has an equivalent exchange-traded fund, the KBW Bank ETF (AMEX: KBE) — has rallied 16.1%, beating the S&P 500 index by more than 10 percentage points.

Yet not all financial sub-groups have kept pace with the banks. For instance, after performing well in relative terms during the fourth quarter, insurers have stalled, with the KBW Insurance Index — which has an equivalent exchange-traded fund, the KBW Insurance ETF (AMEX: KIE) — more-or-less tracking the move in the overall market in recent weeks.

Continue reading Insurers poised for a bounce relative to banks?

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Filed under: Newsletters, Commodities, Oil, Stocks to Buy

“I am adding Enterprise Products Partners (NYSE: EPD) to my ‘Deep-Discount’ portfolio,” says Nathan Slaughter, editor of Half-Priced Stocks.

The advisor explains, “Enterprise is among the nation’s largest pipeline operators, owning nearly 900 miles of crude oil pipelines and 33,000 miles of natural gas, natural gas liquids (NGL), and petrochemical pipelines.” Here is his review.

“Following a series of acquisitions, Enterprise is now one of the nation’s largest publicly-traded energy partnerships. As a master limited partnership (MLP), the company is generally exempt from federal income taxes, provided it distributes the lion’s share of its cash flows to shareholders (technically referred to as unitholders.)

“This special status allows MLPs to shell out generous payments, although these distributions typically don’t qualify for the reduced 15% dividend tax rate.

“As opposed to the ‘upstream’ business of exploration and production, Enterprise is a ‘midstream’ energy player — a sector coveted for its steady cash generation potential. Much of Enterprise’s diverse revenue stream comes from pipeline charges, which are influenced more by volume flow than by volatile commodity prices.

Continue reading Enterprise Products (EPD): Pipeline to profits

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Filed under: Newsletters, Commodities, Oil, Stocks to Buy

“I am adding Enterprise Products Partners (NYSE: EPD) to my ‘Deep-Discount’ portfolio,” says Nathan Slaughter, editor of Half-Priced Stocks.

The advisor explains, “Enterprise is among the nation’s largest pipeline operators, owning nearly 900 miles of crude oil pipelines and 33,000 miles of natural gas, natural gas liquids (NGL), and petrochemical pipelines.” Here is his review.

“Following a series of acquisitions, Enterprise is now one of the nation’s largest publicly-traded energy partnerships. As a master limited partnership (MLP), the company is generally exempt from federal income taxes, provided it distributes the lion’s share of its cash flows to shareholders (technically referred to as unitholders.)

“This special status allows MLPs to shell out generous payments, although these distributions typically don’t qualify for the reduced 15% dividend tax rate.

“As opposed to the ‘upstream’ business of exploration and production, Enterprise is a ‘midstream’ energy player — a sector coveted for its steady cash generation potential. Much of Enterprise’s diverse revenue stream comes from pipeline charges, which are influenced more by volume flow than by volatile commodity prices.

Continue reading Enterprise Products (EPD): Pipeline to profits

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