Filed under: Politics, Presidential elections

He made hundreds of millions of dollars running Bain Capital, but Mitt Romney won’t be running the U.S. He announced this afternoon that he is ending his run for the presidency. No doubt, countless Mormons and private equity lobbyists have gone into mourning.

Technically, Romney is “suspending” his campaign. This means that he will keep the delegates he won in his primary victories in Massachusetts, Michigan and Utah. This will give him some influence in the process of selecting the eventual Republican nominee.

Although Romney was a great success in the world of private equity, it didn’t seem to help him in the national campaign. Mike Huckabee’s line about the essential coldness of private equity investors — “I believe most Americans want their next president to remind them of the guy they work with, not the guy who laid them off” — was pretty devastating. I don’t know if that background was Romney’s greatest weakness — his Mormonism didn’t help, nor did his salesman’s tendency to say just about anything to please a given audience — but you can bet there are some disappointed Democrats out there. I’m sure they were looking forward to exposing the layoffs that Romney initiated through his equity investments.

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Filed under: Market matters, Politics, S and P 500, DJIA, Federal Reserve, Technology, Recession, NASDAQ

For those of you living in a cave, virtual gaming is on fire. People are spending hours, days, months of their lives in virtual worlds like SecondLife. These are truly virtual worlds, complete with their own currencies that grease economies in which participants build virtual businesses and bring home real bacon.

So, it’s interesting to read about a lawsuit brought about by two founders of such virtual worlds. The accusations essentially revolve around a plan to make money running the virtual economy of one such world and make massive profit by essentially “printing” infinite currency to sell to participants. Obviously, not Harvard PhDs in economics (although they also often say silly things).

I read about this whole incident on TechDirt, a great website for lots of news and insightful analysis of technology. TechDirt ran an article, More evidence why virtual world economies are risky yesterday that discussed the ins-and-outs of virtual economies and then extended some lessons to something more tangible for many of us: the U.S. economy.

Says TechDirt’s Mike Masnick:

While this suggests the folks in question had little sense of how basic economics works, it also highlights a pretty serious risk in these virtual worlds. At the same time that we’re seeing Ben Bernanke struggling with managing the monetary policy of the US economy, for virtual worlds where there really is no scarcity at all, the temptation to simply flood the market without recognizing the consequences is just too great.

Well said, Mike.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author is also a member of the TechDirt Insight Community.

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Filed under: Bad news, Housing, Recession

Sales of previously-owned homes fell for the second consecutive month in December 2007, signaling that the nation’s worst housing slump in more than 20 years is no where near recovery stage.

The National Association of Realtors’ index of signed purchase agreements decreased 1.5% to 85.9 in December 2007, the group said Thursday, in a statement. Economists had expected the index to fall about 1% in December. The index fell a revised 3% in November 2007, a downward revision.

Another sobering housing stat

Economist Glen Langan told BloggingStocks there’s no way one can sugarcoat Thursday’s housing sector statistic.

Continue reading Pending home sales fall 1.5% in December, signaling housing slump continues

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Filed under: Earnings reports, Technical Analysis, Stocks to Buy

Western Union Company (NYSE: WU) provides a range of money transfer and bill payment services worldwide. Its consumer-to-consumer operations involve multi-currency and real-time processing systems for walk-in, online, and telephone money transfers. Its consumer-to-business operations enable payments to utilities, auto finance companies, mortgage servicers, financial service providers, and governmental agencies. The firm also offers money order products and advance payment services. Western Union does business through a network of more than 335,000 locations, in over 200 countries and territories.

Investors were pleased with the company’s steady results last week, when it reported Q4 EPS of 32 cents and revenues of $1.31 billion. Analysts had been looking for 31 cents and $1.3 billion. Management also guided FY08 EPS to $1.24-$1.28 ($1.26 consensus) and FY08 revenues to $5.34-$5.44 billion ($5.39B consensus). Goldman Sachs Asset Management noted that it held a 6.1 percent stake in the issue.

Continue reading Western Union Company (WU): Shares defining bullish ‘flag’ consolidation

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Filed under: Indices, Money and Finance Today, Technical Analysis, Commodities

Mining stocks don’t always march in lockstep with the price of gold. Among other things, the shares can be affected by money flowing into and out of the overall equity market, as well as changes in company or sector operating fundamentals and investor outlooks.

That said, the shares and the precious metal do tend to loosely track one another; historically, at least, the relationship between the two tends not to move too far out of line. When it happens, however, it can signal a short-term trading opportunity.

Over the past few weeks, mining shares have come under considerable pressure in relation to the metal. In fact, the ratio of the Philadelphia Stock Exchange Gold and Silver Index (XAU) to spot gold has fallen to a level that has, in recent years at least, been a staging point for a relative rebound in the shares.

While it is possible that continuing turbulence in equity markets could produce a different result this time around, the pattern of the past five years suggests it is a good time to go long the shares and sell (or sell-short) the metal.

One way to play it using exchange-traded funds: buy the Market Vectors Gold Miners ETF (AMEX: GDX) and sell the streetTRACKS Gold Trust ETF (AMEX: GLD).

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.

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Filed under: Politics, Presidential elections

He made hundreds of millions of dollars running Bain Capital, but Mitt Romney won’t be running the U.S. He announced this afternoon that he is ending his run for the presidency. No doubt, countless Mormons and private equity lobbyists have gone into mourning.

Technically, Romney is “suspending” his campaign. This means that he will keep the delegates he won in his primary victories in Massachusetts, Michigan and Utah. This will give him some influence in the process of selecting the eventual Republican nominee.

Although Romney was a great success in the world of private equity, it didn’t seem to help him in the national campaign. Mike Huckabee’s line about the essential coldness of private equity investors — “I believe most Americans want their next president to remind them of the guy they work with, not the guy who laid them off” — was pretty devastating. I don’t know if that background was Romney’s greatest weakness — his Mormonism didn’t help, nor did his salesman’s tendency to say just about anything to please a given audience — but you can bet there are some disappointed Democrats out there. I’m sure they were looking forward to exposing the layoffs that Romney initiated through his equity investments.

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Filed under: Consumer experience, Wal-Mart (WMT), Recession

For years, rising home prices and home equity loans helped people with stagnant incomes to keep up with record food and energy prices. With the collapse of the real estate market, it was beginning to look like there was nothing to take up the slack. But this morning, CNNMoney reports, Wal-Mart Stores Inc. (NYSE: WMT) customers who received gift cards over the holidays are using them for “food and consumables rather than discretionary purchases.”

If that’s really true, rather than a convenient excuse for a less-than-perfectly managed retail store experience, then it tells us that the U.S. economy is in a heap of trouble. That’s because a consumer who uses gift cards to buy food instead of gifts is one that is running low on options. Compared to getting money from a pawn shop, a gift card is a compelling way to pay. But once that gift card runs out — and it probably can’t buy more than a month or two of groceries, then what?

Continue reading Can Wal-Mart gift cards take up the slack where home equity left off?

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Filed under: Bad news, Housing, Recession

Sales of previously-owned homes fell for the second consecutive month in December 2007, signaling that the nation’s worst housing slump in more than 20 years is no where near recovery stage.

The National Association of Realtors’ index of signed purchase agreements decreased 1.5% to 85.9 in December 2007, the group said Thursday, in a statement. Economists had expected the index to fall about 1% in December. The index fell a revised 3% in November 2007, a downward revision.

Another sobering housing stat

Economist Glen Langan told BloggingStocks there’s no way one can sugarcoat Thursday’s housing sector statistic.

Continue reading Pending home sales fall 1.5% in December, signaling housing slump continues

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Filed under: Options

Cablevision (NYSE: CVC), an entertainment and communications company controlled by the Dolan family, is recently down 12 cents to $24.11.

The Dolan family has made frequent attempts over the last four years to implement strategic alternatives at CVC.

CVC March option implied volatility of 43 is above its 26-week average of 29, according to Track Data, suggesting larger price movement.

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

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Filed under: Indices, Money and Finance Today, Technical Analysis, Commodities

Mining stocks don’t always march in lockstep with the price of gold. Among other things, the shares can be affected by money flowing into and out of the overall equity market, as well as changes in company or sector operating fundamentals and investor outlooks.

That said, the shares and the precious metal do tend to loosely track one another; historically, at least, the relationship between the two tends not to move too far out of line. When it happens, however, it can signal a short-term trading opportunity.

Over the past few weeks, mining shares have come under considerable pressure in relation to the metal. In fact, the ratio of the Philadelphia Stock Exchange Gold and Silver Index (XAU) to spot gold has fallen to a level that has, in recent years at least, been a staging point for a relative rebound in the shares.

While it is possible that continuing turbulence in equity markets could produce a different result this time around, the pattern of the past five years suggests it is a good time to go long the shares and sell (or sell-short) the metal.

One way to play it using exchange-traded funds: buy the Market Vectors Gold Miners ETF (AMEX: GDX) and sell the streetTRACKS Gold Trust ETF (AMEX: GLD).

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.

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