The Fed and where stocks go from here

This post is by Peter Boockvar from The Big Picture

Click here to view on the original site: Original Post

The main issue the Fed faces in the next few months is what to do with the end of their purchases of mortgage debt. Let it expire and end the biggest portion of their QE policy at the risk of higher mortgage rates or extend and expand it because of worry of higher mortgage rates? In the release of the minutes from the Dec meeting, “all members agreed that no changes to the Committee’s large scale asset purchase programs…were warranted at this meeting” as the economic outlook hadn’t changed much since their Nov meeting. They did say though that they will “continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in the financial markets.” A few members were worried about the wide output gap and wanted “more policy stimulus” especially if growth faltered and mortgage problems arose. One wanted to scale back the asset purchases.

The US Treasury market, Fed and the level of interest rates hold the key to stock market performance in 2010 and the thesis will specifically be put to the test just in the next few months. If the Fed decides to stick to their current plan to end the purchases of MBS/Agency debt by March 31st, yields are going higher with mortgage rates following and stocks are going lower as they’ve already priced in, in my opinion, a healthy rebound in corporate earnings. If the Fed caves in because of the fear of what higher rates will do to a still fragile but improving economy and announces another round of asset purchases, aka more money printing, no matter what the size, the reflation trade will be in full force, the US$ will resume its downward trend and nominal gains in stocks will continue.

Cressey & Co. Creeps Toward Lowered Target With Latest Close

This post is by Erin Griffith from Pe Hub Blog: Firms & Funds

Click here to view on the original site: Original Post

After two years in the market, buyout firm Cressey & Co. has gathered just over $300 million in commitments toward its first fund since spinning off from Thoma Cressey Bravo in 2007.

The effort had an initial target of $500 million, but the firm has since lowered that figure to around $400 million, peHUB has learned. Cressey & Co. plans a final close in the first half of 2010, with Park Hill and Shannon Advisors serving as the fund’s placement agents. A call to partner Bryan Cressey was not returned.

The firm split amicably from Thoma Cressey Bravo two years ago, in order to separate funds focused on different industries. Cressey & Co. invests exclusively in healthcare services companies while Thoma Bravo buys companies in software, education, distribution, financial services and consumer goods and services. In March, Thoma Bravo closed its first solo fund with $822.5 million in capital commitments.

Cressey argued at the time that an increase in life expectancy will drive the need for more health care services. He also noted that buyout firms to shy away from health care services because of regulatory complexities, giving his firm less pricing competition on deal opportunities.

Since the split, Cressey & Co. has added Bill Frist, former U.S. Senate Majority Leader, as a partner. Senator Frist was the first practicing physician to be elected to the U.S. Senate since 1928. The firm also partnered up with Ralph Davis, chairman of law firm Waller Lansden Dortch & Davis LLP.

Cressey and Thoma Bravo continue to share an office space (which of course made me wonder about LP jealously issues) and jointly manage their past funds (including one with Select Medical Corp., which recently filed for a $300 million IPO). Thoma Cressey Bravo’s two most recent funds, Thoma Cressey Bravo VII LP and Thoma Cressey Bravo VIII LP have performed relatively well, with Fund VII posting a return in the high 30% range (at year-end 2008, based on an earlier peHUB story). Fund VIII is too early to tell.

Fund VI, on the other hand, has had a rough go of it, thanks to exposure to companies serving the telecom space. Those businesses watched their customers crumble under the 2001 tech and telecom meltdown. Fund VI will likely break even, with returns ranging from 2% to 6%.

So why is Cressey & Co. having a difficult journey to close its fund? In July 2008, Buyouts quoted one potential investor saying he passed on the fund in lieu of another healthcare fund with a larger team and a wider mandate of healthcare investments than just services companies.

Twitter Starting to Pop Up in Ad Deals

This post is by Tom Johansmeyer from BloggingStocks

Click here to view on the original site: Original Post

Filed under: , , ,

The New York Times (NYT) is putting its 2.3 million followers to work. It isn’t ready to start charging a la carte for Twitter advertising, but it is including the channel in the comprehensive packages it presents to advertisers. And, the Times isn’t alone. Several media outlets (including BloggingStocks) have ads running through their Twitter streams, but this is still virgin territory, for the most part, and media companies are still feeling their ways through it.

Continue reading Twitter Starting to Pop Up in Ad Deals

Twitter Starting to Pop Up in Ad Deals originally appeared on BloggingStocks on Wed, 06 Jan 2010 15:00:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments

Add to digg
Add to
Add to Google
Add to StumbleUpon
Add to Facebook
Add to Reddit
Add to Technorati

Flywheel Ventures Raising Fund Two

This post is by Erin Griffith from Pe Hub Blog: Firms & Funds

Click here to view on the original site: Original Post

Flywheel Ventures is seeking $35 million for its second venture capital fund, according to a regulatory filing. The Sante Fe-based firm invests in seed and early-stage information technology and physical sciences companies in the Southwest/Rockies region.

Recent backings include Lingotek, a Salt Lake City-based developer of collaborative translation technology. In January, the firm gained an exit on Groople Inc., an Englewood, Colo.-based provider of Web-based group travel services. The company, which had received more than $23 million in VC funding, sold to Short’s Travel Management.

No commitments to the new fund have been closed on to date.

The firm’s first fund closed in 2005 with $32.5 million in commitments. Note the disctinction between FlyWHEEL and FlyBRIDGE Capital Partners, a different venture firm formerly named IDG Ventures Boston.

Peak Cars, or Just a Car Sales Trough?

This post is by pk from Paul Kedrosky's Infectious Greed

Click here to view on the original site: Original Post

While this comes from an admittedly polemical source — Lester Brown at EPI — the graph shows that for the first time new vehicles sold in the U.S. has fallen below scrappage in the same period. Yes, there are many reasons to believe this is transient, downturn-driven, and aided and abetted by government programs, but it’s an intriguing anomaly.


Blackstone Checks-In a Deal for Highland Hospitality

This post is by Tom Taulli from BloggingStocks

Click here to view on the original site: Original Post

Filed under: ,

The Blackstone Group (BX) is one of the world’s largest private equity real estate investors, with a global portfolio of $23.7 billion. The firm also has extensive hotel holdings. Some of the brands include Hilton, La Quinta, Waldorf-Astoria, Boca Raton Resort & Club and the Trianon Palace Versailles.

In fact, as financing warms up — and valuations remain attractive — Blackstone is starting the year by boosting its holdings. According to a report in the Wall Street Journal (subscription required), the firm is angling to control Highland Hospitality. This was done by making a clever purchase of outstanding debt from Wachovia.

Continue reading Blackstone Checks-In a Deal for Highland Hospitality

Blackstone Checks-In a Deal for Highland Hospitality originally appeared on BloggingStocks on Wed, 06 Jan 2010 14:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Add to digg
Add to
Add to Google
Add to StumbleUpon
Add to Facebook
Add to Reddit
Add to Technorati

Retail Sales in Europe Fell; Praktiker Drops 6%

This post is by Mayank Mehta from Market News

Click here to view on the original site: Original Post

European retail sales fell in November as the economic recovery is still fragile. The Bank of England kept its rates and bond purchase program in place. The ECB and central bank in Switzerland has already begun to unwind their bond purchase programs. Continental AG plan to raise €1.1 billion.

CES: Audiovox Press Conference

This post is by Alexander Eule from Tech Trader Daily

Click here to view on the original site: Original Post

I thought the crowds might have lightened up once away from the big TV makers, but even car-electronics specialist Audiovox (VOXX) has a very full house. I’m just happy to have a seat.

SVP Tom Malone steps up to the mic  and comments on the large crowd.

  • Malone starts by discussing FloTV, the Qualcomm-powered live mobile TV service. Audiovox announced a partnership with Qualcomm (QCOM) at last year’s CES show. Audiovox has the exclusive in-car solution for FloTV.
  • People want what they watch at home in the car, as well, according to Malone. Products started shipping to new car dealers in late December. Retail product will be shipping in less than 30 days. Audiovox has an aggressive distribution plan from there on out.
  • Company shows a CNN clip with President Obama talking to kids about what they want for Christmas. After mostly game-related requests, one child says he wants a FloTV. Crowd is quite amused.
  • Audiovox has been selling a portable TV product called the PTV 350 at (AMZN), Best Buy (BBY) and RadioShack (RSH) since the fall.
  • If folks are worried about texting while driving, I cant wait to see what safety groups have to say about FloTV as it gets popular in cars.
  • Beyond mobile television, Audiovox has also partnered with Sony (SNE) to create a rear-seat Playstation 2 entertainment system. It’s been available for the last two months and includes a drop down 10-inch screen. Everything is one box. Available now at retail and car dealers. Sold every piece available, so far, Audiovox says.
  • New promises: Lexi. A new e-reader under Audiovox’s RCA brand. E-content automatically syncs at night. 7,000 page turns with one charge. Orientation feature. Holds 1,400 standard e-books. Today the company announces a partnership with Barnes & Noble’s (BN) Maybe I’m missing something but I think Barnes & Noble has their own rather talked-about e-reader.
  • Company is also introducing a “personal tracker.” The size of a cigarette lighter. Can track children and senior citizens. Yikes.

Mean Street: Buffett Shows ‘Em How to Negotiate

This post is by Evan Newmark from Deal Journal

Click here to view on the original site: Original Post

You can never be 100% sure about what’s going on in any hostile takeover bid. But here’s what I’d bet is going on behind closed doors at Cadbury’s HQ.

They’re freaking out.


Forget £9 pounds a share. Cadbury will now be sold to Kraft. And Cadbury shareholders will be lucky to get any premium over today’s £7.70 share price.

Certainly, as the Cadbury share price falls to match the Kraft offer, it looks as if its takeover defense is crumbling. And all it took was one simple, but very smart press statement from Kraft shareholder Warren Buffett.

Now, that’s one guy who knows how to negotiate.

It’s amusing to read this morning’s press about Buffett’s masterstroke – a “rebuke” to Kraft, said the WSJ. Kraft CEO “Irene Rosenfeld may well be losing marks,” said the FT’s Lex Column.

Are they kidding?

Warren Buffett is Kraft’s single biggest shareholder. He’s owns 9.4% of the company. He could probably kill the Kraft bid for Cadbury or get rid of Rosenfeld with one or two phone calls.

But yesterday’s press release probably seemed a pretty obvious thing to do. Sure, there’s the case against just issuing Kraft shares: Its shares have languished and the terms of the Cadbury takeover aren’t agreed.

But why not help CEO Rosenfeld out by stopping her from overpaying? Right now, there are no other bidders. After months of speculation about Hersheys and Ferrero and private equity, there is still no viable white knight for Cadbury.

Why not take away her freedom to negotiate against herself?

There’s already plenty of pressure on Rosenfeld to raise Kraft’s bid, to just “get it done.” It’s the dynamic of any big deal – the ups and downs, the hours burned talking with the board and advisers, the hours spent dreaming of running a bigger, better company.

A big deal is a lot of hope and a lot of hours for any CEO. And to walk away? Over a billion dollars or so? How can it seem reasonable to any CEO to just say “no”, to walk away?

But this is exactly why every CEO has a board and it’s exactly why Buffett did what he did. Buffett is giving Rosenfeld the perfect excuse – “Who doesn’t listen to Warren Buffett?” Buffett’s press statement is simply “negotiations” – the art of getting what you want at a price you want.

After all, there is no good reason an extra billion dollars from Kraft’s shareholders should end up in the hands of Cadbury shareholders if in the final reckoning, enough Cadbury’s shareholders will take the current offer.

Who are Cadbury’s shareholders today? Well, there are thousands, but only a handful that really matter – perhaps a dozen institutional fund managers and a dozen hedge funds. (It’s estimated that a quarter or so of Cadbury’s stock is now owned by merger arbs.)

Cadbury Chairman Roger Carr can talk all he wants about Kraft’s “derisory offer” and Cadbury’s long-term value. But how many of those two dozen fund managers want to kick off 2010 with a big fat capital loss on their books?

That’s exactly what they will have if Buffett makes Kraft walk. Weren’t Cadbury’s shares trading well below £6 before the Kraft offer?

Certainly, Cadbury Chairman Roger Carr knows exactly where the shares were trading before the offer. And it’s that thought that will soon compel Carr to pick up the phone, call Omaha and try and do a little negotiating himself.

He shouldn’t be too surprised if Buffett doesn’t return his call.

Doom, the Shorter Version

This post is by pk from Paul Kedrosky's Infectious Greed

Click here to view on the original site: Original Post

Courtesy of Paul Farrell, here is a quick tour of gloomy pronouncements from some of the most bearish folks out there. This sort of thing is always a good tonic, so check Farrell for the whole thing.

4. Johnson: Running out of time before Great Depression 2

Yes, "we’re running out of time … to prevent a true depression," warns former IMF chief economist Simon Johnson. The "financial industry has effectively captured our government" and is "blocking essential reform," and unless we break Wall Street’s "stranglehold" we will be unable prevent the Great Depression 2.

7. Soros: Dollar dead as a reserve currency, nest eggs dying

Billionaire investor George Soros’ "New Paradigm:" America’s 25-year "superboom … led to massive deregulation … blindly chasing free markets … unleashed excessive greed … created the dot-com and credit meltdowns" and a "shadow banking system" of derivatives.

"The system is broken. The current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency," warns Soros. "We’re now in a period of wealth destruction. It is going to be very hard to preserve your wealth in these circumstances."

10. Kaufman: Irrationality replaced reason, science, technology

Henry Kaufman was Salomon’s chief economist and "Dr. Doom" for 24 years: "Why are we so poor at managing our key economic institutions while at the same time so accomplished in medicine, engineering and telecommunications? Why can we land men on the moon with pinpoint accuracy, yet fail to steer our economy away from the rocks? Why do our computers work so well, except when we use them to manage derivatives and hedge funds?"

Kaufman warns: "The computations were correct, but far too often the conclusions drawn from them were not." Why? Selfish, myopic politicians and bankers.

11. Biggs: Sell everything, buy guns, food, head for the hills

In his 2008 bestseller "Wealth, War and Wisdom" former Morgan Stanley research guru Barton Biggs warns us to prepare for a "breakdown of civilization … Your safe haven must be self-sufficient and capable of growing some kind of food … It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc … A few rounds over the approaching brigands’ heads would probably be a compelling persuader that there are easier farms to pillage." Biggs sounds like an anarchist militiaman.

12. Diamond: Nations ignore obvious till it’s too late, then collapse

The end will be swift. In our age of short-term consumerism and instant gratification, few hear the warnings of our favorite evolutionary biologist, Jared Diamond. Societies fail because they’re unprepared, will be in denial till it’s too late: "Civilizations share a sharp curve of decline. Indeed, a society’s demise may begin only a decade or two after it reaches its peak population, wealth and power."

UK Rates, Bond Plan Unchanged; Sainsbury Rises

This post is by Mayank Mehta from Market News

Click here to view on the original site: Original Post

The Bank of England left its key lending rate unchanged at 0.5% and kept its bond purchase plan unrevised. Auto sales in December surged on government incentives. UK home prices increased 1.1% in December and added 5.6% from a year ago. Persimmon gained. J Sainsbury same store sales increased 4.2%.

Walgreen’s December Sales Were Slow

This post is by Brent Archer from BloggingStocks

Click here to view on the original site: Original Post

Filed under: , , ,

WAG logoWalgreen’s (WAGoption chain) stock is trading lower today after the company said its same-store sales fell 0.3 percent last month, the first monthly sales decline since February. According to the company, this dip in sales is due to WAG stocking fewer seasonal items, which is better than the alternative of shoppers just not buying anything. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on WAG.

This morning, WAG opened at $36.16. So far today the stock has hit a high of $37.29 and a low of $35.92. As of 12:00, WAG is trading at $36.84, down 16 cents(-0.5%). The chart for WAG looks neutral and S&P gives WAG a neutral 3 STARS (out of 5) hold ranking.

Continue reading Walgreen’s December Sales Were Slow

Walgreen’s December Sales Were Slow originally appeared on BloggingStocks on Wed, 06 Jan 2010 14:20:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Add to digg
Add to
Add to Google
Add to StumbleUpon
Add to Facebook
Add to Reddit
Add to Technorati

Incoming FOMC Voters Keep Hawk-Dove Balance Mostly Intact

This post is by Real Time Economics from Real Time Economics

Click here to view on the original site: Original Post

The new year brings a new set of voters to the Federal Open Market Committee, but the tilt of the committee won’t change much as hawks are replaced by other hawks and doves by other doves.

The Federal Reserve’s interest-rate-setting body will spend much of the year weighing whether to tighten policy — as futures markets expect — while the economy recovers. But the new voting lineup probably won’t tilt the balance much from the 2009 FOMC.

The four presidents of regional Fed banks joining the rotation this year are James Bullard of St. Louis, Thomas Hoenig of Kansas City, Sandra Pianalto of Cleveland and Eric Rosengren of Boston. They’ll join the eight permanent voters on the FOMC — seven governors of the Federal Reserve Board (two of those positions are now vacant) and the New York Fed president. Every Fed policymaker, including presidents who are not voting this year, gets a voice at the table. But regional bank presidents tend to draw a bit more attention when they’re voters.

In the 2010 lineup, which takes effect at the January 26-27 meeting, Hoenig is likely to be the most hawkish voice on the spectrum, perhaps even dissenting as Jeffrey Lacker of Richmond did last year. As the dovish Janet Yellen of San Francisco moves off the voting slate, Rosengren steps in. (He dissented in late 2007, seeking a deeper rate cut than the rest of the FOMC backed.) The other 2009 voters coming off the rotation, Charles Evans of Chicago and Dennis Lockhart of Atlanta, consistently represented the center of the FOMC behind Fed Chairman Ben Bernanke. On the 2010 rotation, Pianalto is likely to line up with the FOMC’s center. Bullard, who will vote for the first time as a regional bank president, views himself as hawkish — though some economists don’t necessarily describe him that way anymore.

Some recent commentary on the economy and policy from the incoming voters:

St. Louis’s Bullard: He doesn’t see the Fed raising short-term interest rates in 2010, but he wants to consider other steps to tighten policy — such selling mortgage backed securities — if the economy heats up. “I started out saying I was a hawk and I very much see myself in that role. Inflation is very costly for the economy so I’d be very reluctant to let inflation get out of control or do anything that would jeopardize our low and stable inflation rate.”

Kansas City’s Hoenig: “I would not support a tight monetary policy in the current environment, but my experience tells me that we will need to remove our very accommodative policy sooner rather than later,” he said in October. “Even if we were to start immediately, much time would pass before incremental increases could be considered tight or even neutral policy.”

Cleveland’s Pianalto: “We have lived through a brutal recession that is only just starting to lose its grip on the economy, and I do not expect to see a quick turnaround. Our economy must contend with a fragile financial system, a consumer sector that is more inclined to save than to spend, a labor market weakened by a lack of business confidence, and the removal of many governmental supports for the economy. I expect to see a gradual and bumpy recovery as our economy addresses these challenges. Still, despite some concerns that inflation will be unleashed from its anchors, I believe there is enough slack in the economy to keep inflation subdued for some time.”

Boston’s Rosengren: The Fed needs to eventually ease its accommodative fiscal policy as well, but “first we have to get the economy in recovery mode and get us closer to full employment,” he said in October. He talked about the importance of returning to full employment without households becoming over-leveraged in the process. “The goal is not to get leverage back to where it was before. The goal is to get the economy back.” Rosengren added that one of his top concerns as the economy recovers is capital losses in commercial real estate that could hamper the financial sector.

Let the ECB Jockeying Begin

This post is by Real Time Economics from Real Time Economics

Click here to view on the original site: Original Post

By Brian Blackstone and Nina Koeppen

The EU’s Committee on Economic and Monetary Affairs is due to question the three official candidates for ECB vice president at a nonpublic hearing on Jan. 14, Dow Jones Newswires reported Wednesday. European finance ministers will discuss the nominations informally at their next meeting on Jan. 19, with a formal proposal due in mid-February. The candidate must then be approved by EU heads of state.

The candidates to fill the slot currently held by Lucas Papademos of Greece (whose eight-year term expires in May) are Portugese central bank governor Vitor Constancio; Luxembourg’s central bank head Yves Mersch and Peter Praet, who is a director at the National Bank of Belgium.

Of course, the ECB’s number two doesn’t carry nearly the weight in financial markets as ECB president, which has been held since 2003 by Frenchman Jean-Claude Trichet.

But this month’s discussions are effectively a starting gun to a more than 18-month process that will culminate with a replacement to Trichet, whose eight-year term expires in October 2011.

European posts, including those at the ECB, are often subject to considerations over how the region’s large and small economies are represented. The euro zone’s four largest economies – Germany, France, Italy and Spain – have a big voice on the ECB’s governing council with each having a Frankfurt-based executive board member in addition to their national central bank governors.

Based on the 3 candidates, the VP slot will stay with one of the smaller countries. Germany’s Axel Weber and Italy’s Mario Draghi are thought to be leading contenders for the top post. And whoever gets the number-two job, it will inevitably be scrutinized for implications regarding the presidency.