Some of New York's biggest companies, including Wall Street giants Goldman Sachs and Citigroup, received doses of swine flu vaccine for at-risk employees, drawing criticism that the hard-to-find vaccine is going first to the privileged.
Hospitals, universities and the Federal Reserve Bank also got doses of the vaccine for employees who need it the most, such as pregnant women or chronically ill workers, according to the city's health department.
In order to receive the vaccine, companies had to have their own medical staff. Distributing large doses of the vaccine to such businesses is "a great avenue for vaccinating people at risk," said Jessica Scaperotti, spokeswoman for the city Department of Health and Mental Hygiene.
But critics said Wall Street firms should not have access to the vaccine before less wealthy Americans.
"Vaccines should go to people who need them most, not people who happen to work on Wall Street," Democratic Sen. Chris Dodd of Connecticut said Thursday.
"Wall Street banks have already taken so much from us. They've taken trillions of our tax dollars. They've taken away people's homes who are struggling to pay the bills," union official John VanDeventer wrote on the Web site of the 2 million-member Service Employees International Union. "But they should not be allowed to take away our health and well-being."
Meanwhile, the director of the federal Centers for Disease Control and Prevention sent a letter Thursday to state and local health departments asking them to review their distribution plans and make sure the vaccine is getting to high-risk groups.
Dr. Thomas Frieden said any decisions that appear to send vaccine beyond high-priority groups "have the potential to undermine the credibility of the program."
Swine flu vaccine has been in short supply nationwide because of manufacturing delays, resulting in long lines at clinics and patients being turned away at doctor's offices. The vaccine started trickling out in early October, and there are now nearly 36 million doses available.
The government-funded vaccine is being distributed to states, where health departments decide where to send the limited doses.
In New York, doctors at companies that have employee health services can request the vaccine along with other doctors but must agree to vaccinate only high-risk employees, Scaperotti said.
Last month, the city began offering vaccine to schoolchildren, as well as to pediatricians and obstetricians who asked for it. Scaperotti said two-thirds of the pediatricians in New York City have requested vaccine.
New Yorkers who cannot get the vaccine at work are receiving it from their doctors — if their doctors have it — or at community health clinics.
About 50 people waited to be vaccinated Thursday at a city-run clinic in Manhattan's Chelsea neighborhood. Matt Bohart said he and his 82-year-old father, Eugene Bohart, had been waiting for three hours for both swine flu and seasonal flu vaccines.
The younger Bohart said the fact that employees of some companies can get the vaccine at work seemed "not really fair."
But he added, "I don't begrudge the people who get it as long as others can get it as well."
Dr. William Schaffner, a flu expert at Vanderbilt University, said allocation of limited vaccine is tricky. CDC guidelines provide a list of patients who should be at the front of the line: children and young people through age 24, people caring for infants under 6 months, pregnant women, health care workers, and adults with health conditions such as asthma and diabetes.
Schaffner said that if corporations are giving shots to at-risk people, the distribution may have been appropriate. But he acknowledged there's "an appearance of potential irregularity."
Still, he said, "I have a feeling that if it were a Ford dealership that got vaccine, there wouldn't be quite as much excitement."
Scaperotti said 50 employers in New York City have received the vaccine so far. Besides Goldman Sachs and Citigroup, they include Time Inc. and hospitals such as Memorial Sloan-Kettering Cancer Center.
Goldman Sachs has received 200 doses, and Citigroup has received 1,200, health officials said.
In statements, Citigroup and Goldman Sachs said the vaccine would only go to those in high-risk groups.
"Goldman Sachs, like other responsible employers, has requested vaccine and will supply it only to employees who qualify," spokesman Ed Canaday said.
Morgan Stanley received 1,000 doses of the vaccine for its New York and suburban offices, but the company turned over its entire supply to local hospitals when it learned it received shipments before some area hospitals, spokeswoman Jeanmarie McFadden said.
Associated Press writers Stephen Bernard and Sara Lepro in New York City, Mike Stobbe in Atlanta and Valerie Bauman in Albany, N.Y., contributed to this report.
Wednesday, November 11, 2009
Sunday, May 31, 2009
When do you shower?
It should come as no suprise that those who take a shower before they leave for work are being treated, by the Federal Government, better than those who shower after they come home form work. What I mean is that banks get 700 billion dollars, while auto makers get 30 billion. That hardly seems fair, when those same banks could forgive the auto-makers debt. Also the auto industry employees three times as many people as the financial indstry; in fact auto-makers are some of the banks biggest clients.
Why is a semi-socialized banking system OK but the same is not acceptable for the automakers. Unlike Citi, GM didn't have a bad business model. This hardly seems fair.
Why is a semi-socialized banking system OK but the same is not acceptable for the automakers. Unlike Citi, GM didn't have a bad business model. This hardly seems fair.
Wednesday, May 20, 2009
The new 40 acres and a mule
On paper Citi's common stock has a book value of approximately $22 billion dollars. However, the US Governement has given the bank more than $45 billion dollars in taxpayers money. For an investmetn like that each tax payer could and probably should have recieved 18.4 shares of Citi. But that did not happen, instead the executives adn VPs there keep hundreds of thousands of shares adn the US citizens got the sort end of the stick. All because Citi was "too big to fail". So its OK if a homeowner failes, he can be kicked out f his home; but if the mortgage company failes then its a problem.
Friday, May 1, 2009
U.S. Bank Stress Test Results Delayed
May 1 (Bloomberg) -- The Federal Reserve is postponing the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials.
The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as today, they said.
Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices.
“Everybody understands they’ve got a tiger by the tail here,” said Mark Tenhundfeld, a senior vice president at the American Bankers’ Association in Washington. “If they don’t let him go gently, there will be a lot of mauling going on.”
The 19 firms include Citigroup Inc., Bank of America Corp., Goldman Sachs Group Inc., GMAC LLC, MetLife Inc. and regional lenders including Fifth Third Bancorp and Regions Financial Corp. The banks in the test hold two-thirds of the assets and more than half of the loans in the U.S. banking system, according to a Fed study released April 24.
Regulators are pushing higher minimum capital levels for the banks to determine whether they can survive a worsening recession.
Officials favor tangible common equity equal of about 4 percent of a bank’s assets and Tier 1 capital worth about 6 percent, according to people familiar with the tests of the largest 19 banks. Financial institutions received preliminary results and are being judged on whether they need more capital to ensure they stay above those levels. Earlier in the process, regulators discussed a TCE target of 3 percent, said two people with knowledge of the deliberations.
‘Dominant’ Element
The Fed, which oversaw the stress tests, wants common equity to be the “dominant” element in a bank’s primary capital, according to a central bank report on the test methodology released a week ago. TCE is a measure of a bank’s financial health that excludes intangible assets such as brand names that can’t readily be used as payments.
Investors and analysts have focused on the TCE ratio as a more accurate benchmark of a bank’s ability to absorb losses. Tier 1 capital is a broader measure of bank health that is commonly used by regulators. Regulators typically look at risk- weighted assets when assessing banks’ financial strength.
Stocks Rally
The Standard & Poor’s 500 Financials Index, which comprises 80 companies, is up 30 percent in the past month as officials played down the prospect of nationalization and the economy showed signs of stability. Shares of Goldman Sachs are up 28 percent over the same period and JPMorgan Chase & Co. has rallied 33 percent.
“One thing the stress tests will do is herald a fundamental shift in approach toward the financial system,” said Stephen Stanley, chief economist at RBS Securities Inc. in Greenwich, Connecticut.
Initially, Stanley said, the Treasury’s Troubled Asset Relief Program treated all banks equally. “Now, finally, there is going to be differentiation. Some banks will get a clean bill of health and others will not,” he said.
The Fed led the stress tests, using as many as 140 staff members working in consultation with 60 people from other bank oversight agencies.
Goldman Sachs Signal
While the banks were ordered not to release the results of the stress assessments prematurely, Goldman Sachs yesterday may have provided a hint with its decision to sell bonds and shares, issuing $2 billion in five-year notes without a government guarantee and making a $750 million stock offering. A spokesman for Goldman Sachs declined to comment.
“You can read between the lines on it that nothing adverse will be coming out next week” about Goldman Sachs, said Ralph Cole, a money manager at Portland, Oregon-based Ferguson Wellman Capital Management Inc., which oversees $2.2 billion.
At least six of the 19 largest U.S. banks require additional capital, according to preliminary results of government stress tests, people briefed on the matter said this week. While some of the lenders may need extra cash injections from the government, most of the capital is likely to come from converting preferred shares to common equity, the people said.
By pushing conversions, rather than federal assistance, the government would allow banks to shore themselves up without the political taint that has soured both Wall Street and Congress on the bailouts. The risk is that, along with diluting existing shareholders, the government action won’t seem strong enough.
Geithner TARP Reassurance
Treasury Secretary Timothy Geithner told U.S. lawmakers yesterday that there is no need for new bank bailout money as of now, said Senate Budget Committee Chairman Kent Conrad.
“He said ‘no, not in the foreseeable future and they’re hoping not at all’,” Conrad, a North Dakota Democrat, said in an interview after Democrats held a closed meeting with Geithner in Washington.
Geithner has said that banks can add capital by a variety of ways, including converting government-held preferred shares dating from capital injections made last year, raising private funds or getting more taxpayer cash. With regulators putting an emphasis on common equity in their stress tests, converting privately held preferred shares is another option.
To contact the reporters on this story: Craig Torres in Washington at ctorres3@bloomberg.net; Robert Schmidt in Washington at rschmidt5@bloomberg.net.
The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as today, they said.
Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices.
“Everybody understands they’ve got a tiger by the tail here,” said Mark Tenhundfeld, a senior vice president at the American Bankers’ Association in Washington. “If they don’t let him go gently, there will be a lot of mauling going on.”
The 19 firms include Citigroup Inc., Bank of America Corp., Goldman Sachs Group Inc., GMAC LLC, MetLife Inc. and regional lenders including Fifth Third Bancorp and Regions Financial Corp. The banks in the test hold two-thirds of the assets and more than half of the loans in the U.S. banking system, according to a Fed study released April 24.
Regulators are pushing higher minimum capital levels for the banks to determine whether they can survive a worsening recession.
Officials favor tangible common equity equal of about 4 percent of a bank’s assets and Tier 1 capital worth about 6 percent, according to people familiar with the tests of the largest 19 banks. Financial institutions received preliminary results and are being judged on whether they need more capital to ensure they stay above those levels. Earlier in the process, regulators discussed a TCE target of 3 percent, said two people with knowledge of the deliberations.
‘Dominant’ Element
The Fed, which oversaw the stress tests, wants common equity to be the “dominant” element in a bank’s primary capital, according to a central bank report on the test methodology released a week ago. TCE is a measure of a bank’s financial health that excludes intangible assets such as brand names that can’t readily be used as payments.
Investors and analysts have focused on the TCE ratio as a more accurate benchmark of a bank’s ability to absorb losses. Tier 1 capital is a broader measure of bank health that is commonly used by regulators. Regulators typically look at risk- weighted assets when assessing banks’ financial strength.
Stocks Rally
The Standard & Poor’s 500 Financials Index, which comprises 80 companies, is up 30 percent in the past month as officials played down the prospect of nationalization and the economy showed signs of stability. Shares of Goldman Sachs are up 28 percent over the same period and JPMorgan Chase & Co. has rallied 33 percent.
“One thing the stress tests will do is herald a fundamental shift in approach toward the financial system,” said Stephen Stanley, chief economist at RBS Securities Inc. in Greenwich, Connecticut.
Initially, Stanley said, the Treasury’s Troubled Asset Relief Program treated all banks equally. “Now, finally, there is going to be differentiation. Some banks will get a clean bill of health and others will not,” he said.
The Fed led the stress tests, using as many as 140 staff members working in consultation with 60 people from other bank oversight agencies.
Goldman Sachs Signal
While the banks were ordered not to release the results of the stress assessments prematurely, Goldman Sachs yesterday may have provided a hint with its decision to sell bonds and shares, issuing $2 billion in five-year notes without a government guarantee and making a $750 million stock offering. A spokesman for Goldman Sachs declined to comment.
“You can read between the lines on it that nothing adverse will be coming out next week” about Goldman Sachs, said Ralph Cole, a money manager at Portland, Oregon-based Ferguson Wellman Capital Management Inc., which oversees $2.2 billion.
At least six of the 19 largest U.S. banks require additional capital, according to preliminary results of government stress tests, people briefed on the matter said this week. While some of the lenders may need extra cash injections from the government, most of the capital is likely to come from converting preferred shares to common equity, the people said.
By pushing conversions, rather than federal assistance, the government would allow banks to shore themselves up without the political taint that has soured both Wall Street and Congress on the bailouts. The risk is that, along with diluting existing shareholders, the government action won’t seem strong enough.
Geithner TARP Reassurance
Treasury Secretary Timothy Geithner told U.S. lawmakers yesterday that there is no need for new bank bailout money as of now, said Senate Budget Committee Chairman Kent Conrad.
“He said ‘no, not in the foreseeable future and they’re hoping not at all’,” Conrad, a North Dakota Democrat, said in an interview after Democrats held a closed meeting with Geithner in Washington.
Geithner has said that banks can add capital by a variety of ways, including converting government-held preferred shares dating from capital injections made last year, raising private funds or getting more taxpayer cash. With regulators putting an emphasis on common equity in their stress tests, converting privately held preferred shares is another option.
To contact the reporters on this story: Craig Torres in Washington at ctorres3@bloomberg.net; Robert Schmidt in Washington at rschmidt5@bloomberg.net.
Monday, April 13, 2009
TIPS
Buying TIPS through a mutual fund (or ETF) is a good idea, because it gives you a lot of convenience for a small price. Pros for investing in a fund include:
1. Buy at any time without a transaction fee. Although there is no charge to buy individual TIPS bonds at auctions through certain places (Fidelity, Schwab or TreasuryDirect), the auctions only come up a few times a year. If you want to buy individual TIPS bonds when there's no auction, you must use a brokerage account. Some brokerage firms charge a commission for bond orders. Vanguard charges minimum $40. You also pay a higher price ("markup") than the wholesale price when you buy on the secondary market. Or you will just have to wait until the next auction, but the prices will have changed by then.
2. Instant diversification. A mutual fund holds about 20 bonds with different maturities. You get all of them with one purchase. If you are buying individual TIPS bonds, they don't come on auction at the same time. You must wait for the auctions or pay commissions to establish your positions.
3. Sell at any time without a transaction fee. If you have individual TIPS bonds, there is no fee if you wait until they mature. If you want to sell before they mature, you may have to pay a commission. TreasuryDirect charges $45. Vanguard charges at least $40. You also receive a lower price ("markdown") than the wholesale price when you sell on the secondary market.
4. Buy or sell for any random amount. Minimum additional investment in the Vanguard TIPS fund VIPSX is $100. Want to buy $456.78? No problem. The individual TIPS bonds are in $100 increments at TreasuryDirect or in $1,000 increments in a brokerage account.
5. Reinvest interest payments immediately without charge. If you have individual TIPS bonds, you must hold the interest payments elsewhere. Reinvesting in another TIPS bond is also subject to the auction cycles and $100 increments at TreasuryDirect or $1,000 increments in a brokerage account.
6. Easy tax handling (for taxable accounts only). TIPS bonds in a taxable account have a unique phantom income issue. I won't go into the details here. The fund shields that issue away from you. You receive regular dividends from the fund and you get a 1099 at the end of the year, just like any other mutual fund.
All of these convenience come at a cost of 0.20% a year for the Vanguard TIPS fund VIPSX. That's $20 a year for each $10,000 invested. If you have $100,000 or more for TIPS, Vanguard's fund offers Admiral shares which cut down the expense ratio to 0.11%, or $11 a year per $10,000 invested. It seems very reasonable to me. Why bother buying individual bonds then? Because,
1. Low expenses. If you buy at auctions and hold to maturity, there is no extra expense. If you buy a large amount of TIPS, you can save money by building your own fund with individual bonds. Fidelity, Schwab and TreasuryDirect charge no fee or commission if you buy at auctions and hold to maturity. Even if you buy on the secondary market, as long as you buy long-term bonds in large chunks and hold the bonds to maturity, a one-time commission and markup can be less expensive than having to pay an ongoing expense year after year.
2. Be your own fund manager. You get to decide what maturity you buy. When you buy fund shares you buy a basket. The fund's (experienced) managers decide what to buy and when to buy. With individual bonds, now you become the (amateur) manager for your own fund. Want short maturities? Buy 5-year notes. Want long ones? Buy 20-year bonds.
I've bought all of these before, the Vanguard TIPS fund VIPSX, the iShares ETF TIP, and the individual bonds. They all worked the way they're supposed to. Right now I'm buying individual bonds and holding them to maturity because I want to save the ongoing expenses.
Buying at auctions and holding to maturity is not that hard. I have a step-by-step guide for doing so. If you buy long-term bonds at least $10,000 at a time, the secondary market can also be cost effective. If the the yield becomes attractive between auctions, I will not hesitate to buy on the secondary market. After all, for a 20-year bond, paying a one-time 1% commission plus markup beats paying a 0.2% expense every year for 20 years.
1. Buy at any time without a transaction fee. Although there is no charge to buy individual TIPS bonds at auctions through certain places (Fidelity, Schwab or TreasuryDirect), the auctions only come up a few times a year. If you want to buy individual TIPS bonds when there's no auction, you must use a brokerage account. Some brokerage firms charge a commission for bond orders. Vanguard charges minimum $40. You also pay a higher price ("markup") than the wholesale price when you buy on the secondary market. Or you will just have to wait until the next auction, but the prices will have changed by then.
2. Instant diversification. A mutual fund holds about 20 bonds with different maturities. You get all of them with one purchase. If you are buying individual TIPS bonds, they don't come on auction at the same time. You must wait for the auctions or pay commissions to establish your positions.
3. Sell at any time without a transaction fee. If you have individual TIPS bonds, there is no fee if you wait until they mature. If you want to sell before they mature, you may have to pay a commission. TreasuryDirect charges $45. Vanguard charges at least $40. You also receive a lower price ("markdown") than the wholesale price when you sell on the secondary market.
4. Buy or sell for any random amount. Minimum additional investment in the Vanguard TIPS fund VIPSX is $100. Want to buy $456.78? No problem. The individual TIPS bonds are in $100 increments at TreasuryDirect or in $1,000 increments in a brokerage account.
5. Reinvest interest payments immediately without charge. If you have individual TIPS bonds, you must hold the interest payments elsewhere. Reinvesting in another TIPS bond is also subject to the auction cycles and $100 increments at TreasuryDirect or $1,000 increments in a brokerage account.
6. Easy tax handling (for taxable accounts only). TIPS bonds in a taxable account have a unique phantom income issue. I won't go into the details here. The fund shields that issue away from you. You receive regular dividends from the fund and you get a 1099 at the end of the year, just like any other mutual fund.
All of these convenience come at a cost of 0.20% a year for the Vanguard TIPS fund VIPSX. That's $20 a year for each $10,000 invested. If you have $100,000 or more for TIPS, Vanguard's fund offers Admiral shares which cut down the expense ratio to 0.11%, or $11 a year per $10,000 invested. It seems very reasonable to me. Why bother buying individual bonds then? Because,
1. Low expenses. If you buy at auctions and hold to maturity, there is no extra expense. If you buy a large amount of TIPS, you can save money by building your own fund with individual bonds. Fidelity, Schwab and TreasuryDirect charge no fee or commission if you buy at auctions and hold to maturity. Even if you buy on the secondary market, as long as you buy long-term bonds in large chunks and hold the bonds to maturity, a one-time commission and markup can be less expensive than having to pay an ongoing expense year after year.
2. Be your own fund manager. You get to decide what maturity you buy. When you buy fund shares you buy a basket. The fund's (experienced) managers decide what to buy and when to buy. With individual bonds, now you become the (amateur) manager for your own fund. Want short maturities? Buy 5-year notes. Want long ones? Buy 20-year bonds.
I've bought all of these before, the Vanguard TIPS fund VIPSX, the iShares ETF TIP, and the individual bonds. They all worked the way they're supposed to. Right now I'm buying individual bonds and holding them to maturity because I want to save the ongoing expenses.
Buying at auctions and holding to maturity is not that hard. I have a step-by-step guide for doing so. If you buy long-term bonds at least $10,000 at a time, the secondary market can also be cost effective. If the the yield becomes attractive between auctions, I will not hesitate to buy on the secondary market. After all, for a 20-year bond, paying a one-time 1% commission plus markup beats paying a 0.2% expense every year for 20 years.
Sunday, February 15, 2009
The Big 3... 2... ...1?
The WSJ is out with a muchly regurgitated piece, which may, however, finally end up being right. Turns out the negotiations between bondholders, General Motors (GM) and the intractable UAW are moving at the same pace as cars on a showroom floor. On February 17 GM is set to give the taxpayers a progress to report; and probably as for more money. With 48 hours to go, there has been minimal progress, it may finally be time to pull the plug.
GM's options are asking the administration for more money, which at this point has a one in a million chance of being granted (so I'm saying there's a chance), or filing for some kind of bankruptcy protection. Bankruptsy may be teh only truly viable long-term option, GM does still have solid revenue, despite low profit margins. Hopefully it also takes Chrysler with it.
One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company. The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.
Now is the time to short the stock.
GM's options are asking the administration for more money, which at this point has a one in a million chance of being granted (so I'm saying there's a chance), or filing for some kind of bankruptcy protection. Bankruptsy may be teh only truly viable long-term option, GM does still have solid revenue, despite low profit margins. Hopefully it also takes Chrysler with it.
One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company. The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.
Now is the time to short the stock.
Thursday, February 12, 2009
Gee Whiz
New York - General Motors Corp, the largest US automaker, is offering another round of early buyouts, this time to 22,000 older and relatively expensive union workers, the Wall Street Journal reported Thursday, citing unnamed GM managers.
The sources told the Journal they hope at least half will accept the deal.
The cuts would come on top of the elimination of 10,000 salaried
jobs around the world that the ailing auto company announced on Tuesday as part of its plan to prove financial viability to the US government.
The company would apparently draw a line under the offer to 22,000 members of the United Auto Workers (UAW) union and warn that it would be the last sweetened deal the company would offer, according to a GM spokesperson who talked to the industry magazine Automotive News.
It would be the third such offer in four years.
All told, GM still employs 62,000 UAW members. Worldwide, the company employs 245,000 people, including 55,000 in Europe.
The company is trying to hang on to 13.4 billion dollars in government loans, which could be withdrawn if GM does not come up with a survival plan by Tuesday. Chrysler motors has a similar condition hanging over its head for billions of dollars in government loans.
Both companies must tell the US Treasury Department how it will reorganize, restore profit and repay US loans by the end of 2011.
Amidst the year-old US recession, auto sales have dropped to their lowest in more than a decade.
The sources told the Journal they hope at least half will accept the deal.
The cuts would come on top of the elimination of 10,000 salaried
jobs around the world that the ailing auto company announced on Tuesday as part of its plan to prove financial viability to the US government.
The company would apparently draw a line under the offer to 22,000 members of the United Auto Workers (UAW) union and warn that it would be the last sweetened deal the company would offer, according to a GM spokesperson who talked to the industry magazine Automotive News.
It would be the third such offer in four years.
All told, GM still employs 62,000 UAW members. Worldwide, the company employs 245,000 people, including 55,000 in Europe.
The company is trying to hang on to 13.4 billion dollars in government loans, which could be withdrawn if GM does not come up with a survival plan by Tuesday. Chrysler motors has a similar condition hanging over its head for billions of dollars in government loans.
Both companies must tell the US Treasury Department how it will reorganize, restore profit and repay US loans by the end of 2011.
Amidst the year-old US recession, auto sales have dropped to their lowest in more than a decade.
Friday, January 30, 2009
Scott trade
There are consumer staples and then there are consumer staples. Coca-Cola is sometimes called a consumer staple, but come on, nobody really needs to drink a coke. Toilet paper and paper towel, on the other hand, are about as staple as staple gets. You need toilet paper. But maybe we don't need as much of it as we've been buying.
In its earnings report today, Kimberly Clark (KMB) says volumes for these basic products significantly tailed off in the quarter:
In North America, sales of consumer tissue products increased more than 3 percent in the fourth quarter, as an increase in net selling prices of almost 13 percent and improved product mix of about 1 percent were partially offset by a 10 percent decline in sales volumes and currency effects of 1 percent. The improvement in net selling prices reflects price increases implemented across the bathroom tissue, paper towel and facial tissue categories during the course of 2008. This focus on improving revenue realization, along with slower category growth and consumer trade-down, particularly in paper towels, contributed to the lower sales volumes. For the quarter, shipments were down more than 10 percent for Viva and Scott paper towels, approximately 7 percent for Cottonelle and Scott bathroom tissue and about 3 percent for Kleenex facial tissue. A portion of the overall volume decline also was due to the company's decision in late 2007 to shed certain low-margin private label business.
We suspect that people aren't necessarily using less toilet paper, so much as they're buying white-label 1-ply, sandpaper-textured toilet paper. Maybe Kimberly-Clark shouldn't have shed that low-margin business.
In its earnings report today, Kimberly Clark (KMB) says volumes for these basic products significantly tailed off in the quarter:
In North America, sales of consumer tissue products increased more than 3 percent in the fourth quarter, as an increase in net selling prices of almost 13 percent and improved product mix of about 1 percent were partially offset by a 10 percent decline in sales volumes and currency effects of 1 percent. The improvement in net selling prices reflects price increases implemented across the bathroom tissue, paper towel and facial tissue categories during the course of 2008. This focus on improving revenue realization, along with slower category growth and consumer trade-down, particularly in paper towels, contributed to the lower sales volumes. For the quarter, shipments were down more than 10 percent for Viva and Scott paper towels, approximately 7 percent for Cottonelle and Scott bathroom tissue and about 3 percent for Kleenex facial tissue. A portion of the overall volume decline also was due to the company's decision in late 2007 to shed certain low-margin private label business.
We suspect that people aren't necessarily using less toilet paper, so much as they're buying white-label 1-ply, sandpaper-textured toilet paper. Maybe Kimberly-Clark shouldn't have shed that low-margin business.
Thursday, January 29, 2009
Wall Street's (still) Big Bonus
The cataclysm on Wall Street did not stop New York City-based employees from collecting $18.4 billion in bonuses for 2008. Sure, that pool is down 44% from the prior year but still represents the sixth-largest bonus haul on record, according to the NY State comptroller's office.
So after the worst year ever, Wall Street collected its sixth-biggest bonus pool. Makes perfect sense.
But whether its John Thain's rationale for paying Merrill employees accelerated bonuses (or any bonus for that matter), Citigroup's purchase of a $50 million corporate jet (before reneging), or the sickening vapidity of the DABA blog, it's clear many people on Wall Street remain completely out of touch with reality.
"The sense of entitlement that's been engendered in this group of people has clearly not been beaten out of them by the brutal performance of the financial sector over the course of the last year," says Bob O'Brien, stocks editor at Barrons.com.
Of course, what's most sickening to the vast majority of Americans is these bonuses were paid (mostly) by the same firms who've received TARP funds. The rationale that "bonuses must be paid or we'll lose our best people" doesn't hold water when everybody on Wall Street is suffering and cutting back. Similarly, the idea "there are separate pools of capital for bonuses vs. lending" doesn't hold water when Wall Street CEOs say "money is fungible" as a way of explaining why they can't track TARP funds.
Since Wall Street is clearly incapable of policing itself, the biggest question now is whether the Obama administration, Congress and Treasury Secretary Geithner will summon the political will and do the right thing -- attach major strings on future bailouts, including:
Severe limitations on bonuses and executive pay at TARP recipients. (I know many people want 'clawbacks' but let's start with the future first, which is simpler.)
Elimination of dividends paid by TARP recipients. (Even after "slashing" their dividends to a penny per share each, Citigroup and Bank of America are set to collectively pay approximately $425 million in dividends this year.)
Force banks to write-down bad debts before injecting capital, a.k.a. The Swedish Solution.
Elimination of lobbying by TARP recipients. (Sorry Tim Geithner, "imposing restrictions" isn't enough.)
So after the worst year ever, Wall Street collected its sixth-biggest bonus pool. Makes perfect sense.
But whether its John Thain's rationale for paying Merrill employees accelerated bonuses (or any bonus for that matter), Citigroup's purchase of a $50 million corporate jet (before reneging), or the sickening vapidity of the DABA blog, it's clear many people on Wall Street remain completely out of touch with reality.
"The sense of entitlement that's been engendered in this group of people has clearly not been beaten out of them by the brutal performance of the financial sector over the course of the last year," says Bob O'Brien, stocks editor at Barrons.com.
Of course, what's most sickening to the vast majority of Americans is these bonuses were paid (mostly) by the same firms who've received TARP funds. The rationale that "bonuses must be paid or we'll lose our best people" doesn't hold water when everybody on Wall Street is suffering and cutting back. Similarly, the idea "there are separate pools of capital for bonuses vs. lending" doesn't hold water when Wall Street CEOs say "money is fungible" as a way of explaining why they can't track TARP funds.
Since Wall Street is clearly incapable of policing itself, the biggest question now is whether the Obama administration, Congress and Treasury Secretary Geithner will summon the political will and do the right thing -- attach major strings on future bailouts, including:
Severe limitations on bonuses and executive pay at TARP recipients. (I know many people want 'clawbacks' but let's start with the future first, which is simpler.)
Elimination of dividends paid by TARP recipients. (Even after "slashing" their dividends to a penny per share each, Citigroup and Bank of America are set to collectively pay approximately $425 million in dividends this year.)
Force banks to write-down bad debts before injecting capital, a.k.a. The Swedish Solution.
Elimination of lobbying by TARP recipients. (Sorry Tim Geithner, "imposing restrictions" isn't enough.)
Friday, January 23, 2009
Obama keeps his blackberry
WASHINGTON – The first family settled into their new lives in the White House on Thursday as President Barack Obama won an important personal victory: He gets to keep his BlackBerry.
Obama will be the first sitting president to use e-mail, and he has been reluctant to part with his ever-present handheld device. Its use will be limited to keeping in touch with senior staff and personal friends, said White House spokesman Robert Gibbs.
And though Gibbs said Obama had to ask at one point where to go next in his "pretty big house," he also said the president was enjoying living above the store and had time for dinner with the family on Wednesday.
"I think that obviously means a lot to him as a father," Gibbs said.
It was back to business for daughters Sasha and Malia, too, who returned to classes at the private Sidwell Friends School on Thursday.
The girls were allowed to play hooky Wednesday after a late-night scavenger hunt at the White House that ended when they opened a door and found their favorite band, the Jonas Brothers.
But two days of frivolity was, apparently, enough. First lady Michelle Obama has worked hard to maintain a strong routine for Sasha, 7, and Malia, 10.
"I know the family's moved now three times in only a few weeks. But if you know them and you know their family, they've had a routine for a long time," Gibbs said. "This is a monumental testament to Michelle."
The monumental testament to her husband? He won the BlackBerry battle.
Gibbs joked that the development was "almost as exciting as the presidential dog." He poked fun at the White House press corps for stirring at the news during his briefing. "Let's make sure the pen still works."
But the BlackBerry victory is a big concession. Obama said earlier that he was working with the Secret Service, lawyers and White House staff to keep the device.
Gibbs said the president will limit its use, and security has been enhanced to ensure that Obama can communicate in a way that's protected. Only a small number of senior staff members and personal friends would be given his e-mail address.
Previous presidents chose not to use e-mail because it can be subpoenaed by Congress and courts and may be subject to public records laws. And Gibbs said the presumption from the White House counsel's office is that Obama's e-mails will be subject to the Presidential Records Act, which requires the National Archives to preserve presidential records.
But he also said there are exceptions for "strictly personal communications."
Obama has often been seen checking his e-mail on his handheld device, even when it meant getting his hands slapped by Michelle during his daughter's soccer game.
Presidents George W. Bush and Bill Clinton didn't e-mail while in office, although Bush was an active e-mailer before becoming president.
That was before the era of the BlackBerry, a device now ubiquitous in Washington and precious to Obama. When asked by The Associated Press about his worst habit during the campaign, Obama responded, "Checking my BlackBerry."
Gibbs said the president believes that using the device is an effective way to keep in touch with people without "getting stuck in a bubble."
He said Obama's e-mails to him personally have ranged "from something that's very strictly business to, why did my football team perform so miserably on either any given Saturday or any given Sunday?"
Those who have access to the president's e-mail will be briefed about appropriate communications, Gibbs said, without offering specifics.
So the president who gave up smoking — mostly — managed to avoid withdrawal from his other addiction — mostly.
All in all, Gibbs said, Obama looked comfortable in his new surroundings.
"They're very much the same four people that I met five years ago when I went to work for them," he said, before conceding, "Obviously, it's a little different."
Thursday, January 15, 2009
Mad off
As a fund manager, its been hard for me not to weigh in on the Madoff scandle, but as a human, I find it hard not to. Option collars are a very simple (to the savvy) way to control losses and moderate gains. Berrnie Madoff was a very bight man, in fact he was once the chairman of NASDAQ, but why isn't he in jail?
Bernie Madoff's investment fund may never have executed a single trade, industry officials say, suggesting detailed statements mailed to investors each month may have been an elaborate mirage in a $50 billion fraud.
An industry-run regulator for brokerage firms said on Thursday there was no record of Madoff's investment fund placing trades through his brokerage operation.
That means Madoff either placed trades through other brokerage firms, a move industry officials consider unlikely, or he was not executing trades at all.
"Our exams showed no evidence of trading on behalf of the investment advisor, no evidence of any customer statements being generated by the broker-dealer," said Herb Perone, spokesman for the Financial Industry Regulatory Authority.
What perplexes me is that I can not get a non-solicitation past FINRA, but they missed this? The key to this scam was verticle integration. Madoff was a market maker, and he controlled the accountants, the brokers, the compliance department, and even the exchange. This is asad day for roberbarrons; it looks lik ethey are all theives.
Bernie Madoff's investment fund may never have executed a single trade, industry officials say, suggesting detailed statements mailed to investors each month may have been an elaborate mirage in a $50 billion fraud.
An industry-run regulator for brokerage firms said on Thursday there was no record of Madoff's investment fund placing trades through his brokerage operation.
That means Madoff either placed trades through other brokerage firms, a move industry officials consider unlikely, or he was not executing trades at all.
"Our exams showed no evidence of trading on behalf of the investment advisor, no evidence of any customer statements being generated by the broker-dealer," said Herb Perone, spokesman for the Financial Industry Regulatory Authority.
What perplexes me is that I can not get a non-solicitation past FINRA, but they missed this? The key to this scam was verticle integration. Madoff was a market maker, and he controlled the accountants, the brokers, the compliance department, and even the exchange. This is asad day for roberbarrons; it looks lik ethey are all theives.
Monday, January 5, 2009
Posion Apple
I think that many accross America were shocked to find out that their Microsoft Zune media players were experienceing Y2K-like problems on January 1, 2009. However, it was even more of a shocker to find out that this mysteriousn "bug" was caused by "The Man" AKA Aaple.
Confronted by a variety of Internet sources, Apple Inc. executives are admitting that the bug which crashed Microsoft Zune music players on New Year's Eve was the work of pranksters within their organization -- and say more tricks may be coming.
"Microsoft really needs to get a sense of humor," said an Apple executive, who spoke to CAP News by phone yesterday under condition of anonymity. He declined to say exactly how they executed the Zune crash, other than to say it involved a massive circuit board, some very skilled hackers and "lots of fuzzy navel Jell-O shots."
He did say that Apple did not have anyone "on the inside" at Microsoft to help them execute the prank. "We can't stand dealing with anybody over there," he said. "You know the PC in our Mac and PC commercials? They're all just like that."
Zune owners are crying foul over the crash, particularly given that it kept them from using their Zunes on New Year's Eve. "Yes, we're sure all the Zune owners were crushed at not being able to hear their ABBA and Carpenters songs when the clock struck 12," said the Apple exec. "I'm rolling my eyes now."
There were reports of complaints, however, including several New Year's Eve gatherings of Zune-owning accountants, engineers, IT technicians and others that had to go without music.
"We wound up just breaking the party up around 10 p.m.," said Neal Smerlitz, who plans the annual New Year's Eve gala for the Chess Lovers of San Bernadino, a California hobbyist group, all of whose members are Zune owners. "Although come to think of it, that's when it ended last year too."
The Apple executive also admitted that other pranks may be in the works. These include a plan to make Microsoft Word programs around the world type "Macs rule, PCs drool" no matter what letters are keyed in. Also, an Internet Explorer bug will make every Web page point to a video of Rick Astley singing "Never Gonna Give You Up."
"Let's face it, that never gets old," chuckled the exec.
He said they also considered a bug that would make the Vista operating system slow, clunky and incompatible with a score of programs, "but Microsoft did that themselves already!" The executive could then be heard cracking up and high-fiving his friends in the room.
Apple CEO Steve Jobs declined to comment on the Zune crash specifically, but did admit that Microsoft is notorious for its lack of humor. "Did you see those commercials with Jerry Seinfeld?" he asked. "They were about as funny as whatever disease it is that I have."
Next time Apple employees use company resources to take down their reval, let's hope the rest of Silicon Valley doesn't find out.
Confronted by a variety of Internet sources, Apple Inc. executives are admitting that the bug which crashed Microsoft Zune music players on New Year's Eve was the work of pranksters within their organization -- and say more tricks may be coming.
"Microsoft really needs to get a sense of humor," said an Apple executive, who spoke to CAP News by phone yesterday under condition of anonymity. He declined to say exactly how they executed the Zune crash, other than to say it involved a massive circuit board, some very skilled hackers and "lots of fuzzy navel Jell-O shots."
He did say that Apple did not have anyone "on the inside" at Microsoft to help them execute the prank. "We can't stand dealing with anybody over there," he said. "You know the PC in our Mac and PC commercials? They're all just like that."
Zune owners are crying foul over the crash, particularly given that it kept them from using their Zunes on New Year's Eve. "Yes, we're sure all the Zune owners were crushed at not being able to hear their ABBA and Carpenters songs when the clock struck 12," said the Apple exec. "I'm rolling my eyes now."
There were reports of complaints, however, including several New Year's Eve gatherings of Zune-owning accountants, engineers, IT technicians and others that had to go without music.
"We wound up just breaking the party up around 10 p.m.," said Neal Smerlitz, who plans the annual New Year's Eve gala for the Chess Lovers of San Bernadino, a California hobbyist group, all of whose members are Zune owners. "Although come to think of it, that's when it ended last year too."
The Apple executive also admitted that other pranks may be in the works. These include a plan to make Microsoft Word programs around the world type "Macs rule, PCs drool" no matter what letters are keyed in. Also, an Internet Explorer bug will make every Web page point to a video of Rick Astley singing "Never Gonna Give You Up."
"Let's face it, that never gets old," chuckled the exec.
He said they also considered a bug that would make the Vista operating system slow, clunky and incompatible with a score of programs, "but Microsoft did that themselves already!" The executive could then be heard cracking up and high-fiving his friends in the room.
Apple CEO Steve Jobs declined to comment on the Zune crash specifically, but did admit that Microsoft is notorious for its lack of humor. "Did you see those commercials with Jerry Seinfeld?" he asked. "They were about as funny as whatever disease it is that I have."
Next time Apple employees use company resources to take down their reval, let's hope the rest of Silicon Valley doesn't find out.
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