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.

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.)

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."

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.

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.