Translation: Go Foreign
at 2006-07-09 19:47:55
Money For Nothing-Chicks For Free
at 2006-07-09 19:47:55
If you are of a certain age you may recall this lyric from the Dire Straits from the early 1980's.
The Striking Price in this weeks Barron's is about the potential complexity of adjusted options. The article gives some examples of strange option adjustments but misses a key point. Often when options get adjusted for something like a merger, spinoff or special dividend the appearance is created that the options are giving away money for nothing, a lot of money.
Capital markets never give away a lot of money. If you see an option that is priced too good to be true, it is. What makes this tough is that people often think there is free money, and the phone rep at the discount firm won't be able to explain to you why you are wrong.
The Big Picture For The Week Of July 9, 2006
at 2006-07-09 19:47:55
 BusinessWeek had a midyear followup of its 2006 survey of market forecasts. The follow up had brief opinions from four people listed in the graphic along with their expectations for the Dow, S&P 500, Nasdaq and Russell 2000. The graphic also lists their current asset allocations.
I think there are a couple of mistakes on the graphic based on the text of the article. First, Warren Bagatelle expects the Dow to finish the year at 11,150 and the S&P 500 at 1365 but the article says he does not expect much for the rest of the year. Something doesn't add up there, maybe he means 1265 which is where we closed on Friday.
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US new home sales up, German inflation and leading index up
at 2006-07-09 19:43:05
Like much of the rest of the US economy, the US housing market is surprising many by its resilience. From Reuters:
Sales of new single-family U.S. homes again defied predictions of a slowdown in May and rose 4.6 percent...
Still, compared with a year earlier, the May sales pace was down 5.9 percent.
The May median sales price for new single-family homes fell 4.3 percent from April to $235,300, a figure that was nonetheless 3.1 percent above the year-ago median price of $228,300.
The closely watched supply of new homes for sale at the end of May fell 0.7 percent to 556,000 from a downwardly revised 560,000 in April, which was a record level.
The homes-for-sale figure represented a 5.5 months' supply at the current sales pace, compared to a 5.8 months' inventory in April.
US data mixed but strong European data point to more rate hikes
at 2006-07-09 19:43:05
The data from the US yesterday were mixed. From Reuters:
The National Association of Realtors (NAR) said sales of existing homes slipped to an annualized rate of 6.67 million units, 1.2 percent below April's pace and 6.6 percent below the pace of 7.14 million units a year ago...
The Conference Board said its consumer confidence index rose to 105.7, from an upwardly revised May reading of 104.7, higher than a median forecast by economists polled by Reuters for a reading of 103.5...
Separately, the Federal Reserve Bank of Richmond said its monthly composite manufacturing index rose to 4 in June from 1 in May.
Also the Chicago Fed said on Tuesday its Midwest manufacturing index slipped in May to 106.0 from April's downwardly revised 106.2.
The data from the UK were relativel
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