"Slimmed-Down Siemens Girds for Growth" (SI)

The stock closed at $113.45, down $1.05. We are fans.*
[he calls Siemens "GE's much better managed doppelgänger" -ed]
From Barron's:

The German industrial giant has undergone one of the lengthier restructurings in corporate history. The result could be fatter profits and a more valuable stock.

SIEMENS MIGHT BE 163 years old, but the German industrial giant is acting as nimble as a teenager these days. Credit that to a 12-year—yes, 12-year—restructuring program focused on cutting costs, workers and underperforming units. The results enabled the Munich-based company to weather the financial crisis of the past two years relatively smoothly, while rivals such as General Electric stumbled.

Coming out of the crisis, a slimmed-down Siemens (ticker: SI) is poised to gain more market share in its three lines of business—industrial, health care and energy. The company also has redoubled its focus on shareholders, who have benefitted this year from a 25% rally, to 114, in Siemens' American depositary receipts. That performance, which Chief Financial Officer Joe Kaeser calls "a reward for the efforts on transformation," has left both GE (GE) and Switzerland's ABB (ABB) in a cloud of dust. Siemens could keep climbing to 140 per ADR as the global economy improves, lifting demand for gas turbines, high-speed trains and medical equipment.

In the thick of the global recession, in 2009, Siemens' earnings from continuing operations jumped 32%, to €2.5 billion, or €2.58 a share. The company followed up, in the fiscal year ended Sept. 30, with earnings before special charges of €4.1 billion, or €4.49 a share, on revenue of €76 billion. Buoyed by a 25% rise in orders in the fiscal fourth quarter, and an €87 billion ($115 billion) order backlog, management, led by CEO Peter Löscher, 53, announced plans to raise the dividend 69%, to €2.70 a share, the first increase in three years, for an indicated yield of 3.1%.

Analysts expect Siemens to earn €6.72 a share in fiscal 2011, and nearly €8 a share in fiscal '12. Industrial equipment and solutions account for about 46% of annual revenue; energy-related businesses chip in 34%, and health care, 16%.

Notwithstanding Siemens' operating strides, its shares trade for only 13 times this fiscal year's expected earnings. That multiple is in line with GE's valuation, but below Siemens' 10-year average price/earnings ratio of 18, and ABB's P/E of 14.

Siemens' shares are cheap for several reasons. Investors are skeptical of turnaround stories generally, and the company must live down a history of creating a bloated corporate structure and overpaying for acquisitions....MORE

*Previously:

"Siemens Long-Cycle Industry Customers Weighing Investments Again" (SI)
"Siemens Reports Big Jump in Orders" (SI)
I'll See Your Eco-imagination and Raise: "Siemens Predicts Sales of Green Technology Products to Reach $55 Billion" (SI; GE)
Siemens; ABB lifted to conviction buy at Goldman: ABB, Siemens, Schneider to Gain From Demand for Smart Grids, Goldman Says (SI; ABB)
Siemens Sees Strong Profitability, Decides to Open a Bank (SI)

And many more, use the search blog box, keyword Siemens.
For more on Siemens vs. General Electric see:

Attention GE: Huge After Hours Breakout for Siemens AG (SI)

Your One-Stop Guide To Frontrunning Monday's Double Open Market Operation

Or: "If this and the Irish bailout don't get the market moving we've got serious problems".
[umm, we have serious problems no matter what stocks do tomorrow -ed]
From ZeroHedge:

On Monday, Brian Sack will go for an all-out onslaught of Netflix and Amazon shorts. For the first time ever the New York Fed will hold not one but two monetization procedures. Incidentally both will focus on the part of the curve that in the past two weeks has been performing best: the sides of the belly.

The two operations, expected to be about $2 and $7 billion, will focus on bonds in the 10-17 Y and 2.5-4 Y sector. In keeping with the tradition of sharing with our readers the bonds that Sack will almost certainly end up monetizing, we present the 10 cheapest bonds that will likely end up being acquired on Monday.

As the Fed is now the largest single holder of Treasurys (since the announcement of the SOMA reinvestment program on August 10, the NY Fed has purchased a total of $124bn Treasuries / TIPS: of the $105bn scheduled for the current month, the Fed has purchased $48bn per MS) expect to see increasingly more detailed analyses of the Fed's SOMA composition as cartoons about how to front run the Fed become increasingly more popular....MORE

Evans-Pritchard: "EU rescue costs start to threaten Germany itself"

How to know when it's game over.
From the Telegraph:

Credit default swaps (CDS) measuring risk on German, French and Dutch bonds have surged over recent days, rising significantly above the levels of non-EMU states in Scandinavia.

"Germany cannot keep paying for bail-outs without going bankrupt itself," said Professor Wilhelm Hankel, of Frankfurt University. "This is frightening people. You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings."

The refrain was picked up this week by German finance minister Wolfgang Schäuble. "We're not swimming in money, we're drowning in debts," he told the Bundestag.

While Germany's public and private debt is not extreme, it is very high for a country on the cusp of an acute ageing crisis. Adjusted for demographics, Germany is already one of the most indebted nations in the world.
Reports that EU officials are hatching plans to double the size of EU's €440bn (£373bn) rescue mechanism have inevitably caused outrage in Germany. Brussels has denied the claims, but the story has refused to die precisely because markets know the European Financial Stability Facility (EFSF) cannot cope with the all too possible event of a triple bail-out for Ireland, Portugal and Spain.

EU leaders hoped this moment would never come when they launched their "shock and awe" fund last May. The pledge alone was supposed to be enough. But EU proposals in late October for creditor "haircuts" have set off capital flight, or a "buyers' strike" in the words of Klaus Regling, head of the EFSF.

Those at the coal-face of the bond markets are certain Portugal will need a rescue. Spain is in danger as yields on 10-year bonds punch to a post-EMU record of 5.2pc.

Axel Weber, Bundesbank chief, seemed to concede this week that Portugal and Spain would need bail-outs when he said that EMU governments may have to put up more money to bolster the fund. "€750bn should be enough. If not, we could increase it. The governments will do what is necessary," he said.

Whether governments will, in fact, write a fresh cheque is open to question. Chancellor Angela Merkel would risk popular fury if she had to raise fresh funds for eurozone debtors at a time of welfare cuts in Germany. She faces a string of regional elections where her Christian Democrats are struggling....MORE

"Zimbabwe – a core holding for 2011"

I'll bite.
As I said in "Invitation to Tea at the Financial Times":

I don't usually run free ads but this one intrigued me.
The FT is obviously doing deep research for some product or service, more power to 'em.
You try waking every morning to the spectre of battling Bloomberg, Dow Jones and Thompson/Reuters in the information wars.
This seemed a natural for about 1/4 of our readership (the rest being journalists, hedgies, wirehouses, the hyperintelligent, folks who like pictures of obese felines* and various regulatory and legislative bodies)....

The full headline of today's link started with "[Shameless FT Tilt promo]"
Here's the latest at Alphaville:

FT Tilt is an online service from the Financial Times focusing exclusively on the emerging world. As a prelude to its December launch, we’re offering our readers a selection of op-eds written by emerging market experts. These pieces discuss contemporary issues facing these markets.
The latest in the series comes from Graham Stock, chief strategist at Insparo Asset Management in London. Accompanying a group of sport fishermen headed for the Zambezi river, he recently visited Harare to get a feel for the political situation in Zimbabwe and the sustainability of the rapid growth that has followed on from the dollarization of the economy in February 2009.
Get the full article here — and join FT Tilt’s exclusive mailing list to get future editions of our View from the Ground series.

*In two of the past twenty-five months our most visited post was "Obama: 'Fat-cat' bankers owe help to U.S. taxpayers (BAC; C; GS; JPM; WFC)". I don't think it was because of my insightful commentary. Rather, I'm guessing the real stars were:

From our Oct. 4, 2008 post:

Save the Bankers

Citi Slicker

Save Me! I'm a BSD Dammit!

Country (wide) Cousin (It's BAC!)

High-Flying Spy Drone, Powered By Liquid Coal

From Wired's Danger Room blog:

No unmanned aircraft in the American arsenal flies higher or longer than the Global Hawk. On Tuesday, it soared high and long, powered by a blend of synthetic fuel. The Northrop-built drone touched down late Tuesday night at Edwards Air Force Base in Southern California after spending more than a day aloft.
Both the Navy and Air Force have flown numerous other aircraft using other non-traditional jet fuels, but this is both the first for an unmanned aircraft, and the first time any type of aircraft has flown with this type of fuel. JP-8 jet fuel (the kind typically used in the Air Force) was combined with a synthetic paraffinic kerosene derived from liqufied coal, and another derived from natural gas, to make up the blend.

Along with other branches of the military, the Air Force is busy developing and implementing alternatives to the petroleum-based jet fuels that have powered its turbine powered aircraft since the late 1940s. The plan is to have 50 percent of domestic aviation fuel for the Air Force come from an alternative fuel blend by 2016. The synthetic paraffinic kerosene (SPK for those acronym loving people in the Pentagon) is the latest fuel to be tested.

Three Air Force aircraft, the A-10, F-15 and C-17, have all been flown using a blend of JP-8 and a renewable fuel made from plant oils and animal fats. The F-22 stealth fighter and Global Hawk are expected to fly on this hydro-processed renewable jet fuel, or HRJ, fuel next year.

Also at Danger Room, a silent Jimmy Carter:

Super-Silent Jimmy Carter Ready to Spy on North Korea

Nazi's in Space

Turns out that some of the Milky Way's spiral arms have a bit of the swastika kink in them:
From MIT's Technology Review:

Some of our galaxy's spiral arms are straight rather than curved, giving the Milky Way a distinctly square look, say astronomers.

The structure of nearby galaxies such as Andromeda is relatively straightforward to see. But the Milky Way presents an entirely different kind of challenge.
The problem is that we see the Milky Way edge on, so that nearer stars and clouds are superimposed on more distant ones. Telling these apart is tricky because working out the distance of any astronomical object is hard. And that makes the overall structure a real head scratcher.

That's not to say astronomers haven't got a few tricks up their sleeves to help. The conventional way to work out the structure is a two step process. Astronomers first create a model of the galaxy and work out how each part of ought to be moving relative to us.

Then they scour the Milky Way for clouds of ionised hydrogen. Astronomers can work out the velocity of these clouds by studying the emission spectra and looking for the tell tile shifts in spectral lines that movement causes.
By matching this measured velocity to the calculated values, astronomers can work out where in the galaxy any cloud should be.
But this method is notoriously ambiguous, not least because nobody is quite sure how fast the galaxy is rotating, so the model probably has all kinds of errors. Another problem is that stars orbiting the centre of the galaxy at the same distance as us (a large portion of the galaxy, as it turns out) all have a similar velocity. So working out where they are is tricky.

It's no surprise, then, that there is little consensus on the exact structure of the Milky Way's spiral arms.
Today Jaques Lepine at the University of Sao Paulo in Brazil and a few buddies add a little spice to this mix.
They've studied the spectra produced by clouds of carbon monosulphide, a relatively common component of our galaxy, rather than ionised hydrogen. This gave them velocity information for 870 regions of the Milky Way which they've used to create a new map of the galaxy with detail never seen before.

One conclusion is that the Milky Way has an additional spiral arm, not seen in previous surveys of the galaxy. The new arm is about 30,000 light years from the galactic core at a longitude of between 80 and 140 degrees.
But a bigger surprise is their conclusion that some of the arms in the Milky Way are not curved in the traditional way, but are straight instead. This gives the Milky Way a distinctly squarish look.

That's not as outrageous as it sounds. Astronomers know of many galaxies with straight arms, such as M101, the Pinwheel Galaxy, shown above.

So according to Lepine and co, anybody looking at us from M101 will see a similar kind of squarish structure. Fascinating stuff!

Here's the Galaxy Song:

"Solar Inverter Shipments Hit Another Record" (PWER)

PWER is trading down a dime at $9.20.
From TheStreet:

Shipments of solar inverters reached 7.3 gigawatts (GW) in the third quarter, another record quarter for inverter shipments as demand in the global photovoltaic market continued unabated. 

In the second quarter 2010, global solar inverter shipments  of 5 GW were also a record for the industry.
The record numbers for solar inverter shipments have stoked fears that 2010 is "as good as it gets" for companies in the sector. U.S. solar inverter company Power-One(PWER_) has been the poster-child for the bear thesis on the solar inverter market. Power-One has ridden the solar demand in 2010 to new stock highs and massive earnings beats. However, Power-One's most recent earnings beat was met with a big selloff as investors feared that the opportunity for the company had peaked.

Inverter companies reported $2 billion in revenues in the third quarter, according to IMS Research. 
London-based IMS Research said in a research report that the majority of solar inverter shipments were for installations in Germany, but growth was slowing in solar's largest market in the third quarter. The demand pull-in in Germany ahead of feed-in tariff cuts in July was massive. Solar installations in Germany in June were above 2 GW, and have since declined. The most recent reported monthly numbers from Germany indicated an installation level of 492 megawatts in September....MORE

"Siemens Long-Cycle Industry Customers Weighing Investments Again" (SI)

The stock is trading down 86 cents at $113.64.
In June's "Siemens Sees Strong Profitability, Decides to Open a Bank (SI)" we saw:

"...Siemens relied on emerging markets and a recovery in its short-cycle business to spur growth..."

Here's the latest from Bloomberg:

Siemens AG said customers for long- cycle industrial products are considering investments again, and that the recovery in short-cycle demand has extended into the first quarter of its fiscal year.

Siemens, based in Munich, continues to review the portfolio of its industrial unit, Siegfried Russwurm, head of Siemens’ industry division, said during an event at Red Bull Racing’s factory in Milton Keynes, where he presented software that’s used to tweak the handling of Formula 1 cars.

Siemens’s industry division, its biggest by sales, accelerated cost cuts, reduced investment and steered its focus toward emerging markets to weather a slump in spending on machinery. The division last year eliminated 16,000 posts and reduced sales and administrative costs by 750 million euros in one year, exceeding a 600 million-euro goal set for two years....MORE, including video

Reuters adds:

Siemens has natural currency hedge -Industry CEO

What Would Keynes Have Done?

He'd probably have traded on inside information.*
From the WSJ's Real Time Brussels blog:

The U.S. Federal Reserve’s decision to buy more long-term U.S. Treasurys, known as quantitative easing, has provoked much criticism here in Europe.  This debate, however, raises an interesting question: Why shouldn’t central banks always buy and sell longer-term debt to control interest rates over all time periods?
Central banks in normal times manipulate rates by dealing mainly in short-term government debt. When inflation is seen as a risk, central banks sell short-term debt to raise yields, and when inflation is tame, banks buy it to lower yields and promote growth.

These market operations directly impact short-term rates. But central bankers hope and assume that changing short-term rates also impacts longer-term rates by changing investors’ expectations of the future path of monetary policy. And it is longer-term rates that are economically important, because they determine whether people will make significant investment decisions, such as building a factory, hiring a worker or buying a house.

Everett Collection

John Maynard Keynes in 1941.

This idea is known as the “expectations hypothesis,” and unfortunately for central bankers, empirical studies show that for the most part it doesn’t accurately describe the relationship between short-term and long-term government debt yields.  That is, long-term rates move in the same direction as short-term rates but not by magnitudes predicted by the expectations hypothesis.

This would appear to be a major problem for the current practice of monetary policy. Are central bankers fiddling around with short-term rates, while the more important longer-term rates exhibit a life of their own? If so, maybe the Fed and other central banks should always deal in debt across a range of maturities, so that the government can firmly control long-term interest rates.

John Maynard Keynes advocated this possibility in his magnum opus, the General Theory of Employment, Interest and Money:

Perhaps a complex offer by the central bank to buy and sell at stated prices gilt-edged bonds of all maturities, in place of the single bank rate for short-term bills, is the most important practical improvement which can be made in the technique of monetary management.
…
The monetary authority often tends in practice to concentrate upon short-term debts and to leave the price of long-term debts to be influenced by belated and imperfect reactions from the price of short-term debts; — though here again there is no reason why they need do so.

...MORE

*We've had a few posts on J.M.K. and his investment performance, here are some tidbits, go to the posts for the rest of the story.:

Keynes The Money Manager

First up, a couple snippets from the one page piece "Keynes The Speculator":

John Maynard Keynes began his career as a speculator in August 1919, at the relatively advanced age of 36 years.
Keynes traded on high leverage - his broker granted him a margin account to trade positions of £40,000 with just £4,000 equity....

You know where this is going don't you:

...Keynes soon learned that short-term currency trading on high margin, using only his long-term economic predictions as a guide, was foolhardy. By late May, despite his belief that the U.S. dollar should rise, it didn’t. And the Deutschmark, which Keynes had bet against, refused to fall. To Keynes’s dismay, the Deutschmark began a three-month rally.

Keynes was wiped out. Whereas in April he had been sitting on net profits of £14,000, by the end of May these had reversed into losses of £13,125. His brokers asked Keynes for £7,000 to keep his account open.... 

...The performance of Keynes’s fund from 1927 to 1946 is shown below. During these years the Chest grew at an annual compounding rate of 9.1 percent while the general British stock market fell at an annual compounding rate of slightly under 1 percent.

Chest Fund Performance 1927 to 1946

The whole thing is worth a read....

John Maynard Keynes: Money Manager (Couldn't Trade Lard to Save His Life)

...My two cents:

Climateer (URL) said:

Aug 5, 10:14 AM

Neil,
Although Keynes ran King's College's Chest Fund 12-fold, £30,000 to £380,000, '27-'45,
the record is decidedly mixed.
Drawdowns of 32.4% and 24.6% in '30 and '31 exceeded the losses in the London market and had the fund at 1/2 it's '27 value.

1932's 44.8% and '33's 35.1% return's were coincident with and subsequent to, Britain's departure from the gold standard.
As an economic adviser to the government Keynes was well aware of the coming devaluation.
Although King's hasn't opened all the trading records, there is strong evidence to suggest that Keyne's was trading on inside information.

Some things never change.

In a 1983 paper "J.M. Keynes' Investment Performance: A Note" the authors are dubious of his performance, without casting the aspersion that I do in my comment. They on the other hand have a great tidbit:

...Investments in commodities were more substantial. The highest annual gain was for ₤17,000 from September 1936 to August 1937 and the highest annual loss, mainly in lard, for ₤12,600 in the following twelve months...

We too have commented on the lard market, in the March '08 post "Volatility Getting You Down, Bunky?":
Maybe it's time you looked into the tallow market.
The tallow/grease/lard complex has been traded for five thousand years:

2992 B.C.
Honey I'm home!
Hi dear, anything new in tallow?
Nope. Same ol', same ol'.

2008 A.D.
Ditto. 

Investing Tips from the World's Richest Economist

No not Paul Krugman. The columnist and Laureate knows how to earn money as exemplified by his lending his name to Enron for $50,000 for four days work.
Judging by his temperament on the Sunday talking head circuit (there's that earnings power/branding again), I would think he's more of a hoarder rather than an investor, speculator or gambler.

And no, it's not John Maynard Keynes.
We had a look at Keynes' investing style in "Keynes The Money Manager". After a disastrous start in currencies, which led to the observation attributed to him by A. Gary Shilling: "Markets can remain irrational a lot longer than you and I can remain solvent."

The performance of the Chest Fund (a sidecar of the Kings College endowment) was indeed impressive.
However, it now appears that Keynes only achieved positive results starting in 1932.
It is probable that this timing indicates he was trading on inside information, knowledge of the British government's abandonment of the gold standard. He was an adviser to the gov. and pushed the policy....

If You Absolutely Insist on Having Some General Motors, Look at the Convertible Preferred (GM; GM.Pr.B)

What's not to love about a GM convertible?
('61 Vette Roadster)

From Barron's Weekday Trader (Fri. Nov. 19):

The Other Way to Play GM 

GM's convertible preferred offers less upside, but more downside protection.

GENERAL MOTORS' $15.8 BILLION initial public offering generated enormous attention yesterday, but there was virtually no coverage of a companion issue of $4.35 billion of mandatory convertible preferred that offers another way to play the auto maker's revival.

General Motors' (ticker: GM) preferred offers investors a 4.75% dividend yield; the common pays no dividend. The preferred has a complex structure that gives investors less potential upside, but better downside protection.

The preferred, priced at $50 a share and listed on the New York Stock Exchange as GM Pr B, was trading this morning around $50.

Here's how the structure works: The GM preferred has a conversion premium of 20%. This means that at the mandatory equity conversion in three years, investors will get $50 a share if the common is trading at a price between $33, the IPO price, and $39.60. Investors get 1.51 shares of GM stock if the common is at $33, sliding down to 1.26 shares if the stock is at $39.60. 

Convertible fans like the structure, even though a security with a mandatory conversion feature doesn't offer the same protection as regular convertibles without one. Warren Buffett is a big fan of traditional converts. His Berkshire Hathaway holds a big issue from Dow Chemical.

"The mandatory convertible is, hands-down, a superior instrument to the common," says Barry Nelson, a senior vice president and portfolio manager at Advent Capital Management in New York, a specialist in convertibles.

He says the GM preferred should offer about 80% of the appreciation in GM common above $39.60. For example, if the common stock doubles, to $66, in three years, investors should receive about $90 for their preferred, including dividends, an 80% gain. GM shares are trading at 33.76 this morning, down 43 cents.
If the stock remains steady or declines, convertible holders will do better than common holders because of the 4.75% dividend on the preferred. 

For those wanting some yield and a play on GM stock, the preferred seems like a good investment.

On Wednesday the common closed at $30.48, the series B preferred at $50.29.
Here's GM's pricing news release with a link to the prospectus.
Yahoo Finance uses the symbol: GM-PB

More Options Strategies for First Solar (FSLR)

While I would normally agree with the author that buying time is better, in this case I lean toward the short dated wild-ass speculation. Links below.
From TheStreet:

...Source: Aqumin

View Chart 

...What interested me when I went to look at the volatilities was First Solar(FSLR_). I already wrote a column on Regions Financial(RF_) and it was totally different volatility and sentiment situation. The implied volatilities are nearing lows and the HV30 (30 Day realized volatility of the underlying) is perking up from lows, so there looks to be a slight edge in buying calls. The earnings in FSLR were great but the guidance disappointed and down went the name, $25.00 or so from yearly highs. The post-earnings play has been good to me over the last month and I will take the opportunity now to try it again.

Trades: Buy to open FSLR January 120 calls for $10.50 and sell to open FSLR January 135 calls for $3.70 for a $6.80 debit on a 30 Delta with FSLR trading $124.20...MORE

From last Week:

First Solar: Trading the Dec. 14 Investors and Analysts Guidance Call--Buy it NOW (FSLR)



Repost: More on the First Solar Initiation by Susquehanna, Likes Dec. $125 Calls (FSLR)


First Solar Hits 200 Day Moving Average, Stops Dead in its Tracks (FSLR)

"Cree: Oppenheimer Sees LED Lift-Off Next Year" and "First Solar: Nod To LA Solar Project Encouraging, Says Citi"

Late hits from Tech Trader Daily!
First up:

“Elements of a very strong 2011 are falling into place” for the light-emitting diode market, writes Oppenheimer & Co.’s Yair Reiner in a note to clients, reiterating an Outperform rating on shares of LED provider Cree (CREE), and a $94 price target on the stock, following a meeting with management yesterday.
Cree shares are $5.95, or 10%, at $64.45 today.

Reiner notes that the LED lighting market in China slowed over the summer, held up by the introduction of new regulations by the government. He expects order flow to pick up in the first quarter of next year. Furthermore, the LCD display market, although not a significant part of Cree’s strategy, is important to support investor sentiment, and Reiner thinks that the LCD market for LED technology will “restart” after Chinese new year....MORE

And:

Shares of First Solar (FSLR) $2.48, or 2%, at $126.68, after Los Angeles county’s board of supervisors yesterday rejected an objection by Northrop Grumman (NOC) to the construction of a major new solar project.

Grumman had said plans for First Solar’s 230 megawatt, 2,100-acre solar panel installation, in Antelope Valley, would interfere with the operations of a facility for testing radar-evading stealth aircraft, according to the write-up today by Marc Lifsher of the LA Times.

In a note to clients today, Citigroup’s Timothy Arcuri writes that the tentative endorsement of the AV Solar Ranch One, as First Solar calls it — it must still be formally approved by the board — is not a big deal for First Solar’s fundamentals, as it was not a big swing factor in estimates for 2011, and is likely not material in that time frame....MORE

This time I mean it, see you all on Friday.

Happy Thanksgiving Everyone! (and "Economic Tips for Limiting Your Pumpkin Pie Intake")

A repost from last year:

Half day on Friday. A couple pictures at other websites.
From Environmental Capital:

Serve yourself (AP)

From Economix:

Matthew Moore (Creative Commons license) 

And from Dealbreaker:

(I was creeped out the
first time I saw it on the show,
now it's kinda grown on me)

On Tuesday we posted a neat video with Dan Ariely, a Duke behavioral economist, about tips for limiting your spending. As it turns out, Ezra Klein at The Washington Post wisely asked Professor Ariely how to apply those same economic principles to help readers limit another kind of consumption: Thanksgiving food.

Professor Ariely had a few suggestions for ways to reduce your turkey intake. They include:
1) “Move to chopsticks!” Or, barring that, smaller plates and utensils....MORE

First Solar Hits 200 Day Moving Average, Stops Dead in its Tracks (FSLR)

Hmmm...
This may be tougher than I thought.
In "Repost: More on the First Solar Initiation by Susquehanna, Likes Dec. $125 Calls (FSLR)" I said:

The one concern I would have going into next week is the 200 day moving average, currently at $127.03.

Mitigating possible resistance at that level is the speed with which the stock fell last week, the SMA didn't provide much support on the way down and may not be the resistance point that is often seen when a stock spends considerable time churning around the line....

Today the stock got to $127.15 and fell back. Currently $126.16, up $1.96.
See also:
First Solar: Trading the Dec. 14 Investors and Analysts Guidance Call--Buy it NOW (FSLR)

Here's the three month chart, via BigCharts:

Technology: Best and Wurst (how's 44% operating margins grab ya?)

From Bloomberg:

`Microsoft' of Machine Tools Runs Plants From Mount Fuji Base

At the base of snowcapped Mount Fuji sits a bright yellow compound that is home to one of Japan’s most profitable -- and secretive -- companies.

Fanuc Ltd.’s systems tell lathes, grinders and milling machines how to turn steel into an Apple Inc. iPhone case or aluminum into the rib of a Boeing Co. 747. More than half of the world’s computerized tools, including those used by suppliers to Toyota Motor Corp. and General Motors Co., use Fanuc controls.

Fanuc's servo motor and spindle

motor factory in Oshino, Yamanashi

Prefecture, Japan. 

Source: Fanuc Ltd. via Bloomberg

“They’re the Microsoft you’ve never heard of,” said Scott Foster, an analyst at BNP Paribas in Tokyo. “If Mount Fuji erupted and took them out, the world would stop running.”

Fanuc’s operating margin rose to a record 44 percent last quarter, the company said, making it the third highest on the Topix 100, according to data compiled by Bloomberg. To further boost profits, President Yoshiharu Inaba is focusing on China and India, Asia’s two fastest-growing major economies.
“We’re working harder than ever to penetrate the Chinese and Indian markets,” Inaba, 62, said last month at company headquarters. “All of our capacity is running full-out.”

Fanuc boosted net income to 31.1 billion yen ($373.1 million) last quarter, an almost eightfold increase from a year earlier. That’s more than double the growth reported by 1,605 companies on the Topix, according to data compiled by Bloomberg....MUCH MORE

And From Reuters:

Two Germans fed up with eating Bratwurst sausages not fried to perfection have come up with a "Wursttoaster," or sausage toaster, to ensure caterers no longer have an excuse to serve anything less than the best.

Marco Bruns, 25, said he and his business partner Felix Rennies, 28, came up with the idea after being less than impressed with English efforts to pull off the popular German snack on one of their frequent trips to Britain.

"We went to a market where there was German Bratwurst but we discovered the English don't have a clue how to cook them -- they were completely brown on one side and completely white on the other side," he told Reuters.

The pair consequently realized it was not all that easy to cook the perfect Bratwurst, and Rennies, a trained engineer, came up with the idea to automate the cooking process "so that the perfect Bratwurst would always be easily achievable."

The Wursttoaster looks rather like a conventional toaster, except that the openings are round and deep enough to house a sausage, but Bruns says the technology behind it is new....MORE

From Wursttoaster.de:

Die Innovation in der Gastronomie! 
Der Smartwurst Wursttoaster Schnell und einfach perfekte Bratwurst...

Ideal für Tankstellen, Kneipen, Snackshops usw.

Typical European ad agency understatement. But it works, I'm re-thinking turkey for tomorrow.

"California Suggests Suicide; Texas Asks: Can I Lend You a Knife?"

Joel Kotkin writing at Forbes:

In the future, historians may likely mark the 2010 midterm elections as the end of the California era and the beginning of the Texas one. In one stunning stroke, amid a national conservative tide, California voters essentially ratified a political and regulatory regime that has left much of the state unemployed and many others looking for the exits.

California has drifted far away from the place that John Gunther described in 1946 as “the most spectacular and most diversified American state … so ripe, golden.”  Instead of a role model, California  has become a cautionary tale of mismanagement of what by all rights should be the country’s most prosperous big state. Its poverty rate is at least two points above the national average; its unemployment rate nearly three points above the national average.  On Friday Gov. Arnold Schwarzenegger was forced yet again to call an emergency session in order to deal with the state’s enormous budget problems.

This state of crisis is likely to become the norm for the Golden State. In contrast to other hard-hit states like Pennsylvania, Ohio and Nevada, which all opted for pro-business, fiscally responsible candidates, California voters decisively handed virtually total power to a motley coalition of Democratic-machine politicians, public employee unions, green activists and rent-seeking special interests.

In the new year, the once and again Gov. Jerry Brown, who has some conservative fiscal instincts, will be hard-pressed to convince Democratic legislators who get much of their funding from public-sector unions to trim spending. Perhaps more troubling, Brown’s own extremism on climate change policy–backed by rent-seeking Silicon Valley investors with big bets on renewable fuels–virtually assures a further tightening of a regulatory regime that will slow an economic recovery in every industry from manufacturing and agriculture to home-building.

Texas’ trajectory, however, looks quite the opposite. California was recently ranked by Chief Executive magazine as having the worst business climate in the nation, while Texas’ was considered the best. Both Democrats and Republicans in the Lone State State generally embrace the gospel of economic growth and limited public sector expenditure. The defeated Democratic candidate for governor, the brainy former Houston Mayor Bill White, enjoyed robust business support and was widely considered more competent than the easily re-elected incumbent Rick Perry, who sometimes sounds more like a neo-Confederate crank than a serious leader.

To be sure, Texas has its problems: a growing budget deficit, the need to expand infrastructure to service its rapid population growth and the presence of a large contingent of undereducated and uninsured poor people. But even conceding these problems, the growing chasm between the two megastates is evident in the economic and demographic numbers. Over the past decade nearly 1.5 million more people left California than stayed; only New York State lost more. In contrast, Texas gained over 800,000 new migrants. In California, foreign immigration–the one bright spot in its demography–has slowed, while that to Texas has increased markedly over the decade.

A vast difference in economic performance is driving the demographic shifts. Since 1998, California’s economy has not produced a single new net job, notes economist John Husing. Public employment has swelled, but private jobs have declined.  Critically, as Texas grew its middle-income jobs by 16%, one of the highest rates in the nation, California, at 2.1% growth, ranked near the bottom. In the year ending September, Texas accounted for roughly half of all the new jobs created in the country.

Even more revealing is California’s diminishing preeminence in high-tech and science-based (or STEM–Science, Technology, Engineering and Mathematics) jobs. Over the past decade California’s supposed bulwark grew a mere 2%–less than half the national rate. In contrast, Texas’ tech-related employment surged 14%. Since 2002 the Lone Star state added 80,000 STEM jobs; California, a mere 17,000.

Of course, California still possesses the nation’s largest concentrations of tech (Silicon Valley), entertainment (Hollywood) and trade (Port of Los Angeles-Long Beach). But these are all now declining. Silicon Valley’s Google era has produced lots of opportunities for investors and software mavens concentrated in affluent areas around Palo Alto, but virtually no new net jobs overall. Empty buildings and abandoned factories dot the Valley’s onetime industrial heartland around San Jose. Many of the Valley’s tech companies are expanding outside the state, largely to more business-friendly and affordable places like Salt Lake City, the Research Triangle region of North Carolina and Austin.

Hollywood too is shifting frames, with more and more film production going to Michigan, New Mexico, New York and other states. In 2002, 82% of all film production took place in California–now it’s down to roughly 30%. And plans by Los Angeles County, the epicenter of the film industry, to double permit fees for film, television and commercial productions certainly won’t help....MORE, definitely worth the read.

Lobby Lookout: Turkey Trade Group Opposes Ethanol Tax Breaks (SFI; SEB)

Talking turkey:
Butterball was a J.V. between Smithfield and Maxwell Farms until September when Maxwell teamed up with Seaboard to buy SFI's 49% stake. Perdue is, of course, one of the 100 largest privately held companies in the country.
From Tax Analysts:

November 24, 2010

Lobby Lookout: Turkey Trade Group Opposes Ethanol Tax Breaks

by Meg Shreve

Tax Analysts' Lobby Lookout reports on the latest efforts to influence federal tax legislation and policy.

As Americans sit down to Thanksgiving dinner this week, few will be thinking of tax policy, but as Congress returns to work November 30, lobbyists for the National Turkey Federation will be pushing for a rollback of an expiring ethanol tax incentive.

The biggest tax issue facing the National Turkey Federation, whose members include Perdue Farms and Butterball Turkey LLC, is the possible extension of the volumetric ethanol excise tax credit (VEETC) -- a move the group opposes, Joel Brandenberger, National Turkey Federation president, told Tax Analysts.
Why would a turkey industry trade group care about the future of an ethanol tax break?

It comes down to the cost of turkey feed, which is often made from corn, Brandenberger said. The group contends that governmental regulations, renewable fuel programs, and tax benefits have created an artificial market for corn-based ethanol and driven up the cost of corn-based feed for turkey farmers and distributors.
The group, which says it represents a $14 billion industry, is calling for the VEETC to be revamped and, eventually, completely rolled back, Brandenberger said. Ethanol supporters, who have long promoted ethanol as an important source of renewable energy, are hoping Congress extends the VEETC and the small ethanol producer tax credit (SEPTC) for another year.

Brandenberger, however, pointed to a July House Ways and Means Committee energy bill draft as an "encouraging sign" that lawmakers are serious about reworking the tax incentives.

As lawmakers mulled over a potential energy bill earlier this year, acting Ways and Means Chair Sander M. Levin, D-Mich., offered a discussion draft of a $25.1 billion energy tax title that included scaled-back, one-year extensions of the VEETC and the SEPTC. The draft would have cut the VEETC from 45 cents to 36 cents per gallon and the SEPTC from 10 cents to 8 cents per gallon. Despite introduction of the draft bill, the energy effort on both sides of the Capitol stalled before lawmakers left to campaign for the midterm elections. (For the draft energy bill, see Doc 2010-16629 or 2010 TNT 143-23 . For prior coverage, see Doc 2010-17454 or 2010 TNT 150-6 .)

The turkey industry does not oppose strong corn prices, Brandenberger said. Instead it opposes the artificial demand for corn that has driven up prices for the crop. After nearly 30 years, ethanol production is no longer a developing industry, and that makes ethanol tax incentives an "anachronism," he said. 

Watch the spokesman dance around the question of higher corn prices, trying to avoid alienating the row-crop lobby:

With the Death of the Chicago Climate Exchange Is the ECX on Life Support? (ICE)

Dear S.E.C.,
I know you're busy right now but when you get a minute could you ask the Intercontinental Exchange for some details of their $604 Million purchase of Climate Exchange, PLC last April?

As I said in "The Chicago Climate Exchange has Died, Richard Sandor Pockets $98 Million and the Intercontinental Exchange Gets Bagged Big Time (ICE; GS)":

The purchase of CLE by ICE stinks to high heaven. I'm sure a bright young para-legal could figure it out in a couple hours....

Here's more from Troy Media via The Epoch Times:

Carbon Emissions Schemes Are Going Up in Smoke

The war on carbon dioxide emissions isn’t going well. Indeed, while the next climate summit in Cancun, Mexico, at the end of this month will make a show of sifting the geopolitical wreckage from last December’s climate summit, any real prospect for coordinated international action is, post-Copenhagen, dead in the political water.

Making matters worse, the “bête noire” of climate alarmists is, once again, reigning supreme: King Coal.

Why False Hopes?

All this begs the question: With all hopes for a global CO2 impact blown away, why are politicians tenaciously clinging to the fiction that regionalized carbon-trading schemes—like the Western Climate Initiative—can succeed where national and international ones have failed?

Speaking to Troy Media, Dalibor Rohac, Research Fellow at London’s Legatum Institute, explains: “If you believe that CO2 emissions are a major factor driving climate change, you need to reduce emissions globally. Cutting emissions unilaterally through, say, increasing the price of carbon in one country or group of countries, leads to carbon leakage as carbon-intensive industries will move to jurisdictions where emissions are not restricted.”

Without international and national binding agreements, the reluctance of industry to participate is already reflected in the slow death of carbon-trading initiatives.

CCX Closing, ECX Next?

By the end of the year, the Chicago Climate Exchange, the only U. S. national carbon market that trades all six greenhouse gases, will quietly close its doors to its carbon-credits business—the main purpose for which it was set up. While the Atlanta-based Intercontinental Exchange purchased the CCX only last April, its voluntary but legally binding system has reportedly ground to a halt in the absence of a federally enacted cap-and-trade scheme.

Meanwhile, across the water, the European Climate Exchange, the leading platform for the EU’s Emissions Trading Scheme, is still trading. But when the Kyoto Protocol expires in 2012 with its requirement for mandatory carbon caps, the European Climate Exchange is widely expected to go the way of its Chicago sister—and a new British report makes clear why.

According to the report by Sandbag, a group calling for even tighter greenhouse controls, the entire five-year period of the EU’s ETS is set to deliver miniscule carbon savings of less than one-third of 1 percent of total emissions. The world’s oldest carbon-trading scheme has simply failed to make any serious impact on global carbon emissions, the purpose for which all such schemes exist.

In June 2010, Japan put on hold plans to introduce emission-trading laws. Australia has delayed any decision on a carbon-trading scheme until 2013 at the earliest, and at the Copenhagen conference, India’s Environment Minister Jairam Ramesh stated flatly, “India will not accept any emission-reduction target—period.”

In North America, however, local politicians still insist that regional initiatives, including the Greenhouse Gas Initiative in the Eastern United States and the Western Climate Initiative in the U.S. West and Canada, could prosper.

The WCI, for instance, is a partnership of seven U.S. states and four Canadian provinces. The WCI wants to establish a cap-and-trade system by January 2012 that, ultimately, aims to reduce regional greenhouse-gas emissions to 15 percent below 2005 levels by 2020.

“This is simply puzzling,” says Rohac. “Regional initiatives are unlikely to have any effect whatsoever on global emissions and therefore on climate change.”...MORE

If you've never heard of Sandbag here's one of our posts:

European Union's emissions trading scheme set to deliver carbon savings of less than a third of 1% of total emissions as ArcelorMittal scores £1.5bn. (MT)

Here's a story from their website:

Sandbag founder appointed to House of Lords

And one of their reports:

• Carbon Fat Cats 2009 - Company Analysis of the EU ETS

Commodity prices, DJIA – on a knife’s edge

The DJIA closed at 11,036.37 on Tuesday, a notably good showing considering the headlines.
First up, a driveby from Bespoke Investment Group:

For the sixth time in the last six trading days, the DJIA is testing its 50-day moving average.  Technicians say that the more often support levels are tested, the weaker they become.  If that's the case, will today's test be the straw that breaks the camel's back?

And from Investment Postcards from Cape Town:

The prices of industrial metals find themselves at crucial levels as indicated by the Economist Metals Price Index in U.S. dollar – the latest number is my estimate. The upward trend since the market bottomed in the first quarter of last year is currently being challenged.

Sources: I-Net Bridge; Plexus Asset Management.

The U.S. dollar prices of industrial metals are heavily influenced by the US$/euro exchange rate, but the drop in the Metals Index significantly outweighed that of the strength of the U.S. dollar. The drop in the Metals Index resulted in a break in the uptrend of the Index in euro.

Sources: I-Net Bridge; Plexus Asset Management.

The marked drop in metal prices, especially those of aluminium and nickel, was also echoed by very weak steel and stainless steel prices....MORE

JP Morgan: "Molycorp's shares face near-term headwinds to hedge against." (MCP)

The stock closed at $30.44 on Tuesday, down $1.15 (3.64%).
From Barron's The Striking Price column:

A Rare Play on Rare Earth 

MOLYCORP, A RARE-EARTH PRODUCER, is one of Wall Street's darlings. The stock has gained 238% in the past year amid global-supply concerns, but now some influential trading advisors are wondering if the stock is due for a rest.

Amyn Bharwani and Marko Kolanovic, J.P. Morgan Securities' derivatives strategists, are telling clients to consider using options to hedge Molycorp's (ticker: MCP) stock as the shares could face near-term turbulence that will limit the stock's advance.

The bearish view hinges on risks surrounding Chinese export quotas and the discrepancy between Chinese domestic and export rare-earth oxide prices. China produces nearly all of the world's rare-earth minerals, and recently announced that it was limiting exports, which was beneficial for Molycorp as many U.S. investors wanted to own U.S. firms involved with rare-earth oxides. The minerals are critical parts of many technologies and military applications.

Another potential obstacle to further stock-price gains is Molycorp's large insider ownership. J.P. Morgan rates the stock at Neutral and has a December 2011 price target of $36, some $4 above the current stock price.

To protect the strong gains in the stock, investors can consider buying puts and selling a bullish call to hedge the stock.

Bharwani and Kolanovic told clients to consider buying Molycorp's March $30 puts, selling the March $22.50 puts, and selling the March $35 calls. The three-part trade recently cost 15 cents, and hedges against any fall in the stock's price from $30 to $22.50. If the stock does not decline as anticipated by J.P. Morgan's strategists, and instead stages a powerful advance, the hedge limits any gains above $35....MORE