Wednesday, January 28, 2009

GOP & the Stimulus Plan/More on Thain/ING debt downgrade/Solta Medical earnings/SBUX

It is not surprising that the House GOP members will oppose Obama's stimulus plan in lock step. If they had been in control of the House back in September 2008, the world would now be a full-fledged depression, and there is no doubt in my mind about that opinion.  Their answer to the current crisis is the same as their answer to anything and everything-more tax cuts. Of course, tax cuts have not kept us out of the current pickle and maybe the GOP needs to explain why before offering more of the same.-  Their intellectual and titular leader, Rush Limbaugh, has already given them their marching orders-do whatever they can to cause Obama to fail.   CNN Political Ticker: 
It is also hard for them to explain in a convincing fashion why they will be voting against tax cuts for the middle class and businesses (about 275 billion dollars)  contained in the plan to be voted on tonight. WorldwideYahoo! CNBC.comI do believe that the majority of the American people sensed the inability of the GOP to adjust their standard ideology to forge a resolution of the current crisis, or even alleviate it, and voted accordingly in the last election.   They have been intent since the summer of 2008 to repeat the same mistakes as Herbert Hoover.  On the other hand, the Democrats can not pass a spending bill of this magnitude without including in it a lot of wasteful spending or spending that is far from the best bang for the buck in a stimulus package.   I see no reason for example to include money for student loans in a stimulus package. 

I do think John Thain would have been McCain's choice for Secretary of the Treasury.

One question that Thain has not answered is why was it necessary to distribute the Merrill bonuses in December when the regularly scheduled time period would have been in January after the completion of the  Another question is how does any company justify paying one dollar in a bonus when the company was for all practical purposes bankrupt at the end of 2008?  The only source of money for the bonuses, after subtracting Merrill's losses for the year, had to be the taxpayer handout.  And, lastly, Thain says the bonuses were needed to keep the talent from bolting to other firms.  Does this mean that Merrill's talent would leave to join AIG, Lehman, Bear Stearns, or Citigroup, or who exactly is hiring these wunderkinds these days?  Besides the real worth of the so-called talent who might have left without a big bonus is probably in  need of a sober and independent evaluation and a recognition of the new realities. / UK - A leaner future for Wall Street bankers  They were paid early only because the Merrill brass feared that Bank of America would have hacked any big bonus payments after 1/1/09. 

Starbucks plans to cut more workers-7,000 for this round- and to close another 300 underperforming stores.  ReutersRevenues for the last quarter fell 6% and the SBUX earned $.09 versus 28 cents a year ago.  Its non-GAAP number, which excludes restructuring costs, as $.15. Starbucks Reports First Quarter Fiscal 2009 Results: Financial News - Yahoo! Finance I currently have no interest in SBUX.  But, at a much lower price than $9.6, my interest might receive a small jolt of enthusiasm. 

Allstate had a negative report.MarketWatch

It is hard to see much to like in Qualcomm's release. MarketWatch

Moody's downgraded the debt of ING Group and ING Bank. MarketWatch 

Fitch also downgraded ING securities today.  Fitch Corporate
For my purposes the Fitch rating of the preferred stock is the most relevant and the preference shares were downgraded to BBB- with a negative outlook.

The CNA senior bond maturing in 2023 is rated by Fitch at BBB with a negative outlook. Fitch Corporate
This is the underlying bond contained in the TC JZV.   The FINRA link to the underlying bond in JZV is:FINRA - Investor Information - Market Data - Bonds - Bond Detail

Linn Energy (LINE), a position owned but not discussed yet, announced its dividend of 63 cents for the 1st quarter.  Yahoo! Finance

I thought the Barron's discussion of  Compass Diversified Financial (CODI) was worth a read. I just put the stock on my small cap monitor list.

I think the S & P is likely to finish the month over 815 so I will restart my investment of cash flow into common stocks.  I have about a thousand in cash flow received this month which has yet to be utilized. 

One of the small caps recently purchased, Solta Medical, reported preliminary results after the close. Solta Medical, Inc. Announces Preliminary Financial Results for the Fourth Quarter of 2008: Financial News - Yahoo! Finance
This is apparently not an earnings release but preliminary numbers for the 4th quarter. Results were poor particularly on the revenue side.  A loss of 3.1 million is expected for the quarter before charges connected with the recent Reliant acquisition, stock based compensation and other costs.  I would not have even bought the 100 shares at $1.35 given this information.  Possibly I would consider it now if I had a do over at less than 1.  This is one reason why I spread my money around when buying these micro caps.  But I will stay with Solta for a day short of a 1 year holding period to see what happens. 

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