Archive - Feb 27, 2010 - Story

Portfolio has prepared a useful interactive map highlighting America's increasing split between the haves and the have nots based on city of residence. Case in point: the wealthiest city in the US according to Portfolio, Newport Beach, has more than a quarter of its residents making over $200,000. On the other end of the spectrum is Reading, PA, whose 80,000 residents have an average per capita income of $14,120 (of half the national average), and none makes over $200,000. And a stab at New Yorkers - with a median household income of just $31,245, and "just" 6.9% of households making $200,000, Mike Bloomberg's city ranks a distant 60th in the list of wealthiest cities.

With February over, and the equity market just slightly down MTD, the January weakness in equities has finally spilled over to High Yield, where we are flowing in a see of red. This was to be expected considering the two nearly $2 billion HY fund outflows experienced in February. Below is the complete heatmap for February HY bond price performance by subsector. Each issue is presented on a size relative basis, with the grayed text giving detailed information about any one specific issue, including corporate ticker, one month change, ISIN, Name, Rating, Outstanding, and last price (compared to January 31, 2010, red is lower, blue is higher).

Rep. Paul Ryan slams Obama's healthcare reform in one of the most concise critiques of the proposed plan. Furthermore, he observes some of the critical flaws in the Obama plan, which contrary to the President's frequent appearances on TV discussing the "lies" promulgated about his proposal (and even misguidedly allowing citizens to temporarily rat each other out in witch hunts straight out of the Stazi or Sekuritate playbook), is in fact itself full of - inconsistencies, for lack of a better word.

The NOAA's National Weather Service has provided the following analysis to estimate the anticipated hit times from the time of impact of the Chilean earthquake (3:34 am local Chile time, 2:34 am Eastern). According to this estimate, California will feel any residual Tsunami waves within the next 2 hours, Hawaii has about 4 hours to prepare, while New Zealand - a little less. For those seeking frequent updates, we recommend the following Hawaii Tsunami Information website.

Concerned that some of you might be backsliding into pure nihilism, it is good to keep the mind open to possibility and responsive to opportunity. Here is a attempt to grasp what the world is really like: evolving, unpredictable, full of data that requires constant translation but instantaneously changes context. My thesis is simple: in the age of electrons as trillion dollar transactions, the printing press is irrelevant.

We will never become dependent on the kindness of strangers. Too-big-to-fail is not a fallback position at Berkshire. Instead, we will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity. Moreover, that liquidity will be constantly refreshed by a gusher of earnings from our many and diverse businesses. When the financial system went into cardiac arrest in September 2008, Berkshire was a supplier of liquidity and capital to the system, not a supplicant. At the very peak of the crisis, we poured $15.5 billion into a business world that could otherwise look only to the federal government for help. Of that, $9 billion went to bolster capital at three highly-regarded and previously-secure American businesses that needed – without delay – our tangible vote of confidence. The remaining $6.5 billion satisfied our commitment to help fund the purchase of Wrigley, a deal that was completed without pause while, elsewhere, panic reigned. We pay a steep price to maintain our premier financial strength. The $20 billion-plus of cash equivalent assets that we customarily hold is earning a pittance at present. But we sleep well. - Warren Buffett

Even Goldman's clients are increasingly challenging the firm's unrelenting bullish outlook: David Kostin says: "Our view that S&P 500 earnings will approach prior peak levels in 2011 represents a key argument supporting our bullish view on US equities. However, it remains the single most contentious point in our recent meetings with both the micro and macro investors. Separately, 10% of S&P 500 sales originate in Europe. Stocks with high revenue exposure face headwinds and should lag the broader market."

Crude oil broke through the $80 a barrel ceiling repeatedly during the week but kept falling back as hedge funds placed big bets on the Euro’s decline. The fiscal drama in Greece held global markets hostage much of the week as worries about the impact of the Greek crisis on the euro outweighed comments from Federal Reserve chairman Ben Bernanke about continued low interest rates in the U.S., pushing the euro down against the dollar and damping crude prices. The euro recovered some ground on Friday amid new reports of European aid for Greece after falling to a nine-month low of $1.3440 on Thursday. Germany’s state-owned bank KfW may take part in a planned Greek bond offering next week, according to market reports.

I've been under the weather for the last few days. So last night I went to sleep early, around 11pm. Around 3:15am, I suddenly woke up, even though I usually sleep straight through until the dawn. There was no obvious reason to wake up at such an odd hour. Claire, my dog, was sound asleep. Out my window on the 15th floor of my building, all the buildings across from the Los Leones golf course were quiet. But I was wide awake. So finally, I decided to make the best of it—I got my laptop and surfed the net, wide awake, reading (of all things) about what the iPad might mean to newspaper publishing—when the earthquake hit. - Gonzalo Lira