Currency headwinds: How will Nordson’s bottom line be affected going forward as currencies continue to fluctuate?

The yield on the 2 year note declined 2 basis points to 0.80 percent. The yield on the 3 year declined a basis point to 1.07 percent. The yield on the 5 year note glided ever so slightly higher by 4 basis points at 1.69 percent. The yield on the 10 year note jumped 11 basis points and the yield on the Long Bond catapulted 24 basis points and sliced right through the 3.00 percent level to finish at 3.03 percent.

Cutting wages and/or hours is a more humane way to downsize than firing people outright, in my opinion. But to the extent that wage and hour cuts have been and will continue to be a trend, it disguises the unemployment numbers. So real unemployment is and will be higher than the reported numbers for unemployment due to wage and hour cuts. Moreover, cutting wages is a paradigm example of deflation in practice. People do the same amount of work but earn less for it.

Q. Were you wrong to be so bullish?

I am also noting that the energy complex is largely floating this boat (XLE +2.59%)... Countering this technical note, cumulative tick and advance decline lines have been consistently positive sloping, albeit mildly so, and the daily pivot proved strong support at $92.00. I will look to close my profitable TBT trade on any turn in fortune. My tax cuts, hmmm...

The big question must be: How could a person with so much market experience be repeatedly at the center of such major misunderstandings regarding the markets, and how could his team - stuffed full of people like him - struggle so much to communicate what they were doing and why?

"Unless there’s a significant rally in 2009, the 2000s will prove to be the worst performing US stock market decade ever, actually losing money for the first time," writes Ron Surz of PPCA Inc. (an investment analytics/software firm) in a research note today. "It will take a whopping 40% return in 2009 to make investors whole for the decade."

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AT&T Inc. (T) – Implied volatility gained 13% to 43% at fellow telecom provider AT&T as its shares reacted to the Bernstein downgrade as they fell 4% to $28.22. The broker now forecasts a share price of $27 instead of $35 for its shares. Although there was notable put buying using January 29 and 30 strikes, investors seemed more inclined to spend option premium on 27.5 strike calls expiring later this month as they scooped up more than 8,000 calls at a cost of 1.05.

Regulatory authorities in the United States and now the EU continue to regard more effective CRAs as part of the solution for poor investment decisions that failed properly to assess underlying risks, and not as a major part of the problem of offloading the necessary due diligence that should predate investment in complex financial products. So far, the major regulatory approach to credit ratings problems has focused on policing the credit rating agencies.

The Treasury announced today that they will auction $30 billion 3 year notes on Wednesday. The increase in issuance here is stunning. The 3 year was reintroduced in November at $25 billion. In its previous reincarnation it was a quarterly issue.

First, a happy new year to all readers. There was a fitting circularity to 2008, in that a year that began with the largest apparent fraud in banking history (Jérôme Kerviel’s €5 billion loss at Société Générale) also ended with it, in the form of Bernard Madoff’s self-confessed Ponzi scheme and losses that have been stated at approaching $50 billion. Kerviel showed that investment banks were not necessarily the most competent handlers of risk – a point that Bear Stearns and Lehman Brothers, and the effective termination of Wall Street as a private entity, later underlined. Bernard Madoff in turn showed that those local councils with deposits in Icelandic banks did not have an absolute monopoly on credulity, nor on negligence in conducting appropriate due diligence – supposedly sophisticated institutional investors were just as capable of being taken for a hugely expensive ride.

This should sound pretty obvious, but it isn't. And I think a lot of people have been violating this rule, particularly on Wall Street and in big corporations. The economic mess we are in is at least partly because of this problem.

The market is overbought. I'll get back to that, but first let's take a look at the overall picture. The market, via [[SPY]] and [[SSO]] is putting in a healthy looking bottom pattern. RSI has broke out over the middle area. Price is putting in a constructive looking price pattern. Depending on how you view it, an argument can be made for a reverse head and shoulders or a bottoming cup and handle. Price has broke out over the 50 day moving average. Last and probably most important, the volume pattern is strong, which signals underlying accumulation. Underlying accumulation is an important trait when bottoms are put in.

1. ...Obama's economic plan could include a large dose of tax cuts, perhaps totalling $300bn, rather than simply pumping out purely government expenditures. Which is probably a good thing and should make many Republicans happy.
2. Still, US steel companies see no reason to sit back and relax. Having seen the success of the automakers, US steelmakers are now clamoring for government support despite recent boom times.
3. As an aftershock from the commodities boom, some shipper groups are clamoring for re-regulation of U.S. railroads, complaining that recent price hikes were unfair. Rail is still probably a better deal than trucks, given customers are taking the price hikes, though lower oil could change this. US railroads were deregulated around 1980 after years of horrible performance. Now they finally have had the ability to modernize and create one of the most efficient rail shipping infrastructures in the world. Hopefully the twisted lesson learned from all this won't be to go back to the way it was.
4. In terms of economic indicators, the US manufacturing index fell to a 28 year low in December, and if the December rate were to persist for a full year, US GDP would drop 2.7%. Lets hope that's not quite the scenario which plays out. China isn't doing so well either, where manufacturing output fell (yes, economic indicators can actually go negative in high growth China) for the third straight month.
5. US auto sales in 2008 fell nearly 20% vs. 2007. And thus oddly enough... Japan could be experiencing a sort of pyrrhic victory since just as autos become the country's #1 export, we hit one of the worst auto slumps in recent memory. Cars seem so 20th century these days.
6. In Semiconductors, semi sales fell 10% YoT in November with memory hit especially hard. Probably related, there are reports of a spreading consumer electronics inventory glut. Music sales fell in 2008 for the 7th time in 8 years. Perhaps the CD will be one of this recession's fatalities.
7. In the deal space, Pfizer's (PFE) CEO has recently said that he is open to acquisitions. Let the speculation commence (continue?). Pharma is one place dealmaking isn't on life support, as buying companies these days is likely cheaper, and faster, than in-house R&D. Also, interesting article in regards to all the stakeholders [[DOW]]'s CEO is struggling to appease: Rohm & Haas (ROH), to complete the deal; shareholders, banks who are iffy on DOW's financials, post a potential ROH deal; the Kuwaitis, though they might now be out of the picture after canceling their JV.

Please bear with this recovering analyst.

In any event, 2009 is here, and with it a big fat "zero" in the Y-T-D column. The challenge is now to figure out how to get the year off to a good start. For the time being, the market seems to want to buy risky assets out of the block, though whether that is an active decision or merely a passive "putting cash to work" allocation remains to be seen. Macro Man has some sympathy for the view, if only for a short-term punt.

For starters, there are precious few prior periods, with less than a dozen downturns worth the name in the last century. So we’re already working from a tiny sample size.

Robert Frank is quite certain about executive pay:

Why not limit executive pay? The problem is that although every company wants a talented chief executive, there are only so many to go around. Relative salaries guide job choices...