Sunday, September 28, 2008

Warren Buffett invests in Chinese electric car maker.

$230 million is sort of chump change for Warren Buffett, but it's interesting nonetheless. He also recently bought Constellation Energy Group, a US electric provider that got itself in a bit of a financial crunch.

MarketWatch: Buffett powers into electric cars, buying 10% of BYD.


MidAmerican Energy Holdings Co. said in a statement that it would buy 225 million shares of Shenzen-based BYD for HK$1.8 billion.

BYD's Website says the company's 130,000 workers produce information-technology products including nickel-cadmium and lithium-ion rechargeable batteries, mobile-phone displays, keypads and housings; laptop-computer keypads, and more.

On the vehicle side, the company produces electric cars, ranging from economy to luxury models, as well as car molds and car parts.

CNBC: Warren Buffett Invests In Chinese Company Developing 'Green' Cars.


BYD chairman Wang Chuanfu is quoted in the release as saying, "We are extremely pleased and grateful that Berkshire Hathaway and MidAmerican will be our long-term investor and partner, as we bring our electric vehicles and other environmental protection measures to the global space."


Tuesday, September 23, 2008

Warren Buffett: Thespian

Just as things are getting shaky again, and on a day that Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, and SEC Chairman Christopher Cox endure the slings and arrows (not to mention helpful guidance) of the Senate Banking Committee [Thank you Founding Fathers for ensuring the separation of powers!] to defend their bailout plan, Warren Buffett, with the dramatic flair of JP Morgan a hundred and one years ago, steps into the breach and invests $5 billion in investment banking firm Goldman Sachs. But he made this deal not without his pound of flesh, as the Goldman preferred shares he is buying yield a juicy 10%, and the warrants he gets are already in the money.

Nice deal Warren, and nice timing too. [Ya big ham - you know they're gonna be talking about this one for a while.]

Does the Financial Panic of 2008 now morph into the Financial Buying Panic of 2008?

Tough call - I'd guess yes, mainly based on observations of an orgy of negativity.

And there are probably a number of people short who have now overstayed their welcome.

Bloomberg: Goldman Gets Buffett's Backing in $7.5 Billion Fundraising Plan.


Saturday, September 20, 2008

Videos of the Week.

CNBC: S&P Head on Downgrades.

Alternative title: Dylan Ratigan Goes Postal!

Dylan Ratigan lets a guy from ratings company Standard & Poor's have it in this first video, and justifiably so. The ratings agencies overrated (**way** overrated, judging by the crisis) debt instruments, and then, in a pure "There's gambling going on in here!" moment, pulled the rug out from companies that dealt and/or now hold them with downgrades based on the toxicity of these instruments. While many people are to blame here, the ratings agencies were supposed to stand above it all as impartial judges, an obligation they completely abrogated.

The quote of the year: "The ratings agencies were directly complicit in the creation of the securities that you now are, like a two year old with a bazooka, blowing people's heads off with."

CNBC: Making Sense of the Market.

Alternative title: Kenneth Heebner Goes Financial!

Perhaps even wilder than the first video, Kenneth Heebner reveals he's got an over 30% allocation to financials (mainly strong banks) in his CGM Focus Fund. And while it sounds nuts, Heebner has a knack for sector calls. I don't know if he's right or early (or WAY early), but gut wise, I like this call.


Tuesday, September 02, 2008

The global cooling debate.

Daily Tech: Sun Makes History: First Spotless Month in a Century.


The event is significant as many climatologists now believe solar magnetic activity – which determines the number of sunspots -- is an influencing factor for climate on earth.

Delta Farm Press: Global cooling gains momentum among scientists.


“Carbon dioxide is not to blame for global climate change, Sorokhtin said. “Solar activity is many times more powerful than the energy produced by the whole of humankind. Man’s influence on nature is a drop in the ocean.”

Canadian climatologist Timothy Ball said, “If we are facing (a crisis) at all, I think it is that we are preparing for warming when it is looking like we are cooling. We are preparing for the wrong thing.”

wattsupwiththat: Livingston and Penn paper: “Sunspots may vanish by 2015″.

Belfast Telegraph: Is there a cold future just lying in wait for us?

On-Line Opinion: Activity is quiet on the sunspot front.


At the time of writing the sun is still spot free. NASA solar physicist David Hathaway points out, quite rightly, that the sun’s behaviour is within major statistical limits - just. The average solar cycle lasts 131 months plus or minus 14 months and the current cycle - the quiet period counts as part of the old cycle - has lasted nearly 143 months. The solar cycle went quiet for years at the beginning of last century before restarting, Hathaway notes, so nothing out of the ordinary has happened - at least, not yet.

Another group at the US National Solar Observatory in Tucson, Arizona, William Livingston and Matthew Penn, believe that there may be a deeper process at work. Sunspots are highly magnetic regions that are somewhat cooler than the rest of the sun’s surface (they appear dark compared to the rest of the sun, but if seen separately would appear very bright) and the two researchers have been tracking both the temperature and magnetic strength of the spots. They found that the spots have been warming up and becoming less magnetic. An average of the trend is a straight line going down which hits the bottom of the graph at 2014. They have concluded that, although sun spots may appear briefly from time to time in the next few years, they will disappear by 2014.

This conclusion is in a paper submitted to the journal Science three years ago but rejected in peer review. With the sun now so quiet the paper has been resurrected from a filing cabinet in the observatory and circulated informally. Dr Livingston told me (by phone from his office in Tucson) that the paper had been rejected on the grounds that it was a purely statistical argument so it would be better to wait and see what happened, and he considered that a fair point. They are now waiting “for the right moment” to resubmit.

But what happens after 2014? Dr Livingston says that as they are using a purely statistical argument, without any theory to back it, they do not know. All they know is that the trend reaches zero in 2014. Conventional theory on the sun’s inner workings never forecast anything like this - in fact, forecast the exact opposite - but has been revised to say that the sun will restart some time next year.