Links of Interest - 12/11/08

There is an interesting article in the WSJ about Bill Miller, and the fall of his once lauded Legg Mason Value Trust fund. After continuing to dip into the value market, buying many beaten down financial companies, the fund has fallen from $4.3 billion AUM from over $16.5 billion just a year ago. The fund that was consistently one of the top performers over the years is now among the worse for one-, three-, five-, and ten-year periods based on Morningstar's rankings.

The IEA is forecasting a contraction in world oil demand, the first in 25 years (see WSJ article). Spare production capacity is at a six year high among OPEC members. Specifically for the US, consumption is expected to fall off 6.3% this year, and another 1.4% in 2009. China is expected to fall 3.5% in 2009 after increasing oil consumption 5.3% in 2008.

Charge-off rates among credit-card issuers are expected to rise more than expected in Q4, after rising more than 6% in Q3 (see WSJ article). Roll rates, which indicate that customers will go from late to not paying, was up 20%. The roll rate for American Express increased to 47% in Q3 from 35% during the same time last year. Capital One increased to 34% from 28% over the last year. Given that unemployment is a leading indicator of credit card defaults, the numbers are not all that surprising.

Defensive stock Proctor and Gamble lowered its sales outlook for the current quarter, stating that organic sales growth will fall short of the previous 4-6% growth targets given just a few months ago (see WSJ article). The stock is down nearly 20% for the year, but still fairing better than the broader market.