Thoughts

Decent Treasury Auction

The seven-year Treasury auction results were OK, with bid-to-cover, yield and indirect participation in line with prior auctions.

Gold Gets Sold

Gold is now down $13 an ounce, and I continue to hear that several large macro hedge funds are liquidating.

Yahoo for Yahoo!

YHOO, especially after the recent weak profit report, remains unloved.

In Wall Street's analytical community, there are currently only six Strong Buys and seven Buys on Yahoo!; there are also 20 Holds and one Sell.

The average price target is only $18.23 a share.

I would like to briefly explain why the Yahoo! bears are wrong-footed and why the market is underestimating the value of the company's private assets.

I have been far too low as to the value of AliPay, as the business has grown dramatically since that report. Indeed, given AliPay's market share of online payments, transaction volume and registered users, it is likely now more valuable than PayPal. In the fullness of time, it will be worth much more.

As of December 2010, AliPay had more than 550 million registered users with daily transaction volume of RMB 2.5 billion (U.S. $378 million). The company is processing 8.5 million transactions a day, and in fourth quarter 2010, AliPay processed more than 50% of Chinese online payments. (AliPay's transactions rose by 88% in the first half of the year!)

These are almost Facebook numbers, and Facebook is now capitalized at $50 billion.

Again, I strongly suspect that AliPay (40% owned by Yahoo!) is now worth more than the estimated $20 billion that PayPal is worth -- or as much as $8 a share to Yahoo! (and moving higher based on the continued rapid growth in the Chinese online payments market).

Head in the Sand

The market continues to ignore a structurally weak jobs market, further reflected in today's disappointing initial jobless claims report.

Run, don't walk, to read "On the Move: Adapting to a New Global Economy" on Knowledge@Wharton.

long YHOO