Thursday, April 30, 2009

Swine flu in the White House?

There were new fears last night that President Obama may have been exposed to swine flu.

A member of the White House team that went with him to Mexico last month is suspected of contracting the disease. The man, a security agent, fell ill in Mexico on April 16 - the day Mr Obama was in the Mexican capital.

The agent's wife, son and nephew were also infected with flu and all four tested as 'probable' for the swine flu virus. They have since recovered.

The archaeologist Felipe Solis, that shook Obama's hand, that died on April 16, did not have swine flu. He had pneumonia.

Fed to delay stress tests

What else is new?

April 30 (Bloomberg) -- The Federal Reserve will postpone the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials.

The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as tomorrow, they said.

Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices.

Some scattered capitulation by the shorts-Finally!

Just monster action today. Compare these numbers to where they were March 9!

FSLR beat earnings and the stock traded up to 190! This was 107!.
Green Mountain Coffee hit 79 today. It was 37.
WYNN hit 44. It was 15!
Dow Chemical closed at 16, it was 6.
IP was a penny from 13, it was 4.
MGM was a nickel from 10, it was 2.

The first three numbers had a huge short base. The last three plays had huge games in credit default swap lands.

The bears got fried!

I sold FSLR today at 188; I don't care how much they want too hype this, or how much they beat earnings---Goodbye! I'll take it! I just played hot potato with that number! I hope it moves some more. But it won't be with me!

And I put the money in SunPower at 27, even though they just raised money at 22.

I just can't get a handle on FSLR's cadmium leakage issue. In their annual report, they only had a current accrued warranty liability of $4 million, and excluding their largest customers, all other customers combined are less than 10% of sales, so the replacements of panels is obviously not a material issue, but I needed an excuse to sell, so I took it.

I said goodbye to ISRG also. It's moved 50%, and the gap up was just too much not to take. And I wanted to know that a short that was covering was buying from me! I hope it runs some more, but I'm not a proponent of the hope theory!

I needed to take some chips off the table, because I'm going into some other lower priced names, that should give me more action like the numbers at the top of this post did!

But at least today, we finally had some action that this market sorely needed.

Bears throwing keyboards!

What happens in Vegas, happens first!

There's a long line of mourners
Driving down our little street
Their fancy cars are such a sight to see, oh yeah
They're all your rich friends who knew you in the city
And now they've finally brought you
Brought you home to me

Anyone buy Las Vegas Sands at $1.77? It was advertised here, when the world was worried about China not buying treasuries!

How about this piece on April 4?

Wall Street wants you to believe that every casino is now a toxic asset, and that every casino is worth what Carl bids! So take the action at the casinos. It's just another group that the shorts have laid on where they have overstayed their welcome! But now, the shortsellers are Wall Street's new "coolers!" So buy the stocks, and let the coolers pay up for their shorts!

You had 300% moves in those numbers in three weeks!

How about those folks that bought $4.1 billion of credit default swaps on MGM? How did that work out?

Now today, we hear massive complaining about shorts getting run in. Wasn't that story advertised here just three weeks ago? The moral pontificating is done by those who are underinvested, or who are short. They feel like they are providing the money. They are! The down payment comes from those that are short, who tried to ruin the financial system, who now need to buy their stocks back. The crooks that are short are now reliquifying the same system that they tried to break. That's their deal. So deal with it!

Now, of course, the price is much more exacting for the shorts, as we have had the best month in the market in years.

Now Obama is going to visit Vegas on May 26. You had that story, with the casino story, and an airbrushed picture of Kim Kardashian so you wouldn't forget it. Anyone take the action???

Now wasn't Vegas supposedly the most toxic area of the country? What had the biggest move? The casino stocks!

Now what happens in Vegas, happens first to stocks! Which means that the material stocks, which are finally getting a bit of a bid, are now prepared to make a Vegas sized move!

Which is why I advertised the material ETF last Friday.

Because that's where the money is going to rotate into next!

They'll follow Vegas' lead!

And to those that stay bearish?

Their portfolio gets the limousine ride with Elvis!

One question the erdudite, intellectual bears can't answer

Isn't fighting the trend a "rookie mistake?"

Wellington horses died by an OD of Selenium

The FL state veterinarian said a high dosage of selenium, caused the death of the 21 polo horses owned by Venezuelan Victor Vargas, president of Venezuela's Banco Occidental de Descuento.

Selenium is a mineral essential for cell function. A spokesman for the state of FL, Terence McElroy confirmed the story, and it looks like Franck's Pharmacy of Ocala was the guilty mixologist!

The flu conspiracy was this: Vials of a missing virus disappeared from a lab in Maryland:

The vials contained samples of Venezuelan Equine Encephalitis, a virus that sickens horses and can be spread to humans by mosquitoes. In 97 percent of cases, humans with the virus suffer flu-like symptoms, but it can be deadly in about 1 out of 100 cases, according to Caree Vander Linden, a spokeswoman for the Army's Medical Research Institute of Infectious Diseases

Must of been a bear's conspiracy!

Roubini's last crack at fame

Check out these quotes in NY Mag.

"The recession has been great for me," Roubini, whose nickname of Dr. Doom belies the permanent grin on his face, told us when we caught up with him later, as a line of girls formed to be photographed next to him. "They love my beautiful mind," he confided. "I am ugly, but they're attracted to the brains. I'm a rock star among geeks, wonks, and nerds."

Later he said the type of parties he likes are the ones where there are 10 girls to one guy and that his friend Bill Clinton "is a fan of this ratio."

We've heard of the Vagina Monologues, but Roubini's apartment has vagina walls!

Roubini calls these plaster epitaphs the "Vaginas of Doom."

Do you think just a wee bit of his bearishness has gone to his head?

The beast is getting Fed! So where's Waldo?

The bull market beast is feasting on shortsellers and under-invested bulls. As advertised here!

Where is the economist from Moody's who did all the downgrading at the bottom? Who warned us of the coming depression?

Where is he hiding?

Where is George Soros?

Why didn't he get a backache to tell the world we were going higher?

His backache lasted one day. He disavowed his first backache and went back to the dark side!

Why don't we hear from them now?

It will be the same with these bears!

Today, I'll try and pull a Cramer and become a statesman.

I'll just collectively call these bears Waldo.

But there's a difference between the Waldos' on Wall Street and the Waldos' from Rutgers.

The ones at Rutgers are smiling!

More debit card use than credit

Yesterday, VISA announced that for the first time, debit purchases exceeded credit transactions.

Stacey Pinkerd from Visa said, "The reality is that the vast majority of consumers want to pay as they go."

Tim Murphy from Mastercard: "A big group of consumers like the discipline that debit spending can bring them, and that is particularly relevant in this kind of environment."

Cliff Cook from USB: "Consumers are being more conservative in the way they manage their finances and that leads to a greater willingness to put transactions on debit cards."

Remember on March 10, when Meredith Whitney warned the world about the multi-trillion contraction in credit cards that was coming? Nobody cared, except for the bears!

I proposed a rather simplistic argument, in this post Frugality is In.

But do the foreclosure math-where the banks have actually taken possession of the homes.

268,532 foreclosures in 2006
405,000 foreclosures in 2007
850,000 foreclosures in 2008

1.5 million homes times $200,000 owed per home, equals a contraction of $300 billion of debt. And that's only with those homes that have been taken over by the banks. Does anybody really think these people are living on their credit cards? Through in 3 million homes that are in the foreclosure pipeline, and soon you'll have a nation of savers. Now you are talking a trillion dollars. They are saving, not just because they have become frugal, because it's trendy, as the NY Times reports, but because it is now a necessity. That's the new cash economy. They have been saving to acquire their next items with cash, as credit has been cut off to them. They are saving to consume! The contraction of credit, is actually pent up demand, being facilitated by saving. And that's the pipeline that the bears can't see!

Now yesterday the only increase that we had in the -6.1% GDP was these savers consuming!

Somehow, the bears and their algorithms, couldn't catch that simple fact.

Now Wall Street didn't catch that then, but maybe they will catch it now.

Especially since the "experts" at the card divisions recognize it!

The bull's resurrection

I thought I would go back to my Easter post, where I assembled some quotes from the bears on the durability of this market rally. Aren't those quotes looking just a wee bit foolish now?

He is Risen!

Today, a lot of people celebrate the resurrection.

But not on Wall Street.

No-one believes in that resurrection; the one of the bull-market variety!

Check out the following quotes:

Ratigan: Suckers' rally. No question. That's not an indictment of the judgement of the market. That's just my perception of the ability of the banks to function in a timely fashion, the ability to create meaningful amounts of jobs in the immediate future, and the as-yet unrecognized meaningful losses to come in commercial real-estate and other asset classes...

So far this feels like a distribution rally before a retest of the lows. It is the timing of things that is the challenge, and the ability to spot a genuine change in character in the long market trend.

The effect of (1) and (2) is what is known in the investing marketplace as "distribution" - that is, you, the retail bag-holder, wind up with the shares at the end of the day, and the institutional and quant-driven "fast money" departs with your cash. When they stop their high-frequency "pass across the table" game, and they will, you find yourself with some very expensive shares as the floor disappears.

Distribution marks tops, usually very significant ones.

"Anyone who is doing anything sensible right now is either losing money or is out of the market entirely." These are the words of a quant trader, who is seeing something scary in the capital markets. Scary enough to merit a warning that we could be on the verge of another October 87, August 2007, or January 2008.

It's the question Pilate asked:

"What is truth?" John 18:38

Judging by the numbers of people going to church today, it appears that millions and millions believe in the resurrection.

Maybe Wall Street should learn from the masses.

A little bit of faith, makes the believing easy.

And it comes with it's own rewards!

The Fed on bond yields

The Fed thinks interest rates are much lower because of their purchases:

Fed analysts suggested the $300bn purchase would reduce the yield on 10-year Treasuries by 25-35 basis points. Officials think the rate today is much lower than it would have been if they had not started buying.

And why is that, since these officials can't see any inflation on the horizon?

However, given the sharp rally in equity markets since early March – the S&P 500 index is up more than 25 per cent – yields would probably have risen much more without the Fed’s intervention.

Now the Fed needs to leak to FT!

Nobody's listening at the WSJ!

Wednesday, April 29, 2009

"I don't sound like nobody!"

Monday I had a story on the bears entitled "Nobody's Home" with some music to boot.

Looks like nobody listened!

And who was the original nobody?

The King!

Elvis Aaron Presley!

On July 18, 1953, Elvis met Miss Marion Keisker from Sun Records' at 706 Union Avenue in Memphis. Their conversation:

E: "If you know anyone who needs a singer..."
M: "What kind of singer are you?"
E: "I sing all kinds."
M: "Who do you sound like?"
E: "I don't sound like nobody."
M: "Well what do you sing, hillbilly?"
E: "I sing hillbilly."
M: "Well do you sound like a hillbilly?"
E: "I don't sound like nobody."

Well, nobody, became somebody!

And now, this market has the bears, suffering with "Suspicious Minds!"

Infidelity from Wall Street!

GDP forecasts

Here is the 2009 GDP forecast by Wall Street

Morgan Stanley -3.3%
Merrill Lynch -3.1%
Goldman Sachs -3.2%
JPMorgan -2.6%
IMF -2.8%

If the forecast isn't green, don't buy it!

Now last Friday, we had the Economist magazine with their anglerfish, ready to swallow anyone not believing in doom.

Three trading days later, we have a quasi reflective backpedal flip flop from these folks, with this article, "Better than it looks?"

USA GDP was down 6.1%, but consumer spending was up 2.2%, inventories were down huge, and defense spending was down 4%. It was better than it looked!

Maybe the world discovered that the ferocious anglerfish was all of two inches!

The end of deflation

At the link below is a great piece on the deflation argument. It's elegant, well reasoned and thoughtful. But it's also wrong!

But this part was right:

Well, did anyone think deflation wasn't a surprise? We've been in deflation. It just took forever for our Government officials to recognize it. So how is it possible for inflation then to start? How are our august officials going to recognize the kindlings of inflation, when they couldn't recognize the deflationary forest fire?

So their policy will foster it.

Look at the statement that our Fed made today:

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

There it is. Our Fed was fighting inflation, when we were in a deflationary environment, and now they are fighting deflation when the seeds of inflationary are being sown!

What is happening to PIMCO's portfolio of bonds? Remember last week, they told us that the economy was in a bottoming process, instead of recovering?

Ask some of your friends that are short, if there is deflation in stocks? How quick did that go away?

And ask your same bearish friends that believe in deflation, and that also despise the Fed just this one question. How is it possible that they and the Fed are on the same page?

These same folks will tell you that stocks are lying! They're not! The same folks will tell you the 10 year bond is lying. They're not!

Now David Rosenberg of Merrill Lynch put out another piece warning us. But this time, he had a caveat, and it wasn't an April Fool's piece!

Mr. Market is to be respected, but he is not always correct

We find it rather difficult to square today’s Fed press statement with the amazing reversal in investor sentiment towards euphoria over the past several weeks. The equity market is, as we all know, a forward-looking barometer, and now seems to have gone further than merely pricing in “green shoots”, to discounting the righthand side of the ‘V’. Mr. Market is to be respected, but he is not always correct.
Fed has a more somber forecast than Mr. Market.

Tautological logic only teaches those believers in it lessons. By assuming the Fed is correct, they assume the market is wrong. Why is the market wrong?

Rosenberg also said this:

There is simply too much slack in the economy, in our view, for us to be worried over the prospect of inflation or a sustained bear market in bonds.

So those that believe in an inflationary universe, now think deflation can't be tamed?

Saturday I said this:

The biggest source of faith in the world, is the smugness that the bears have in their intellectual superiority. How else can they feel so assured that they are right, when the action in the markets tells them they are wrong? And isn't that how markets operate? They are designed to fool you, until after the fact. That's almost a tenant of faith!

Before King David slew Goliath, he had to take down a bear. It's the same in this market.

The bear has already been slain, and the head of the deflationary giant has already been cut off!

The Philistines are freaking!

Some recovery/infrastructure plays

Caterpillar sold all of 5 Cat excavators in China in January. Now Caterpillar says business in China is screaming.

Doesn't that mean they are now selling 600 a month?

And if CAT is doing that business, how about these as a cheap derivative play on the construction recovery?

United Rentals (URI 6.37)
Manitowoc (MTW 5.50)
Terex (TEX 13.47)

The next leg up is now "patently obvious"

When we have a GDP that shrinks 6.1%, and the market shrugs it off, it means that stock investors see much better times ahead, and that micro pullback and consolidation that we had, was the extent of the pullback.

It didn't matter that the Economist put an anglerfish on their cover that the bears latched on as a "classic" which supposedly portrayed the ignorance of the bulls!

Neither did the "vaunted" stress test!

And it didn't matter that the quants were blowing up, because they were short, and the market couldn't rally without the blessings of these providers of liquidity!

What these quants missed, is that their shorts, were the markets liquidity! And Mr. Market had decided to expose them! That wasn't in their equation!

And it didn't matter when the experts said the "swine flu" was going to crush the economy of the world.

The flu helped stage the rally! It showed that their wasn't sellers, and it also showed the public of the folly of Wall Street's predictions. The whole world, now knows what a trillion dollar loss by banks feels like in their 401K and in the value of their home. So how was it possible, that this swine flu was going to cause four trillion dollars of damages?

The swine flu can't hardly even close a school; how is this going to shut down our economy?

Now a week ago, I said we are starting the next leg up, and that it was "patently obvious."

It's now patently obvious that Monday's downdraft was an orchestrated move by the bears to crack the market. And it's now patently obvious, that we have already had the price and time correction in this bull market. We corrected 5%; so that was the price correction. And the time correction was one day.

It's now patently obvious to a few more people!

And now, this market rally will broaden out to encompass even those sectors that didn't come along for the first ride!

Today even Goldman Sachs had some nicer things to say about the housing stocks, as they now "trust" their book values more. As though Goldman is the arbiter and judge of trust! And just like Hatzius was dragged kicking and screaming into the bullish camp, so will Goldman's analysts!

But soon, the bulls won't even have to have these p*ssing contests with the bears.

Because this leg up is too patently obvious!

The Specter switch

Biden said that Arlen had "immense personal courage." When you are behind 41-27 in the latest Republican primary polls, switching was his only option.

Arlen just wanted to be relevant.

I would also think, that there are a lot of investors on the sideline of this bull market that also want to be relevant. And more than a few bears are probably questioning themselves.

Just switch sides.

Have some "immense personal courage!"

The Fed's meeting

The Fed comes out with their statement today, and in the leaks last week we were told that the Taylor rule, indicated that a -5% Fed funds rate would be appropriate for today's economy.

If that is the case, shouldn't we hear about Quantitative Easing II?

But hasn't that plan already been a bust?

Ever take out your trash on trash day, and see your neighbor with a generic hefty bag, stretched to the gills with garbage?

It's packed so tight, that you can see through the bag!

That's our Fed with all of their programs.

Now they have to wrap it up in a good sports bra!

Just so the world thinks they have things under control!

No wrinkles for $30!

Tomorrow, No7 Protect & Perfect Intense Beauty Serum wrinkle treatment goes on sale. Two years ago, twenty weeks of supply sold out in one day.

The British Journal of Dermatology reported that 70% of those that used the cream, had fewer and finer lines.

An over the counter anti-wrinkle cream with a double-blind randomized control trial. You'd think they were selling stock!

The study is at the link below.

pdf file of trial:

Tuesday, April 28, 2009

The Dendreon squeeze

Every short in the world hated Dendreon. They hated it at 8, 7, 6, 5, 4, and 3. Until it spiked on their Provenge news to the high teens, and then it settled in the low 20's. At about 1:30 today, the stock was going to be halted for the release of news. Look at the above chart.

From 1:25 pm EST, to 1.27, the stock dropped from 24 and change to $7.50, and it rallied to $11.81 whereby it was dutifully halted by the NASDAQ. 3 million shares traded hands in 70 seconds. The NASDAQ found nothing wrong with the trading and left all the trades stand.

After the halt Dendreon announced the news that was expected, and it closed at just under 26 in after hour action. Now look at this post on the Yahoo message board:

HIGH PROBABILITY MASSIVE BEAR RAID 12 30 pm central today 28-Apr-09 11:22 am

DNDN could easily drop 50 % on a massive bear raid its coming.. today @ 12 30 pm central

You had one of the best bear raids in the history of this market, executed in 70 seconds, that took a stock from 24 to 7.5 and ending at 12--a 50% haircut in two minutes on 3 million shares, and the move, and the time of it, were given the heads up by a poster on the Yahoo message boards! And the hapless NASDAQ, let the trades stand!

Now watch the DNDN conspiracy tellers stay all over this story.

I just like the idea that the shorts got burned immensely by the stock; and that today's move were predicted,in advance by a Yahoo message board poster, and that this stock, is once again, the poster child of manipulation in this stock market.

By the shorts, and the longs, and the FDA panels!

But mostly by those that were short!

Because they had the most to lose!

WHO is like Nouriel Roubini!

Neil Ferguson, of the World Health Organization (WHO) said that 40% of Britain could be infected by the swine flu virus in the next few months if it becomes a pandemic.

Up to 40 per cent of the British population could be infected with swine flu over the next few months, a leading expert warned today.

Professor Neil Ferguson, a World Health Organisation official, predicted millions would be hit if the deadly outbreak becomes a pandemic.

The academic, who sits on the WHO taskforce that last night decided to put the world on an unprecedented alert, forecast swine flu could dog Britain for months.

Which is why this WHO is like Dr. Roubini, formerly known as Dr. Doom, now going by the moniker Dr. Realist, who needs his own reality check!

Maybe Roubini listens to "Crystal Ball" by the artist formerly known as Prince!

I wonder what tomorrow has in mind for me?

Or am I even in it's mind at all?

Perhaps I'll get a chance to look ahead and see.

Soon as I find myself a crystal ball.

Citi and BAC--Raise more capital!

Look at the above chart showing reserves.

Does anybody really think the banks really trust their own balance sheets?

Does anybody really think the banks really trust their own earnings?

So now we hear that Citi and BAC need some billions, after a "leak" of the stress test.


Ken Lewis hasn't been playing ball lately; he's been talking too much about Paulson and Bernanke twisting his arm to buy Merrill Lynch.

So now we get this leak.

And now, the Fed's can pretend that this "stress" test is real.

It's as real as Larry David's nurse!

Monday, April 27, 2009

The beastly bull market

Everyday another person looks for the coming correction.

When this market becomes loathsome, when it becomes disgusting, and when it becomes stupefyingly irrational, to these vainglorious highbrows who speak of the coming depression, then and only then can you consider that possibility.

Now today RGE Monitor had this headline--Will the Swine Flu Spell Global Disaster?

Which means, we need to go a lot higher, because the simplest way to kill a virus is with heat, and the bears are still cooking up stories!

What a depression really looks like

How about sacks for clothes, instead of shopping at Saks?

How about a broken down truck instead of a Lexus?

How about a shanty instead of subprime?

How about a soup kitchen instead of Whole Foods?

And we are in a depression?

How about it?

Are you buying what Wall Street is selling?

Because you've traded down?

Are you?

How to spead a banking virus

From the opinion page of the WSJ:

The cavalier use of brute government force has become routine, but the emerging story of how Hank Paulson and Ben Bernanke forced CEO Ken Lewis to blow up Bank of America is still shocking. It's a case study in the ways that panicky regulators have so often botched the bailout and made the financial crisis worse.

In the name of containing "systemic risk," our regulators spread it. In order to keep Mr. Lewis quiet, they all but ordered him to deceive his own shareholders. And in the name of restoring financial confidence, they have so mistreated Bank of America that bank executives everywhere have concluded that neither Treasury nor the Federal Reserve can be trusted.

Swine flu seems to have started in Washington!

Nobody's home!

Where are these sellers that want out of this market?

How about the swine flu sellers?

How about the low flying plane over New York?

Why is it, that those that are bearish, aren't wrong? And why doesn't anyone call them on the carpet for their continual bearishness?

We supposedly were never going to eat organic foods again; meanwhile Whole Foods rallies from 7 to 19.

We supposedly never were going to go out to eat, meanwhile Darden goes from 13 to 39 and EAT rallies from 4 to 18.

We supposedly never were going to buy a gadget that needed flash memory again; meanwhile SNDK rallies from 5 to 15.

We supposedly never were going to buy a Ford truck again; meanwhile Ford goes from 1 to 5.

We supposedly never were going to shop again except at the Dollar stores; meanwhile Nordstrom's rallies from 6.66 to 22.

Big names touted here on March 9, had huge moves also. It wasn't just the small numbers that moved! GE from 6 to 12. IP from 4 to 10. AKS from 5 to 12. BAC from 3 to 9. WFC from 9 to 21. USB from 9 to 18.

And now the homebuilders are breaking out, including the supposedly ugliest ducklings, HOV and BZH, which are both trading at 2.77, on their way to another double, after going up 5X and 10X already.

Weren't their tax losses worth anything?

The bears said no, because no-one was supposedly, ever going to make another nickel building a house again!

Looks like no-one listened!

Except the bears!

Nobody's Home!

But they still think they're still Nobody's Fool!

But if you still think those that are bearish, are that smart, spend 88 minutes listening to this. Maybe it will open your eyes!

Nouriel Roubini lowers his "depression" odds

Dr. Doom changes his tune, and his name:

No, I am not Dr. Doom. I am Dr. Realist. I don't believe we are going to end up in a near depression. Six months ago I was more worried about an L-shaped near depression. Today, after the very aggressive policy actions taken by the U.S. and other countries, the risk of that near-depression L has been reduced from 30 percent to 15 or 20 percent. We are instead in the middle of a U.

Less than three weeks ago, Roubini was calling Cramer a buffoon, and saying this:

Roubini said the latest surge is just another bear market rally following the pattern of other rallies after the government intervened. He expects the market will test the previous low because of worse-than-expected macroeconomic news, disappointing earnings and because banks will fail after the stress tests come out.

"Once people get the reality check, than it's going to get ugly again," Roubini said.

Now on March 9, Roubini said that there was a 2/3 chance that the economy would enter a great depression.

Now that story has disappeared off of CNBC's website, except for the headline, "US Recession Could Last up to 36 Months."

So now the odds of a depression have gone from 66% to 20%, and now Dr. Doom wants to change his name!

To Dr. Realist!

Looks like the wrong person got the reality check!

Let me suggest a new moniker for Mr. Roubini on behalf of Mr. Cramer.

Dr. Buffoon!

Biota on the Australian Exchange

A spec on Relenza--but you need to take the drug early at the first sign of symptons.

It's also a play on Government panic. How big will their stockpiles get?

Goldman's VAR

According to Bloomberg:

April 27 (Bloomberg) -- Goldman Sachs Group Inc., unbowed by the securities industry’s worst year since the Great Depression, increased its trading bets at the fastest rate on Wall Street.

Goldman Sachs’s so-called value-at-risk, the amount the New York-based bank estimates it could lose from trading in a day, jumped 22 percent to $240 million in the first quarter, twice what Morgan Stanley stands to lose, company reports show. VaR climbed 2.8 percent in the same period at JPMorgan Chase & Co. and dropped 14 percent at Credit Suisse Group AG.

According to Goldman's Q1 conference call:

Turning to risk, average daily value at risk in the first quarter was $240 million compared to $197 million for the fourth quarter. The increase was driven by higher credit spread risk.

Q: Okay. And then just real quickly on the VAR, it sounds as if the principal trading business, less emphasis, agency business is probably a little bit higher this quarter, maybe that characterization is wrong; correct me if I''m wrong but if that is the case, why would VAR be higher? If you could just help us conceptualize that a little bit.

A: It's really just volatility and movements in credit spreads that drove it. It's not position size.

Fed study--Rates should be negative 5%

The ideal interest rate for the US economy in current conditions would be minus 5 per cent, according to internal analysis prepared for the Federal Reserve’s last policy meeting.

The analysis was based on a so-called Taylor-rule approach that estimates an appropriate interest rate based on unemployment and inflation.

A central bank cannot cut interest rates below zero. However, the staff research suggests the Fed should maintain unconventional policies that provide stimulus roughly equivalent to an interest rate of minus 5 per cent.

Sunday, April 26, 2009

The "hot potato" flu stocks

Microcap stocks that should get monster action tomorrow:

AVI Biopharma (AVII .89)
Sinovac Biotech (SVA 1.97)
BioCryst Pharmaceuticals (BCRX 2.21)
Novavax (NVAX 1.42)

and on the bulletin board:

NanoViricides (NNVC .82)

More flu conspiracy

WASHINGTON (CNN) -- Missing vials of a potentially dangerous virus have prompted an Army investigation into the disappearance from a lab in Maryland.

The Army's Criminal Investigation Command agents have been visiting Fort Detrick in Frederick, Maryland, to investigate the disappearance of the vials. Christopher Grey, spokesman for the command, said this latest investigation has found "no evidence of criminal activity."

The vials contained samples of Venezuelan Equine Encephalitis, a virus that sickens horses and can be spread to humans by mosquitoes. In 97 percent of cases, humans with the virus suffer flu-like symptoms, but it can be deadly in about 1 out of 100 cases, according to Caree Vander Linden, a spokeswoman for the Army's Medical Research Institute of Infectious Diseases. There is an effective vaccine for the disease and there hasn't been an outbreak in the United States since 1971.

Remember this story the day before when all the polo horses from Venezuela died at the Wellington polo club in Florida?

Watch someone connect the dots when they shouldn't be!

The Swine Flu and Obama

  • 81 dead in Mexico (all schools, universities, museums, theatres etc. have already been closed.)
  • 1300 people currently being treated for it in Mexico
  • 10 students from New Zealand who went to Mexico became infected
  • Seperate cases now in Israel and France
  • Britain on alert
  • 8 cases identified in Queens, NY, out of 100 sick people
  • On April 16, President Obama met archaeologist Felipe Solis in Mexico City. Felipe died the next day, with flu like symptoms
  • 2 in Kansas
  • 7 in San Diego (Gov. Schwarzennegger yesterday spent his day at NASA's Ames Research Center coordinating CA plans with federal officials)



Relenza (Biota Holdings and GlaxoSmithKline)

Prevention from airborn virus:

Surgical masks

Don't think these won't be the next play on Wall Street. (There are some small Chinese medical companies that will probably scream on this news. And the only ones that may breathe easier on this news if it spreads, are the bears. Economic panic estimates are here: )

The World Health Organization didn't raise it to a pandemic level, which means it probably has spread more than they think--after all, our President met one of it's victims!

The Obama connection:

Earlier, panic spread throughout Mexico, where those who died were reported to be the first victims of a pandemic with the potential to kill millions.

The same virus type has appeared in Texas, California, Kansas and New York. A total of 19 people have been infected, eight of whom have recovered.

Last night it was reported that President Obama had met one of the possible victims earlier this month.

He was greeted on his visit to Mexico City on April 16 by archaeologist Felipe Solis, who died the following day from flu-like symptoms.

Economic preview

Bloomberg Survey

Release Period Prior Median
Indicator Date Value Forecast
Case Shiller Monthly YO 4/28 Feb. -19.0% -18.7%
Case Shiller Monthly In 4/28 Feb. 146.4 142.8
Consumer Conf Index 4/28 April 26.0 29.5
GDP Annual QOQ% 4/29 1Q A -6.3% -4.7%
Personal Consump. QOQ% 4/29 1Q A -4.3% 0.9%
GDP Prices QOQ% 4/29 1Q A 0.5% 1.7%
Core PCE Prices QOQ% 4/29 1Q A 0.9% 1.2%
Pers Inc MOM% 4/30 March -0.2% -0.2%
Pers Spend MOM% 4/30 March 0.2% -0.1%
PCE Deflator YOY% 4/30 March 1.0% 0.7%
Core PCE Prices MOM% 4/30 March 0.2% 0.2%
Core PCE Prices YOY% 4/30 March 1.8% 1.8%
Employ Costs QOQ% 4/30 1Q 0.5% 0.5%
Initial Claims ,000’s 4/30 25-Apr 640 645
Cont. Claims ,000’s 4/30 18-Apr 6137 6230
Chicago PM Index 4/30 April 31.4 34.9
U of Mich Conf. Index 5/1 May P 61.9 61.9
Factory Orders MOM% 5/1 March 1.8% -0.6%
ISM Manu Index 5/1 April 36.3 38.3
ISM Prices Index 5/1 April 31.0 34.0
Vehicle Sales Mlns 5/1 April 9.9 9.7
Domestic Vehicles Mlns 5/1 April 7.1 7.1

Saturday, April 25, 2009

The IMF flip flop

What a difference a little rally makes in the stock market. Today the IMF said that the current policy stimulus may be enough:

The head of the International Monetary Fund said on Saturday that if countries are successful in cleansing their financial systems, the fiscal stimulus already implemented for 2009 “may be enough”.

Just four days ago, the IMF was warning the world about $4.1 trillion of losses, and $875 billion of additional capital needed, and that additional action was needed for a market recovery:

Further Action Needed to Reinforce Signs of Market Recovery: IMF

Under one scenario, capital injections totaling $875 billion would be necessary for banks located in the United States and Europe using a common measure of leverage— tangible common equity (TCE) to tangible assets (TA)—of 4 percent, the level prevailing before the crisis. Estimated equity requirements for banks in the United States by the end of 2010 are about $275 billion; for the euro area, $375 billion; for the United Kingdom, $125 billion; and for banks in other advanced economies in Europe outside the euro area, about $100 billion...

Overall, further decisive and effective policy actions will be needed to stabilize the international financial system. The global response to date has been rapid, but often piecemeal and insufficient to bolster public confidence. In particular, the global banking system needs to be cleansed of its impaired assets.

Early this week, the bears had seized on this report by the IMF. What will they do now?

Now I could be wonkish, and tell you that the ISM has bottomed, along with the Empire State and Chicago Fed. I could quote you retail sales figures, increasing auto sales and a nine week GM shutdown that will dramatically change the supply/demand relationship for automobiles, and I could tell you that we have the lowest housing starts in 30+ years, and the biggest home affordability since the 60's, with interest rates at even lower levels, but would that matter?

It doesn't! The biggest source of faith in the world, is the smugness that the bears have in their intellectual superiority. How else can they feel so assured that they are right, when the action in the markets tells them they are wrong?

And isn't that how markets operate? They are designed to fool you, until after the fact. That's almost a tenant of faith! After all, wasn't Abraham told that his descendants would be as the stars of the heavens and as the sands of the seashore? (Genesis 22:17). In his day, you could only see 4,000 stars, so that statement would appear to be foolish. And Abraham knew sand--he spent some years walking in the desert!

The only difference is, Abraham's object of faith, validated his belief! These statistics that the bears trust in, only portray the past; while they think they foretell the future!

Why else do the bears get so p*ssed if you throw in some theology with your arguments? They just want facts--that way they can distort them to match their beliefs! But it's not the facts that are wrong, it's their belief! And that's harder to change than the facts!

Just ask some of these rocket scientists that blew up their quant funds, with their dispassionate use of statistics. Their formulas knew price, but they didn't know value! They thought their models were being prescriptive, when they were just descriptive, because they thought they were deterministic! Plug in enough variables, and chance leaves. What if Abraham was a quant? How many variables would he put in for stars? 4,000? He'd be short by 10 million billion billion--for starters!

But here's the difference. Abraham would of counted the stars as though they were grains of sand. Would a modern day quant put that variable in their Abrahamic regression analysis?

But I digress. The fact is, if you take the Great Depression II off of the table, stocks, junk bonds, and so called "riskier" assets move up.

That's because these "riskier" assets already have all the risk taken out of them in price!

But you don't hear that from Soros, or Whitney, or Schiff, or Rosenberg, or Roubini now do you?

So instead, you hear it here!

Barrons "Big Money" polls

58% think the market hasn't yet bottomed! 58%!!!! But 60% say they are bullish!

And these are the average prices that the bulls on the "Big Money" poll, think we'll see by year end 2009, and June 2010!

DJIA------ 8676----- 9488
S&P 500-- 906----- 1003
NASDAQ-- 1684---- 1841

Big Money ain't have a clue!!

The market won't wait for these clowns to buy!!

And then Barron's tells us that luckily, historic precedents seems to favor having a bottom in the stock market, in the first term of a new President, and "and the bottom could be seen in 2009, perhaps in October, after a retest of the March low."

We already had the bottom!

Astrophysicists and journalists just can't get their handle around 666!!

Time to revisit Slippery Simons

According to ZH, Mr. Simons Renaissance fund is underperforming the S&P by 17% Month to Date! And he runs close to a hundered billion!

Someone needs to keep an eye on him!

What happened to these astrophysicit quants? It seems their returns aren't so great when they need to find a real locate or good borrow! It's time to revisit my story on James Simons the first week of this year so we can put a finger on his problems!

Tuesday, January 6, 2009

James Simons' "fuzzy" math

The other day I cooked some fish for dinner, and the next day, when I walked in the house it stunk. So I cleaned the kitchen again, but it still smelled funny. I sniffed the microwave, and refrigerator, and cleaned them again, but the house still smelled funny. I ran the dishwasher but things still smelled funny. No matter how I cleaned, or how much bleach I used, I couldn't get rid of the smell.

That night, the smell got worse. It was the smell of a rodent, that had died in the attic. It wasn't just something fishy going on, it was a rat! And somehow this incident came to my mind when I was checking out Renaissance Technologies annual returns for 2008.

Hedge fund manager James Simons made $670 million in 2004, $1.5 billion in 2005, $1.7 billion in 2006, and $2.8 billion in 2007, as head of Renaissance.

Simons made some very good money this year by aggressively shorting stocks. Supposedly the astrophysicists and the mathematical wizards with all their PHD's contributed markedly to his success, but somehow their algorithms didn't factor in a good locate or a real borrow.

He testified this year in front of Congress in November, and talked about his mathematical background, and his stint as a code cracker for NSA. Here's a story on him.

How did his funds do? Here are their returns for 2008.

James Simons futures fund-DOWN 12%
James Simons Renaissance Institutional Equities Fund- DOWN 16%

Now I didn't mention the Medallion fund. This was the fund that gave all the money back to investors that were not employees of the company in 2005. This fund is owned just by the employees of James Simons Renaissance Technologies.

How did this fund do?

The Medallion Fund was UP 80%.

Thus Simons was able to generate, once again, outsized returns for his employees, but he wasn't able to replicate any of this success to the two funds that the public can participate in. So if you worked for him, you were up 80%. If he managed your money, you were down 12-16%.

So in honor of all those astrophysicists from James Simon's Renaissance Technologies, we have picture from space, of the Keyhole Nebula that tells how Simons treats it's investors!

Now if only we had a rat at Renaissance that could give us the view inside the keyhole....

Off to Disney!

Look at the photographer's face above Miley's head! He's surprised that Hannah Montana has grown up.

My daughter's birthday is coming up, so we're heading to Disney. She's turning seven, and getting a Kaiya Eve pettiskirt to wear at her birthday tea party next week.

That's a party dress I don't have to sweat!

Friday, April 24, 2009

No glimmer of hope for the bears

The bears keep trying to outdo one another with their cleverness.

Look at the latest issue of The Economist.

Paul Kedrosky highlights this on his blog saying, "Good cover on the current issue of The Economist."

The "light at the end of the tunnel"used to be an approaching train. Now we need to fear the anglerfish!

First we had Roubini's "yellow weeds" and now we have Kedrosky's "anglerfish" comments!

What the bears are missing though is balls, so they subconsciously latch onto this article!

This fearsome fish is all of two inches!

And it gets worse. When an angler fish mates, the male bites into her back, his body dies, and he shrinks down into just a couple of gonads, the size of a parasite!

The media used to be the parasites living off of the bears ideas.

Now we have another "fluff" piece, but this time the bears are the parasite as they've been neutered by the market.

But they are hiding in the media's shadow!

We have a couple of Type 6 stools!

Today's market recap

Did you see that pathetic attempt in the last few minutes to drive the market down, only to have it bounce back the last two minutes of the day?

Over at Jeff Cooper made the bear's case Thursday morning, with this article:

"New Bull Market Is, Well Bull

On Monday, the popular averages entered the window where an interim top was forecast. The week opened with a 90% down day and the worst decline since the early March low. Significantly, in the process, the Weekly Swing Chart turned down for the first time since turning up on the week ending March 13.

And then he reports on his "gnome."

My gnome high in the Appalachians tells me that over the last few days someone was buying hundreds of thousands of 85 Spyder puts and selling hundreds of thousands of Spyder calls. Is this the same group that was jacking up the techs yesterday morning? Someone seems to be making a big bet that the S&P is going to 800 or lower by May expiration.

This afternoon, he switched gears. He better find a new gnome!

There's a case being made that there's a better-than-average likelihood that the more-than-30% rally in 6 weeks by the S&P through last Friday marks a first leg up as opposed to another bear leg. Why?

But that's the mark of a good trader! To switch positions when the market tells you that you are wrong!

Don't think that you won't see a lot of this in the coming weeks, because we are in the 2nd leg up in this bull market--and it isn't going to wait for anyone bearish.

Maybe they better re-read this story!

The market is hot, and the little shorts that these stocks are wrapped around with, are going to ravaged by the starving bulls! A five day old hamburger from McDonalds looks like a steak at Ruth Chris, to someone starving on a desert island!

And speaking of Ruth Chris, I touted that on April 8, on "The cupboards are bare" story.

But speaking of that, the cows at Ruth Chris' are rather tasty, and RUTH, at $1.60 looks ready to double!

It closed today at $2.74, up 71% in all of two weeks and two days!.

And since I started this story with Cooper, let me get in an advertisement.

In that same story, I touted Cooper Tire at $5.78. It closed today at $8.21 up 42%.

Also in that same story, I touted Goodyear Tire at 7.69; it closed today at 10.87 up 42%.

Nice moves in two weeks and two days! That's a catch-22 for the bears! So much for the bear's good year!

That is hot action in hot little numbers! What did the bears think, that the world would sit idly by, when all this money can be made at their expense?

That's why they only have a pea shooter!

In the cupboard story, the stocks that should have moved, but didn't, until today, were the fertilizer companies. I suppose that's why I had such sarcastic articles about the bears stool, and their dandelion tea!

After all, the fertilizer cupboards are bare!

If you like bathroom humour, you need to read them! If you don't like bathroom humour, but you want to make some money, you need to read them anyway!

Now weren't we supposed to have a story about the bank "stress test" that was supposed to shake the foundations of the earth today and their toxic assets?

It wasn't too toxic was it?

Now last week, Meredith Whitney gave an interview where she said, "In you 20's, you just want to look serious, but when you're in your thirties, you just want to look hot."

If she want's her research to be actionable, she needs to get rid of her shorts otherwise Meredith's research is going to be the next toxic asset!

As advertised here!

Hot potato? Her research has now become a hot potato for stock investors. In fact, Meredith's research is Wall Street's next toxic asset! She's now become a passover plague!

Where's the bathroom humour in that? Click on the above link.

Meredith's article was right under the CNBC story with the toilet flush!

Cheesecake Factory earnings

Cheescake Factory is one of the biggest winners on the NAZ today, hitting 18.

Goldman Sachs downgraded CAKE on April 20, and it pushed the stock down to 13 and change. It only moved 35% in their face in four days!

But I'm taking CAKE off the table today at 17.73, only because I like the numbers, and because I touted it here at 7.37 in December! The earnings were good, and I could say that CAKE slowed their expansion thus boosting earnings but that's not my reason for selling. I have an opportunity cost for money!

Lower gas prices means the consumer will still go out to eat. Cheesecake Factory (CAKE 7.37), which also owns Gran Luxe and Brinker International (EAT 8.53), which owns Chile's, Maggiano's, Romano's Macaroni Grill and On the Border are both plays, with good charts that have made a rolling bottom, that now look like they getting ready to head higher. Not a play you need to overthink. Everyone knows these stories, and yet nobody is interested. But today I saw good buying in both.

Buy the materials--if you want 700%!!

That's the next move with the biggest bang for the buck!

Coal is up, steel is up, the shorts have finally laid off of the fertilizers, because the world economy is turning, and only on Wall Street could they con people into believing that people don't need to eat--even though the restaurants stocks have all tripled and quadrupled from their lows!

But if you're squeamish, and you are afraid, for some ungodly reason, (even though you shouldn't because this market is not coming down, and we are now on the next leg up in this bull market, as I so emphatically said on Tuesday ) here's your play.

UYM 15.73 is the double materials proshares ETF. The June 18 call is at $1. I think it goes to 7.

By June.

700% by the sixth month!

And that's my play for speculators!

Housing and oil

Housing has bottomed!

Deal with it!

Prices are going up, and inventory is going down. From 12.5 months, to 11.2 months to 10.7 months, and a 4% appreciation in the average price from last month.

Now if housing goes up, won't that help the banks?

So deal with it!

Oil has bottomed, and so have the oil stocks.

Deal with it!

Wall Street thinks that the problems in credit are so bad, because that's the last leg they think they can stand on. What are they going to say-that the restaurants stocks are going down? That tech is going down? That retail is going down?

Marilyn Chambers passed away. Her days of going down are over. It's the same with the bears tired old story. Find a new one!

Wall Street is missing the most rapacious creditor in the world, and that is the OPEC oligarchy. They now sees the glimmer of the nascent recovery taking hold, so prices in oil will now start climbing. After all, they need to make up some of their losses from the financials!

And after all the "stool" that Wall Street has thrown your way, don't you think Dubai wants to get rid of the sewage off of their beaches?

They need higher prices, and they'll get it.

And Wall Street is so naive, that they'll think the higher prices indicate that the economy is getting that much stronger because oil is no longer going down!

When in fact, we've just been pimped out to Saudi Arabia!


To the day!!!!

Oil is rebounding, and the oil stocks are ready for an explosive move upwards, but no-one seems to want to buy the story, but they better, because the stocks are moving!

It was advertised here, to the day! But this time I gave you a week!

Now next Wednesday, you will see a dramatic decline in crude inventory, and the corresponding start of the next leg up in the oil stocks.

But why would that be unusual? Don't people trade stocks, bonds currencies and oil, and the tech stocks? Wouldn't you like the bottoms and tops in these to make money? How about to the day!

You got the top in bonds, on New Year's day.

Sell it! Sell your 10 year paper! Sell your 30 year paper! Sell your 5 year paper! Credit Suisse said to buy 5 year paper two weeks ago. That's a call? Just sell it to them! Sell your Treasuries! You had a heck of a year. The best since 1995. So just sell them! Sell them to PIMCO if they are supposedly so bullish on bonds. Sell it to Goldman. Sell it to BlackRock. Sell it to Wellington. Sell it to the fools swarming over this paper. Hit the bids for gosh sakes! Just go and sell it!

To the day!

You had the reversal in the dollar, at 1.47 euro.

To the day!

You had the bottom in crude.

So now that we have finally gotten a lower contango in oil, you can now SHORT the bearish ETF DTO that tracks crude, and that gives investors double the short return on oil! When the trend gets choppy, these short ETF's are designed NOT to work. Look at what happened to SKF and URS! So if you like oil at these levels, and with the flattening of the contango, you short the ETF that makes money when crude drops. And just like the bearish financial ETF that didn't work, and just like the bearish real estate ETF that didn't work, you now have a bearish crude ETF that now won't work. Especially now that it has already run in anyone that had shorted it. So only the professionals are left to play in this playground! Join them!

You had the March 9th bottom in stocks.

This weekend, Barron's warned us about Dow 5,000. So what. We go higher. Roubini warned us that the Dow would hit 5,000. So what. We go higher. Meredith Whitney warned us that we will have a $4.7 trillion contraction in credit card loans. So what. We go higher. Trot her out on CNBC and let her pump the bear case. So what. We go higher. Now Roubini and Whitney, aren't the bloggers in the "cottage industry" of bears that I talked about yesterday, but wouldn't a new bull market meaningfully impact these bears? After all, who needs "Dr. Doom" if what we need is "Dr. Boom?" Moody's warned us today about the new "lepers." They have now published a list of "Bottom Rung" companies that are more likely to be first to default. So what. We go higher.

To the day!

You also had the bottom in tech stocks!

Why not? Weren't we told that tech won't lead this market? Wouldn't it be most frustrating for the bears for these stocks to go up while their earnings are going down? And if tech stocks, with declining earnings will be going up, what will happen to those stocks that still have rising earnings? They'll be re-appraised on the Wall Street auction!

And to top it off, I threw in the low of housing.

The numbers on the average home sale price came out today at $165,400. That my friends is the absolute low reading that you will see in this housing cycle, so get on board, or get run over by the train.

To the day!

Ford over five!

Now that "wasn't" supposed to happen, wasn't it? At least that's what the bears told us! Some companies don't need Uncle Sam's help, thank you very much!

And didn't they tell us that the market was ready to go down with their tricks on Monday and Wednesday where they tried to manipulate the market?

Yesterday, I was speaking to a deflatinonista hedge fund manager, that I hammer with bullishness at least once a week. Last Saturday, he told me I was crazy, and that the market was heading to a 5 handle on the S&P and the Dow. Yesterday, he changed his tune.

It was about 3:30, and right before the market started to rally, and then he said that maybe "the lunatics" in the market could move the market to 11,000 by the end of summer, but he was waiting for the S&P to get under 800 first.

I said, "Under 800?? You have no chance at all for that to happen. You need to move now! This is it--we are starting the next leg up!"

Now think about this--He is one of the brightest folks I know in the business, and he has every bearish argument and statistic in his viewpoint arsenal.

But he changed his market viewpoint on the Dow by 100%, in the last week! From 5500 to 11,000! That is what happens to someone who is short the market, and under-invested.

Now think of those bears, who dispense advice whose franchise relies on their "bearishness." Unlike traders, or investors, they aren't graded by the market.

At least not yet!

But Mr. Market is coming!

And then, these bears, will finally be gone!

But these prognosticators will be the last to know!

So listen to them, at your own peril. After all, didn't Roubini tell us that "Ford was running out of cash, and heading to bankruptcy?"

Roubini and the bears will soon find out, that the survival of the fittest doesn't happen over millions of years. Evolution is quick!

After all, his Ford prediction of five months ago is now toast!

And this Darwinian market will get the professor, and show that the bears belief's are as right as the flat earth theory!