Wednesday, September 30, 2009
The Forbes 400
Rank Name Net Worth ($mil) Age Residence Source
1 William Gates III 50,000 53 Medina Microsoft
2 Warren Buffett 40,000 79 Omaha Berkshire Hathaway
3 Lawrence Ellison 27,000 65 Redwood City Oracle
4 Christy Walton & family 21,500 54 Jackson Wal-Mart inheritance
5 Jim C. Walton 19,600 61 Bentonville Wal-Mart
6 Alice Walton 19,300 60 Fort Worth Wal-Mart
7 S. Robson Walton 19,000 65 Bentonville Wal-Mart
8 Michael Bloomberg 17,500 67 New York Bloomberg
9 Charles Koch 16,000 73 Wichita manufacturing, energy
9 David Koch 16,000 69 New York manufacturing, energy
11 Sergey Brin 15,300 36 Palo Alto Google
11 Larry Page 15,300 36 San Francisco Google
13 Michael Dell 14,500 44 Austin Dell
14 Steven Ballmer 13,300 53 Seattle Microsoft
15 George Soros 13,000 79 Westchester hedge funds
16 Donald Bren 12,000 77 Newport Beach real estate
17 Paul Allen 11,500 56 Mercer Island Microsoft, investments
17 Abigail Johnson 11,500 47 Boston Fidelity
19 Forrest Edward Mars 11,000 78 McLean candy, pet food
19 Jacqueline Mars 11,000 70 Bedminster candy, pet food
19 John Mars 11,000 73 Arlington candy, pet food
22 Carl Icahn 10,500 73 New York leveraged buyouts
23 Ronald Perelman 10,000 66 New York leveraged buyouts
24 George B. Kaiser 9,500 67 Tulsa oil & gas, banking
24 Philip Knight 9,500 71 Beaverton Nike
The story at Forbes here.
Ken Lewis to resign from Bank of America
But Ken's greatest salvation was his insider purchase of 200,000 shares of stock at $4.80 on February 4. At least he wasn't selling. And his buy demonstrates his confidence in the Merrill merger.
Now it only remains to be seen, if Ken tells a different tale than Secretary Paulson, who already had his own spin of revisionist history in the glossies last month.
So when is someone going to grill Bernanke so we can at least hear him tell the world, "I don't know" or "I don't remember." Is Alan Grayson the only one that can do that?
So in preparation of the investigation, here's some tidbits of Alberto Gonzalez's testimony before Congress that Ken should learn:
"I have searched my memory"
"I have no recollection of thgat meeting"
"I don't remember the contents of that meeting"
And then this beauty, "I don't recall" uttered 74 times.
Four lines for Ken to remember and then he has a "get out of jail free" card!
The PMI front run
At 9:57 someone hit the market with sell orders. At 10:00 the PMI numbers came out, printing 46.1. So then the folks say the market is rolling over, when in fact, it's just another "flash" order, as Chicago PMI subscribers get this information 3 minutes before the media does.
And once again, the bears think this means something for stock prices.
It doesn't. It's just an algorithm trading against another!
Now did anyone see the clown from CoreStates Capital being interviewed on CNBC this morning? He was asked if he was worried about the jobless number. His response 2 minutes into the clip was, "Well the employment numbers don't concern me yet, since I'm still employed. If that changes, I'll be concerned."
And that my friends, is Wall Street's attitude towards the unemployment numbers Friday. And that's the video that should go viral before CNBC takes it down off of their site. Because that is Wall Street. They don't care one iota that Main Street is losing jobs. As long as they aren't!
Because when they were, they were pimping a depression. They were so bad, they couldn't of even worked for the ladies in Hungary!
So how then, is the jobless number on Friday going to mean much, when we have a GDP contraction of just .7% for Q2--Just one quarter after the quarter when the end of the world was supposed to happen?
Newsflash: How many times can you successfully bet on the end of the world? Isn't it once? So why then, would anyone believe the bears and their double dip argument? We avoided the end of the world, but now, it's going down there again? For a retest?
When was the last double dip? 1937? And then after that? 1982? So that's your bet? The one that Nouriel Roubini said was going to happen?
Wouldn't it be nice if someone could come up with one word for the double dip crowd?
I have one, but it wouldn't be polite, because it also sums up my feelings for the guy from CoreStates Capital.
Hungary to massage GDP numbers
And the figures are going to be elevated because they are now going to include the benefits of prostitution.
Sept. 30 (Bloomberg) -- Prostitution and the illegal drug trade boosted Hungary’s economic output figures for the last 14 years after the government revised the way it calculates gross domestic product.
The two activities account for about 1 percent of GDP, statistician Peter Szabo said in an interview in Budapest today. Their inclusion “significantly” boosted output figures going back to 1995, he said.
“There are more than 10 categories of prostitution, each with their own unit prices and other detailed data, so we simply had to account for them as output,” Szabo said. “Used by a foreign tourist, these services of course are considered exports.”
In 2005, Hungary told the IMF they would be getting revenue from prostitution. In 2007, Hungary said they were going to get another billion annually from the revenue of the sex workers entrepreneur's permit.
Today, it's just another off balance sheet item. But this time, its a boost!
RIMM is ridiculous at these prices
At under 68, the price on RIMM is totally ridiculous.
It's as ridiculous as when it was under $40 in March.
A give away price.
Wall Street's bears inbred research
Eugenics was a serious issue in 1929. In April of 1929, in the Journal of Race Betterment, you had this story, "Does America Need More Morons?" In the March issue, the author of note was Margaret Sanger, the founder of Planned Parenthood, who was making noteworthy quotes like this: "In my experience as a trained nurse while attending persons afflicted with various and often revolting diseases, no matter what their ailments, I have never found any one so repulsive as the chronic masturbator."
I wonder what she thought about chronic speculators?
But is this the psychology today? So why compare charts from the Great Depression to now when the thinking of the world was so different?
Maybe you could say that Wall Street just seems to be full of morons because the bears are just inbred in other like minded bears research!
But before we talk in circles, we need to look at Euclid, but first you need to be set up. Because that's how Wall Street works. They always throw a diversion at you!
Remember Bolt? Usain Bolt? Who couldn't? How about his 200 meter race with the world record? Or the Olympic Gold? He's the fastest man in the world. See that's Wall Street. They set the story. And then, they give you the picture.
So now, here's Usain Bolt and his 200 meter world record run.
The setup is this. Usain is in lane 5. Look at the runners in lanes 6, 7, and 8. They get the head start since they are running on the curve. And the video isn't in English, just like Wall Street research, where they inundate you with statistics, just to make your eyes glaze over. But who needs and interpretation? We know what's happening!
So after seeing this, I now ask use a question that was in a book regarding Euclid in the 1700s.
If I give you a rope, and wrap it around the earth, like a ring wrapped around a finger, so it lies perfectly on the earth's surface, and then I lengthen the rope just 1 meter, how much slack is there now between the rope and the surface of the earth?
The answer is simple, but the solution seems wrong.
We know that circumference of a circle, with a radius R=2πR. So we need to find the gap, we'll call that g. And since we have 100 centimeters in a meter, well, the calculation is pretty straightforward. (The pi symbol on blogger looks like a n)
So cancel out the 2πR on each side and we have
Divide each side by 2π to get g
or 6.26 inches.
Which intuitively, doesn't make sense. Especially since you saw the staggered starts in Bolt's race. The average circumference of the earth is 24,883.2 miles. And if I just lengthen that rope by 1 meter, it will clear the earth by six inches around the entire earth. (At least I didn't throw in that 12 to the fifth power is 12x12x12x12x12=248832)
But the Bolt 200 meter run, and the height of the rope above the earth is just the diversion. The height of the rope above the earth is only dependent on the length of the extra meter. It has nothing to do with the size of the earth. That's just used to confuse you.
And that's the statistics the bears produce. Today's rope statistic is the $1.5 trillion of losses that the IMF says are still on the banks books around the world.
$1.5 trillion? The Fed guaranteed over $11 trillion worth of stuff already. The Fed lent $500 billion to people they didn't even know their name. So what's $1.5 trillion? And this $1.5 trillion loss, is $600 billion better than what the IMF said in April, because prices of the securities on the banks books have already gone up. So why don't we get that headline? Bank's unrealized losses decrease by $600 billion!
Wall Street's bearish rope isn't big enough to hang anybody, but they still throw out these stories because of the inbred bears research.
And just like in 1929, the result is the same.
It's a moronic viewpoint of the world!
Tuesday, September 29, 2009
Brett Favre "lessons"
No-one seemed to pick up on that play. Maybe the press was too concerned about the crackback block that Brett inadvertently threw the week before.
Annyway, the following is from from the What would Dad Do guy.
Did you see the Minnesota Vikings, San Francisco 49ers game on Sunday?
Brett Favre, nearly 40, threw the game-winning touchdown pass with two seconds left on the clock.
Here are some observations:
1. You can’t beat experience when time is running out. In other words, when business gets tough at your company, you might want to rely on those older workers to get you into the end zone.
2. Passion is contagious. I’m thinking no one in the huddle was wondering if Brett was "engaged" in the task at hand. Are your leaders sufficiently engaged?
3. We all still love our humble heroes in moments of glory. Humility is a character trait of most true leaders.
4. Success lessens the pain. If you watched the game, you know that Brett took some hits. At an age when many of us can barely walk after raking the leaves, he was getting hit by men the size of locomotives. I’m thinking he still felt good on Monday morning.
5. “Prove it” is something we have to do, every day. Here is a future Hall of Famer, at the end of his career, and he still had to prove he could do the job. All of us should approach our own work with such an attitude.
The next game for Brett Favre is against the Green Bay Packers on Monday night. I am going to the game--and I am bringing earplugs.
Gannett to raise $400 million-The short thesis is toast!
Oh boy--the shortseller thesis is crumbling on this number that I've been touting!
$200 million due in 2014, and $200 million due in 2017.
And GCI is now touting earnings for the quarter of 39 to 42 cents versus the 29 cents Wall Street estimated. And the shorts weren't ready for a pre-release! They thought earnings would come in after the October option expiration!
Another bear shot!!
Here's the first headline on the story from Dow Jones:
Gannett Co. (GCI) projected third-quarter earnings well above analysts' expectations as the nation's largest newspaper publisher announced plans to sell $400 million in five- and eight-year notes as it joins the raft of companies raising fresh capital to pay off other debt
Trading up over 10% in the pre-market to $11.40! It has a lot of room to go!
What ever happened to the joker that bought all the puts on this name? Who then had it advertised all over Wall Street?
Oh my--Such a scary proposition. Someone must "know something." Isn't that what we heard?
What happened to the joker with the phony after hour prints on this number?
So what did they know?
Just another false advertisement spun up on Wall Street!
And now the 44 million shorts have to deal with this story.
And deal with the fact the business is turning for GCI, and that their debt is being re-financed.
And deal with the fact, that the short's story, was laid out with all their scheming, real time, as it happened here.
And now, today, we get to eat their lunch!
After all, we need to do some advertising also!!
The uptick rule
Wall Street is now taking on the proposed "uptick rule."
Vanguard, which makes money by lending out securities to shortsellers, had this statement by its CIO, Gus Sauter, in regards to the reinstatement of the uptick rule: "We've always felt that short-sellers enhance liquidity and provide a positive impact on the marketplace."
The trading houses with the black boxes, and Goldman Sachs, of course, are also against it. Look what Citadel had to say: "...lead to greater disruption of legitimate trading activity and even greater market costs.
High frequency trader Getco had this: "..make today's equities and options markets less efficient, less liquid and more costly."
Today, SEC sleuth, Mary Shapiro, (the one who proposed the $33 million fine for BAC when they hid $3.6+ billion of bonuses for Merrill Lynch that was summarily rejected by Judge Jed Rakoff) who never found a Wall Street back pocket that she didn't like, is having a hearing on security lending. Remember how AIG tossed billions down that hole? Or how State Street had to hid losses from their security lending program? Or CALPERS $634 million loss on their security lending schemes?
What do they need to know?
The custodians of your assets, the mutual funds and trust banks, have been lending your stocks out for the extra juice. And then they've been blowing that money in a Wall Street program set up to invest that juice.
So now Mary needs a hearing.
Because Wall Street needs to protect all of the above!
The webcast of it is here. I doubt if they'll need an extra bandwidth for this!
Monday, September 28, 2009
ET lives as a baby white handed gibbon! And so does this!
Which leads to Colonel Jessep--and this stock market. Which leads to this!
And Jack Nicholson's wisdom!
Which is all the market is doing.
To get over (higher) it just needed to get under (lower) first!
And despite the "Who wants to be a millionaire" technique of the all the bears, with their revisionist predictions after the fact!
Claiming they were bulls when they were bears!
With their phone a friend call!
Paul McCartney and "Her Majesty"
"Her Majesty is a pretty nice girl, and some day I'll make her mine."
The US bank will hire up to 200 staff across all regions in an attempt to establish a dominant position as one of the world’s leading asset managers. In 2007 Goldman was ranked 17th in the world in terms of assets under management.
The move comes as several of its rivals, such as Credit Suisse and Barclays, have reined back their global asset management ambitions amid sharp falls in assets and revenues.
Barclays is soon to complete the sale of Barclays Global Investors to BlackRock, the independent management group, turning it into the world’s biggest fund manager with $3,000bn of assets under management.
Goldman, which has $820bn under management, plans to expand organically.
The more you manage, the more powerful the opinion of the money manager.
Sunday, September 27, 2009
What a finish in Minnesota!
So Favre drives the Vikings 80 yards with no timeouts in a little over a minute, with this absolutely terrific winning TD pass, and an absolutely fabulous catch by Greg Lewis!
Now that's football!
David Rosenberg--"I was bullish!"
His latest screed now says he told clients to get long bonds and commodities at the low, and that he turned neutral at the market bottom!
Even though the market was going to retest the lows when the S&P hit 946 in early July.
Even though he said the market would retest it's lows in early June.
Even though in early May he said that this short covering rally was finished!
Even though on April 1, he made a joke about "being bullish" and then he said this:
We remain of the view that the risk of earnings disappointments will take the S&P 500 to new lows before the bear market runs its course. Based on the outlook for corporate profits and the typical trough P/E multiple that characterized recession bear markets, it would not surprise us to see the S&P 500 gravitate in a 475-650 range for an extended period of time.
He now calls his April Fool's joke just playing the Devil's Advocate, and that "nuance" was the being bullish tip!
David now admits the "green shoots" weren't brown as he advertised!
And that is Wall Street advertising!
Missing the whole move, but then saying you had a nuance of self doubt that meant you were bullish, while publishing 25 page commentaries that were bearish!
Here is Rosenberg's latest:
Special Report TripleC 092509
Saturday, September 26, 2009
Ableson on Amherst
Amherst estimates this massive overhang at seven million units. That's the equivalent of 135% of a full year's existing-home sales and chillingly greater than the 1.27 million units that made up the overhang in early 2005, when the housing bubble had just begun its dizzying and more than a little lunatic ascent.
Put another way, of the 56 million units that the Mortgage Bankers Association says make up the mortgage universe, Amherst gauges 6.94 million units are in what it dubs the "delinquency pipeline" eventually headed for liquidation. And it reckons that another 300,000 mortgages replenish that unwelcome flow every month.
Essentially, then, this shadow inventory represents a massive furtive supply of future foreclosure. Amherst fingers negative equity as keeping the delinquency pipeline heavily stocked. Quite a reasonable assumption, we think. A home owner, saddled with a house that's valued at less than it cost him to buy or that he can reasonably expect to sell it for may lack the will and, more importantly, the wherewithal to keep making payments on his mortgage.
Homeowners' equity has declined from 58.7% back in '05 to around 43% today. What's more, nearly a third of households have no mortgages, which, of course, means that the equity percentage of the 50-plus million that do have mortgage loans is a good cut lower than 43%.
Homeowner's equity is 43.5%, and of this, over one third consists of those who own their house outright.
So what is the homeowners equity of those who have mortgages?
Since 33% have 100% equity, then 66% constitute those who have mortgages. So what equity rates changes the 33% from 100% equity, to 43.5% equity for all?
Because if 33% of the group has 100% equity, than 66% would have just 15.3% equity to equal total homeowner equity of 43.5%
.333 x 100% equity=33.33
.666 x 15.3% equity=10.19=43.5% homeowners equity
Because that then, is the average equity in a home. And remember, this rate will overstate homeowner equity rate. Because if you are already underwater on your home, how much equity do you have? You are in what Singapore's sovereign wealth fund calls "negative wealth added." Or worse than zero!
Thus, when you see these predictions that real estate can fall another 25%, what would that do to the average homeowner that has a mortgage?
If real estate would fall another 25%, it would be the single largest stimulus plan that the world would ever see. Because then, the masses would all just quit paying their mortgage, and the courts would be so backed up that no banks could foreclose, and then the banks would have to enact a massive forbearance program for homeowners, on the homeowners terms, and then the TARP money could rightfully shift from the hands of the bankers to the people.
Does that sound ridiculous?
It's only as ridiculous as they who say home prices would fall another 25%.
Because that would be the consequences.
Amherst would be Amsterdam!
Selling financial porn!
Friday, September 25, 2009
Thank goodness Michelle has a hair clip!
Obama sure didn't want Berlusconi getting too close to his wife!
Could you imagine what would of happened if she followed Cosmo's advice?
The "latest" hair tie
Did anyone hear the story about the woman in the bar, who took off her panties, and used her thong as a hair tie?
Soon you may, as this technique is now being advertised in Cosmo!
"Let's Make a Deal!"
PITTSBURGH -- The Group of 20 nations is close to an agreement that would require members to subject their economic policies to a type of "peer review," according to several senior G-20 officials, in a shift that would expose the U.S. and China to broad scrutiny of the way they run their economies.
Also, the G-20 heads of state will announce on Friday that the G-20 will become the permanent council for international economic cooperation, eclipsing the Group of Eight, a senior U.S. administration official said.
And the WSJ Op-Ed today with Kevin Marsh, member of the Federal Reserve Board of Governors:
As my fellow members of the Federal Open Market Committee and I stated earlier this week, economic activity has picked up, and conditions in financial markets have improved further. Longer-term inflation expectations are stable, and economic conditions are likely to warrant exceptionally low levels of the federal-funds rate for an extended period...We are at a critical transition period, of still unknown duration, and we must prepare diligently for an uneven road race ahead. If policy is not implemented with skill and force and some sense of proportionality, the success of the overall endeavor could suffer.
In this environment, market participants and policy makers alike should steer clear of ironclad policy prescriptions. Nonetheless, I would hazard the view that prudent risk management indicates that policy likely will need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary, and taking proper account of the policies being instituted by other authorities.
So why then is Treasury, trying to access $128 billion of TARP money that hasn't been used?
Maybe it's because Treasury really knows what is behind the doors!
Thursday, September 24, 2009
The Economy in cartoons
FINRA blows investors money
Hedge funds, private-equity funds and stocks.
So what did they do this year?
They got out of stocks in April.
And what did stocks do?
They rallied 55% from their lows.
So much for long term investing. From the people that regulate brokerage firms. That preach buy and hold, when they do the opposite.
Buy and fold!
What was their investment mix?
50% for stocks and private equity.
20% for hedge funds.
15% in real estate and commodities.
15% in fixed income.
So in April, just when the stock market was rebounding FINRA did the switcheroo. Let's get conservative!
They lowered the "risk" in their portfolio.
So FINRA, which regulates brokerage firms and stock -brokers, showed the world that they don't know what the hell they are doing. And they also showed the world, that they don't believe in buy and hold, even though that is what they preach in their examinations of brokers and firms.
Buy and fold!
They new mantra of FINRA!
That should help every broker in arbritration.
Overseen of course, by the new watchdog of the SEC, Mary Shapiro!
The WSJ on Geely Automobile
Goldman Gears Up in China
Chinese car maker Geely Automobile wants to be taken seriously. It now has one seal of approval: Goldman Sachs Group's private-equity arm is investing $245 million through a convertible bond.
Geely will use the money to expand in China as it continues to reinvent its image. Its current reputation is of a company producing cheap, unreliable -- and sometimes eccentric -- vehicles. At the Shanghai auto show it unveiled a Rolls-Royce look-alike with only one passenger seat.
This has left it trailing a frothy Chinese market. Its sales this year were up 22% by the end of August, far behind the sector's 32%, JDPower figures show. The company is 10th in China, with a 2.9% share -- hence its multiple of 11.5 times expected earnings, even after Wednesday's 19% stock jump. Rival BYD, with Warren Buffett's backing and a hopeful future in electric cars, trades at 65.2 times.
Geely's investment in research and development and recruitment of overseas executives seem to be paying off, with better feedback on its pipeline of models. The next planned step could be bidding for Sweden's Volvo through Geely Holdings, Geely Auto's unlisted parent.
But Volvo would be a big bite, given Geely's small acquisitions to date and the challenges of cross-border auto deals. While Goldman is betting on a red-hot market, Geely still has to prove it can put the money to good use.
(I closed on a small transaction with Goldman Sachs where I needed a counterparty to protect a position in a completely unrelated matter. They were consummate professionals, their pricing was very good--it was much better than the street, and it was a very quick and clean transaction. I was pleasantly surprised. So I'm highlighting Geely again--It's a trade that has Goldman's backing.)
A123 Systems priced at $13.50
AONE was priced at $13.50, US maker of batteries for electric cars.
It should be well received by the market, and was led by Goldman and Morgan Stanley.
Now remember "lithium!"
Manna from homes!
From the WSJ:
On Friday, the Census Bureau reports new-home sales for August. Economists estimate an annualized sales pace of 440,000 units, flat from a year earlier.
Both reports could add to a snowballing consensus that housing is rebounding. A vigorous recovery would be manna for the economy. Home sales spur purchases of fridges and lawn mowers, and rising prices make consumers wealthier and heal bank balance sheets.
Wednesday, September 23, 2009
Born to Run!
Springsteen knew that the stakes for the third album were high. Garry Tallent, the bassist in the E Street Band, recalls, "We were ready to be booted from the label." Keyboardist Roy Bittan remembers that Bruce "felt everything was on the line." Guitarist Steve Van Zandt says that if the third record "didn't make it, it seemed obvious that it was going to be the end of the record career." To make matters more difficult, Bruce's ambition was as towering as the pressure. He would not settle. Years later, he recalled, "When I did Born To Run, I thought, 'I'm going to make the greatest rock 'n' roll record ever made.' "
It took him six months during the spring and summer of 1974 to record the title track. Van Zandt now laughs at the thought of it. "Anytime you spend six months on a song, there's something not exactly going right," he says. "A song should take about three hours." But Bruce was working with classic-rock motifs and images, searching for the right balance musically and lyrically. Born To Run marked a change in Springsteen's writing style. Whereas previously it seemed as if he had a rhyming dictionary open beside him, now his lyrics became simultaneously more compact and explosive. What mattered to him was to sound spontaneous, not to be spontaneous. "Spontaneity," he said, in 1981, "is not made by fastness. Elvis, I believe, did like 30 takes of 'Hound Dog,' and you put that thing on," and it just explodes...Within weeks, Appel also sent tapes to Scott Muni at WNEW in New York, Maxanne Sartori at WBCN in Boston, and Kid Leo (Lawrence Travagliante) at WMMS in Cleveland. To Leo: " 'Born To Run' was the essence of everything I loved about rock 'n' roll. Bruce held on to the innocence and the romance. At the same time, the music communicates frustration and a constant longing to escape." Leo played the song every Friday afternoon at 5:55; one fan remembers it as the start to the weekend happy hour. Nearly two dozen more stations had it by the new year. All this exposure, with no record in sight, made the record company nervous. When listeners heard something they liked, they usually wanted to buy it right away. But in this case, hearing the song on the radio helped build anticipation for the album...
He almost didn't release it. But Jon Landau, who had stepped in as a producer, helped persuade him to let go. According to writer Dave Marsh, Landau called Springsteen and said, "Look, you're not supposed to like it. You think Chuck Berry sits around listening to 'Maybelline'? And when he does hear it, don't you think he wishes a few things could be changed? Now c'mon, it's time to put the record out." The album appeared in 1975, and it launched Springsteen toward mega-stardom, getting him on the covers of Time and Newsweek simultaneously. Reviewing the album in Rolling Stone, Greil Marcus proclaimed, "It is a magnificent album that pays off on every bet ever placed on him—a '57 Chevy running on melted down Crystals records that shuts down every claim that has been made. And it should crack his future wide open."
Born To Run, song and album, fulfilled its destiny. By fusing the pop sounds of the 1950s and 1960s to the generational desires of the 1970s, it defined its time and transcended it. Even Springsteen eventually came around to appreciate what he had accomplished. In 2005, on the 30th anniversary of the album's release, he admitted that "[i]t's embarrassing to want so much, and to expect so much from music, except sometimes it happens—the Sun Sessions, Highway 61, Sgt. Peppers, the Band, Robert Johnson, Exile on Main Street, Born To Run—whoops, I meant to leave that one out."
Remember these pictures taken in December and in March? That were plastered around the world to show we were heading for Armageddon?
How did that short on Ford work out?
Now remember last week, when we saw those pictures of idle ships?
And how Maria Bartiroma was breathlessly intoning about the fall in prices in the Baltic Dry Index yesterday? How she was concerned that world trade was slowing?
China is now projected to have growth of 8.9%. Now that wasn't supposed to happen! Did anyone think that maybe trade is doing fine, thank you, but prices are down because we have some idle ships? So short the shippers at your own peril. Just like these brainiacs got courage to short Ford at the lows because they saw the cars stacked up at the ports. But no-one wants to make that analogy now. Especially since the stocks of the shippers are down. Just like the stocks of the auto companies were, when you had the above pictures!
But if you missed those auto plays, and you missed Buffett's 8 bagger in Hong Kong with his first $230 million bet for 10% of Chinese electric car and battery maker company BYD, you now have another shot at redemption. That company is trading at over 60X earnings.
Now you have the next play. Goldman Sachs just put $250 million into Chinese car company Geely, (HKSE: 0175.HK) via convertible bonds and warrants.
It's currently selling at about 10X earnings. You will get a PE expansion on this name, with Goldman's bet.
And it should turn out, just like Buffett's!
Tuesday, September 22, 2009
House to extend unemployment benefits
Sept. 22 (Bloomberg) -- The U.S. House will vote today on legislation extending jobless benefits for 13 weeks in states hardest hit by the recession amid the worst surge in long-term unemployment in more than half a century.
The measure would continue aid to about 300,000 Americans projected to exhaust their benefits by the end of this month. The aid, to people in 27 states with unemployment rates of at least 8.5 percent, when combined with prior extensions would mean they could receive benefits for as much as 92 weeks...
McDermott’s office said the bill would help those living in 27 states, Washington, D.C., and Puerto Rico. The states are: Alabama, Arizona, California, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Massachusetts, Maine, Michigan, Mississippi, Missouri, Nevada, New Jersey, North Carolina, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Washington, Wisconsin and West Virginia.
If your state unemployment rate is at least 8.5%, then you get benefits. That is every state above except Pennslyvania. PA gets benefits because their insured unemployment rate is greater than 6%.
This means that the unemployment rate will increase, as those who have fallen off of the roles because of losing benefits, will be able to get another 13 weeks, and then be "counted" again.
Half of Madoff's accounts never lost money
It was the Bernie and Jeffrey show.
The government said a search of financial records, including microfilm records dating back to 1979, show that investors suffered net losses exceeding $13 billion. In all, 15,870 claims have been made to the trustee by those seeking a share of any recovered money. The court document said there were approximately 8,094 customer accounts held by Madoff's private investment business from at least 2000 through December 2008. At the time of his Dec. 11 arrest, there were 4,902 active customer accounts, the government said. Most of the customers who had current accounts have made claims with the trustee, prosecutors wrote. Of those, nearly 50 percent had a net loss, meaning they contributed more funds to their accounts than they withdrew, while about half had no net loss because they withdrew more funds than they contributed, prosecutors said.
So half of the people, never lost any money, and the half that did, they lost $13 billion. Of that, almost half of all that money went to Jeffrey Picower, who netted over $5 billion from Madoff, and who withdrew $6.7 billion from his Madoff accounts.
That's where half is!
A drug raid in Polk County, Florida
Now you know what officers do, during a drug raid.
The search warrant allowed the officers "to search for drugs,stolen property, and the fruits of illegal activity."
So the officers play the suspects Wii!
The suspect had a wireless computer camera catch all the action.
Looks like someone's "Wheee!" is now on tape!
The bull market web
M&A is making a comeback.
So are IPOs and secondaries.
Banks are unwinding their CDOs.
The public is looking to buy stocks again.
Ships in ports are being stacked higher.
And speaking of ships, look at the cruise industry. CCL nudged guidance higher and the stock is almost up 5.5%.
The bears thought they could squash this market, but now they are caught in Spiderman's web.
And now, even The Lizard is it's friend!
David Tice says "Whoops!!"
His ridiculous comments, don't even need any from me.
Sept. 22 (Bloomberg) -- The biggest U.S. stocks rally since the Great Depression will end within six months because the economy isn’t improving fast enough, said David Tice, Federated Investors Inc.’s chief portfolio strategist for bear markets.
Tice said the Standard & Poor’s 500 Index will fall below 400 within 18 months, a level it hasn’t reached since 1992 and a 62 percent plunge from yesterday’s close. The investor said he has been “bloodied, but unbowed,” as the index climbed as much as 58 percent from a 12-year low in March, an advance that he called a “sucker’s rally” one month after it began.
What happened to the AIG outrage?
Remember just over three weeks ago when Charlie Gasparino was warning us about AIG when it was 47?
And all of the street was downgrading it?
Where are they today, now that AIG is at 52 after hitting 54?
AIG wasn't supposed to bounce back this fast! They spent all their firepower knocking the stock down; while the vocal critics broke ranks and covered their shorts.
So where is the warning today? Why doesn't Wall Street come out and tell us to stay away?
But who is left to downgrade it?
Barron's warned us it was heading down to it's book of $21, Wells Fargo downgraded it, Credit Suisse downgraded it and slapped a $15 target on it, and Sanford Bernstein, not to be outdone screamed a sell on this number and slapped a $10 target on it.
You had the usual pundits on CNBC saying the equity was worthless, and the same ranting from a whole host of other brokerage firms.
Janet Tavakoli of Structed Finance came out with a piece that "proved" their wasn't any value to the equity holder.
You had the entire story here, before it happened, and they pulled it off.
So where are they now?
Did the story change?
Or did they do their job? They panicked the sheep, they got the stock to come in, and the hedge fund boys that were feeding them the stories, used the opportunity to cover their underwater shorts.
And that's just how the street works.
The stories are used to manipulate stock prices for their benefit.
Because Wall Street only wants to play when they see all the cards!
And the touts, are just Wall Street's props!
Remember last month?
A month ago, this was the headlines. So if anybody thinks that the Fed will upset the apple cart in their meeting today and tomorrow, think again!
After all, Bernanke saved the world!
The Fear of the Shadow
Yesterday the WSJ was warning us about the new looming bear market. We fell all of 40 points on the Dow.
This morning the futures are up 70.
Story sure packed a punch didn't it?
Now we have the leaked story that the Fed isn't in any hurry to quit their QE:
The Fed is considering kicking away a fairly important prop for the housing market. But this will likely happen in slow motion. The real mystery is what they will say about their program to buy $1.25 trillion in mortgage-backed securities to support housing. Some observers think the Fed will stretch mortgage purchases out rather than end them abruptly, as scheduled for December. Given that the Fed lately buys roughly 80% of all new mortgages, that gentler approach might make sense.... Given the risks, the Fed might be better off saving the decision for November, suggests Mr. Crandall. It might have a better feel for the housing market's intrinsic strength by then.
Thus you get a weaker dollar, and higher stock and commodity prices.
What the bears and the WSJ don't realize is that the foundation for this market is solid. But they keep on seeing things that aren't they.
Last night, I was running the steps in the football stadium, and I do this big circle of 90 flights up, and then 90 flights down, and keep doing the circuit until I get to the puke threshold. At that time, toward the end of the routine you just start dying, your legs are wobbly and rubbery, and you just drip sweat. And then, your mind plays tricks on you. It's not on the way up, because then you are struggling to get to the top, and you are going slow. It's when you come down when you can still go fast. The black shadow from the bleachers reflects on the stadium steps, and on the way down, it looks like you just have concrete blocks on the right side that you can run down on, as the shadow is so dark it looks their is nothing underneath you. And when you are at the top of the stadium, you have to tell you mind that there is concrete under that shadow you can't see.
That's this market. But the fear is just an illusion; the shadows are all the bearish commentators, and pundits who never climbed up to the top anyway. What do they know about the struggle? Now that the economy is getting better, these folks want the cheap prices, without all the work.
Life just doesn't work that way. It doesn't accommodate your whims!
And that's all these pundits have. Just whims they whiff with!
Last night, I pounded those steps, because I missed a couple of trades, and I didn't want to wear black socks. Have you ever seen those black socks? That older men wear up to their knees? I never gave them a second thought. I thought they were a fashion statement. I didn't know they were for circulation!
The other day, I was working at my desk until about 1:30 am, and when I came home, and took my socks off, I noticed that my socks had left a mark on my legs. That had never happened before. And then it hit me. Support socks? A couple missed trades? Hit the stadium steps! Not going to happen!
But every bit of hard work always has its rewards. I was walking around the stadium, heading back to my car, taking my time, as two really fine looking coeds were walking in front of, and I couldn't help but overhear their conversation. One was just wearing shorts shirts and a sports bra, and the other had the same, but she had on these nylon zippered sweats. The girl, with the sweats says to the one not wearing hardly anything, "I'm so hot, I feel like just taking off these sweats." I started walking just a bit more quietly. Then she says, "I have so much sweat trapped down there, I'm afraid I'll get a yeast infection!" Time to jog to the car. The show is over!
And that's the reality for the bears. Just when they think they have a chance to see something, they find out it's only an illusion in their mind!
They have nothing concrete--Just the shadow of the past bear market!
Monday, September 21, 2009
"Buy it on the headline"
The WSJ had a story tonight on Perot Systems. There was 3,000 calls traded on PER, versus on 10 puts last Friday.
They also highlighted the October 20 calls, at .55 which I had mentioned this morning immediately after the news of the buy-out was announced. They closed at $9.60 today.
Friday, I was speaking to someone who thought it was in play, who also mentioned the press release Friday morning, touting Perot's entry into India's electronic health records.
I was told to "buy it on the headline" and the "takeover chatter" is a plus, and "what do you have to lose--the options are cheap" and "it's a weekend play" and "somebody knows something" they've been buying the "piss out of the contracts."
It was a perfect spec, but I had CNBC on in the background, and I got distracted, and I didn't do it.
It was a great tip, it had great risk rewards, it made a lot of sense, and I should of traded and reported on it.
When the Ross Perot Foundation sold the Magna Carter, he got $20 million or so from it, when he should have easily gotten $30 million.
So today, he made it up to long -suffering shareholders!
So tonight, I'm going to the Stadium, and I'm going to run steps.
So I'll have a different pain, and it will let me forget about this one that got away!
Bill Gross: It's a Barney Fife market
He said it was just a "Barney Fife" market.
Maybe he should heed his own advice.
Just hold your nose and buy!
Russian Tycoon's new ship
Check this out:
Russian billionaire Roman Abramovich has a rather curious new addition built in to his latest oversized yacht. The 557-foot boat Eclipse, the price tag of which has almost doubled since original plans were drawn to almost $1.2 billion, set sail this week with a slew of show-off features, from two helipads, two swimming pools and six-foot movie screens in all guest cabins, to a mini-submarine and missile-proof windows to combat piracy.
It might not seem like somebody with such ostentatious tastes would crave privacy, but along with these expensive toys, Ambramovich has installed an anti-paparazzi “shield”. Lasers sweep the surroundings and when they detect a CCD, they fire a bolt of light right at the camera to obliterate any photograph. According to the Times, these don’t run all the time, so friends and guests should still be able to grab snaps. Instead, they will be activated when guards spot the scourge of professional photography, paparazzi, loitering nearby.
And now people can talk about his boat, instead of the $86 million he spent for Bacon's “Triptych” which was a portrayal of Mr. Bacon's comments on his own angst.
Which seems to be the disease that is circulating around Wall Street.
Maybe they should learn to tweak the photo shield, and zap all the bearish stories that won't make you a dime in this market!
The coral reef man
Lin Tianzhuan, the human coral reef, after a year of operations and treatments has now been "cured."
And you thought Michael Jackson's legs were bad?
Dell acquires Perot Systems for $30
Just like the Giants took out the Cowboys Sunday night.
Which means there still is one winner in Texas.
But someone was playing that name. Almost 2500 contracts of the October 20 calls were bought at .55 on Friday, that now will be worth 10!
The market cynics could be literary critics
Yet the critics keep coming.
His new book, The Lost Symbol, has these flattering words from the Guardian:
But the writing is mostly bad in an uninspired way. Someone seems to have half-persuaded Brown that "symbolism" is a more effective word than "symbology"
Same with the Telegraph:
But the secret to Brown’s success remains a mystery. Publisher Doubleday’s canny and aggressive marketing, combined with the Vatican’s unfortunate decision to engage with The Da Vinci Code, are no doubt predominantly responsible. But no one has yet explained how a failed songwriter from New Hampshire and a well-worn bit of historico-religious conspiracy hokum managed to unite in the holy grail of bookselling: an author who can sell books to people who don’t generally read.
Not content with that, they then pick out the worst twenty sentences from his books.
They are just using the Nouriel Roubini approach! Or that approach of any other bear. Who are getting downright testy with their righteous indignation. One of the best is Karl Denninger. Here's his latest from Friday.
His facts are always right. But he just comes to a different conclusion than what the market is buying. And I wonder if sometimes if he gets so postal because the market is moving against him!
Now someone else was selling Sunday, but he was doing it in a more subtle way. With Bob Scheiffer of CBS, Stephanopolous of ABC, Jorge Ramos of Univision, David Gregory of NBC, and John King of CNN.
Looks like Fox wasn't invited! Because that was the "Medici vengeance" since Fox didn't broadcast Obama's health care speech to Congress.
Which tells you it was Sunday.
Bo was just preaching to the choir!
Just like Karl.
Sunday, September 20, 2009
Obama open to bail-out newspapers
Turn your news business in a non-profit, and spin off the other assets. As long as their viewpoints are in line with Washington's!
The president said he is "happy to look at" bills before Congress that would give struggling news organizations tax breaks if they were to restructure as nonprofit businesses.
Obama said that good journalism is "critical to the health of our democracy," but expressed concern toward growing tends in reporting -- especially on political blogs, from which a groundswell of support for his campaign emerged during the presidential election.
"I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding," he said.
The WSJ cries wolf, again, and again, and again...
In March, the WSJ said we were heading for 5,000.
Dow 5000? There's a Case for It
Despite Friday's small gain, the Dow Jones Industrial Average marked its fourth consecutive week of losses as it tumbled through the 7000-point mark and spiraled to new 12-year lows. The Standard & Poor's 500-stock index is trading below 700 for the first time since 1996. As earnings estimates are ratcheted down and hopes for a quick economic fix fade, the once-inconceivable notion of returning to Dow 5000 or S&P 500 at 500 looks a little less far-fetched.
On April 6 they called the rally just another bear-market rally. What did you think they would call it? They were, after all, touting Dow 5,000!
It's Starting To Look a Lot like November.
The recent stock-market rally is turning heads. Why, there hasn't been anything like it since at least...November.
..Until this past Thursday, November's rally was bigger, with the S&P 500 up 21% in 17 days, compared with 20% for the current bounce. The earlier surge carried through to early January, but then fell off a cliff to hit 12-year low..
But this rally's scaffolding includes wishful thinking, too. It was launched by word that some big banks were profitable in January and February. Two months do not a quarter make, and banks indicated conditions got tougher in March.
While this bounce might not mirror November's, it still has the hallmarks of a bear-market rally.
After being wrong in March, and then in April, the WSJ tried again in May, telling us that stocks are no longer cheap.
By Most Measures, Stocks are No Longer Cheap
The outlook for stocks has brightened but, thanks to the big rally of the past two months, the market is no longer a bargain.
By many measures, stocks are still on the cheaper side of the ledger. But they are approaching levels that bring them closer to long-term averages, making them neither a deal nor expensive.As a result, valuation has shifted from being a talking point of the bulls to one used by those bearish on the near-term outlook. And even many of those who think the market has hit bottom -- a rapidly growing group -- say valuations now suggest investors should tread more carefully.
In a fairy tale, you can only cry wolf three times, but this is Wall Street, so we need to treat them biblically. We have to forgive them 70x7 times. So the WSJ warns us again tonight:
A Bear Market Lurks as Dow Nears 10000
Rarely has the stock market seen a six-month rally like the one it just turned in. The Dow Jones Industrial Average's 46% surge was one of just six of that magnitude in the last 100 years. And that is exactly what worries many analysts.
All previous rallies of this magnitude took place in the 1930s and the 1970s, according to Ned Davis Research. Those were periods of turbulence for both the economy and the markets, and none of the gains was sustained.Many analysts believe that stocks are again in such a turbulent period, and that this rally could lead to another slump. Stocks did enjoy a rally of 40% in 1982, at the start of a long-running period of stock-market prosperity. That rally wasn't of the same magnitude of the others, however. It came as economic troubles, notably inflation, were finally being squeezed out of the economy.
"We could end up having another big decline next year," said Tim Hayes, Ned Davis's chief investment strategist, who correctly forecast a rally early this year. "Right now, people are asking me, 'Is it too late to get in?' We are saying, sure, you can get in, but don't fall asleep at the wheel, you have to get out, too. If you are looking to put money in and then not look at it for a year, you are taking a big chance."
I guess the WSJ learned their technique from W!
And so did the health care reformer sitting in the White House!
Saturday, September 19, 2009
Where's the outrage?
Remember this picture in 1994? It awakened the world to the poverty in Sudan.
But now we have the vultures in business. When did it become fashionable to proclaim the end of companies? Or try and usher them into bankruptcy's door?
Why do so many people relish the idea of the economy and the markets getting worse? Do they want the private equity vultures to finally be able to pounce? And make money off of everyone's else's misery? Doesn't the loss of jobs matter?
And when did the most important virtue become the P/L of the shortseller?
Why was the lady fired from Wells Fargo, who lived in the Madoff victim's house? Didn't that story resonate with the public because their was a certain "unfairness" about it? Wells Fargo was just feeding on the carrion of a Madoff victim.
But the only way the vultures leave, is when things get better. They only prey on the weak.
And in this market, you still have a trillion dollars bet against it. Betting that things get worse. Betting that people will still suffer. Betting that they will lose their homes. Betting that they won't get any jobs.
So Wall Street's vultures can pounce and get another meal, off of the back of the working man.
The other day, Business Insider came out with a top 10 of bankruptcy bound companies.
The story starts with this:
Despite a few green shoots in the economy and a rocketing stock market, many large companies are still struggling to avoid bankruptcy.
A new report by Audit Integrity identifies some high-profile names "that have the highest probability of declaring bankruptcy among publicly traded firms."
Then this list was tweaked and here is the ten companies on their critical list.
This story, is already six months old. When the stocks were cheap. When the vultures were circulating. These companies, are already off the critical list, and that list has just been replaced by the P/L of the shortseller.
Five of the above names were touted on this blog. Before they doubled, tripled, quintupled or octupled. Somebody had the other side of that trade. And they want out, before they face a duodectuple!
In fact, LVS was first touted here on March 13 at $1.77, Textron was touted here on April 5 at $7.42, Goodyear Tire was touted here on April 8 at 7.69., CBS was touted here on March 12 at 4.02, and Macy's was touted at 8.
Now this time, its the journalists that are faking.
So the vultures won't feast on their friends.