It really gets wearing calling these Wall Street folks to task, who keep finding cracks in the market, so I decided to read I Corinthians 13, before I wrote this story. Two weeks ago, Doug Kass made another bearish call. Today he amplified it, and said that the market may have made a top for the year, and he gave the following ten reasons:
Cost cuts are a corporate lifeline and so is fiscal stimulus, but both have a defined and limited life.
Cost cuts (exacerbated by wage deflation) pose an enduring threat to the consumer, which is still the most significant contributor to domestic growth.
The consumer entered the current downcycle exposed and levered to the hilt, and net worths have been damaged and will need to be repaired through higher savings and lower consumption.
The credit aftershock will continue to haunt the economy.
The effect of the Fed's monetarist experiment and its impact on investing and spending still remain uncertain.
While the housing market has stabilized, its recovery will be muted, and there are few growth drivers to replace the important role taken by the real estate markets in the prior upturn.
Commercial real estate has only begun to enter a cyclical downturn.
While the public works component of public policy is a stimulant, the impact might be more muted than is generally recognized. There may be less than meets the eye as most of the current fiscal policy initiatives represent transfer payments that have a negative multiplier and create work disincentives.
Municipalities have historically provided economic stability -- no more.
Federal, state and local taxes will be rising as the deficit must eventually be funded, and high-tax health and energy bills also loom.
But remember how Wall Street works. These macro calls are like the game "Who wants to be a millionaire." You get a Phone-a-Friend, an Ask-the-Audience, a Fifty-Fifty (50:50) and then three bad calls of your own.
A week before the market bottomed, Doug Kass got bullish, calling for a generational low. In mid April though, he sold out. And he got short.
On April 17, he was adding to his shorts and his SKF long and said this "Unlike my some of my bullish brethren on RealMoolah, I see blemishes in both Citigroup and General Electric's reports" and he said this "I added to my SPDRs and PowerShares QQQ shorts and my UltraShort Financials ProShares long in premarket trading."
Because the day before Kass said this:
Doug Kass Buckle Up, Goose -- We're Going Short 4/16/2009 4:39 PM EDT In light of the fact that the S&P 500 has met my variant view expressed five weeks ago, Maverick is now engaging on the short side. I would caution getting too carried away with the market's strength -- which appears now to be the case.
I would say that Doug Kass has been way better than most on this rally, but he has used the "Who wants to be a millionaire" approach to market timing.
But since their were so few bulls at the bottom, and since Cramer needs Kass to sell subscriptions, his record is overstated.
So think about that, and his variant view of the market call today.
The stock market moves higher, yet bond yields come down.
Thus, the common thought is that the bond market is not discounting the recovery in the economy that the stock market sees in it's ebullience.
So supposedly, one or the other is wrong.
And since people want the market down, the thesis you'll hear, is that stocks are the ones that will follow bonds direction.
But they'll dress up this thesis with a ton of charts and gobblegook to "prove" their points.
Yesterday, I said that most stock guys can't take any pain, and most folks want you to get out in the first quarter, I'll give you all you need to know about the above thesis in 25 words:
The stock market is reflecting a profitable recovery for corporate America, and the bond market is currently reflecting the unwinding of some wrong way bets.
As Joe Friday said, "Just the facts ma'am" but Wall Street can't handle the simple truth!
And now PIMCO's panda bear, El-Erian is on CNBS, who just last week told us that stocks had hit a wall, and stocks were on a prolonged sugar high. Now he says this sugar high is caused by:
positive economic numbers, (but he thinks it is just an inventory cycle)
sideline liquidity (by all those who missed the rally)
Thus he says we need a continual injection of sugar.
Maybe he doesn't realize how big this sugar cube is!
But how about his injection of bearishness that has kept people out of the market, who are on the sidelines, that now need to buy? Why would the market accomadate those people that were afraid to invest?
So now these learned folks, who manage close to a trillion dollars, are reduced to talking about "Sugar highs?" And last week it was "walls?"
Next they'll be talking about "Sugar walls!"
Maybe Mr. Sugar high, needs to watch Sugarcube since he is so afraid of making money! (and keeping with my quarter thesis, the point is made in the first 25 seconds)
On Saturday, April 25, these were "Big Money's" targets for the markets for 2009 and 2010, and now that their 2010 targets have already been succeeded, I thought I would bring them up.
Wouldn't it been nice to have someone tell you that this was just plain foolish? Oh someone did. Here!
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! Big Money ain't have a clue!!
Dr. Doom was finally banged around by Bloomberg today! Since the US markets have re-gained $4 trillion of value, "Roubini said in March the advance was a “dead-cat bounce,” that it may “fizzle” in May and warned in July that the economy’s “not out of the woods,” the MSCI World Index was posting a 58 percent gain, the largest since it began in 1970."
So how could the good Dr. miss this move? Can we get some color from him on his calls--or maybe just a "huddle?"
But Roubini can't comment, because he's on vacation!
Quick--would someone buy him a cell phone.
But what is nice is that the mainstream press has now decided to question the good Dr. Something that this blog has done extensively. But the difference between the mainstream press and this blog is that here, we told the world that Dr. Roubini was a charlatan on March 10, the second day of this bull market, before it moved 50% in the good Dr.'s face.
And now that we are at my 1040 S&P target that I advertised in April that I would re-advertise after we hit 1040, instead of retesting 666, the mainstream press now sees his position for what it was.
PDLI (9.22) pioneered the humanization of monoclonal antibodies, which enabled the discovery of a new genration of targeted treatments for cancer and immunologic diseases. They recieve royalties on licensed products from major drug companies like Genetech, Wyeth and Elan.
Royalty revenues go to stockholders. A 50 cent dividend is payable to shareholders on October 1, with an ex date of Septemeber 15.
If you want to speculate on the non royalty collectiong operations of PDLI, the play is Facet Biotech (FACT 10.76) which was spun off in December of last year.
When you had the spin-off, some of the dumb institutions were forced to dump the stock.
Here is Facet's latest 10-Q. They had $363 million of cash, and another $100 million in property and equipment, and with 24 million shares outstanding, the market cap of the company is comfortably below the cash on its books--which gives you $14 cash, and a $17 book.
According to FACT, their cash, with their current burn rate, will last at least through 2012. The products they are working on are still in their early stages of development.
So fundamentally the stock isn't exciting, even though it is selling at $4 less than cash, but the chart says another story.
The charts says it is ready to go higher.
And if every institution that had to sell, has already sold, who needs to argue with the charts?
Now if I could only get some XL recycled shirts with UCLA Blue and Gold colors, a Viking/Packer combo with a 4 on it, and some 'Nole and Gator wear, I'd be set!
On June 17, Goldman Sachs upgraded BIDU to 350. The story is here. I shorted the stock into their upgrade, and pocketed the $25 points on the downside, covering my position on June 23, as advertised here.
What did Goldman Sachs do with the shares of BIDU that they owned? They sold, 340,399 shares in Q2, or 81% of their position.
6/30/2009 79,586 (340,399) (81.05%)
Goldman touted the stock higher, but they didn't believe their own tout, but to their credit BIDU did trade higher in Q3.
After the SEC attempted a truly staggering feat of legal contrivance by blaming the Merrill bonus fiasco on "understood" arrangements and placing all the blame on counsel, where the trail would end because Bank of America would never waive attorney-client privileges, Rakoff shot back and told the SEC, in no uncertain terms, to not take him or the legal system for Wall Street's marionettes, a role the SEC is more than happy to play day in and day out.
In this sense, Rakoff's response to the SEC is a masterpiece, which, assuming the Judge is not voluntarily or otherwise silenced, could force Rakoff to rake the SEC over the coals of public humiliation and finally acknowledging its crony lap dog status for a group of wealthy Wall Street insiders who consistently have special status with Mary Schapiro and her henchmen.
Quoting from the order released earlier:
"In its August 24th submission, the SEC repeatedly reconfirms its central assertion that "Bank of America's [proxy] statement was materially false and misleading because it indicated to shareholders that Merrill [Lynch] would only make 'required' payments to its employees, such as salary and benefits, but would not pay discretionary year-end bonuses, [whereas] [i]n fact, Bank of Americas expressly had agreed to allow Merrill to pay up to $5.8 billion in discretionary year-end bonuses." Yet the same submission asserts that the SEC, despite its 2006 policy quoted above, decided not to bring charges against culpable individual offenders because all the company's witnesses "stated that they had relied entirely on counsel to decide what was or was not disclosed in the proxy statement." Further, the SEC asserts that it was unable to test this assertion because "Bank of America has not waived the attorney-client privilege [and] [a]s a result, the investigative record does not include any specific rationale as to why the disclosure schedule [revealing the bonuses] or it contents were not disclosed in the proxy statement."
At this point any lawyer readers can proceed to go ahead and vomit, because, indeed, this is the "defense" used by the SEC. Rakoff has a comparable reaction:
"This is puzzling. If the responsible officers of Bank of America, in sworn testimony to the SEC, all stated that "they relied entirely on counsel," this would seem to be either a flat waiver of privilege or, if privilege is maintained, then entitled to no weight whatever, since the statement cannot be tested. In asserting that no waiver occurred, the SEC cites just one case, John Does Co. v. United States[,] which, on first reading at least seems hardly to support such a broad assertion applicable to the fact here."
The SEC now has full permission to request a doubling of its near-$1 billion budget, as apparently the current money it has barely allows it to only afford the services of 3 year old chimpanzees with less than a month's experience with case law. Continuing with Rakoff's evisceration of the SEC's bidetesque approach to all things legal:
"If the SEC is right in this assertion, it would seem that all a corporate officer who has produced a false proxy statement need offer by way of defense is that he or she relied on counsel, and, if the company does not waive the privilege, the assertion will never be tested, and the culpability of both the corporate officer and the company counsel will remain beyond scrutiny."
And the punchline:
"This seems so at war with common sense that the Court will need to be shown more than a single, distinguishable case to be convinced that it is, indeed, the law. It also leaves open the question of whether, if it was actually the lawyers who made the decisions that resulted in a false proxy statement, they should be held legally responsible."
And how does BofA approach this whole problem: why claiming the world will end of course if it were to engage and clear its name. The tried and true approach of the gun against the temple of the financial system works with Obama: why should it not work with the SEC:
"Bank of America's position is that rather than puts its assertions of innocence to the test, it decided to spend $33 million of shareholders' money to settle the case "so that Bank of America would not face the unnecessary distraction of a protracted dispute with one of its principal regulators at a time when the financial industry continues to face difficult challenges stemming from uncertain and turbulent conditions."
But didn't Ken Lewis recently repeatedly state that everything is peachy again? Funny how the same world can be both black and white at the same time, depending on what suits the cause.
Luckily, the "end of the world approach" does not work with Rakoff, who concludes as follows:
"Whatever this chain of vague expressions may mean, if it is intended to suggest that Bank of America settled this case to curry favor with the SEC or to avoid retaliation by the SEC, the Court needs to know the specifics."
Zero Hedge fully hopes that the entire responsible executive committee of Bank of America face criminal prosecution for this SEC co-opted attempt to obfuscate and limit legal recourse in a case that is as simple as night and day. And, of course, that Judge Rakoff continues his pursuit of the SEC's complacency in seeking anything even vaguely resembling an equitable disposition for BAC's shareholders/taxpayers, with the end result being that the SEC should either dramatically change its entire modus operandi, be disbanded, or that the executives at the SEC responsible for this fiasco voluntarily step down before the wave of public anger turns against this blatant example of all that is wrong with the crony SEC-Wall Street machine.
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Now, how about Treasury and the Federal Reserve? Remember how they said they didn't know about the bonuses?
According to the SEC document, senior officials from the Federal Reserve and the US Treasury were made aware of the bonuses during discussions in mid-December. At the time, BofA was in talks with the authorities over an extra $20bn in aid to offset mounting losses at Merrill during the fourth quarter and seal the merger.
“According to Bank of America, during those discussions Bank of America provided the Federal Reserve and Treasury officials with a Merrill financial document that included the expected VICP [the group’s annual bonus programme] expense of $3.373bn for 2008 as a separate line item,” it said.
$33 million for Merrill bonuses to $150 million for misleading prospectuses--Now you know why Judge Rakoff is p*ssed.
BAC, Treasury, and the Federal Reserve are all lying.
Which explans Geithner's bullsh*t today.
He said that an audit of the Federal Reserve would be "problematic for the country."
Turbo Tim in overdrive! Starts at .47 seconds into it for about 3 minutes of obfuscation!
I mentioned Harmon this morning on the JP Morgan upgrade,and the stock is now 29.79 up 10% on the day.
10%--and just getting started.
And this weekend it was panned by Barron's.
Now I went over their very sophomoric and rudimentary analysis of that call on this blog, early Saturday morning, just 44 minutes after the Barron's article was out.
And today, JPM puts out a $44 target on Harmon.
So who were the clowns that sold on the Barron's news?? Didn't anyone want the free money?
Here's the story--you can read it again, and kick yourself, for not taking the free money.
Now why did the stock rebound so strongly? Was it just the upgrade, or is it the 6.66 million shorts feeling some pain?
Sunday night, I wrote about pain and I quoted Lombardi. He taught his players to play with pain.
And that's what this market can't stand--even by some of these bulls.
Look at Jim Cramer, who was pounding the table on Citigroup. Yesterday after the close, he got squeamish on the stock because it moved down a quarter.
A quarter?
And he abandons his thesis for .25?
Even though he thinks the stock is heading to 12?
How much pain can he take?
We now know. A quarter's worth.
But football last four quarters.
The coin above is an 1844 half eagle. It's not a quarter eagle. That's two quarters.
And it's worth $2.5 million.
So think about that next time, you heed the advice of these touts that will cost you money.
Where did all that bubble talk go? Why did it disappear?
Is it because the market is now recognizing that it isn't a bubble, and those commentaoris on bubblevision, now can't get their panties in a bunch babbling about bubbles?
Or is it because "bubbles" aren't even on Amazon anymore!
After all, weren't these panties hawked on Amazon as "Deluxe String of Bubbles?"
You can still buy the panties, but now they've been renamed-Pearl G-Strings.
So bubble talk has been banned on "bubblevison" and now, it's even been banned on Amazon.
It's seems that the bubble has turned into a pearl.
So quit talking about the string of bubbles!
Bernanke has been re-appointed, with an early decision made, because in a week, we get to look over the Fed's books.
And those loans are "pearls" and not "bubbles."
No buts about it!
And they need Bernanke to "photo-shop" those loans!
The Federal Reserve now must make known the details of the loans, and who got what from the taxpayer, despite the Federal Reserve's insistence that this information.
The Board's Motion for Summary Judgment is DENIED, and Bloomberg's Motion for Summary Judgment is GRANTED. Specifically:
1. The Board shall produce forwith the Remaining Term Reports within five business days of the date hereof;
2. The Board shall search forthwith records at the FRBNY that constitute "Records of the Board" within the meaning of 12 C.F.R. # 231.2(i)(1); and
3. The parties shall confer following their review of the results of the search and inform the Court by letter no later than September 14, 2009 how they propose to proceed.
Art Cashin, one of the best, is on CNBC again, and is still being dour, as he has been through-out this rally.
Remember when Kiplinger magazine was touting the recovery? "Cash In" And the magazine was selling at 75% off? Because no-one bought it?
And that time, I said this:
Now compare that to Art Cashin, on CNBC, one of the most respected traders with a pulse on the market. He is rather dour, and still sees downside. No one is discounting what he says by 75%. Which means, that this time, Art is probably on the wrong side of the trade.
CNBC viewership is down so they trot out Amanda Drury with some black lace on her blouse, making viewers think they may be getting a bra not a blouse.
It looks like that is CNBC's new cashin' in strategy.
Because Art's hasn't worked!
Even though he is absolutely one of the best of all time!
Goldman Sachs is expected to contribute more than £2billion to Britain's depleted public finances this year as profits and bonuses rebound to boom-era levels.
The Wall Street giant is facing a 2009 UK corporation tax bill far in excess of last year's £1.1billion after seeing its earnings stage a dramatic rebound during the first half.
And the Treasury is set to reap a further £1.1billion income tax windfall from Goldman's 5,500 City workers, who are set to earn an average of around £500,000 in pay and bonuses this year
After being bearish on every move higher by the stock market, and after warning us about lower prices, now that we have moved +50%, look what the WSJ has to say:
The breadth of the recent rally has technicians bullish.
And they they quote:
"There has been no evidence of deteriorating strength in each of the rally days this week, suggesting a continued healthy condition for the rally from the March low," wrote Richard Dickson of Lowry Research in a Monday report referring to last week.
Isn't that special? Now they are bullish?
Maybe it's because the WSJ wants to sell the Dow Jones stock-market indexing busines!
Now before you start with your fantasies, you should remember that Murdoch's current wife, divorced her first husbad, who was 32 years her senior because he was a "father figure" to her.
Maybe it was the "grandfather figure" that she really coveted!
