Morning Call [7:56am ET] I had to take a second look at this headline yesterday: “Bank of Ireland increases government stake”. It should be accurately stated as “Government of Ireland increases stake in BOI” and that’s a good thing? In any case, the stock was sent soaring on the Irish and New York Stock Exchanges, up +12.12% in NY on Thursday plus a further +6.29% in pre-market trading today.
Yes, it seems the people have spoken; they want the government to invest in bankrupt banks. At the least, if you happen to be a distraught shareholder in one of these busted banks, you’ll happily take the taxpayer money rather than sell and take your loss on a bad decision.
Therein lies the problem. Government has turned into a comfort blanket and teddy bear.
When will people wake up and realize they are on the road to perdition?
I don’t care how the US Government spins today’s national jobs report – the consensus is for a decline of 50,000 jobs and an increase in unemployment to 9.8% -- the data is bogus and the report itself is just a platform for whatever Administration is in power to push their agenda. The mind boggles.
I’ve been resting up for PDAC. If you happen to be in or around Toronto, the investment forum of this conference is free to the public, affording anybody an opportunity to get to meet the management of almost 1000 companies in the mining and exploration business. There is nothing like it in the world. I’d like to meet you there.
http://www.pdac.ca/pdac/conv/index.html
Have a good day.
CTA Trading Desk Post-Close Report
The old trading axiom, “never short a dull market” best describes the current trading environment; no matter how meek the activity and how weak the conviction, traders need to keep the mouse clicking the buy button as prices keep on chugging higher.
A burst of buying after the better than expected jobs report pushed prices over near-term resistance of 1125 to 1130 on the S&P 500, as traders concluded the US economy had turned the corner with nothing but blue sky and sunny days ahead. Financials (XLF +1.95%) had a stellar day led by Wells Fargo (WFC +2.52%), JP Morgan Chase (JPM +2.12%) and Goldman Sachs (GS +2.18%), as did high tech glamour stocks Apple (AAPL +3.91% to a new all-time high) and Google (GOOG +1.80%).
Anytime Financials and Tech (QQQQ +1.51%) lead rallies like this, the likelihood for a continued advance increases, and traders become a bit more aggressive accumulating long positions.
Next target on the upside for the S&P is the January high of 1150, with higher objectives around the .618 retracement of the Bear market at 1228. The vast majority of Monday sessions since the low last March have had positive closes, so most traders will be expecting further strength at the beginning of the week.
Precisely one year ago the S&P bottomed at 666, and, as you know, we have previously discussed the propensity for March to mark important turning points. If equity prices do hit either of the targets, traders should closely monitor the price action around those levels to determine whether a reversal is probable. One such sign would be a high volume upside gap breaching 1150 or 1228 with a close lower on the session. Such an outside down day reversal on volume would greatly raise the odds the 12-month trend has ended on an exhaustion gap and key reversal to the downside.
Time will tell, but have no preconceived notions about when it should end, and be on the alert for concrete signs the Bull move has terminated.
Have a great weekend.
Comments
Cara 100 Ratings Changes
Good morning.
AUY - Downgraded to Sector Perform @ UBS
POT - Deutsche Bank Initiates Coverage with a Hold. PT = $120
The mind boggles.
"I don’t care how the US Government spins today’s national jobs report – the consensus is for a decline of 50,000 jobs and an increase in unemployment to 9.8% -- the data is bogus and the report itself is just a platform for whatever Administration is in power to push their agenda. The mind boggles."
What boggles me is some still seem to see a lower number of losses as a positive.
Fewer cookies will leave the jar as we reach the bottom — simple as that.
Or, another analogy — You can't field a baseball team with less than nine players and you can't stay in business without a given number of employees.
We may be getting to the point where reality will not be able to be disguised.
Positive Jobs Report
Broad range, but better than expected given the games Larry Summers was playing with expectations.
February Jobs
Bloomberg is shamelessly pumping futures.
There's a green one, and a blue one, a red one
and a yellow one, and they all look like ticky-taffy, and the all Spend just the same.... Roll those printing presses, Boys !!
"Stock futures rise after upbeat jobs report"
Gotta love that headline from AP- unless of course you are one of the 36 THOUSAND people that lost jobs last month...
my take
gold bases around this level, or it takes a hard dump down.
either way gold stocks follow the market, down on strong volume or slightly higher on weak volume.
i no like this much,
sitting mostly in cash waiting to reload due to a sinking feeling about things here.
im seeing a number of small caps i follow moving nowhere to down with some large volume spikes down, i cant say this is what predicated the 2008 great crash, but something is amis.
a sudden spike upwards on good volume will convince me otherwise, but the USD seems to be in a no man's land from a TA perspective. i suspect its more about EU weakness than anything else. a greek bailout announcement over the weekend could change things dramatically.
good luck,
Re: my take
$SILVER:$GOLD chart is showing a 75.27 RSI-7 this morning and rising which suggests it's time to lighten up on the bullion. I'm mixed here because $USD is overbought and news of IMF sale of the motherload should spike gold price at least for a couple of days. Mulling it over as I watch SLW make me money today after reporting stellar results last night.
Cheers.
Cara 100 Update (Final)
AAPL - target, estimates boosted at BofA/Merrill. AAPL price target improved to $260 from $250 on higher revenues and gross margin. 2011 and 2012 EPS estimates raised to $13.65 and $14.85, respectively. Maintain Buy rating.
XOM - Downgraded to Market Perform @ Howard Weil.
our leaders today
On my watchlist, it's gold miners oil E&P, and homebuilders leading us higher. Semiconductors are dead last, barely in the green. An interesting picture it paints, but perhaps not one of sustainable excitement in the underlying economy.
GS, GE
out of my GS short for a 1% loss.
GE - bought a bunch of GE at $16.24. I really think we're at the bottom of the range for GE and we're going higher. It bounced nicely off it's 50 DMA and its uptrend looks to be intact. I think this will be up to $18 soon.
GE
Bought some March $15 calls on GE at $1.28. I think sentiment on this one is going to change very soon. Their alt energy divisions have been doing well and in an improving jobs situation (or at least a perceived improving one) the drag of their financial division will be mitigated (or might actually improve overall earnings). It's one of the few blue chips that has not really run much....I know, I know...it's a dog and is no longer a blue chip.
Where does Stimulus Money go?
Over at Jesse's Cafe this morning there is a review of a book titled ECONned by Yves Smith. After a quick read I am wondering if the Repo Market will crush everything.
Want to receive the Cara 100 ETF prospectus?
As you know, the Cara 100 Model Portfolio ETF is moving toward availability. If you would like to receive the prospectus when it is produced:
-- log in here at Cara Community
-- click the box at the top of the right-hand column of the home page
-- complete the form, which asks you for your name and country of residence
Because you are a member, we already have your email and you'll be on our distribution list.
If you are not a member, this is another good reason to become one.
Thanks,
Jack
it amazes me
So some of the various ETFs performance lately is really astonishing.
XRT (retail) is back to summer 2007
XLY (discretionary) early/mid 2008
XLK (tech) early 2008
However
GDX is slightly below 2008 levels, even though $GOLD is above
Do we think the conditions for retailing really is equivalent to summer 2007? XRT:SPY shows that retailing has greatly outperformed the S&P since the crash. I"m thinking this can't last, but one wonders just how long it can continue...
Drinks are ' on the house ' at the Global Casino
Floor managers saying " everything's fine... trust us. "
Re: my take [sell PM?]
This is my dilemma too. According to this and similar PM TA, it's time to start selling. However, my trade is not finished, as I did not see drop in U$D yet that was supposed to propel PM prices. Furthermore, if gold formed a bullish flag from dec 09-march 10, now we are seeing a breakout. Thus, I will sit tight a few more days and reevaluate.
Am I The ONLY One Left HERE with this OPINION?...(Re-posted)
For some time I have been reading news/opinions and sharing links about real world facts that is predicting lots of dire and unrest in all of the financial markets coming in this year due to many reasons all of you heard of before specially starting from countries defaulting in Euroland as Greece is ONLY the first here. However, FEDS and their Bankesters boyfriends, the likes of GS and JPM, have managed to keep this fake market rally up with just a hiccup of 9% after almost 70% of market run-up since March 9 using their manipulative computers and trading tools. As many here said, like NYGrad, they made all TA analysis just a big JOKE and frankly just BS !!
I really don't see this market returning ever to a free traded market free of Gov't Control and Bankesters's manipulations. Traders face a very difficult task here as many of their well known trading tools or techniques are no longer working. Many have encountered huge losses in last 2 yrs. It even makes it impossible for many to be swing traders, short or even long-term traders as there is no truth and valid market conditions and company facts that investors could truly trust and believe in its fundamentals. The PPT team will always be working at full force to change the direction of investors expectation and change the price action move in a matter of minutes or less on any single day or night (futures market).
I do believe in GOLD surviving being the ultimate currency in a world full of debt and default, budget deficits everywhere, and collapse of many currencies. I am sure the more turmoil we see in the world going higher and higher in debt, the less world currencies would worth and the higher Gold prices would reach. HOWEVER, no one has assured investors who want to protect their cash or saving that investing in golfd miners or gold equities is as good as investing in physical gold simply because historically we have seen over many decades that Gold stocks have sold off sharply when equities market sold off sharp during corrections or market turmoils. Therefore, many would say well why not buy physical gold then and hide it somewhere in a bank's safe but should we really because if that bank collapses and closes their doors, you will never be able to get out your gold bars from them. Does that mean you need to hide them in your home? your basement? your garden? where?? forgive me for being too cynical here but frankly what options do the honest investors (not just day traders) have left to protect their hard earnings money and life savings in this terrible terrible corrupted market?? If they can’t stay in CASH since the currency is gradually being devalued then how could they invest and protect their earnings?
People have lost confidence in this market and I am one of them and want to be shown the WAY to protect themselves and their families.
I would truly appreciate if Bill and others can comment on my few points here and provide their thoughts of where do they think the solution lies here?
Thanks and GLTA
Re: my take
$xau:usd is also overbought daily but the weekly trend is still up on both in the eyes of this amateur,perhaps we can expect choppy trading as the pm's slowly grind forward. Perhaps we will be able to better judge if we see a late day surge in prices forcing shorts to buy with pm s gapping down on Monday, this has occurred in the past although it is no indication of the future, damn i need a new crystal ball.
Re: it amazes me
I believe this year will be disappointing for stocks due to very slow recovery. Similar to 2004, but maybe even worse. The comparison of 2003-2004 to 2009-2010 is very striking so say the least. Shorting opportunities should start soon.
Re: it amazes me / XRT short?
I also shorted XRT in the last few months for the same reason, and more often than not I lost money (and the same with XME). So now I'm more careful with these stocks. Since I'm not good at shorting (I even tried with F, CAKE and WY that are going up every day and every week), I'm looking at the other side. That is to be long the same bets I lost shorting... It's working.
But I'm also looking at the relation between GDX and SPY (http://xrl.us/bgxojj) that Bill explained some days ago to decide what train I want to ride.
The banks are performing
The regional banks are not disappointing. Once 51,5 on $KRX is broken the trend certainly will not be down. $BKX is not doing bad either, but the regionals are the ones doing the boring banking that is needed.
Pulp is on fire
Hardwood and softwood pulp has been soaring lately and the stocks reacting upwards powerfully. BMO upgraded the whole sector this week.
TMB.to
MERC
CFX/UN.TO
etc...
mean reversion
SPY:XLU is showing utilities greatly underperforming SPX starting with the March lows. Again, we're back to 2007 levels on this. Check the weekly chart. Perhaps something to buy and hold - collect the dividend, and hedge it with an SPX short. :)
Has the Yen topped out?
Early in December 2009 the Bank of Japan announced that they will be printing (more) money. The Yen tanked from 116 to 106. Today they did more or less the same and the Yen which yesterday was over 113 is showing 110,6. Is 115-116 the line in the sand which will not be allowed to break?
The yen has been rising since mid 2007 where it cost 80. It has made a double (or triple) top around 115-116 since.
Opinions?
Re: Am I The ONLY One Left HERE with this OPINION?...(Re-posted)
analyst65... I posted an Excellent audio conversation from Bill Fleckensten last night. It is a great summation of the past 2 years ( but includes the lead-up from the past 10 years ). Those who have read Mr. Fleckenstein know he is of the same genius ( and I do not use this term Lightly ) as Bill Cara. No one is perfect, but he has been almost dead-on correct for the past 15 years. You will not see him on TV much, if not at all, for he is not into fame or glamor. He has access to the best contacts and minds in the financial world. If you will pay close attention to the Last 5 minutes of the audio, he disects the advent of the gold, and the gold miners, in relation to the markets and world currency values. It may seem brief, but encapsulates a world of thought. Sure, prices will ebb and flow, just as Bill Cara talks about. But there Is a Constant. I am not screaming ' the sky is falling ', but the truth is just that, The Truth, based on reality and not hype. It is up to the individual and his time frame And tolerance. I also realize that in the near ( and long term ) there will not be a substitute for the use of oil, therefore I, personally, also focus on Big Oil, ( ie ) XOM, CVX, NOV,WFT, RIG, etc... If you have time, listen to the entire interview..It is worth it... http://kingworldnews.com/kingworldnews/Broadcast/E...
Re: Am I The ONLY One Left HERE with this OPINION?...(Re-posted)
No Analyst65, you are not the only one disgusted. Many who were posting and trading here and are no longer posting. Probably just gone, not trading but back to the daily life, hoping and taking care of their business. I am also disgusted. And nearly out of the market, gasping my last, down to 35% of the account I started with. Months of taking small short positions and holding too long. That was trading what I thought would happen...that fundamental value in companies was going down and prices would follow...wrong! Lately back to v small long positions. But verrry timid. No way to make any gains, down to holding on to these last few $ before I decide to either pull the plug or ...What? I think thats what you are asking.
Two days ago I spent some time doing the due diligence, looking at GMO-one of my favs. I did not see any insider buying - rather the opposite. I did not see any volume ramping up. I did not appreciate the Motley Fool upgrade. I did not understand the SEC filing from 10 days ago. Yet today, many people are VERY happy and buying GMO. Just another story of the big one that got away. I have several of those stories. Bought AAPL within these last 12-14 months for $89 per share and sold for a small profit ....at $95! WHOO HOO! Trading genius.
Vad (and lots others) says trade what you see. I won't chase GMO here though Chinese bank investment may just transform GMO at a time when Bill is calling for longer term strength in commodities. ^VIX is down to (nearly) April 07. Yet, IMHO I think people (and some professional traders and money managers are people), I think people ARE scared and grasping at straws.
I would like to see my miniscule amateur trading account make me wealthy but really, it isn't gonna happen. I understand your plea as ...what do I do now? As you put it... looking for a "WAY to protect themselves and their families."
Good luck.
And in that vein, thanks Bill for the GS Rubicon report and for your hard work and time spent keeping this blog a civilized forum and learning space.
Peace from North Puget Sound
I am adding to MON at this level today..( $ 72.50 )
Took positions early this week in the $ 71.00 areas... I am not buying for the short term, nor for a potential LBO ( although I do believe it could happen )... If the quants take her lower, so be it.... I can only buy at, what I believe, are reasonable trigger points..
GS Sustain
I have popped 30 of the Sustain report stock tickers into the Finviz Screener and not one of them has an RSI-14d less than 30. Three are over 70.
My list does not include symbols on non-US exchanges.
Re: GE
Ok, this is my last comment on GE. A lot of people are focusing on it's price relative to earnings but I think the truer measure of its valuation is free cash flow. Here is a look at GE's free cash flow over the past 10 years:
2009 - $16.0 Billion
2008 - $32.6 Billion
2007 - $27.8 Billion
2006 - $14.0 Billion
2005 - $23.2 Billion
2004 - $23.4 Billion
2003 - $20.5 Billion
2002 - $16.1 Billion
2001 - $16.7 Billion
2000 - $6.4 Billion
The average for the past 10 years is $19.7 Billion. GE's current valuation is $173 Billion or 10.8 times free cash flow. From the period of 2003 to 2008 (I excluded 2000 to 2002 b/c valuations were absurd), GE traded at an average price to free cash flow of 15.3 times. I calculated this using the trading price on 3/31 of each year after the above numbers were reported. So for example, for 2003 I used the price at 3/31/04.
Assuming their free cash flow stays the same as it currently is right now for the next 3 years (which is a very conservative assumption) and it is valued at the same multiple that it was valued at from 2003 to 2008, I get a valuation of $245 Billion or $23/share. Big deal, right? That's only a return of 41%. And you could probably get that return from investing in the S&P 500 over time, right?
Well, what if FCF grows back to say 2005 levels? They will have 40% more FCF than they currently have. Bears argue that GE is a different animal now than they were then. They have deleveraged and will no longer earn the same from their financial division that they did in the past. Well, that's not necessarily true. As of their latest quarter they have only shrunk their total assets by $16 Billion from their peak or a whopping 2%.
Anyway, this is why I have been bullish on GE. I think investors will soon agree with this valuation. I'm going to be adding deep in the money calls ($12.50 strike) that expire in 2011 and 2012.
EDIT:
Added a few GE $12.5 Jan 2011 calls at $4.25.
Re: Am I The ONLY One Left HERE with this OPINION?...(Re-posted)
analyst65,
Re: "many would say well why not buy physical gold then and hide it somewhere in a bank's safe but should we really because if that bank collapses and closes their doors, you will never be able to get out your gold bars from them."
Assets of a client of a bank that are stored in a safety deposit box are not accessible to the bank. Also, bankruptcy relates only to ownership of the bank. The assets of a client deposited in an account at a bankrupt bank are legally segregated from the proprietary assets of the bank and hence are protected by law. Even if there is theft involved, client assets are protected by industry insurance.
Known as a storehouse of value, physical gold is a desired asset during periods of extreme inflation or deflation. Some people bury their gold in the ground, but it would be much safer in a bank.
Over a period of many years, the value of securities fluctuates, but has produced an annualized Total Return (dividends and capital growth) of about +10%. To survive in a competitive world, corporations must achieve a positive return of something above inflation or else their shareholders will not continue to invest, preferring the shares of another corporation or possibly a risk free US Treasury investment. This long-term process will occur whether or not government and/or banks happen to be well run or not. At times they are not, like the present, there will still be ways to protect your assets. But the ability to trade is the key. You can hold long or short positions on over 90% of any marketable security, including equities, bonds, commodities, precious metals and currencies. Successful traders do that.
Agreed, these are challenging times to trade securities because of the behavior of some important market participants, like govts and banks. That's the reason we complain, and why we try to help one another. Unfortunately there is little we can do when a government intervenes in the capital market for policy reasons that are, or let's say may, oppose an investor's reasons, which is to obtain a positive return. However, I do think banksters are not afforded the same protection. If, as and when they are prosecuted for acting against the client -- and mark my words, this will happen, it's only a matter of time before regulatory authorities and the courts recognize the owner of capital has rights that supercede those of the client's banker, advisor and agent -- there will be trial juries of we the people who will nail the offenders with incredibly long prison sentences. The anger is building, and all bankers and legislators know it. Something will ultimately be done to eliminate conflict of interest in banking as has always been the case in all other aspects of life.
In the meantime analyst65, and others, you need to spend the time to learn how to trade successfully. That's the only way most people will get their financial freedom. Governments and bankers will certainly not provide it.
Re: GE
teamonfuego,
That is the kind of participation we need. Thank you.
Re: GE
Teamonfuego, Thanks for your thought process on GE!! Fundamental and technical pictures tell a story, but I appreciate the decision making process being shared to know WHY the decision was made rather than just learning WHAT decision was made. Have appreciated your comments over time.
Re: GE
Thanks Bill...
One other thing regarding FCF. While 2009 had $16 Billion in FCF, you have to take a look at each quarter to see just how impressive their FCF has been even during this downturn:
Q1: -$3.0 Billion
Q2: +$4.1 Billion
Q3: +$7.0 Billion
Q4: +$7.8 Billion
So over the past 2 quarters they have generated almost $15 Billion in FCF. Over the past 3 quarters it was $19 Billion. Clearly FCF troughed in Q1 and I think even Q2 could be considered an outlier. However, if you include Q2 and extrapolate Q2 to Q4 out to a full year you get $19/3 x 4 = $25.33 Billion. That means that GE is currently trading at 6.8 times its current FCF run rate. That is less than half the average P/FCF it has traded at over the past 7 years.
Re: GE
Thanks G.
I know it's heresy about GE but I'm also thinking they have a lot of room to raise their dividend. While they’re only paying out a dividend of about 2.5% right now, I would argue that they currently have the ability to pay a dividend of $1/share based on their free cash flow. That is a dividend yield of 6.1%. So in addition to the stock having the potential to generate returns of over 100%, it can also pay you out an annual dividend of 6 to 8% based on the value of the shares right now. Not a bad long term investment...
Re: GE
GE is at the same price it was at in 1996, and about 75 percent off it's all time high... seems to me to be a bad long term investment. still involved in who knows what sort of derivatives, commercial paper, etc etc...
whereas look at something as simple as PEP, more than doubled since '96, yields 2.8, diverse product mix in a growing (EM consumer) industry versus a shrinking (credit deflation of GE) industry.
in terms of what i would consider to be conglomerates, SHLD LUK BRK look much better than GE in the fact that they are fairly transparent and don't rely on accounting shenanigans or acquisitions to produce growth. JMHO.
Re: Am I The ONLY One Left HERE with this OPINION?...(Re-posted)
I share your sentiment Analyst65.
Either the current markets are too challenging unless you are GS, or I am not good enough to trade these markets at this time.
But i am continuing to watch and believe eventually volume and some sort of cause and effect will return to prices.
if the past engine of capital markets were volume, it has been replaced today with hope.
additionally, i know I am not good enough to scalp and trade today's conditions with higher prob of winning, nor the high prob of protecting capital. So i sit out and wait, but still watching to learn.
Re: GE
I like it! they are def too big to fail :)
Re: I am adding to MON at this level today..( $ 72.50 )
would detail why, but that research is available to anyone willing to do the work, as I believe anyone ( myself included ) can use any stats to convince themselves to buy or sell ( ie: 2007, 08 and 09 )... I go by charts when dealing with an established global power.. all I can say, is, for long positions, I use charts only, with any relevant news ( such as GMO seed use will quadruple in EU over next 10 years ). The self imposed rules I use, are, lots are bought in maximum 100 shares lots for any equity over $ 60.00 per share, and on a sliding scale ( 75 shares at $ 72.50, and 100 shares at $ 71.85, today )... I Never purchase over 20% of intended allotment total, below first purchase ( $ 71.35 for MON ).. I also use variable sliding scales for sells, whether at a profit or loss...
What happened next...
Mentioned PLM earlier in the week. Wanted to share the follow-up. After it closed off it's lows leaving a nice tail on the candlestick chart at the 200d MA I bought it and it promptly turned around and headed south again. Now I'm enjoying what they call the "slope of hope..."
Re: GE
mcgro2: We already know what it did in the past 10 years. What it did in the past 10 years doesn't tell us anything about what it might do in the next couple of years or what it's intrinsic value is. What I'm looking at tells me it is worth a lot more than its current valuation, not that it went down 50% in the past 12 months or that it hasn't done anything in 10 years.
Re: Am I The ONLY One Left HERE with this OPINION?...(Re-posted)
Analyst65- I hear you. There's nothing wrong with you, and there's nothing wrong with feeling frustrated when it's warranted.
I shorted DELL in the mid-nineties on Fleck's call (via Herb Greenberg, who was writing for the SF Chronicle at the time). I lost 40k on that position. Which was my first lesson in (a) position sizing and (b) taking losses quickly.
A colleague of mine watched YHOO move up in the late nineties until he couldn't take it anymore. Then he bought in. And it continued to move up.
What 'sense' can one make of the NDQ bubble of 2000? Oil/NGas prices in the summer of 2008? This current rally? You really can't. It just happens.
What you can do is protect yourself.
(a) Stay out. Nothing wrong with that.
(b) Trade with the trend, using stops to lock in profits.
(c) Trade counter-trend, using stops to keep losses small when you're wrong. (Much discussion here re mental stops, but they work for me. I've taken paper cuts on intraday shorts since last July, but taking losses quickly coupled with the occasional win has kept me out of trouble.)
Market action is irrational because people are irrational. Yet irrational pricing is where you find opportunity.
Nothing wrong with cash right now, IMO. The time will come when you're able to put it to good use. It may not even be in the financial markets. You might drive around your neighborhood one day and realize distressed sellers are offering you the buying opportunity of a lifetime.
Why get caught up in the hype? Turn it off. Relax. Do something else for a change. The market will still be here when real opportunity arrives.
Re: GE
"Assets of a client of a bank that are stored in a safety deposit box are not accessible to the bank." - Bill
It appears to be a cyberspace myth that FDR's Executive Order 6102 of 1933 (Gold Seizure) included IRS agents inspecting bank boxes. Scroll down to 'Safe deposit box seizure myth' subhead at the following link for explaination of executive order language and documented events.
http://en.wikipedia.org/wiki/Gold_confiscation
DRV
in @ 12.61
out @ 11.67 today.
DRV
in @ 12.61
out @ 11.67 today.
MDVN
buy limit 12.29, 3PM price + (5% of 10 day ATR) good for day
do your own homework.
PUK/DF/TRAK
sold too soon ...as usual
No position.
SPXU
buy stop 32.97/32.97 limit. Hitting near the last low in mid Jan. EOM favorable trading period ending.
Do your own homework.
Re: PUK/DF/TRAK
bsi - I can't remember the guy who said this but I remember reading a quote from a really wealthy guy that was interviewed about how he grew his wealth. His number one reason: he sold early.
It's so true in my mind. I can't tell you how many times I sold something early only to watch it go up and up and up. I'm convinced that NLS is going to be one of them. But I have gotten better at just forgetting them and looking for more opportunities. They're always out there and focusing on them helps you avoid the frustration caused by selling too early on others.
Re: PUK/DF/TRAK
Bernard Baruch
http://www.brainyquote.com/quotes/authors/b/bernar...
Congressional Budget Office
Congressional Budget Office (CBO): Obama proposed budget would incur $9.76T in deficits and publicly held debt would grow to 90% of GDP by 2020
- revises 2010 budget deficit to $1.5T from $1.3T on 1/26; 2011 budget deficit revised to $1.3T from $980B forecasted on 1/26
- deficit under the Presidents proposals would fall to about 4% of GDP by 2014 but would rise steadily thereafter
- cumulative deficit over the 2011-2020 period would equal $9.8T (5.2% of GDP), $3.8T more than the cumulative deficit projected in the baseline. Of that difference, roughly $3.0T stems directly from proposed changes in policy and another $0.8T results from additional interest on the public debt.
- largest budgetary impact would stem from the Presidents proposals to index the alternative minimum tax (AMT) for inflation and to extend various tax provisions contained in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). Over the next 10 years, those policies would reduce revenues and boost outlays for refundable tax credits by a total of $3.0T
http://cboblog.cbo.gov/?p=482
VISN capitulation play
in @ 4.98 today.
Sell limit 7.50/sell stop 4.57/4.57 GTC
Do your own homework.
GE 2009
ALOHA!!
I believe you have to look at companies in more detail and this is what I got from the latest GE 2009 Annual Report.
The first 28 pages of the total 124 page annual report are essentially just PR with many glossy photos of execs and products. I wish companies would just get to the nuts and bolts and skip the exec PR and let the numbers speak for once and not just the "highlight" numbers. The devil is in the details.
Now I did not find any ten year info on FCF in the GE 2009 Annual Report, but one indicator of a company's future is "working capital" and I pay a lot of attention to that. For novices here is the definition of "working capital".
Current assets minus current liabilities. Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations. Companies with negative working capital may lack the funds necessary for growth. also called net current assets or current capital.
Here is what I found for GE ...
WORKING CAPITAL
2006-$7.52BIL
2007-$6.43BIL
2008-$3.43BIL
2009-($1.59)BIL
So you can see working capital projects a whole different outlook at GE than FCF. For the first time in a long time GE has a negative working capital and as you can see it has been steadily eroding since 2005. Of course this is not displayed prominently with glossy photos on the first page. Its buried.
Let me visit some other data both not so buried and buried deep ... Here we go!
You cannot have cash flow without revenues ... GE revenues took a plunge in 2009 compared to 2008.
REVENUES
2008-$182.5BIL
2009-$156.78BIL
EARNINGS
2009-$17.41BIL
2009-$11.02BIL
GEOGRAPHIC REVENUES- Down across the board from the USA, Europe, Pacific Basin, South America, Middle East and Africa. Nowhere are GE's revenues up from 2008 to 2009. I might also point out that in the global revenue spread that GE's US market was the first to fall in 2007 to 2008, but the next year in 2008 the entire global revenue stream dropped off in 2009.
Next I look at debt to get a feel for cash flow and also management's agendas. I do not like to see a steady increase in LT Debt usage.
LONG TERM DEBT
2005-$8.9BIL
2009-$11.68BIL
A 31% increase in LT Debt in five years. Not inspiring.
If I were a shareholder in GE I think dilution and shareholder equity would be an issue.
SHARE DILUTION
2008-10.01BIL
2009-10.61BIL
RETURN ON SHAREHOLDERS EQUITY
2007-20.4%
2008-15.9%
2009-10.1%
PPE
Down $9.3BIL to $69.2BIL in 2009 as GE sells off assets.
DELINQUENCY RATES
On managed commercial equipment loans/leases and consumer finance.
EQUIP
2007-1.21%
2009-2.81%
CONSUMER
2007-5.38%
2009-8.82%
USA
2007-5.52%
2009-7.66%
NON-USA
2007-5.32%
2009-9.34%
I am amazed that the focus is how much delinquency exists in the US markets but according to GE the NON-USA markets delinquency rates have gone up 75% in three years, which is much higher than delinquency rates here in the USA. Still not a good outlook.
GE R&D
2007-$3.0BIL
2008-$3.1BIL
2009-3.3BIL
How much of that R&D was paid for by US government grants? Between 40%-45% taxpayer funded is the answer.
US GOVERNMENT R&D
2007-$1.1BIL
2008-$1.3BIL
2009-$1.1BIL
Last but certainly not least is GE's pension fund and it would be no surprise to see that it is in disarray as many US companies in the Fortune 500 are in a similar predicament. Guess who they will want to ask for a bailout on pensions?
EMPLOYEES
2007-327,000
2008-323,000
2009-304,000
Less employees means less ability to service pension funds.
First of all let me point out that there are 157,000 active GE employees supporting 478,000 former or retired GE employees who are vested.
LOSS ON PENSION FUND ASSETS
2008-($4.85)BIL
2009-($4.94)BIL
COST OF PENSIONS
2008-$613MIL
2009-$1.01BIL
So GE has massive sustained losses in their Pension Fund as costs skyrocket going forward with costs nearly doubling in one year.
Now part of the reason cost of pensions for Fortune 500 companies have been slowed is due to the US Treasury and how it picks up a large percentage of costs. In GE's case for 2010 Medicare Part B subsidies will amount to $70MIL, but in 2011 that drops off significantly down to just $5MIL, so right off the bat without a single word uttered GE's pension costs will rise another $65MIL in 2011. What will offset those rising costs? Obama?
There's my analysis of the GE 2009 Annual Report. Here is the link.
LINK: http://www.ge.com/ar2009/pdf/ge_ar_2009.pdf
I only had time to make it to page 90 or so out of the 124, so maybe there are earth shattering positives on GE's horizon. Don't get me wrong there are positives for GE but there seem to be a lot of negatives and its just not all GE's fault as they have to do the best they can to operate in a World of malinvestment brought on by the monopoly of the US Treasury and the US FED.
I view Jeff Immelt the same way I view most of US Fortune 500 execs who decided to go outside their core business in the misguided quest for profits and larger bonuses in the credit sector at the height of a credit bubble.
Let's hope the lesson was learned, but certainly the Board rooms of the US Fortune 500 companies need to be discarded for their poor performance for the sake of the shareholders.
If you plan to be a shareholder in any company you must look at the BIG PICTURE and not just the bottom corner of one quarter.
GE has some challenging times ahead ...
Re: GE
how does one know the "intrinsic" value of GE when the vast majority of the company's balance sheet is tied up in "assets" that GE cannot value, much less sell? seems to me "intrinsic" is very overvalued these days.
as kaimu said, GE has a tough road to hoe, and many years to repay for the shady moves of jack welch.
Re: GE
Please give me an example of an asset that GE can not value.
Re: GE
ALOHA !!
teamonfuego-Do you have a link to the ten year FCF data? How was that calculated?
Re: GE
Please give me an example of an asset that GE can not value.
re: ..it's ability to obtain financing via the commercial paper market. over 1/3 of GE's revenue comes from commercial lending. the barriers to entry are very low, and private equity, hedge funds, banks, are encroaching on this quickly, some with the backing of the USG.
Re: GE 2009
Kaimu - You posted a lot of data and I have a bunch of questions/comments:
1.) Current Ratio (pretty much the same thing that you're looking at(working capital))...this is something I always look at and always want at least a 1.5 CR. I don't agree with the numbers you're posting. Where are you getting them? Here is what I see for current ratios:
2009 - 2.76
2008 - 2.02
2007 - 1.99
2006 - 1.98
This translates into far more current assets than current liabilities.
2.) Revenues - you posted the revenue drop from 2008 to 2009. umm...could you tell me what big cap companies outside of AAPL didn't have a drop in revenues? How about taking a look at revenues for the past 10 years?
2009: $156,783.0
2008: $182,515.0
2007: $172,738.0
2006: $163,391.0
2005: $149,702.0
2004: $152,363.0
2003: $134,187.0
2002: $131,698.0
2001: $125,913.0
2000: $129,417.0
3.) Earnings...again, look at more than just 2008 vs 2009. I already explained that people focusing on Earnings are missing the picture on GE and that FCF is the better measure.
4.) Share Dilution - again, you're only looking at 2008 vs. 2009. Take a 10 year picture. Shares went up from 10.0 Billion to 10.6 Billion from 2000 to 2009 and all of the increase came from 2009 when they did equity raises at the heart of the financial crisis. In fact, shares in 2005 were at 10.6 Billion so technically they haven't done anything in the past 4 years.
5.) PPE - I mentioned this already...they have reduced assets by a whopping 2%, contrary to what the bears want you to believe (i.e., that they're rapidly shrinking leverage and changing their business model).
6.) Delinquency Rates - These have already peaked.
7.) Pensions - you're referencing pension expenses going up by
$65 Million in 2011. How is that material? I'd argue that their FCF of $7 Billion in q4 should be able to sufficiently cover that.
Re: GE
Morningstar and I backed it up by going to Sec.gov.
Re: GE 2009
ALOHA !!
I got all my info directly off the GE 2009 ANNUAL REPORT posted on their website. I posted the link.
1) Okay, call GE.
2) So we're not only voting lesser evils we're buying them?
3) I'm not focusing on earnings.
4) Did GE buy back those shares with debt or revenues?
5) I like more PPE added not less.
6) Peaked where? USA or NON USA? Who at GE says they peaked? Remember this is GE's financials and not the US FED.
7) Its material to the bottom line or is the bottom line now irrelevant?
So where's this link to ten year FCF and how they were calculated?
Yamada on bonds
Yamada speaking on the end of the US treasury bull run
http://www.bloomberg.com/avp/avp.htm?N=adviser&T=Y...
tying in with Bill's TOG
Re: GE
GE Capital generated $50 Billion in revenues in 2009 in what was an awful year for delinquencies and capital financing, resulting in only $2.3 Billion in profits. Way back in 2005, they had $50 Billion in revenues and generated $8.4 Billion in profits.
I would suggest that as the markets return to normal you will see profits in this segment return to normal. We've seen that the credit markets are back to 2007 levels. I believe that as the financing market normalizes you could see an additional $6 Billion in profits (or $.50-.60/share in additional EPS) from GE Capital alone. This says nothing about the Energy Infrastructure division, which has almost doubled in 4 years and which now generates almost as much in revenues as their Capital division.
EDIT:
Another note on the Capital division. In Q3 they only generated $262 Million in profits in this division on over $12 Billion in revenues. Do you think this profit margin will continue going forward or do you think it will trend back to its historical average of 17 to 19%? If its the latter then that translates into an additional $.18 EPS each quarter in earnings. So the $0.22 in earnings in Q3 could be $0.40 come next year, assuming revenues stay the same (they have actually started to increase as of Q4).
Re: GE 2009
Kaimu - FCF: http://quicktake.morningstar.com/StockNet/cashflow...
$65 Million expenses / $10 Billion profit = 0.0065.
Re: GE 2009
ALOHA !!
Thank you for the link and NO that is not how FREE CASH FLOW is calculated.
First off I do not see whether those numbers for "cash flow from operations" include amortization and depreciation and those numbers definitely do not show any "divdends" adjustment only CAPEX. Are dividends not a factor in cash flow? When GE pays out dividends doesn't that effect "net" cash flow, FCF? Dividends need to be subtracted along with CAPEX to determine "Free" Cash Flow. How can you have annual FCF and not factor in dividend costs that are paid quarterly?
Come on mate ... $65MIL is just GE's NET "subsidy" for Part B Medicare in 2011. Without that subsidy who pays? $65MIL is not the total of GE expenses.
So FCF according to your link has been miscalculated in my book. I know I am taking on the world renown MORNINGSTAR and I am just an orchid grower out here in Hawaii, but don't shoot me I'm just the messenger!
Re: GE
Thank you teamonfuego. I had already added to my GE holdings earlier this morning before reading your comment. One metric I check every week is the oil rig count. So far steady as she goes as just about every week the rigs under contract are rising. http://www.ods-petrodata.com/odsp/weekly_rig_count...
Until the punch bowl is taken away (cheap money) I'll cautiously stay invested in the market.
Re: GE
To all of you who have been involved in the GE thread started by teamonfuego, thank you. This discussion is precisely what we need here, and what I always envisioned for this site. You are thinking, and speaking up! Thank you, thank you.
Whether you are an orchid grower or a geologist or whatever; it's the common sense and due diligence that we need. You are all owners of capital, and we need you to speak up.
Re: GE
My observations over the past decade is GE Capital rising to become a major cog in the wheel, a division that became "too big to fail" within GE. The belief was that there was more money there than consumer goods, power plants and jet engines etc. GE Capital were the go-to people when you had to, not because you wanted to. They are very tough to do business with, and while not a lender-of-last-resort, certainly operating actively in higher risk lending such auto, boats, and recreational properties. The GE business model is in the process of change as competition from government-favored lenders is crowding a market at a time when repos and defaults are high. I am expecting new revenue sources to replace those now in decline but am not willing to use past history for benchmarks and would warn others against doing so. If these new revenue sources do not pan out then GE may go down as a company that lost it's way, another failing manufacturer of highly engineered products in a world of increasing competition.
Re: GE
My observations over the past decade is GE Capital rising to become a major cog in the wheel, a division that became "too big to fail" within GE. The belief was that there was more money there than consumer goods, power plants and jet engines etc. GE Capital were the go-to people when you had to, not because you wanted to. They are very tough to do business with, and while not a lender-of-last-resort, certainly operating actively in higher risk lending such auto, boats, and recreational properties. The GE business model is in the process of change as competition from government-favored lenders is crowding a market at a time when repos and defaults are high. I am expecting new revenue sources to replace those now in decline but am not willing to use past history for benchmarks and would warn others against doing so. If these new revenue sources do not pan out then GE may go down as a company that lost it's way, another failing manufacturer of highly engineered products in a world of increasing competition.
Re: GE 2009
Kaimu - My calculations of FCF are using the standard components:
Net Income + Dep/Amort + Chgs in WorkCap - CapEx. Are you implying that this is not the way to calc FCF?
Leveraged ETF scan
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Full disclosure: long GME 2/25
Bank of Ireland
The Irish people are getting very upset...
"But Fine Gael leader Enda Kenny warned of a revolution if there was more money put into Anglo Irish Bank, which he described as a "dead bank, which will not lend any more money".
"I put it to you, Taoiseach, there will be revolution on the streets if you do that. Whatever case can be made for AIB, there can be no case made for giving €6bn more of taxpayers' money to Anglo Irish Bank."
http://tinyurl.com/yflsmqc
And Yet More On GE
What I Learned From Hank Paulson's Book
Jeff Immelt, CEO of General Electric, frightened Paulson in early September by calling to say GE, which Paulson describes as "an American business icon," was having trouble borrowing money by selling IOUs known as commercial paper, and visited Paulson several days later in person. In mid-October, Paulson called Immelt to discuss imminent plans for a Federal Deposit Insurance Corp. guarantee of all new bank debt, but not GE's. Immelt told him not to worry, GE would manage and would benefit indirectly by a more stable banking system.
The next day, Immelt called back and said the bank guarantees were hurting GE's finance unit because banks could borrow with U.S. government guarantees and GE couldn't. And on Oct. 16, 2008, Immelt came in person to press the matter with Paulson. Over the following weeks, Paulson and Treasury official David Nason "worked hard to get Sheila [Bair] comfortable" with extending the guarantee to GE. In November, she did. GE's finance unit, along with Citi, became one of the biggest users of the program.
Re: GE
Terry - As an investor there really is no way to quantify opinions one has of a stock. I hear your concerns but I'd rather look at the raw data. I think there is significant upside in earnings and free cash flows. Here are two things I'm focusing on:
1.) FCF was $16 Billion in 2009 vs $32 Billion in 2008; however, FCF in q4 was $7.8 Billion or right back to where it was pre-crisis.
2.) Net Income was $11 Billion in 2009 vs. $17 Billion in 2008; however, this amount was significantly dragged down by their capital unit. Net margins were less than 2% in 2009 vs. historical averages of 17 to 19%. If you believe that delinquencies have peaked like I do then you would agree that the net margins will make their way back up to 17 to 19%. If this happens then they will generate upwards of $0.70 in additional earnings (in q3 they would have made an additional .18/share using historical net margins). That's a 70% improvement over their current earnings. The company is trading at 16 times earnings and they could earn $1.70 just with historical margins returning. $1.7 x 16 times earnings = $27/share.
If we have learned anything over the past year its that companies earnings can bounce back. I don't see any difference with GE...it's just taking a little longer.
Re: GE 2009
I would never buy stock in a company whose most important product is 'Progress.'
My trust in the FASB is on par with my trust in Moodys, S%P and Fitch. It's what you Don't know about GE's financial position that will hurt you. They have any SIV's or other 'off' balance sheet items? What is their assumed investment return for pension purposes?
We can massage numbers and assumptions but show me their Tax Returns. I would say that the deterioration of financial accounting standards these last 40 years has been something I could never have imagined.
GE??????????
Since 1992, GE has been a net borrower. How could America's best company be a net borrower for 18 years? Well, look at what the company is doing to make money, and it's easy to figure out. About 50% of the company's total debt is in the form of short-term paper— the 90-day commercial paper market it can access thanks to an AAA rating by Moody's. (But no longer; since the CP market is all but shut down… Moreover, GE has lost its AAA rating.)
The company uses this debt, which carries a low interest rate, to finance credit cards, which carry a high interest rate. If you walk into J.C. Penney or Macy's and take out a credit card, chances are pretty good that you're on the hook to GE. In total, GE Capital has spent $43 billion on buying such receivables in the last three years alone. And here's the scary part. Fifteen times since 1997, the company has sold a large batch of these securities (at a loss?) less than three weeks before the end of a quarter. (In Warren Buffett's last BRK Report, he confesses to having to take a bath to close a credit card company he established to serve GEICO customers, who were assumed to be above average credit-worthy. If WB can't make it with his "good" credit customers, what chance do you think someone with much less credit-worthy customers will have— as CC defaults skyrocket to over 10%, I believe…)
That's how the company is able to match its earnings forecasts so precisely. Meanwhile, GE's debts have mounted. Today, its balance sheet stands precariously at four times debt to equity. Why take such risks? Because these debt-laden acquisitions accounted for 40% of GE's revenue growth from 1985 to 2000, according to Merrill Lynch analyst Jeanne Terrile (who retired immediately after publishing her study of GE's use of debt).
Since her report in 2002, General Electric has produced $140 billion in free cash flow— real profits. It has borrowed an additional $178 billion (not including unfunded pension liabilities). Thus, it has continued to be a net debtor. GE now owes its bondholders $435 billion. It has another $248 billion in current obligations. That is not a misprint: GE owes its creditors $683 billion.
Why would GE borrow so much money? GE's asset base produces only average returns. Over the last 20 years, GE's annual return on assets has averaged 5.7% and only exceeded 6% three times. For most of the period, an investor would have done better in Treasury bonds than in GE's assets. So how did GE report such enormous returns on equity? For the last 20 years, GE's average annual return on equity was more than 20%. Did it fudge the numbers?
No, it simply used enormous amounts of leverage.
Today, GE owns net tangible assets of only about $17 billion. Thus on a tangible basis, GE is currently leveraged by far more than 30-to-1. That's worse than the leverage employed by Lehman, Bear Stearns, and Merrill Lynch. A mere 3% decline in the value of GE's asset base would wipe out all of its tangible equity.
In GE, we see all of the signs of an unavoidable bankruptcy. It's built a long history of net debt accumulation. It carries huge amounts of short-term debt. (Specifically, before the end of 2012, GE must repay or refinance $240 billion.) It has a tremendous pile of 'average' to below-average assets, many purchased at inflated prices. GE's long-term asset base grew $200 billion (or 30%) between 2003 and 2008.
GE is now engaged in a desperate effort to sell assets: 145 different divestitures, totaling at least $100 billion. Finally, there's the "kiss of death". We know GE's funding costs on its debts are about to soar. It has lost its triple-A rating and will most likely continue to be downgraded. In fact, in 2008, the U.S. government had to guarantee $500 billion of GE's debt via the TARP. Without the guarantee, GE would have already gone bankrupt.
With the guarantee, GE spent $4.3 billion on interest in the last quarter. So on an annualized basis, GE is now spending roughly $17 billion each year to service its $683 billion in debt. That's an annualized interest rate of 2.4%. This is not sustainable. Sooner or later, GE is going to have to pay a market interest rate. The government guarantee expires in 2012.
Currently, the yield on high-yield corporate debt is around 10%. Egan Jones, the only reliable ratings agency, now rates GE two slots above "junk". Even if we assume GE could still qualify as an investment-grade credit— which is a very generous assumption— it would still pay something like 8% on its debt in a free market. That would cost more than $41 billion a year. Last year, GE earned $45 billion before interest and taxes— in total.
It spent $33 billion of these profits on capital expenditures and necessary investments— expenses required to keep the business going. That left it with about $12 billion in what we call "owner earnings". That's not nearly enough money to pay the interest on its debts— whether the government backs them or not.
Imagine if the interest on your mortgage consumed 91% of your pre-tax earnings. Could you possibly avoid bankruptcy? No way, right? But there's a big difference between owing the bank a few hundred grand and owing folks more than $500 billion. In 2008, even though GE couldn't actually afford its debts and required a government bailout, it spent $12.4 billion on dividends for common-stock holders.
That's 20% more than it spent on dividends in 2006! (GE finally cut its dividend by 70% in February 2009. It will be eliminated soon, I promise. Its creditors will finally wake up and demand it.) Today, the stock market values GE at $171 billion. In fact, the common stock— every single share— is not worth one penny. (Its assets are undoubtedly worth far less than the ~$683 billion it owes.) I think it's time to sell it short and profit on its inevitable decline.
Re: GE??????????
Thanks normzyx. Very succinct indeed. I would caution against shorting this puppy. GE is probably 'too big to fail.' I'm not sure that the Feds want the pension obligations. Your points are well taken. I characterize GE as a financial engineering company that builds CHoo CHoo trains.
While we are piling on, I also question their depreciation schedules and inventory accounting for their 'real' businesses. Games can be played. What portion of ventories are LIFO, FIFO or average cost. Given the advance in their raw materials costs, they may be reporting substantial inventory profits. Could be under reporting except for their penchant for 'beat the number'games.
How do they bid their long term projects? Turn key, cost plus or a combination? But hey, your debt analysis trumps my silly accounting questions.
I do believe Immelt is doing a decent job given the hand he was dealt. Just as GM was a health care provider that built cars, GE is an undercapitalized bank that builds really cool heavy stuff.
Interesting information on Jobs
Hi all,
I have been reading this blog for a couple of years and this is my first post.
I just want to share this new tool I saw on Google today.
http://www.google.com/finance/domestic_trends
Of most interest is the Job and Employment graphs. I can't say this is a leading indicator but it certainly casts doubt that we are in the clear for recovery.
I did a post mortem on 2009 - The buy & hold strategy caused much pain. Learning and making minor gains on the ST trade strategy thanks to you all.
Thanks for the posts everyone and especially Bill for sharing your time.
Seek
A Look Behind; A Look Ahead
Unemployment continues to look better than reality because of accounting gimmicks used at BLS. In the latest Shadow Government Statistics report (see http://www.shadowstats.com), economist John Williams says, "…as economic activity shows renewed or intensified downside movement in the months ahead, the unemployment rate should rise and payroll declines should intensify (net of short-lived census hiring), regardless of the reporting distortions".
In other new real numbers from SGS, total obligations for the U.S. government went way up in a just released report. Shadowstats.com reports, "…total federal obligations as of September 30, 2009, stood at $70.7 trillion, up from $65.6 trillion the year before"… What does that mean? Well, in 2002 the total U.S. obligations stood at just $35 trillion and change. So, the indebtedness of America has doubled in just 7 short years. With a Gross Domestic Product of $14.3 trillion, total U.S. obligations are nearly 5 times GDP! Rising obligations are not a sign of good economic health.
Finally, have we already started the next wave down on a double-dip recession? Williams thinks we still have "continued financial system instability". Williams says things are getting worse and the Fed knows it. He says, "…Mr. Bernanke continues to behave as though he has a serious problem. Consider the latest surge in the monetary base". It surged by $90 billion in just the last 2 weeks of February. It was another new record. Record amounts of money printing is bound to produce very big inflation whenever the banks get around to lending again. And meanwhile, credit/money is still disappearing faster than BB can pump it in!
Even though a record amount of money is being created and pumped into the banks, the overall money supply (M2 and MZM) is still shrinking! That means money is being held back from the "main street" economy by the banks. I think the Fed is pumping in money because it knows big losses are coming! The banks will simply need extra cash on hand to pay off sour investments. That's one big reason they are not lending. So, shrinking overall money supply is the tip-off we are getting on a down elevator and, according to Williams, that is "signaling an intensifying economic downturn in the months ahead".
Re: Am I The ONLY One Left HERE with this OPINION?...(Re-posted)
Thank you Bill and thanks to all of those who commented on my few words of frustration and disgust with the market. I am sure most of us hate to trade in a market based on deception and pure manipulation but looks like to trade these days we have to forget about fundamentals, facts, market real conditions, truth, where you THINK market should go or do, ...etc ..etc, just day trade only if you can using very close stops and cut your losses quick to exit or stay cash and wait for the right moment and prices to come to you as many of you mentioned here. Would also like to hear your opinions about Gold stocks, historically they have not been immune from losing value or falling when equities falls in market corrections or crashes, do you think this time it is going to be different and they would stay up mirroring the price of GOLD or would you rather buy the physical Gold as safe heaven since fake USD$ rise won’t last?
Personally, I WILL NEVER TRADE based on my strong conviction or belief or where I THINK the market should go or do again, mark my words, in a market like this full of Gov't and bankesters control and manipulations, this is a FAILED miserable STRATEGY.
And yeah one more think, almost ALL SHORT/Ultra SHORT ETFs hit their 52-WEEK LOW Today, I guess that means FEDS and their boyfriends Goldman Sucks have decided to take this market to the moon and you better believe it. Don't fight it or listen to your inner conviction, just follow them like herds because this is how to make any profit these days, funny isn't it but TRUE..
and last, just go ahead and read this article just for fun..
http://finance.yahoo.com/news/179-Percent-Real-Une...
Have a good weekend all..
Consumer Protection Agency and Vollker Rule
Elizabeth Warren has said this before in several different interviews but the crux of where to put the Consumer Protection Agency and reform is:
"At the 'tip of the spear' in the sense of where our financial crisis started, one lousy mortgage at a time...then those risks were aggregated, sliced and diced, ....ultimately made billions for the wall street banks..."
http://www.charlierose.com/
Re: GE 2009
ALOHA !!
teamonfuego-I am commenting on the link you used at MORNINGSTAR that shows the 10 year FCF that match your data. Somehow your data matches MORNGINGSTAR data.
I am saying that the very bottom of your link where MORNINGSTAR shows "net operating cash flow" minus CAPEX is wrong.
I calculate FCF by the following formula:
net income + amortisation + depreciation - capex - dividends.
How can anyone who claims an accounting commonsense leave out "dividends" from any formula than calculates cash flow? So when you say GE can raise dividends to $1 it would massively cut into their FCF by my calcs, if "dividends" are accounted for in FCF.
What is MORNINGSTAR'S rationale for leaving out dividends? I do not know and I cannot explain that. I just do not see where annual dividend expenditures cannot help but impact cash flow.
Its just a commonsense thing ... but then again the way accounting in America has morphed into vapor I guess anything goes.
Re: GE??????????
ALOHA !!
normzyx-The GE 2009 Annual Report did get into the derivatives side and I did see numerous mentions of their MBS holdings and ratings and notes on "fair value", but I did not pursue it further due to time constraints. Does anyone know what GE's CDS is at?
Let me just say this about "toxic assets" and those US Fortune 500 companies who jumped onto the MBS with the AAA credit bubble. I did a post here awhile back about MAIDEN LANE I, II and III and what I see there cannot be dismissed in terms of "trickle down". The "assets" carried on those three funds backed by the US FED have seen a large part of their "collateral" downgraded to BB+ and lower from AAA, yet the "fair value" has come down, but not to the degree that junk status would reflect. I can only assume that what GE Capital holds is not much different than the US FED and the MAIDEN LANE bailout of Bear Stearns and AIG's toxic assets. The assets are "junk" ... by logical deduction then the "fair value" should be junk, but the "new" accounting rules are convenient. So in essence the accounting profession is not too far off from the SEC in terms of its credibility. Go look at ENRON to see the lows a major US accounting firm(Arthur Anderson) can stoop to when survival is on the line.
GE CAPITAL GROUND REPORT
This brings me to a conversation I had with my father-in-law last week who wrote loans with GE Capital up until 2008 when he had to close his loan business in San Diego, CA because GE Capital would essentially not loan any more. My father-in-law was writing pool and landscape loans for San Diego county and some of the surrounding counties even going to LA county and by his account he had a thriving business.
What he told me was that in the heyday of GE Capital and the San Diego real estate market GE Capital made these pool and landscape loans based on "stated income". If you "stated" your annual income was $400K, even if it was only $100K, then GE Capital said yes. Minimum "heartbeat" loan was $75K with okay credit they bumped it up to $100K. He said they would finance a pool/landscape loan up to 90% of the appraised residential property value, so that means if your home appraised at $800K you could get a pool/landscape loan up to $720K. He also said under certain circumstances he saw loans go through for 125% of appraised value because of credit scores. Further he mentioned that if one lender raised its minimum or maximum then the other lenders would match the increase soon after to stay competitive. To me from my father-in-laws experience essentially GE Capital just threw any sort "risk management" right out the window along with all the other lenders. Now that has to be a TOP DOWN management decision, no two ways about it. In my father-in-laws words, "They just thought real estate prices would go up forever so they loaned like there was tomorrow!" Where have I heard that before? So I hear an awful lot about how "homes" are underwater but I never hear any mention of the pool and landscape loans attached to the home mortgage that were written at 90% to 125% of value. No wonder all those Housewives Of Orange County have those lavish "resort style" backyards with the 100ft long grill and the waterfall in the pool with the cabana boy motif! So if BAC and GE Capital are looking at home loans that are all underwater then chances are the pool and landscape loans are all underwater as well. Just how many types of loans are homeowners in California walking away from? Where is that data?
Let me also comment on long life durable goods, big ticket products that GE manufactures like everything from commercial electric switchgear and lighting to jet engines. You have to understand that these are not exactly "off the shelf" type items sitting around like t-shirts on a rack at Bloomingdale's. These are all what my former industry, electrical contracting, used to term "long lead items". When an owner hires an architect and engineer to design build a school, prison, bridge or office complex it takes years of planning then bidding and then construction before a public works project is complete and they never complete on schedule, at least none I was on. None of that happens in the same year local bond issues are passed to finance these projects. As bad as all the US State budgets are, and it seems sovereigns are not in such great shape either, then these "long lead items" will diminish and I think that is just starting to be reflected in GE's 2009 annual report. So even if tomorrow suddenly the credit bubble was back in full swing and California and the sovereigns were flush with capital again it would take years to get projects out of design and into the final construction stage where most of GE's products are utilized. Just something to consider when analyzing company fundamentals like those of GE and Siemens, etc who's revenues depend on such products.
Re: GE 2009
"How can anyone who claims an accounting commonsense leave out "dividends" from any formula than calculates cash flow? So when you say GE can raise dividends to $1 it would massively cut into their FCF by my calcs, if "dividends" are accounted for in FCF."
Thanks for the implication that I have no commonsense. I appreciate that. This is coming from the guy that rants on and on about the same thing every day. In an attempt at being civil, I will just say this:
As an investor I want to look at what cash is coming to the company that will either (1) stay with the company to be reinvested or (2) be paid out to me as an investor. So that is why I don't include dividends in my calculation. Free Cash Flow is all of the cash that is available for distribution among all the securities holders of an organization. So including dividends in this calculation is essentially double counting it. Its like saying "What do I have available to pay out to shareholders after I have paid out to shareholders?".
Let me ask you - as an investor what makes up your total return on an investment? Is it just the return on the shares of the stock you hold or is it also the dividends that you receive?
Re: GE 2009
Stick to your points gents. We don't want ad hominem attacks to throw the discourse off.
Ringing the bell again
Lead story on the morning news shows is improving employment report, new high for Apple, etc.
\
What everyone knows isn't worth knowing.
Update: Apple is in RSI distribution mode.
Analysts on GE
I know a lot of analysts thoughts aren't worth much, but it's good to see at least one person agrees with my theory that the GE Capital unit will provide a huge boost to earnings in due time:
http://blogs.wsj.com/marketbeat/2010/01/07/jpm-rai...
A Technical look at GE
FD: no position, long or short.
Trendline analysis (free charting on Prophet.net) shows GE in an ascending right triangle with horizontal resistance at 17.24. GE has been unable to break above that area since Sept. There is an ascending support line from March 2009 with 15.60 as a rough support target. The stock is moving into an ever narrowing apex. Volume has been declining since the Sept/Oct high.
Bulls have been unable to push it above that resistance line but if the resistance line is broken and sustained, the potential target would measure 17.24+5.25 or 22.50. Alternately if the support line is broken, the downside target would measure 10.35.
For reference, horizontal trendlines are stronger than ascending/descending trendlines. Longer the trendline, stronger it is.
Max pain opts expiration are 16 for March and April.
RSI 7 period is 65,59,51.
We'll know what happens in the fullness of time.
Re: GE 2009
There are numerous variations of FCF depending on GAAP interpretations for the user. Are we talking Net FCF or Unlevered FCF or Levered FCF, and so forth.
At the end of the day, however, the FCF should measure the ability to grow and pay dividends to shareholders.
Net Free Cash Flow always deducts dividends while Gross FCF does not. Morningstar and the investment bankers always use Gross FCF to sweeten the picture. Also, Capex should not be amortized but report actual prior period expense or you're confusing net income with FCF. Actual prior period Capex is at the CEO's descretion and not smoothed over based on gov't depreciation schedules.
Thus a key point to consider regarding GE's healthy looking Gross FCF is that when sales decline, Capex gets cut and receivables decline and this in turn can increase FCF until the revenue loss catches up.
You're both right in that dividends can be or not be a part of CFC but Kaimu's analysis and use of Net CFC lead to the proper conclusion regarding GE's condition as an investment, IMO.
Cheers.
Re: GE 2009
"You're both right in that dividends can be or not be a part of CFC but Kaimu's analysis and use of Net CFC lead to the proper conclusion regarding GE's condition as an investment, IMO."
I'm not sure I agree with that. I believe Gross is the better measure to use because we are looking at it from a shareholder's perspective, which measures the total return including dividends paid out to you. So if they didn't pay any dividends then you would expect the return of the stock to be greater to reflect this fact. It honestly really doesn't matter in my mind but I would prefer to look at it from the viewpoint of "what will the company generate before it pays its shareholders?" so that I know what amount of cash is available to me as a shareholder.
Re: GE 2009
Hi Bill:
I noticed the interesting discussion on your blog about where dividends should appear when calculating cash flows. It looks like the parties should define which of the cash flow models they are referring to, or prefer to use - there are so many (CF Operations, CF Financing, CF Investing, Free CF Firm, Free CF Equity) and dividends appear in some of these and not in others, some investors may use one accounting standard on this (dividends paid are part of CF Financing under US GAAP but can be CF Operations under international standards). According to the text used by the Chartered Financial Analyst designation, there may be company-specific reasons why investors would prefer to use FCF Firm or FCF Equity for valuing share prices. Much of the new edition of the book "Equity Asset Valuation" deals with calculating and using cash flows. Here's a preview on Google Books:
http://books.google.com/books?id=TZQW1Batc5QC&pg=P...
More simply, the final CF calculation at the bottom of this wikipedia page might be helpful (although it's not showing a FCFF or FCFE):
http://en.wikipedia.org/wiki/Cash_flow_statement
Maybe you can say both of your discussants are right and that they should agree to define their terms and why, in GE's case, one definition and use is preferred.
/anon
Anyone in Massachusetts?
Mitt Romney was on TV touting the Massachusetts Health Care plan recently. Today I googled and found a very negative article in the Boston Herald.
I would value a personal opinion from someone familiar with it first hand.
Romneycare model a dud
By Michael Graham | Thursday, March 4, 2010
http://tiny.cc/1T8i5
Re Tata Motors
Hello Bill,
Eagerly awaiting your commentary on PDAC and your views on miners.
Here is some information on Tata Motors http://www.thehindubusinessline.com/iw/2010/03/07/...
Thanks,
/anon (India)
Re: GE 2009
I like to use P/FCF as a valuation metric for a stock and I use the value posted by FINVIZ. Now you got me wondering whether those are any good and consistent between companies. Another problem is it is omitted for many stocks.
BTW, FINVIZ shows GE as 25.02 a neutral/black reading. Contrast that with 12.34 for CAT, a good/green number. Both companies have high debt ratios and poor ROA.
TAXES
Ugh. That time of year again. Want to poll the community for thoughts on schedule D preparation. In the past, I have used Turbotax online and muddled through it by importing Schwab transactions and editing them as best I could and manually entering IB account info. Thinking of trying tradelog or gainskeeper with Tax Act or something different to ease the pain this year - wash sale, options etc.
It shouldn't be so $!@^#$% complicated. Any advice/opinions/thoughts would be appreciated.
KC
Re: TAXES
KC - I use TD Ameritrade and they have Gainskeeper included. It's pretty solid.
Re: GE 2009
Illini - if you extrapolate out q3 and q4 what do you arrive at for P/FCF using FINVIZ? Also, what value are they using for FCF?
Black and gold: oil and the US dollar (Matthew Wild, March 201
This essay was posted on another blog and addresses an interesting issue about the US economy. What do you think?
http://www.oftwominds.com/journal10/black-gold03-1...
Re: GE 2009
teamonfuego -
Using gross CFC is the most common reporting coming from the "sell side" and is just another way of viewing it. The less common Net CFC just shows you an added dimension of what's left for management to use to strategically grow the company.
In commercial real estate, for example, investors act in herds. Agressive investors in small student apartments, for instance, love the gross income multiplier to determine value. This herd uses gross rent multipliers over net operating multipliers (or inverse NOI/cap rate before debt service) because they know the b.s. is usually understated or even omitted in the operating expenses offered by the agents (typically management and replacement reserves get lost and/or high energy costs are understated on the listing) and gross relies on far fewer variables (rent only, which is easy to estimate in the marketplace), and others go a little further and take out vacancy and collection loss for effective gross rent multipliers. Another reason for this is that these owners have lied on their income tax returns by overstating expenses for decades and do not want to provide this information to depress the value and worse go to jail! Main factors for use of multipliers are prevalence of the indicator in the market, time constraints and level of due diligence which typically goes up with value. Each property type has different characteristics with the use of these indicators. Cheap apartments sell mostly based on Gross Rent Multipliers (GRM) while a $15+ million shopping center will sell based on a detailed projected proforma developed from due diligence of historic records and leases gone over with a fine tooth comb as well as current market conditions and often expanded into a discount cash flow analysis.
GE, at the end of the day, is a big animal to tackle. Drawing conclusions of this troubled behemouth from a simple Gross CFC could lead to the wrong interpretation of its turnaround prospects, IMO.
I do believe kaimu's quick top down review of the money flows at GE were bloody good for a lowly orchide farmer! C'mon, admit he knows a thing or two ;)
Cheers.
Re: GE 2009
I still think excluding Div in a calc of FCF is the correct way to do it. Why would I exclude what was paid to me as a dividend in determining what my total return could be from a company? Dividends are part of my total return and in my opinion should not be backed out of FCF. I guess we're just not going to agree on this.
Look, I'm not saying that Kaimu isn't smart. However, I know plenty of smart people that don't see the potential in a company that I do (and vice versa). I just think he and others are missing the boat on GE. In large part he's pointing out miniscule random facts that he pulled out of a 10-k to back up his theory that the world is going to hell in a handbasket. Also, he primarily focused on comparisons between 2008 and 2009...well, duh of course things aren't going to look good. In what universe have things looked good when comparing a trough to a peak?
Too many people are overly bearish about everything in our economy. I get sick of hearing the non-stop bearishness. People are focusing too much on extrapolating things out for ever in one direction without considering the possibility that things can get better...that human beings inherently adapt, react and adjust to things and that things can reverse course.
I think the potential in the GE Capital unit is significantly underestimated. We're talking about a unit that has about $480 Billion in assets and still generated profits at its most depressed state. About 98% of their current earnings are derived from only 65% of the company because the other 35% is a cyclical business and is at its trough. Well, what happens if that other 35% of their business rebounds again in large part because the global economy is no longer contracting? What happens if those loans they made don't default because the global economy is recovering and if they ended up over-provisioning for losses? I've seen way too many reports that are extrapolating out what will happen in CRE because it happened in Res RE and in the general economy in 2008. It's not a binary event in my opinion. I think people in general are just too bearish about everything, including GE's Capital unit.
Anyway, sorry for the rant. I will be posting this week about some interesting companies I have been digging up that have a boatload of cash and could be nice turnaround stories, as well as some China companies that look pretty interesting (assuming you believe that China is actually a growing economy).
Re: GE??????????
Kaimu, Regarding your father in law's pool and landscape loans:
Were these just to fund such lavish projects? I.e., a second or third lien? All the second lien holders of HELOCS and 'home improvement' loans whether for pools (or cruises for that matter) are SOL. Unfortunately these 2nd/3rd lenders are holding out -- which is why short sales are taking an age. The 1st lender has to negotiate a 'go away fee' with the second lender--if anything is even due on their side of the balance sheet. Lots of banks (Chase, Countrywide, Irwin) had specialty Home Equity Departments. Often these easy Lines/Loans were the loss leaders of local banks; now the high defaults rates are contributing to their demise.
Re: Black and gold: oil and the US dollar (Matthew Wild, ...
I don't follow the original premise that there's a benefit to having one's currency used as the basis for oil transactions. Any of the participants can easily offset the dollar in the currency markets, which as I understand it, are far bigger than the oil market. The Chavez of the world may huff and puff, but in the end they'll sell oil at the current market price in whatever currency they agree with the buyer, and then turn around and convert that into the currency they agree to use with the seller of whatever they're buying, whether that be Russian weapons or US wheat. The net result of all these transactions will be the relative currency values at that point in time.
Re: GE 2009
ALOHA !!
teamonfuego ... I was referring to MORNINGSTAR'S link in terms of common sense. I didn't mean to hurt you. I always approach things from a BUSINESS aspect as I have been an entrepreneur since I was 18. When I write a check and mail it out to a shareholder I am not sure how that becomes an asset.
In my mind ANY costs that cut into my net income must be counted against cash flow period! If I "pay out" dividends then how can I truly look at my cash flow as "free"?
It irritates the hell out of me to see expenditures counted as cash flow or income. The US Treasury counts DEBT ISSUES as income. I have always butted heads with the "establishment" ever since I worked for the IRS in their PROBLEM RESOLUTION DEPT in the 1980s as I sided with the taxpayer too often. I guess I am doomed to live in an Alice In Wonderland world where outlays are receipts and visa-versa! When I get to heaven I do hope I can sit at Mr. Orwell's table and chit-chat about his genius.
In a World where you can choose your accounting principles and morals like you can choose you underwear we are doomed to the low end of mediocrity.
GS sustain report appears to be super bullish for India
I'm in middle of reading this monster report but so far I'm very impressed by the bullish cause for India. The most convincing is demographics. While China's population will start aging very soon, India has very favorable demographic profile and will increase numbers of productive work force for a few decades to come. While the middle class growth in china is slowing now, it is just starting in India. India's GPD share of global GDP is expected to double by 2020 according to the GS report (just like china's) but I would not be surprised if it won't exceed China due to demographics.
Interestingly, all that aligns well with Marc Faber report (January 2010) that outlined numerous positive macroeconomic issues in India.
Anyone from India here to confirm the reports?
BTW, sounds like the GS economists have no problems with the global warming theory (exhibits 50-53). FD: I agree.
Icelanders Reject Icesave Bill in Referendum
www.bloomberg.com/apps/news?pid=20601087&sid=awUQt...
The power of the people in action through direct vote. Too bad they did not use their power sooner to oust the politicos who brought them to ruin.
EDIT: Another aspect of the people's protest per the article:
"Protesters have gathered every week, with regular numbers swelling to about 2,000, according to police estimates. The last time the island saw demonstrations on a similar scale was before the government of former Prime Minister Geir Haarde was toppled.
Icelanders have thrown red paint over house facades and cars of key employees at the failed banks, Kaupthing Bank hf, Landsbanki and Glitnir Bank hf, to vent their anger. The government has appointed a special commission to investigate financial malpractice and has identified more than 20 cases that will result in prosecution."
Re: GS sustain report appears to be super bullish for India
I have not read the entire report either but I do note that there are hardly any Indian companies on the two focus lists. (pages 154 & 470). I notice a couple but they are listed in India, thus out of reach for amateurs like me. The play on (GS Sustainable) multinational companies situated well in India remains a mystery to me, perhaps until I read further.
Re: GS sustain report appears to be super bullish for India
You are right, they mentioned only a couple of Indian companies. I was thinking along more general lines rather than stock picking.
Edit: I stopped reading exhausted before 200 pages. How many people and for how long worked on this project? I must have been a while as some data seems to be dated before 2009 (like national debt).
Re: GE 2009
Kaimu, you live in the real world of facts. Where's the fun in that!
The FASB 'standards' have deteriorated to your point; choose your own accounting principles!
I have always had a bone to pick with companies adding admittedly non cash charges for depreciation to cash flow. So they really do not reserve (hold in cash) monies needed to replace plant and equipment? These are somehow 'free' monies to be allocated by management for whatever purpose? I suppose they are free to use the depreciation set asides to buy back stock?
Last rant of the weekend. MOST BOARDS SHOULD BE IN PRISON! Either that or on the funny farm because they are INSANE! How many hundreds of BILLIONS of shareholder wealth was destroyed with buybacks. Of course the Boards are so enamoured with the Bankster tricksters that they roll over for the sake of a presumed higher stock price. They are shameful examples of buy high, sell low.
Someone needs to do a study on how much cash was squandered on buybacks over the last 10 years. My 'guess' (because I'm lazy) is easily half a trillion.
Re: TAXES
Thanks for the input TOF. I wound up going with taxact and tradelog and it was a pretty good system for managing 2 accounts (IB and Schwab). It amazes me that it has to be so complicated. Brokers have everything they need to take care of it all for us- but it is not in their financial interest to put any effort into it.
You get the post of the year award for your thoughts on GE- I've never seen such a robust and sustained response on the blog. But I wouldn't bet against you- as I recall you went "all in" when I was at my puke point last year- good timing. FWIW I used to work for GE and had the fortune of leaving and cashing out my GE stock at $60+ about 15 years ago....
Re: Black and gold: oil and the US dollar (Matthew Wild, ...
gademsky,
Much of what is presented is believable and much more is plausible, but in my opinion, the conclusions are too simplistic. Nations are not monolithic (except possibly dictatorships) in their motives nor reactions. Good and evil are a mixture as well.
Whether W invaded Iraq due to his own oil point of view or due to his "programmable nature" (I see him as a sort of Chatty Cathy doll.) I have always accepted oil was the prime motive. We haven't heard much about it lately, but the US Iraq Embassy is obviously a fortress designed to insure our presence in the Mid East.
"Opec nations account for two-thirds of the world’s oil reserves and one-third of production. If they turn against the dollar en masse in 2012, or if enough oil producing nations individually switch to other currencies, the US economy is over. The last Great Depression was bad enough, but back then the U.S. had vast reserves of oil. The only way out of the next one will be for the nation to export more than it imports."
Oil has been, is and will continue to be our nations life blood — yes, we are addicted to oil — but...
This is not so:
"The only way out of the next one will be for the nation to export more than it imports."
Let's assume the reason for the Iraq invasion was to secure oil. Would "...A dozen national leaders will sit in a room in Libya sometime in 2012 and essentially decide whether the U.S. continues as a country." Would they not know the US would shift the war in their direction?
This group of leaders is no more united than the western nations, but the need for oil may very well unite the west since all are addicted as we are.
No matter how many choose to ride bikes, no matter how many windmills we install, our whole being revolves around oil.
If a drug addict will kill for a fix, how far will any nation go to continue its existence?
History is clear. Prior to WW1 it was thought by many that the civilized world ws too economically interdependent to go to war. (Read "The Proud Tower", by Barbara Tuchman.) With its economy in ruins Germany succumbed to the rantings of Hitler. Japan went to war for economic survival and a very divided US united almost over night on Dec.7,1941 when its existence appeared to be at stake. (There were many additional motives among the populace as well.)
Let's hope for a better solution. Public talk is usually hyperbolic, but most decisions are made in secret.
Re: GE 2009
Ross,
"MOST BOARDS SHOULD BE IN PRISON! Either that or on the funny farm because they are INSANE!"
I'll go with the first part for at least many of them. My only real experience is with a few local medium sized company boards who operated in the Goldman Sachs fashion.
Over a period of a couple decades I saw what I refer to as "corporate incest" with the top management of companies whose annual reports I worked on. The same people from a group of five companies served on each others boards and compensation committees. They grew exceedingly wealthy as they destroyed over 10,000 jobs, our city's economy and the community support the companies had given for a century.
Crazy like a fox comes to mind.
The Easter Bunny Market
http://ronsen.blogspot.com/2010/03/easter-bunny-ma...
Volatility extended down amidst a tepid recovery.
Re: Anyone in Massachusetts?
Grym-
I live in MA and have posted on the mandated health care system in this state (see posting dated 7/29/2009). Graham is a local talk radio host but is pretty much spot on in this write-up. From my own posting "There was a survey in the state and the overall response to the insurance requirements were negative. The lower income groups were the most dissatisfied overall. The higher end of the income ladder had the highest rate. No why? Because it didn't effect most of them. Most had good jobs with company health care. The group the plan was intended to "help" had the lowest rating. This is the model of what is coming our way."
There is a lot we can do to improve the healthcare problem but what is coming out of Washington, I believe, will make it worse. There was also a recent Boston Globe article on the cost of health insurance as a percentage of city and town budget. The average appears to be about 15.8%. That is what percentage of your local tax bill is going towards in terms of just insurance cost for local town employees. This is not schools or town services but insurance!!! By the way the Globe is a very Democratic newspaper. So if Washington uses MA as their model, which they seem to be doing, watch out USA.
Re: GS sustain report appears to be super bullish for India
I agree about their ideas on India. I have only read 100 pages so far but that was my takeaway. I'm not sure I agree because I think China's government has full control of the economy and has been more successful at implementing changes quickly and effectively. That doesn't mean opportunity doesn't exist in India because the sheer power of their numbers (people) is amazing.
Does anyone have a list of Indian ADRs? I've been busy going through my list of small cap China Stocks on the OTC BB and Nasdaq small cap, but I'd love to start looking through Indian companies.
HYWELL
ALOHA !!
Bill ... Yes, it is a dreadful shame to lose Hywell. I enjoyed my talks with him very much. He spoke fondly of Cuba and his visits there. A guy you could talk easily with over a Kalik or two!
Wow ... I was surprised to read there were 26 witnesses the prosecution has lined up! That's a heck of a lot of witnesses!
What did the accused have to say? "I ain' know nothing 'bout this."
Unfortunately "life is cheap" from the Board room of GS and the Halls of Congress down to the Moncur Alley destitute. What's a little "bling" worth, eh? Or in some parts of the world the "promise of 72 virgins"? What happens if there are only 2 virgins? Contact the SEC ...
Once again sorry for the loss of Hywell ...
Re: GS sustain report appears to be super bullish for India
There's IFN, the Indian Fund, a closed end fund currently selling at a 3.5% discount to NAV. From CEFConnect.com:
Top Holdings
As of 01/31/2010 reported by fund sponsor
Holding Value %Portfolio
Reliance Industries Ltd. $145.87M 9.49%
Infosys Technologies, Ltd. $129.66M 8.43%
Housing Development Finance Corporation $46.91M 3.05%
Tata Consultancy Services Ltd. $38.18M 2.48%
HDFC Bank, Ltd. $37.72M 2.45%
Oil & Natural Gas Corporation Ltd. $36.57M 2.38%
Bharat Heavy Electricals Ltd. $35.09M 2.28%
Jindal Steel & Power Ltd. $31.49M 2.05%
State Bank of India $30.37M 1.98%
Lupin Ltd. $30.11M 1.96%
Wipro, Ltd. $30.12M 1.96%
Re: GS sustain report appears to be super bullish for India
Illini -
India has one truly spectacular multi-national conglomerate and it is Tata Group. Nothing even comes close by comparison. Tata's size and diversity is historically tied to the strong socialist leanings of India's republic since breaking from the brits.
From Wikipedia: "It has interests in steel, automobiles, information technology, communication, power, tea and hospitality. The Tata Group has operations in more than 85 countries across six continents and its companies export products and services to 80 nations. The Tata Group comprises 114 companies and subsidiaries in seven business sectors [5], 27 of which are publicly listed. 65.8% of the ownership of Tata Group is held in charitable trusts.[6] Companies which form a major part of the group include Tata Steel, Corus Steel, Tata Motors, Tata Consultancy Services, Tata Technologies, Tata Tea, Titan Industries, Tata Power, Tata Communications, Tata Teleservices and the Taj Hotels."
http://en.wikipedia.org/wiki/Tata_Group
You can buy Tata Motors ADR: TTM and Tata Communications ADR: TCL on the NYSE.
Cheers.
Re: GS sustain report appears to be super bullish for India
teamonfuego -
"Does anyone have a list of Indian ADRs?"
ADR Name Ticker Industry
Dr. Reddys Labs RDY Pharma. & Biotech.
HDFC Bank HDB Banks
ICICI Bank IBN Banks
Infosys Technologies INFY Software&ComputerSvc
Mahanagar Telephone Nigam MTE Fixed Line Telecom.
Patni Computer Systems PTI Software&ComputerSvc
Rediff.com India REDF Software&ComputerSvc
Satyam Computer Services SAY Software&ComputerSvc
SIFY SIFY Software&ComputerSvc
Sterlite Industries SLT Indust.Metals&Mining
Tata Communications TCL Fixed Line Telecom.
Tata Motors TTM Industrial Engineer.
Wipro WIT Software&ComputerSvc
WNS Holdings WNS Support Services
There may be a few more out there but then that's it.
Cheers.
Re: GS sustain report appears to be super bullish for India
"Does anyone have a list of Indian ADRs?"
Here's a few on my list TOF;
On the NYSE: MTE, SLT, IBN, WIT, TCL, TTM, PTI, and RDY.
On Nasdaq: INFY
BTW, I think all of these pay a dividend, although it may be small.
I think RDY is a big supplier for the global generic pharmecuetical distributor TEVA.
(FD: No positions)
WIR #10
Just want to thank Bill for the clarity he has provided in his review of Gold & PM and Silver through his WIR #10. I've read a ton re: PM over the past few years and none of it brings the subject into a more tradable focus as those few concise paragraphs offered here by Bill to help me as a trader.
Thank you Bill and enjoy the conference! You're on your way to becoming the Mahatma Ghandi of financial reform. But don't go on a fast until they abolish the Fed just yet.
Re: GE??????????
If Boeing ever gets the 787 rolling out the door, the GEnx engine will start selling. Considering
GE's debt though, it's small potatos. Their sales will be some percent (market share) of $40Billion over 25yrs vs $683Billion current debt.
GEnx: New engine for 787 and 747
The engine carries composite technology into the fan case. General Electric has a 64% risk-sharing stake in the GEnx program. Other stakeholders include Ishikawajima-Harima Heavy Industries (IHI), 15%, and Avio, 12%. Volvo Aero, Techspace Aero, Mitsubishi Heavy Industries and Samsung Techwin hold the remaining 9%.
For the second time in commercial aviation, after the Airbus A380,[citation needed] both engine types will have a standard interface with the aircraft, allowing any 787 to be fitted with either GE or RR engines at any time. The engine market for the 787 is estimated at US$40 billion over the next 25 years... wikopedia
Is GE too big to fail? Another AIG or GM in the making? At the peak of the lending frenzy, I heard that plastic surgery loans were being made and securitized.... wonder if GE has any of those listed as assets along with the pool and landscape loans? LOL
GE seems like GM was in some respects. Humongous pension liabilities, a reckless and over leveraged financial services division, an an overgrown overpaid bureaucracy. Perhaps someday it will be broken up and sold in piece
Jeff Immelt did forgo his cash bonus for the second year but took home .....$5.6 mil in cash and shares.
Again a pittance compared to the company's debt.
Re: Anyone in Massachusetts?
bigmother,
Thanks. I kind of thought Romney was overstating it.
IMO the best fix would be to require insurance companies to insure everyone as a single pool which would genuinely spread the risk.
Re: GE??????????
GM??? That company had at one point I believe negative $30 Billion in equity.
ADR Dividends
For those interested in dividends, here’s a link to current U.S. listed international stocks (ADRs) with dividend yield.
261 listings from From CPLP at 18.8% to CEF at 0.1%
http://tinyurl.com/y9ncrxr
PDAC report #1
I spent much of the day researching two companies. I will not tell you what I discovered until after the conference when I gather all my notes, but these two companies are worth the time for you to research as well. They trade on the Toronto Exchange and I think are also pink-sheeted for US trading and are traded in Europe. One is Centerra Gold (TSX:CG $1.8 billion market cap) and the other is Alamos Gold (TSX:AGI $1.6 billion market cap). Interesting is that both have been doing exploration work in Turkey and are comfortable there.
As you know, I recently added New Gold (NGD) and US Gold (UXG) to the Cara 100, so I spent time with them as well. US Gold will have an interesting couple months ahead. At some point, I expect them to put both Nevada and Mexico properties in production.
With the present healthy state of the industry, there are more people attending this year -- a record number in fact. It really is quite a show. The number of delegations from countries around the world, with exhibits in the Trade show, is impressive. There is a huge group from China and from various countries in Africa plus our old friends from across South America.
What has impressed me most today is the growth in sophistication in mining companies that I didn't even know the names of five years ago.
Earlier in the day I met about half a dozen of you from the blog, and signed a book for Shannon.
I am off now for the CPM Silver reception and then the PDAC Welcome reception.
Re: Am I The ONLY One Left HERE with this OPINION?...(Re-posted)
You are correct, many people agree.
DYN kangaroo tail play
nice reversal on March 3 on high volume.
Max pain is 2.5 for March/April.
Not crazy about shares under 5 bucks but I don't have many RSI triple buy signals to work with as alternate trades.
Buy limit 1.40
Do your own homework. About 20% cash now.
It is easy to doubt yourself
even with the most studied path one takes. To take a trade is always a mark in ones courage and vulnerability. At certain times, I am reminded of this verse..... ' The conditions of a solitary bird are five: The first, that it flies to the highest point; the second, that it does not suffer for company, not even of its own kind; the third, that it aims its beak to the skies; the fourth, that it does not have a definite color; the fith, that it sings very softly. ' ... San Juan de la Cruz, Dichos de Luz y Amor
Gold Confiscation
Bill,
While I agree with your comment (for now),
"Assets of a client of a bank that are stored in a safety deposit box are not accessible to the bank."
we have seen so many other "normal" situations trashed that nothing can safely be taken or granted.
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From Wiki:
Executive Order 6102 required U.S. citizens to deliver on or before May 1, 1933 all but a small amount gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 per troy ounce. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($166,640 if adjusted for inflation as of 2008) or up to ten years in prison, or both.
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It is not the banks in this case — it is the Federal Government. While this may seem remote, a few years ago we had the FASB rules, banning the shorting of specific banks was unheard of, and government owned factories were the stuff of the Soviets.
All it would take is a court order and all boxes would be opened.
Cara 100 Ratings Changes
Good morning.
Upgrades:
CNQ - to Buy @ Canaccord Adams
POT - to Buy @ Morgan Joseph. PT = $130
RIMM - to Outperform @ BMO. PT Raised from $70 to $88
TCK - to Buy @ Canacord Adams
------
CSCO - JP Morgan Resumes Coverage with an Overweight
CTSH - PT Raised from $49 to $57 @ UBS. Buy
MDVN
long @ 11.74 which was the mid point of the weekly low and the close in Nov 2008.
One cancels other order. Sell limit 30 (max pain opts expiration) and sell stop 10.99/10.80 limit GTC.
Also putting a buy stop 12.29/12.29 (Friday 3pm price + 5% of 10 day ATR). Smaller position to catch any reversal to upside. Expecting a short squeeze but we'll see what happens.
Do your own homework.
GL
Re: Gold Confiscation
"From Wiki:
Executive Order 6102 required U.S. citizens to deliver on or before May 1, 1933 all but a small amount gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 per troy ounce. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($166,640 if adjusted for inflation as of 2008) or up to ten years in prison, or both."
While I agree with your concerns the much ballyhooed EO 6102 did not bring as much gold as people believe today simply because most people didn't comply; especially with gold coins. There were some "show confiscations" that showed up in newsreels but most people simply kept their coins and also kept their mouths shut. And safety deposit boxes weren't opened anywhere. And there was only one person ever prosecuted under the order and that involved a very large amount of gold in a New York bank. That person was never fined or sent to jail.