Bill Cara’s Blog for May 5, 2010 [See post-close report]

I had "bought the dip" with a tiny position on the Swedish OMX 1 1/2 hr. after the open, just below some intraday channels, after it had done the parabolic down thingy. It bounced decently though not to positive, but I just got stopped out at break even. Think there will be some more downside.

Good morning. These are interesting times.

CCJ - Upgraded to Hold @ Canaccord Adams

INTC - Downgraded to Hold @ ThinkEquity

KGC - Downgraded to Hold @ TD Newcrest. TD Newcrest questions Kinross Gold's investment in Red Back Mining and its strategic direction. Target to $22 from $24.

MRK - Downgraded to Neutral @ GS

MRK - Upgraded to Buy @ Hapoalim following the company's Q1 results with a $40 price target.

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Susquehanna Financial Initiates Coverage on the following tech stocks, all with a Positive rating:

BRCM, INTC, LLTC & TXN

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Other stocks of possible interest:

EGO - Downgraded to Neutral @ UBS
HL - Upgraded to Buy @ UBS

What's with FAS? I don't see any split alert... some quotes fluke?

Quotes certainly indicate that, it's just that I don't see any alert about split anywhere... Normally these things are known well in advance, and repeated the day before actual split. Got a link anywhere that I must have missed? Last split alert I see for FAS is from July 2009, reverse 1:5

MRK - Downgraded to Neutral @ GS

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Note to NYUGrad:

Thanks for the video clip. Powerful stuff. I can't picture the American Sheeple storming the Capital Building, as it might cut into their viewing time of American Idol but there's always hope.

Regards,
BH

Got it, ty. Never seen this news disseminated in such way before

dont act surprised gang,
you could see it happening in slow motion.

gold getting smacked down here, while USD moves towards 84.

crisis in europe and in other geo-strategic sectors only boosts gold for so long before the rush into dollars finds its way out of gold.

case in point yet again.

lets see where the usd tops from here, this could be a big swing though, as always europe is in worse shape than the US, when is the last time you saw 3 protesters killed and american's storming their parliament. i by storming thats what i mean, not signs and shouting, i mean storming.

for all the war talk we shower on americans, for all the comments europeans love to smugly make about aggressive american foreign policy, we have ample proof that when the shit hits the fan, europeans move towards violence. theyve done it on an epic scale twice in the 20th century and in smaller but equally horrific events in armenia, yugoslavia, russia and Chechnya. add to that consistant riots at soccer matches and constant riots every time there is fiscal instability such as today and we have the ever boiling cauldron that is europe. no the US seems fairly passive if you ask me, and their surging dollar during this mess is proof positive.

people will go broke shorting the USD the past little while believing that instability in california is just as bad as greece or portugal becuase the number line up.

wrong, wrong wrong.

its a game of comparative currencies and the USD is winning, and the loonie isnt doing bad either!! yeah!

good luck, dont mine the dump.

MA - target, estimates boosted at Citi. MA price target jumped to $265 from $250 on strong core spending trends. 2010 and 2011 EPS estimates raised to $13.75 and $16.58, respectively. Reiterate Hold.

Moving to another table at the casino.

Sold my SPXU for 6.8% gain. Looking for a small bounce up on overall markets into afternoon. then adding more SQQQ.

well I dipped toe in SIM and LFT, as they fell in Bill's buying ranges. Still net short but always good not to be leaning too far one way.

+ 2% on the last 50K instutional buys on DO... out for the day

Bill, I don't know what is the wrong data, but I see that CAC40 is -0.9%, and the worst are Unibail (real estate) -8% and Lafarge (building materials) -5%.
Credit Agricole and BNP are about -3% (not sound at all, but not so bad as the Spanish banks BBV and STD in the last few days).

http://bit.ly/bVWtLS

Now up 8%, squueze happened and can continue into close. Volume is huge midday.

Rumor has it that ECB might either cut rate, and/or buy debt, like FED did. Any insights on how might this impact the equity markets?

sort of a country of Ben Roethlisbergers?

Took an initial 1/4 position Long in GILD @ 39.68. Bullish engulfing candle on the daily today and RSI (7) crossed above 30 on daily also. Don't like the light volume though.

Also Long ITMN at 10.53. Held 50% Fib level from high of day at 10.44 nicely. Stop just below that at 10.35/10.40 area.

Yes !! Socialism in action, or rather "inaction"

I hope you are wrong about the after effects, but reluctantly agree with you that they are far more worse than advertised.

Is the govt's estimate of damage also including the costs of depreciating homes, communities, retail business, tourism loss, etc?

I personally have stopped using BP gas stations.

Seems like this is ho BP is handling the situation, look closely:
http://tiny.cc/adg6z

Just saw that Kinross announced today that they have taken a 9.4% in Red Back Mining through a $600m private placement at $25 CAD (a tad OVER the current market price!). Considering that RBI.TO is trading at about a 7 year high, I think it is safe to say that the big dogs are still on the hunt for quality gold assets. KGC stock is really getting beaten up after announcing Q1 earnings. I haven't had a chance to read into what has disappointed the street so much.

Glad to see the SEC is making a move here but considering how suspicious the whole thing looked for at least a year, its sad that it took this long to finally conclude this was a fraud. The OTC (OB and Pink Sheets) markets in the US is sketchy to say the least. Seems like there is a lot more accountability/disclosure for these micro-cap outfits on the Toronto Venture exchange.

And i think right now the cap on liabilities for any oil co is $75M. They are trying to raise it to 10B. Heck, if i were President I would make it infinity. Why cap it at all? they pay for full cleanup.

Agree . BP should pay all.. They are in this because they would not install a safety valve at the base. Cost $5,000..

several pundits sluff off the effects og Europe... The Do Not have a printing press, via the Fed... How can the European trade status remain constant ? Severe measures will Have to be effected, and purchase power of citizens will drop...

Baz, could they accept greek bonds at full value? Not printing, but in that direction.

Flat on ITMN - half at 11.17 other half at 11.19

Remains to be seen how eventual text shapes up of course, but so far it seems to be meaningless play of the words. If they create bailout fund by means of levy on banks, that levy is going to be passed on customers and even with institution customers - further down the chain, on taxpayers.

Most of all, if two other issues are not addressed (too big to fail and separation of bank risk from unsuspecting customer risk, by means of Glass-Steagall or the like), then what are they going to do when (not even if) the next crisis hits and system comes under the threat of destruction again? Shrug.

not to be cynical, but i remember lots of talk of the dreaded swine flu costing over 50 billion in GDP, right when the market was taking off. or the fact that people can't "eat" iPods.

DBA 52 wks = - 4 percent
AAPL 52 wks = + 94 percent

i don't pay attention to news flow at all anymore, just spreadsheets.

mcgro2 - i hear you but this is a whole different ball of wax. oil actually kills wild life and destroys the coast line. there is a huge seafood industry in the gulf that will get hurt, not to mention the vacation industry as oil washes upon the shore. exxon valdez affected a market that had few vacationers and not much of a seafood industry and they are still having issues will oil washing up on their shores.

The LA fishing industry alone is a $2.6 Billion a year industry. The vacation industry to the western Florida beaches is a multi billion dollar a year industry. Add to this the liability claims from anyone or anything exposed to this and it could be huge. The Texas City Refinery explosion, which was a magnitude amount smaller than this, cost BP about $2 Billion.

This spill is currently taking up over 120 square miles, which will grow as the oil leak expands and moves toward the coast. This oil will be in the gulf for probably 50 years and will spread significantly as soon as the first hurricane comes into the area. I'm telling you that this is going to be a big problem for BP for years to come.

You're implying with a 15 to 20% upside that BP shouldn't be hit at all by this? I just don't agree. The impact to the coast in terms of future liabilities could be several billion dollars annually. The oil will wash up on the shores for years and years. While the fishing industry won't be 100% defunct, it will raise serious questions from businesses that previously purchased seafood from that area. If it's a 40% hit for several years, that could be a $2 Billion annual hit (assuming the total gulf seafood industry is double that of Louisiana). The liability hit on wildlife will be several billion dollars. The liability hit on the vacation industry will probably be several billion. The potential for ships coming into the port area at the mouth of the Mississippi bringing oil up the Mississippi and contaminating the river and all of its wildlife and you're looking at another untold billions in liability. And add to this the liability issues related to the 11 people that lost their lives and the shareholders that lost money on this. All told I could see them setting aside at least $7 to $10 Billion annually for many years. Anyone estimating this at a $10 to $15 Billion total liability is either backed by the oil industry or long the stock.

The liabilities associated with this issue are basically the same thing that happened to the cigarette makers back in the day. And I would expect there to be significant volatility in the stock over the next few days. If the leak is capped the stock may rally but I would use any rise in the stock prise as a reason to short given all of these long term liability issues.

Add to this the fact that offshore deepwater drilling will be in serious trouble now. So where is the growth going to come from?

By the way, RIG isn't out of the woods. Look at their balance sheet. They have about -$7 Billion in net cash less LT debt. They will also some big problems with paying off these liabilities and I don't think their stock should only be down 20%.

Moody’s changes outlook on BP to negative

By Ed Crooks in London
Last updated: May 5 2010 20:39

The outlook for BP’s credit has been revised to negative by Moody’s to reflect the possible impact of its oil spill in the Gulf of Mexico.

The move raises the possibility that the ratings agency could change its view of the company for the first time in a more than a decade.

http://www.ft.com/cms/s/0/42910562-587c-11df-9921-...

Be careful, Schleppy... Japan could certainly be the catalyst needed, but the FDA is not to hip on oversea(s) results... ITMN most certainly will need to issue paper to cover another trial, or sell out to a partner, who, most probably, will have the favored terms.. This is playing out Soooo much like DNDN, and that is a concern... DNDN eventually was worked back down to the low $ 3.00's. I, personally, believe ITMN will eventually win approval, but it is at least two years away. ( unless, as mentioned, the Japan results are: # 1. very robust and # 2.. the FDA accepts these results.)... good luck.