Bill Cara’s Morning Call
[7:08am ET] Independent traders know as a fact that Humungous Bank & Broker (HB&B) research analysts are biased and unaccountable. We also know they give short-term tips to their firm’s proprietary traders and sales people that are at odds with their longer-term published opinions. These unfair practices are permitted because the fundamental conflict of interest structure of the securities industry is permitted.
Today the Wall St Journal has reported that FINRA (the Financial Industry Regulatory Authority) has launched a broad inquiry into how up to a dozen Wall Street firms disseminate stock ratings and research. Important questions are being asked.
On August 24 this year, WSJ informed the public of how Goldman Sachs analysts were tipping their traders with info that differed from published reports. These regular meetings were called “trading huddles”. At the time, I called it insider trading, which is criminal.
The WSJ has stated: “Securities laws require firms to engage in "fair dealing with customers." Analysts are prohibited from issuing opinions that are at odds with their actual beliefs about a stock. It is permissible for analysts to have different short- and long-term views on a stock… Critics of Goldman's trading huddles have complained that distribution of such tips to in-house traders and major clients hurts other Goldman customers who aren't given the opportunity to trade on the information and could be relying on the firm's longer-term research to make investment decisions… Goldman doesn't disclose the existence of the huddles to non-participants but has said that any information discussed in the firm's huddles is consistent with its long-term research reports.”
If accurately quoted, the latter is a flat-out lie.
Shortly after the truth was exposed, the public learned that a 29 year old non-lawyer operations manager was recruited from Goldman Sachs to head up the SEC Prosecutor’s Office.
If “fair dealing” with the public is a matter of law, then the system is thoroughly corrupt. Who is going to clean up this mess? Tim Geithner? Ben Bernanke? Larry Summers? Bob Rubin? Hank Paulson? Chris Dodd? Barney Frank?
The problem with America today is that the nation has become a joke, a parody of itself where the people obtain the news from comedians like Jay Leno, Jon Stewart and David Letterman.
These problems will finally be addressed in full, as I opined yesterday, only after a market crash and economic depression destroys the wealth and the spirit of the average American and the system must be rebuilt from scratch.
People would not listen to me when I urged a restructuring of the capital markets in a June 2, 2006 featured article in the Wall St Journal. Many of those same people are now paying attention.
But, I have asked this question before: where is the leadership going to come from to clean up this mess? It’s not just a single person, but a network of well-connected people who will have stand up to the challenge.
This morning in markets, there has been an attempt to rally equity prices in Europe after a trashing in Asia-Pacific markets, largely around China, and also in the financial sector in many markets. But after a brief flurry of buying action across Europe, bids were soon hit and prices have been falling over the past 90 minutes.
At this point, the $USD is a tad softer and precious metals and U.S. equity futures a tad stronger, but it looks to me that traders will soon stuff the PM and stock buyers with more than they may be expecting. There may be some big picture clarity by late in the afternoon today.
Have a good day and a great weekend.
CTA Trading Desk Report
Option expiry came and went with relatively low turnover as, once again, equities traded in an extremely tight trading range. The bullish excitement generated by upside earnings and guidance from Research in Motion (RIMM +10.32%) and Oracle (ORCL +6.38%) led to a nice pop higher in technology stocks early Friday morning, but the broad market seemed unimpressed, maybe bored, marking time, waiting to turn the page to a new calendar year.
Gold (GLD +1.57%) perked up a bit today after pivoting off one of the support areas we have been mentioning the past few days. Whether this area marks a short-term tradable bottom remains to be seen, so active traders should remain nimble with stops in place.
Gold did go parabolic over the past couple months, so it is possible a more serious correction could take place, especially if the first tag of the 50-day Moving Average is unable to elicit a sharp bounce higher. Since big institutional players normally step in to support their positions at this level, absence of buying could indicate they have already abandoned ship.
With the holidays just around the corner, it’s hard to imagine much happening next week with the equity market open for only 3 and a half days. Good time to rest up and recharge the batteries, spending more time doing homework, researching possible investment themes and ideas for the New Year.
Btw, if any of you are subscribers to INO.com, I'd like to hear of your experience there. As you know, I have referred to INO.com and probably have sent business their way. If I can iron out a few issues, I might become interested in an affiliation with them.
Have a great weekend.
Comments
Pretty decisive reversal in Europe.
http://twitpic.com/u0900.
Our futures scaling back.
Grasshopper's request for chart analysis
The following free software might prove useful to people wanting to understand how various indicators provide buy and sell signals. See the screenshot attached of RMBS. The software provides a huge number of indicators for a given stock, each marked with a buy (green circle) and sell signal (red cross), so one can play around with whichever mix of indicators provide the most positive outcomes or aid in trading decisions, given time and practice. The software does cover a significant number of markets.
http://www.stock-anal.com/
Conspiracy to sell PM's yesterday?
Dunno Dave, but fine shorting setups there were on GLD yesterday. Does that make me a conspirator? :)
Missed the entry on this nice setup I found yesterday. GLD moves at a brisker pace than the rest of this sleepy market. Wonder if it has become traders' pick for the week? I'm watching it again pre-market.
edit: lol, I took a couple of bites shorting GLD this morning, but look at that breakdown at 9am! Why didn't I ride on the back of the big boys...
price charts
Is there a site where I can check the price chart of oil, gold, and other commodities all on one page? Thanks!
Two new videos from Adam Hewison, Market Club
"As the Dow Goes, So Goes the Country" http://bit.ly/5T3t98
"Is the NASDAQ Running Out of Steam?" http://bit.ly/8o9olK
Thanks Bill, for recommending these short @ sweet video blog from Marketclub. They are saved on my daily diet rotation of things to watch.
Cara 100 Ratings Changes
Good morning.
ADBE - Maxim Group Initiates Coverage with a Hold. PT = $37
POT - Downgraded to Sell @ Soleil. PT = $85
Cara 100 Update
AMZN - estimates, target raised at UBS. Shares now seen reaching $160. Estimates also boosted, to reflect better traffic growth and the recent Zappos acquisition. Buy rating.
NKE - estimates, target increased at Government Sachs. NKE estimates were raised through 2012. Company is seeing a meaningful improvement in sales across the globe. Buy rating and new $78 price target.
ORCL - target, estimates boosted at Barclays by a dollar to $27. 2010 and 2011 EPS estimates improved to $1.59 and $1.77, respectively. Maintain Overweight rating.
ORCL - numbers boosted at FBR. Estimates were raised through 2011. License upside is driving margins higher. Outperform rating and new $27 price target.
RIMM - numbers raised at UBS. Estimates were increased through 2011. Company boosted guidance, and addressed other issues on the conference call. Neutral rating and new $72 price target.
RIMM - Upgraded to Hold @ Deutsche Bank. PT Raised from $60 to $75
RIMM - Standpoint Initiates Coverage with a Hold. PT = $90
RIMM - PT Raised from $73 to $80 @ Broadpoint. Buy
UTX - numbers raised at Citigroup. Shares now seen reaching $80. Estimates also increased, to reflect better cost controls. Buy rating.
Re: Cara 100 Update
Sounds like a top to me :)
Iran Forces Occupy Iraqi Oil Well, Border Guard Says
Something to keep an eye on especially if anyone is shorting oil.
http://www.bloomberg.com/apps/news?pid=20601087&si...
Why does this man still have a job?
President Obama may spend his Christmas holiday wondering why his approval ratings have plummeted. Here's one clue: the "smartest man in the room" is a dunce.
Harvard Swaps Are So Toxic Even Summers Won’t Explain
Try hiring competent advisors, Mr. President.
Cara 100 Update
BBY - FBR Capital Initiates Coverage with a Market Perform. PT = $36
More on RIMM
If you recall, I published a Brief on RIMM after the close on Nov 6 at $58.72. On Nov 2, Citigroup downgraded RIMM from a BUY to a SELL. I thought it was a joke as the price had already come off. Actually, I thought the rating change was likely because Citi was supporting a RIMM competitor like Apple, Motorola or Palm. But, to be fair, there were a lot of doubters when I opined I was bullish for all the reasons I gave. I even presented a two-page dissenting view from an independent analyst I know and like. So the recent quarter results are out; the operating performance is once again outstanding; and the price has popped in the pre-market to $71.60.
Credit Suisse issued this quite bullish report today:
Research In Motion Limited (RIMM) OUTPERFORM
CP: US$ 63.46 [pre-market US$71.60]
TP: US$ 95
CAP: US$ 36.3b
F3Q Results: Diversifying Growth - Raising Estimates
• Retain above consensus estimates, Outperform rating. Following F3Q results which were largely supportive of our view that RIM is a direct beneficiary of robust smartphone market growth and will be able to maintain global share (19-20%) as international share gains offset NA share loss, we are revising our FY10 EPS up to $4.37 (from $4.20) and maintaining our above consensus FY11 EPS of $5.32. We reiterate our Outperform rating and $95 target price.
• Volume growth strong. RIM's better than expected net adds and shipments in F3Q and F4Q (mid-point of guidance is 10.9mn units versus consensus of 10.2mn) support: 1) strong smartphone market growth (26%/27% in 09/10, LT CAGR of 18%), 2) RIM's international momentum (non-NA revenue is now 37% of total sales vs. 29% in FY09) and 3) a less than expected share decline at Verizon in the near-term. While our FY11 unit forecast of 48.8mn assumes that Verizon share declines to 65% in 2010 from 85+% in 2009, we don't assume a recovery in share at AT&T where RIM's market share is currently 20% (vs. 50+% prior to the iPhone launch).
• ASP guidance impacted by mix. While ASPs in F4Q are expected to remain flat at $320 versus our prior expectation for them to be up q/q, we think this is largely driven by a mix shift given the success of lower ASP devices (8520). Based on our proprietary BOM analysis, however, we believe that the 8520 while ASP dilutive is GM accretive (management seemed to endorse this on the call, guiding GMs +80bps q/q despite expectations for flat ASPs). We are modeling FY11 ASPs down 10% y/y (versus -5% in FY10 and +1% in FY09).
• Valuation. With shares likely to open at around $70, implying a P/E of 13x our FY11 EPS, we find valuation compelling, particularly in light of secular top-line growth (29% CAGR, FY09-FY11), sustainable margins (OMs of 23.1%/22.8% for FY10/FY11), and improving FCF conversion (>100% for the first time in FQ3). We apply an 18x P/E multiple (23% premium to SPX) to our FY11 EPS to arrive at our $95 TP.
FINRA
Bill,
I looked up what I could on FINRA and see it is an independent agency and appears to have no power to discipline anyone.
While I suppose any additional voice adding to the chorus of complaints is welcome, what result can we expect when all the government agencies are impotent? (or worse — complicit)
Re: price charts
Kenwood,
You might try these.
http://tiny.cc/P8yRr
http://tiny.cc/EeY6S
http://tiny.cc/YOb4T
Cara 100 Update (Final)
DELL - Macquarie Initiates Coverage with a Neutral
IBM - Macquarie Initiates Coverage with an Outperform
PAYX - Lazard Initiates Coverage with a Hold
XOM - BOA/Merrill Lynch Initiates Coverage with a Neutral
UUP Halted
UUP Halted pending news dissemination.
Re: UUP Halted
http://bit.ly/8SnhpX
"DB Commodity Services Responds to Exceptional Investor Demand for PowerShares DB US Dollar Index Bullish Fund. Creations temporarily suspended pending regulatory clearance for 240,000,000 additional shares"
I guess they ran out of shares due to demand?
Trades this morning
Sold out of my FWLT at $28.90...took a hit overall on this position.
Bought a few POT Jan $100 calls at $10.06 average. I think the 50 DMA at around $106 is support.
Bought a few CSC $50 Jan puts at $2.40. I see a series of lower highs recently and the reaction to Fedex's earnings may have put a short term top in the transports.
EDIT:
bought a couple more POT Jan $100 calls at $9.6
bought last couple POT Jan $100 calls at $9.2.
Average now $9.65
FYI: IMMR
I mentioned this company a while ago...they have interesting patents on haptics technology which is just the feedback you get from touching a touch screen. They have recently signed what I think are major deals with Cypress Semi and Atmel, licensing their technology for their chips. Additionally, they have a big deal with Nokia, which is coming out with some haptics enabled phones. I think this could be a multibagger stock.
Risk is it's not yet making money and they have an outstanding issue with their accounting for medical sales that has caused them to not file their last 2 quarterly reports. However, they have said it won't affect the amount of sales, just the timing of them.
FD:
no position yet.
EDIT:
Bought at $4.42. This will be a longer term hold for me as I know they don't have earnings right now.
Dollar getting up to dance
I guess the UUP shortage of shares was an easy indicator?
http://quotes.ino.com/chart/?s=NYBOT_DX&v=s
'Bernanke more powerful than The President' Ron Paul
http://bit.ly/92vctd
Largest mall in the world is not in U.S.A. It's in China & empty
"Episode: Utopia, Part 3: The World's Largest Shopping Mall
If you thought Minnesota's Mall of America was the world's biggest shopping center, think again. South China Mall is a Vegas-like spectacle built in 2005 that now sits almost entirely empty. In the current economic climate, could this be a symbol of things to come?"
http://bit.ly/6TOTbU
Re: UUP Halted
The only question is what it means. The daily RSI(7) is 80! RSI(7) 70-80 was a reliable marker for dollar tops in the last 3 years, except for august-october 2008 when everything crashed (but dollar). The big question is: another crash looming or a buying opportunity for PM/equities?
One thing that makes me wonder how come silver is so strong in the face of the strong dollar? My SLV is still in green and evades being stopped out.
I have to admit the volume in UUP is astonishing, to say the least.
Rimm... waiting around for $ 69.31 ... bought
$ 69.07... sold $ 69.62... vol. heading down past 20 min..
Re: Largest mall in the world is not in U.S.A. It's in China ...
I can't tell you how many times I've seen this footage and heard people use it as evidence that China's growth is a fraud and actually traded on it. I mean, c'mon! I need some concrete evidence that this was:
(a) filmed during typical peaks in shopping in China...after the mall opened
(b) not in any way filmed by a company that is biased against China
I also need some concrete evidence from people on the ground there that have visited this mall during multiple times in the year to confirm that it is not getting any traffic.
And even if I was to confirm all of this, there are massive cities all over the country that dwarf our country's cities and to make anecdotal evidence by looking at one shopping mall in a land where a billion people live is ludicrous.
Re: Largest mall in the world is not in U.S.A. It's in China ...
http://bit.ly/6rm4IY
If you invested in China stocks/etf's you would have done very well.
everything i included in my comment was a quote from that video page. I have never been to China so I have no comment on if there really are empty buildings/cities, or not.
Re: UUP Halted
NYUGrad,
Re: "I guess they ran out of shares due to demand?"
Who bought the shares? Has anybody seen a registration statement? Why was a market halted intra day? This stinks to me. Sounds like shorts wanted out, and the govt regulators permitted it.
If anybody knows what happened here, I'd appreciate being informed.
anyone see Palm $ 8.80 - $ 9.22 sometime Tuesday ?
.......
Re: UUP Halted
"Additional information is contained in two related 8K filings which are available at: www.sec.gov. DB Commodity Services LLC will issue an additional 8K once the registration statement has been declared effective by the SEC."
http://bit.ly/92NzsQ
GOLD HERE
ALOHA !!
As the USDX is up relatively strong right now to 78.03 they need to hold the 78 handle into the weekend to keep momentum going! The POG is also up relatively strong as well as the POS somewhat. I have nine currencies that I follow confirming higher percent POG gains than the current USD POG gain listed. Also the DOW is flat, not much help, but the HUI and XAU are up modestly as well as TSX GOLD.
I see the US FED tried to crash the POG at the usual NY time but that failed. The US FED needs that momentum into the weekend or else the dollar longs and the gold shorts will be spending the weekend fretting into Monday's Asia market open and possibly lose the momentum they "bought" yesterday. In all the FOMC meeting minutes I read the Chairman always chides his underlings, the governors and their techies, when they squander capital and lose momentum. How much it costs the US FED to move the POG down $35 in one day is of great importance. I have read Arthur Burns chewing out his underlings for failing on currency momentum.
When I say the "US FED" I am not talking about Ben Bernanke as a "trader", no the US FED farms the dirty work out to its bullion bank agents like JPM and GS, as well as the foreign central banks and their agents like Deustche Bank, which handles the EU gold shorting. All this is very timed and coordinated and very deliberate across many time zones in order to gain momentum, especially coming or going into NY. The interventionists do not always WIN ... Now if they could have their way then the POG would still be at $300USD and not embarrassing them and their paper trades, which is one of the reasons the GLD and SLV ETFs were created. In very basic terms, "If you can't beat them ... join them!" These two ETFs took a lot of wind out of the sails of the money metal miners. Now if HB&B and the US FED wants to confiscate gold and silver they now have a convenient warehouse at the tip of their fingers from which to operate, thanks to "investors" asleep at the wheel. Let me just say that the TSX and AMEX and ASX golds would be much higher along with the POG and POS if these two ETFs did not exist. Welcome to INTERVENTION 101!
Re: UUP Halted
ALOHA !!
Imagine a GLD or SLV intraday "trade halt"!
XOM - Good Entry Price ?
Bill or anyone else ... what are your thoughts on XOM? Do you think it is getting close to a good entry price now with the XTO info three days old.
Would like to get in but wonder what other think?
Thanks ...
Re: UUP Halted
ALOHA !!
Bill I agree it "stinks"!
Maybe that "crowded dollar short" was JPM and GS! They seem to be the Rothschild types who don't mind taking profits any way they can by playing both sides of a trade. As markets get more volatile why not ... they're "traders" too, eh? Well, "inside" traders to be sure! All that "talent" needs those end of year bonuses more than we do!
Dissapointing Reality
Quote from Bill - "These problems will finally be addressed in full, as I opined yesterday, only after a market crash and economic depression destroys the wealth and the spirit of the average American and the system must be rebuilt from scratch."
I was born in the US and have lived here 29 out of my 30 years. Unfortunately I agree with Bill on this on too many levels.
The heart of the problem is everyone wanting something for nothing - Most of the worthless policies coming out of Washington and the Fed are based on the assumption that reality is something we can create and orchestrate based on press releases and manipulation of public opinion, not what is actually happening on the ground. Severe depression and/or hyperinflation are economic consequences that cannot be spun - and the public in the end will demand accountability and a system based on truth (at least that is my idealist hope.)
The entire housing bubble and credit bubble were built on this fundamental fallacy on a personal level with people believing that the way to get rich was to buy real estate and borrow on it to take money out. I thought wealth was created by innovation and productivity increases not new ponzi schemes.......wow turns out it is... Now we just need to let the Fed and Treasury know that.
XOM ... Good Entry Price ???
Bill or anyone else with comments - what are your thoughts as to XOM's price today being a good buy entry point? Has the XTO dilution been accounted for or do you think the price goes lower?
Thanks ...
Is this an island top reversal on HAO?
http://bit.ly/8zhV8z
Re: Largest mall in the world is not in U.S.A. It's in China ...
yeah sorry for the rant...it wasn't necessarily directed at you. it's just that i have seen this link on so many trader blogs it makes me a little ill.
Re: Dissapointing Reality
ALOHA !!
soulek1 ... You just defined our monetary system which is the basis for every other market in America. Our money is our life's blood and right now that blood has been contaminated with leukemia. The doctor in charge of our monetary IV just got confirmed.
When you work your entire life accumulating those "dollars" you expect to retire and live on that accumulation, but many more Americans are discovering the hard way that without government handouts and their entitlements they would be in the "poor house" as the "stored value" of those dollar savings has dwindled to nearly nothing. Since 1913 the US Dollar purchasing power is down to $0.04 measured in 1913 dollars. Since 1980 a US Dollar only buys $0.38 worth of goods and services, measured in 1980 dollars. Who can afford to live off savings based on current bank rates of return? They're effectively negative so that now the US Dollar pays no interest just as gold pays none, however which holding has held its value best?
Now for those of you who will claim that holding gold from 1981 to 2001(20 years) was a mistake true enough, but had our own US government here in the Land of the Free and the Home of the Brave, not confiscated gold in 1933 and made it illegal to own until 1971 then many who bought gold in the 1920s at $22 per ounce could have ridden out the 1980 correction and still had a 1400% profit. Government that is owned by the MONEY MONOPOLY made FDR write that Executive Order, otherwise FDR and the US FED would have been deposed back in 1933. In effect without FDR's gold confiscation Executive Order the US FED would have lasted from 1913 to 1933, only 20 years. Now look! It goes back to the Rothchilds whereby he who controls a Nation's money is even more powerful than a sitting US President. Who has the real power in America today? It's not OBAMA! OBAMA is just another "one finger" puppet, just like the entire GANG OF 535(US Congress). Congress showed us all who owns them by confirming Bernanke.
When anyone speaks of complete market collapses and starting from scratch in my mind that is a monetary collapse. That is a "no confidence vote" ... the C WORD!
Re: Largest mall in the world is not in U.S.A. It's in China ...
"If you invested in China stocks/etf's you would have done very well."
Just as:
• if you invested in tech stocks which had no earnings in the 1990s
• if you bought and sold houses pre 1980
I have posted this one earlier as well as one of the brand new city in which nobody lives or works.
There are also reports of a high speed rail to nowhere.
I saw a report on the Book Channel this summer that all of the construction which went into the Olympics was of US, European or Australian design and engineering.
There is information that China's GDP is high because they count all government infusions of money immediately.
The only fact I am sure of is we "know" too little for me to bet the farm on China. They are even more in control than our government and look where we are.
a reprieve... until spring...
remember LEAP 2020's prediction of a US bond default for the fall/winter of 2009... the one which i outlined in the spring would be both wrong, and summarily ignored as the prediction is carefully pushed to the next year as a great way to entice paid subscribers....
we lah dee dah, no default, and now its the spring.... i wonder if the default they have been predicting that is always 2 quarters away will happen in 2011, or 2012, or 2013, 2014... surely they will proclaim they called it... for a small fee....
http://www.leap2020.eu/
GEAB N°40 is available! Spring 2010 – A new tipping point of the global systemic crisis: When the slip knot around public deficits is going to strangle Western states and their social security systems
Re: Is this an island top reversal on HAO?
I just looked at the longer chart on HAO, goes down every month like a clock!
Re: Is this an island top reversal on HAO?
Swiss made :)
Everyone on the right side of boat, please move to the left side
http://finviz.com/map.ashx?t=sec
Rotation?
Off to Cipriani. But I prefer dive food.
Goldman
Here's an actual disclosure from GS Research:
"Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, our proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research."
Gray enough to not admit to any wrong doing.
Re: a reprieve... until spring...
One of the CTAB guys said "in trading, being early is the same as being wrong" referring to attempting to go short during the dotcom boom. In this case I think the LEAP guys are just early. But from a trading perspective, if you put your money on LEAP to win, you'd be broke.
That's the thing about prognosticators that go all in with how they phrase things - the level of certainty, etc. Fortune-telling is an art, and we live in a world of probability, and really anything can happen. But in the long run, I think the whole default scenario will play out - just like it did in GD1.
And yet - in trading, early is the same as wrong.
HB&B Highway Robbery Continues
Today First Premier Bank was chastized for their credit card fee hike in the face of new Consumer Credit Protection landing just about the time you get your Christmas bills in the new year. They raised their rate from 9.9% to 79.9% APR with a $250.00 line of credit and $256.00 annual fee. That's right -a fee bigger than the line!
Having been spanked for the excessive annual fee, they lowered it to $75 on a credit line of $300.00 and all is fine at 79.9% APR. Read the letter announcing these changes if you happen to have a First Premier Bank card!
FYI Low balance cards are touted as 'credit restoration' devices. Fat chance anyone needing help restoring their credit will handle the fees and rate. You'd be better off borrowing from Guido's cousin, Tony.
$1.8TRIL
ALOHA !!
US Treasury Daily Statement for Dec 17th shows a total FY 2010 "marketable" US DEBT issuance of $1.8TRIL USD, that's $36BIL USD for every day the US Treasury has been open since Oct 1st. Let me say it again, so it sinks in, "$36BIL PER DAY!" That's a TARP every 19.4 days! The US Treasury makes Hank Paulson look honest!
On Dec 17th $122BIL USD of Regular Series Bills were issued, a maturity of one year or less. So around 70% of this total marketable debt($1.2TRIL) is short term only, less than one year.
As onerous as that is compared to FY 2009 Bush was issuing more "marketable" US DEBT at a rate of $41BIL USD per day.
Yet where OBAMA differs is that he is sneaking more by taking from the Trust Funds, the future of our kids, via Government Account Series, some $50BIL more than Bush was into trust Funds.
In layman's terms its like your deadbeat brother-in-law who can't get a loan from the bank so he asks you to lend him money, taking from your family's future so he can continue his deadbeat ways today. Reminds me of WIMPY in Popeye and the whole "hamburger" thing! Tuesday never comes ...
LINK: http://www.youtube.com/watch?v=NJ6xBaZ92uA
OBAMA is also "spending more"(outlays) about $30BIL more than Bush, so far. It is showing up in Defense Vendor outlays and Unemployment benefits.
US Treasury net operating cash balance for FY 2009, under Bush, was $116.4BIL USD. Under Obama we are running negative $169.1BIL USD deficit, around $3.4BIL per operating day in the hole.
Normal accounting that you and I are used to is irrelevant to government since government can create unlimited debt issues by either stealing from our own future via "non-marketable" Trust Funds or by selling "marketable" US Treasuries to China and the other exporters/creditors. Debt to the US Treasury is counted as "revenues", right next to tax revenues in fact. It's only PAPER!
DJ... Obama being briefed today on commercial real estate
troubles ahead.... mgm ' ciity center ' seen close to default... lots of worries on Obama's team about the " next shoe to drop "... on another note, I watched the cnbc interview with BAC's new ceo... nice, smart guy, but he seemed very 'conservative' with his outlook... focused on customer service, and no more purchases.. internal growth was his theme..
I believe XOM will be the buy
of the decade... Can the daily R hit 9 ? What a wonderful base to build from.. love the home grown gas theme with XTO... Let the arb's do their thing, that's ok... CF worked just fine off the 58 point ( as being played both ways )... I still think CELG will get taken out at $ 75.00 ( reminds me sooooo much of DNA )... AMGN had good euro news ( and they might be the one to snatch celg ), but I think MRK or J & J will also be thinking of expansion... one may have glazed over the stem cell aspect of Celgene's results, but gern ( what a PR machine !! ) could make some future waves, although there have been some decent insider buys over at STEM recently... speaking of ' advanced knowledge ', did ya'll see the $ 55 Dec. calls taken out on Celgene yesterday ? juiced just a little, I'd say... oh well, so it goes ( anyone have a girlfriend/boyfriend over at Big G's trading desk ?!! ).. have a great weekend..
YCS
long 11/30 @ 18.65
Sold 12/18 @ 20.28
Triple RSI buy pick.
Fundamental Conflict of Interest - Regulate Credit Derivatives
I thought we were done to death with this story ... with all the regulation aimed at mere mortgage brokers and appraisers you would THINK our biggest offenders wouldn't get off scott free?
I am inviting your comments be heard where they might do some good. At the feet (feeding trough) of our representatives:
"....after everything we have been through, very little has been done to change the system. The $590 trillion - yes trillion - derivatives market is still largely unregulated, opaque, and poses an enormous risk to our financial future.
This is "casino capitalism," and the first step to reform is to treat derivatives trading for what it is - gambling. That is why I have introduced legislation to allow state gaming authorities to regulate derivatives markets.
Petion Link: http://www.cantwell.com/action/derivatives?utm_sou...
This is not a new concept. Until 2000, this is exactly how derivative trading was regulated. At that time Congress granted an exemption from gaming laws for derivative markets and opened the door for the irresponsible speculation that nearly destroyed the U.S. financial system. My bill would repeal this exemption and help avoid repeating our past mistakes.
This is going to be an uphill battle. Derivatives regulation may be one of the most complicated issues Congress must tackle to restore true stability to our financial system. Wall Street has some of the most highly paid and highly skilled lobbyists on Capitol Hill. They will continue to exploit the complexity and simply say, "this is impossible for you to understand, just let us self-regulate." This is exactly what happened last week in the House of Representatives, when lobbyists successfully inserted several terrifying loopholes in the House financial reform bill.
The only way we can overcome this massive opposition is with massive popular support -- and that starts with you. Financial reform is making its way to the Senate floor. Now is the time to regulate and now is the time for you to make your voice heard.
Please sign the petition today.
Thank you,
Maria Cantwell, Washington Senator"
morgan stanley sends jingle mail
So who is going to get on the phone to try and make Morgan Stanley feel guilty about them walking away from their $8 BILLION in loan obligations? Anyone? Anyone?? I wonder if we can guilt them into continuing to make the payments so they don't end up "stiffing" their lender. Something tells me such silly tactics won't be effective. Yet why do we try to use such manipulative techniques on our citizen/taxpayers?
Gosh it's great to be a banker. All the money, none of the guilt - and zero impact on your "credit rating".
http://www.ritholtz.com/blog/2009/12/morgan-stanle...
"They spent over $8 billion on commercial property in 2007 — the peak of commercial real estate in the US. Now, they are going to preemptively “Walk Away” from five San Francisco office buildings, letting them go back to the lenders.
Morgan Stanley spokeswoman is correct when she says it is technically not a default. Instead, it is a case of Commercial Jingle Mail. Rather than make payments, they are turning the keys over to the lender — just like underwater homeowners do!
Good luck making moral arguments against homeowners doing just that in the future . . ."
Re: $1.8TRIL
What a sickness!
And the experts in charge see the "cure" for the economy is to get the consumer to return to the same practice — borrow to buy everything you've ever wanted — on a credit.
Like credit cards, the sky's the limit as long as you pay the interest payment. All unsecured debt.
For any who don't know it credit card companies can cut your rating, but they can't take what you bought. Just like the student loans. There is nothing they can take from you.
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An aside: My first time in London I asked the waiter if there were refills on coffee and explained in the US they just keep refilling the cup. "We don't think that is very good business." Fed take note.
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Caution: Don't pay it off!
About twenty years ago my son had run up a four-figure credit card tally and paid it off in one payment. His credit allowance from th card company dropped to less than half of what it had been.
They told him it was, "Due to erratic behavior."
Like Whimpy life has become a cartoon.
Re: I believe XOM will be the buy
baz22,
You may want to consider CVX. Chart looks nicer and dividend higher. Depends on your time horizon.
Re: Why does this man still have a job?
Well said!
Re: I believe XOM will be the buy
Baz, I'd recommend you listen to Donald Coxe's audiocast from yesterday. He states there is a big debate amongst engineers as to whether shale gas will really work out. Production tends to drop off after the first year, and there isn't enough experience to know whether this can be counteracted, and how to project what the XTO acquistion really means for XOM's lowly 8 year reserve life.
http://events.startcast.com/events6/122/C0018/Even...
FWIW
Thanks for the warning
Thanks for the warning
Saturday, December 19th, 2009 | 6:20 am
Canwest News Service
Bank of Canada warns on risk How rich to hear Bank of Canada governor Mark Carney warn Canadians this week about taking on excessive debt.
Forgive me governor, but where were you in the boom years before the credit crisis when low rates and poor governance got us in to this mess? Oh, right, you were at investment bank Goldman Sachs, where American household indebtedness was the basis for Goldman's record profits.
Nevertheless, governor, you may have a point: Rates will rise one day, and that spells trouble ahead for Canadian bondholders. And, of course, there is the potential for rising inflation.
These are all good reason to take a cautious approach to government debt. So thanks for the warning. And feel free to give us a little advance notice if U.S. Fed chairman Ben Bernanke tips you off on his timing for dumping all those U.S. Treasury bonds he bought in the midst of the financial crisis.
We definitely want to get ahead of that trade.
Oil refiners overlooked and out of favour It seems that Exxon Mobil waited until every last energy analyst from Wall Street to Houston had given up trying to predict when and where the world's largest energy company would make its next major acquisition. So, when Exxon announced a US$31-billion purchase of XTO Energy in an all-share deal this week, you could hear analysts swearing that Exxon screwed them on the timing.
The deal was not well received by The Street due to its high sticker price. But it is significant for one of the biggest U.S. natural gas producers, at a time when an abundance of gas has sent prices tumbling.
Which brings us to another maligned area of the energy market that presents an interesting opportunity: oil refining. Valero, the biggest refiner in the United States, is currently down nearly 80% from its 2008 high due to a collapse in margins — the difference between gasoline (what it sells) and oil prices (what it buys).
Refiners are losing money and are so badly out of favour that they might warrant a second look. Set your sites out a decade and pick up Valero shares for next to nothing.
Citigroup investors smoked A second blockbuster deal this week was Citigroup's completion of a US$20-billion capital raising, billed as the largest-ever equity raising in U.S. capital markets. The money was to go to repaying its loan to the U.S. government. The results? Citigroup shareholders lost 20% in one week. Here is what Citibank CEO Vikram Pandit had to say about the deal: "We owe the American taxpayers a debt of gratitude and recognize our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need." Here is what he really meant: "And without Uncle Sam pulling our strings, we can finally pay ourselves some killer bonuses."
The U.S. government, which happens to be the biggest shareholder of Citigroup, shelved its plans to sell US$5-billion, or one-fifth, of its holdings of Citi common stock because at the current share price it would mean selling at a loss. The company's share price is down nearly 25% in three weeks, and the KBW Bank Index is down 14% since peaking in October. The economy may be recovering, but banks are still an easy short due to their need for more capital, hostile regulators and heavy loan losses.
Chart of Charts -- Neutral, maybe indicating topping
Aloha all, winter is hitting in full force in Hawaii, the temperature gauge in my shop registered 70F at 8AM. brrrrr....
The Chart of Charts is expressing "No Opinion".
That said, this market action is obviously either a pause before a further climb or a top. That is pretty basic, no great wisdom. But there-in lies a good point--don't overcomplicate the market.
The market is tricky, but the more you read does not necessarily help you understand or predict the market. You could spend all weekend reading blogs in the hope of gaining insight, but that extreme amount of "research" could actually be detrimental to a clear view. You are probably better off going to get some exercise, go on a 4 mile hike through the woods -- clear your head. And think about staying healthy, because if Primary 3 plays out, there is going to be some serious SHTF, and your overall health and energy levels are going to be factors in how well you and your family get through things.
The fundamentals of the world financial situation are horrific. Mortgage rate resets on large pools of mortgages are entering a phase of big increases. None of the bank and risky asset problems have been solved...at all. Government just transferred money from tax payers to special interests, without solving any problems.
That said, we made a "Top Call" on November 21th, review the Chart of Charts from that era.
S&P closed at 1106 on November 19th. Now it is at 1102 courtesy of that final ramp job to create "Min Pain" to option writers at expiry.
Distribution continues, from strong hands to weak hands. Interesting how Calpers just now made it against the rules for it's investment decision makers to receive gifts from "Investment Advisors" aka Salespeople.
US lawyers declare: Money more important than dignity
"The wife of Tiger Woods will miss out on more than $50 million if she pursues a legal split because of his string of affairs, top American divorce lawyers have revealed.
Raoul Felder, a celebrity divorce attorney whose client roster has included the former wives of Martin Scorsese and Tom Clancy, said that Elin Nordegren would be "financially ill-advised" to walk out on the philandering golfer for good.
Miss Nordegren, 29, was widely reported last week to be "100 per cent" set on a divorce and in line to receive in excess of $100 million in one of sport's most expensive separations."
http://www.telegraph.co.uk/news/worldnews/northame...
seems to be a global hang up nowadays. I'd like to see a response such as "Miss Nordegren to US attorneys: Drop Dead!". Funny that Tiger appears to individually represent the US's elites behaviour in present times.
Re: US lawyers declare: Money more important than dignity
I guess she's not in the camp of, "...it's just about sex," nor does she plan to run for office.
This raises serious questions which the media will not likely let us forget.
1. Do you suppose she really believed he meant those vows?
2. Can she get by with only $100M?
3. Will she be the Biggest Loser? (Whoops, wrong show.)
Why I'm watching so little TV these days.
bank liquidity
Do the banks really have the cash that the Fed gave them or did they use it to buy treasury secutities and pocket approximately 4.3% per year risk free. If so, what will happen in the future when they need cash and must sell bonds at the same time the treasury is selling bonds. Won't interest rates increase and who will be buying bonds from both parties? Can the banks use bonds to pay back the Fed without selling them?
Does this explain why the banks are not lending?
Re: morgan stanley sends jingle mail
Davefairtex
I make no moral judgements about homeowners handing over the keys as Morgan Stanley is apparently doing. My only objection is an attitude that some homeowners have who, in fact, got in over their heads financially albeit with a LOT of help from their banks.
The word I used was entitlement to descibe an attitude of some toward their bank. This is not a constructive approach to any creditor. After all, you did borrow with an intention to replay the debt--correct? The idea one is OWED extra consideration after a period of default on your obligations depends on whether indeed you entered into the transaction with good intentions and later experienced hardship or whether you initially intended to deceive and make out like a bandit. Banks are at least making an attempt to help the true hardship cases. They are also being beseiged by the opportunist bandit class who plead hardship while stashing their cash. I have consulted both classes and I can say those who expect to miraculously have their 2nd 'go away' or their balance reduced have watched too many infomercials about debt elimination.
Disclosure: I prequalify modification prospects and refer to a professional negotiator I respect. It's very arduous work.
One prospective modification client came in for a consultation. During the conversation he removed his jacket to reveal a sidearm. He then became visibly angry when I explained that his income and assets must be verified. I was relieved he did not return. This is a side of human nature I find hard to stomach. Actions have consequences. Maybe not so obvious what Morgan Stanley's consequences will ultimately be. One can hope they get their lump of coal.
Re: I believe XOM will be the buy
Thanks, Jock, but Coxe is relying on too many ' if's ' in his views... He does point out the fact tha XOM is the largest integerated oil co., ( with the largest amount of cash and stock to barter with ),... I, for one, can do without his personal views on climate/politics.. points can be made for either side of that debate... But, thanks for a different view....
"The recession is over but the depression has just begun"
Thats the title of a lengthy article by one Edward Harrison on The Big Picture Blog. It's a repost from Harrison's own blog over 2 months ago. Very interesting. I read the whole thing and was fascinated. If you want a summary, go down to the 8 point conclusion at end before comments, which are many.
www.ritholtz.com/blog/2009/12/the-recession-is-ove...
Explains to me why we are in a bull market which depends on Federal deficit spending which will not last. Then kaboom.
Re: morgan stanley sends jingle mail
Honestly loannetter I am not hoping Morgan Stanley gets their lump of coal. If a bank loans money to MS and the structure of the deal allows MS to walk away, it's the bank's fault for loaning money under such conditions in the first place. When banks do silly things, letting them off the hook - well I think they call that Moral Hazard. Next time, the bank will think twice about loaning money under such conditions.
It does sound like the pre-qualification job you have taken on is a lot of work though. Mostly education I'm guessing as to what's likely to work to folks who have received a lot of bad information. Education to angry people with firearms seems like not so much fun.
Re: bank liquidity
dan,
I think you've got it there. I believe this is one reason the banks are not lending. The other big reason: Businesses and individuals are holding back and do not want to borrow except when desperate. (Too risky for the bankers.) Most are in a cutting mode.
As for the future I expect we will see a lot of M&A with the biggest sucking up smaller banks which have less toxic stuff. Locally, our biggest bank recently found some unnamed buyer of a chunk of their debt and surged to a new high of $1.02/share up from $0.36/share. (A couple years ago at $30+)
While they had no derivatives they had made a lot of large construction loans on projects which are now dead.
Since regulations, oversight agencies and the Constitution are no longer restricting the Fed and Treasury we have no way of knowing what a few mouse clicks may make possible.
Re: morgan stanley sends jingle mail
Loannetter,
Your approach to the walk-away seems well reasoned and fair. As I recall the original question relates to one who meets your criteria of fully intending to pay, but is now seeing possible personal problems similar to those of friends.
The extreme double standards where the banks have prospered even after causing this mess seem enough to give his questioning validity.
You have a very stressful work situation right now and for the foreseeable future. As a pro-gun advocate I'm disgusted by such an attempt to intimidate anyone with a flaunting of his weapon. The laws vary greatly by state, but common sense and courtesy do not. It is people like him who make me want a right to carry — defensive use only.
As for the big banks like Morgan Stanley I fear they will continue to meld into even a more powerful few and continue to run the country (into the ground).
Alternative Energy Solutions
I read a very interesting article in The Economist regarding development of flow batteries for automobiles:
http://www.economist.com/sciencetechnology/tm/disp...
These batteries allow for a quick change of electrolyte at filling stations in addition to the conventional but longer plug in for re-charging. The key elements are vanadium and chromium. This could be portentious for new finds such as in the Ring of Fire ( Noront & Freewest come to mind ). On the other hand, Big Oil could stall this by simply buying out any such sources of supply.
American Financial History condensed into 10 min Bullet Item
I condensed the entire American Financial History into a 10 minute bullet item read. Have at it.
http://oahutrading.blogspot.com/2009/12/10-minute-...
veteran technical analyst Alan R. Shaw
Alan R Shaw ,Louise Yamada's mentor's thoughts on the Dow and Gold in the following link 10 December.
http://tinyurl.com/ydeyh22
"Aside from municipal bonds, Shaw said he's currently investing only in gold stocks, expecting bullion to rise to at least $2,000, perhaps $3,000, an ounce,"
He thinks US stocks are in a bear market that may last till 2018.
Re: morgan stanley sends jingle mail
Thanks, Grym for your comments. Anyone who attempts to intimidate another is obviously a bully or very desperate. Probably both. We need to keep things in perspective here. Financial hardship is hardly life or death. I've been priviledged to witness both.
The start of a trend?
Barrons notes that the ex-wife of Steven Cohen (SAC capital, hedge fund) divorced from him many years ago but now believing that she was shortchanged in the settlement has filed suit against him under a civil version of RICO (racketeer influenced and corrupt organizations act), accusing him of, among other things, insider trading.
Could this be the beginnings of using RICO against others in the HBB club?
I'm not holding my breath, but I did find it kind of novel in approach...
Wishing you a very happy holidays and good trading to all!
Re: The start of a trend?
Couldn't resist...so hell hath MO fury for Mr Cohen?