Friday, January 30, 2009

Insolvent

Why don't we get it ? Is it too complicated to understand ? Are we just not bright enough to comprehend ?

Do the words good bank, bad bank, bailout, TARP, TALF, aggregator bank, too big to fail, systemic risk, confuse us?

Now finally, some in the mainstream financial media are getting it and starting to use the "I" word. No, not illiquid as has been the case for the past year and a half but the other "I" word, insolvent. This might be a good time to look at the definition of this word.

in⋅sol⋅vent

[in-sol-vuh-nt]

–adjective
1. not solvent; unable to satisfy creditors or discharge liabilities, either because liabilities exceed assets or because of inability to pay debts as they mature.
2. pertaining to bankrupt persons or bankruptcy.
–noun
3. a person who is insolvent.


In the real world that you and I live in, when you cannot pay what you owe, or cannot meet required liquidity measures in your affairs, lets say your brokerage account, you rectify the situation by raising cash. This is accomplished by selling assets in the account, period. You do it any way you can. On the street you would sell assets that you own. No you don't get to keep the rolex , or the beach house, or the club membership as it all goes until all your obligations are satisfied. In your brokerage account this is known as a margin call and either you sell or they sell you out but either way it gets done ! I have mentioned before that I was counselled by a very wise man, early in my career to 'never, ever, ever meet a margin call as it is the market's way of telling you that you are wrong.' Sell the position out and move on. Do not under any circumstances throw good money after bad.

When the liabilities exceed the assets in the account or the institution it is insolvent. I realize that saying this is heresy on CNBC, the Fed and the Treasury and treasonous on Capitol Hill, but common stockholders in insolvent companies get nothing, zero, zilch, nada. Banks included !

Worthless stock is their punishment for investing in and not selling a poorly run company. Yes I know about the too big to fail and systemic risk fear mongering. Problem is, there are plenty of banks in this great country, with plenty of capital adequacy, with plenty of performing assets, with plenty of good management.

Keeping insolvent banks alive via life support with taxpayer funds penalizes these prudent banks, is perverse, immoral and just plain ol' wrong. I don't care how many Nobel prize winners in economics, Fed governors and global economic gurus tell me to the contrary.

The other evening while channel surfing and caught some of Larry Kudlow's evening show. I stopped in to listen as he had on Bill Isaac, the former chair of the FDIC and Bob McTeer, the former Dallas Fed president. In what is becoming more and more unfunny, both of these expert boobs were recommending a form of regulatory accounting forbearance for the banks. They see mark to market accounting as what is killing the banks as every time the assets on the bank's books drop, the banks then must set aside more capital in reserve against them in a never ending death spiral.

Now I was never a Fed governor and never will be, nor will I ever run the FDIC but I do know a few things and what I am about to say is highly technical and some may need a financial encyclopedia to understand it if you have never worked on Wall St., the Fed or the Treasury and that is.....

SELL IT !

I repeat, JUST SELL out the asset that is dropping in value !

See, I told you what I was gonna say was highly technical and quite complex. It really is not rocket science but rather an issue of manning up and taking your medicine. Now I don't care if you don't want to sell, I don't care if you think it's not fetching what it's worth and is depressed. That is inconsequential and is now a moot point. That time is past. You sell and either survive to trade/do business another day or go bankrupt. It truly is that simple.


I rail on lots of those at the top for their ignorance but today I want to give Jamie Dimon, CEO of JP Morgan some credit this morning. In his interview this morning on CNBC, he at least was candid enough to admit that mark to market accounting is not the reason for the problems at the bank. If only McTeer and Isaac would put down the Kool-Aid so many at the top seem to be drinking.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $66.15
Long 1 unit Ultrashort Real Estate ticker SRS @ $51.30 stop @ $47.18
Long 1 unit Ultra Crude ticker UCO @ $10.60 stop @ $9.38
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit Wells Fargo ticker WFC @ $20.20 stop @ $22.43
Short 1 unit JP Morgan ticker JPM @ $27.35 stop @ $29.54
Short 2 units of Apollo ticker APOL @ $83.40 stop @ $86.31
Short 2 units Morgan Stanley ticker MS @ $21.30 stop @ $23.82

Punting Crude Long

The time has come to have a look at crude. I like to do this via the USO (chart above). We have a series of higher lows, which some could argue look extremely anemic and I would agree. But what has caught my eye is the volume, which has surged substantially as we have bumped along since the start of January. This heavy volume should help serve as a defensible line in the sand for me which I shall use as my stop loss point should it be violated to the downside. I am most definitely early here but the risk/reward of this trade looks very compelling.

The proshares ultra crude, ticker UCO (chart above) is my preferred vehicle to get long crude which I am this morning. I have included a link so those who are unfamiliar with proshares and in particular UCO can get acquainted.

I am getting long here 1 unit of UCO at $10.50 with a stop at $9.38




Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $66.15
Long 1 unit Ultrashort Real Estate ticker SRS @ $51.30 stop @ $47.18
Long 1 unit Ultra Crude ticker UCO @ $10.60 stop @ $9.38
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit Wells Fargo ticker WFC @ $20.20 stop @ $22.43
Short 1 unit JP Morgan ticker JPM @ $27.35 stop @ $29.54
Short 2 units of Apollo ticker APOL @ $83.40 stop @ $86.31
Short 2 units Morgan Stanley ticker MS @ $21.30 stop @ $23.82

Short a 2nd Unit Morgan Stanley - MS


Morgan Stanley did gap down this morning, with the stock opening at $21. I was filled a 2nd unit short at $21.10 which now leaves me with 2 units short at an average of $21.30. I will leave my stop alone for now.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $66.15
Long 1 unit Ultrashort Real Estate ticker SRS @ $51.30 stop @ $47.18
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit Wells Fargo ticker WFC @ $20.20 stop @ $22.43
Short 1 unit JP Morgan ticker JPM @ $27.35 stop @ $29.54
Short 2 units of Apollo ticker APOL @ $83.40 stop @ $86.31
Short 2 units Morgan Stanley ticker MS @ $21.30 stop @ $23.82

Thursday, January 29, 2009

Quick Update on Morgan - MS

Given the above chart, I want to add a 2nd unit short on MS with a move below the $21.25 level. I fear that this my occur at the open tomorrow via a gap, which depending on it's severity, would serve to cool my enthusiasm. I am sure we are not the only ones who are looking at this formation so the gap possibility most certainly exists.

Some may argue that the formation on the chart above is too short term to be of merit or significance. This is valid, but patterns happen and MUST be respected at any interval, be it 1 minute, 5 minute all the way out to monthly. What interests me is that this shorter term pattern is occurring into a longer term one, the upper boundary of the channel.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $66.15
Long 1 unit Ultrashort Real Estate ticker SRS @ $51.30 stop @ $47.18
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit Wells Fargo ticker WFC @ $20.20 stop @ $22.43
Short 1 unit JP Morgan ticker JPM @ $27.35 stop @ $29.54
Short 2 units of Apollo ticker APOL @ $83.40 stop @ $86.31
Short 1 unit Morgan Stanley ticker MS @ $21.65 stop @ $23.82

Getting Short Morgan Stanley - MS


I want to state up front that I am aware that Jim Cramer, he of CNBC's Mad Money, yesterday said Morgan Stanley could double from here. I also realize Ken Heebner mutual fund guru extraordinaire, loves Morgan Stanley as well. I have confidence that John Mack, who runs MS is no different than Fuld, Thain and rest of the choir boyz on Wall St.

That being said, I still need to get short 1 unit here of Morgan Stanley, ticker MS, at $21.75 with a stop at $23.82


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $66.15
Long 1 unit Ultrashort Real Estate ticker SRS @ $51.30 stop @ $47.18
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit Wells Fargo ticker WFC @ $20.20 stop @ $22.43
Short 1 unit JP Morgan ticker JPM @ $27.35 stop @ $29.54
Short 2 units of Apollo ticker APOL @ $83.40 stop @ $86.31
Short 1 unit Morgan Stanley ticker MS @ $21.65 stop @ $23.82

Shorting More Apollo - APOL


In my haste to get out the last chart APOL I neglected to indicate the head and shoulders on the chart. The chart (above) outlines some of my thoughts on it. Based on this and some of the intraday charts I am adding a 2nd unit short to APOL here at $83.10 and I am lowering my stop to $86.31


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $66.15
Long 1 unit Ultrashort Real Estate ticker SRS @ $51.30 stop @ $47.18
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Wells Fargo ticker WFC @ $20.20 stop @ $22.43
Short 1 unit of JP Morgan ticker JPM @ $27.35 stop @ $29.54
Short 2 units of Apollo ticker APOL @ $83.40 stop @ $86.31

Shorting Apollo Once Again - APOL

I want to bring your attention back to Apollo Group, ticker APOL (chart above). Please remember that channel it has formed on the 10 yr chart which I have posted previously. APOL broke above the upper boundary, danced around and then broke back below. The last few days rally has seen APOL attempt to rally up into this boundary from underneath. (does any of this make sense?)

I am using this raly to get short 1 unit of APOL here at $ 83.95 with a stop at $88.11


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $66.15
Long 1 unit Ultrashort Real Estate ticker SRS @ $51.30 stop @ $47.18
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Wells Fargo ticker WFC @ $20.20 stop @ $22.43
Short 1 unit of JP Morgan ticker JPM @ $27.35 stop @ $29.54
Short 1 unit of Apollo ticker APOL @ $83.85 stop @ $88.11

Wednesday, January 28, 2009

Getting Long SRS, Adding to SDS

I want you to realize that I am aware I was stopped out of my long SRS position this morning and that this is not a "take that" trade.

That said, I am getting long 1 unit of the Ultrashort real estate, ticker SRS here at $51.20 with a stop at $47.18

I am also going to use todays strength to add a 2nd unit long of the Ultrashort S&P 500 ticker SDS here at $73.30.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $66.15
Long 1 unit Ultrashort Real Estate ticker SRS @ $51.30 stop @ $47.18
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Wells Fargo ticker WFC @ $20.20 stop @ $22.43
Short 1 unit of JP Morgan ticker JPM @ $27.35 stop @ $29.54

Getting Short JP Morgan and Wells Fargo

I am using the days strength to get short 1 unit each of the following:

Wells Fargo ticker WFC here at $20.20 with a stop at $22.43

JP Morgan ticker JPM here at $27.35 with a stop at $29.54



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Wells Fargo ticker WFC @ $20.20 stop @ $22.43
Short 1 unit of JP Morgan ticker JPM @ $27.35 stop @ $29.54

Financial Mania Day

The XLF (chart above) is rallying and the volume seems to be missing in action. Is it me or does this bother anyone else.

The RKH (chart above) paints a similar picture. I continue to hear pundits say the regional banks did not make the mistakes the big boyz did. It seems to me the market thinks differently.

The chart on JP Morgan (above), has a very, very nice rally in progress. Yes, I know Jamie Dimon is the best, but he better hope volume shows up, and quickly.

The chart on Wells Fargo (chart above) has gapped up today. Remember my 20 yr chart on WFC a few days ago? $20 was the break down level. Note where we are rallying into it today.

The chart on Bank America (above) looks to show a bear flag. Again note the declining volume of the rally. Caveat emptor.


Lots of the talk about the good bank/bad bank scenario in the markets as the impetus for this. What can I can tell you except that there is no shortage of fools in this market. Markets rise and correct in bull markets and drop and correct in bear markets. CNBC can continue to bring out pundit after pundit extolling the value and virtue of the banks at these levels and yes they are bouncing wonderfully this morning but just remember that they can just as easily gap down and they have up today.

I realize many are just yearning to believe that each remedy by the Fed and Treasury is the holy grail fix for the financials. Many are praying the worst is over and sunny days lie directly ahead. In many cases their retirement counts on it. Unfortunately for these people the banks are insolvent. All this is window dressing, it is just pain delay that is all. Buying time. The powers that be were sure that this was just a temporary disruption in the regularly scheduled bull market of profits and credit. So why price assets at "fire sale" prices when they will quickly recover.

Well, it has been more than 18 months and prices have not recovered. So even my room temp IQ deducts that this is NOT fire sale prices but rather market prices. Remember my grandfather's admonition that "he who panics first panics best".

I am sure CNBC will cart out Steve Grasso and the rest of the crew to crow about this "rip your face off rally". Just remember where these stocks were prior, (as CNBC conveniently omits this quite often) because it is where most folks and fund managers own these things. Hint, it is at extraordinarily much higher prices.

So is this it? Have we seen the bottom? Have we seen the capitulation? I want you all to do some homework. I want you all to ask your family and friends if they have sold out their IRA and 401k accounts. My guess, mainly from my own informal research, indicates that they have not. they have not sold out and moved to cash. Just like the tech bubble, they hung on all the way. The hope and prayer method as it is informally called.

I want to say this last thing about the good bank/bad bank garbage. If you think that President Obama, the Fed, the Treasury can wave their wand and magically make this all go away then you deserve the fate that awaits you. Sorry if this offends you but that's just the way it is.

I will tell you this, that as bad as things feel given the stock market and the economy currently YOU AIN'T SEEN NOTHIN' YET compared to how bad it can and WILL be if our bond market implodes. I used to say we need to quarantine these bad assets, loans investments, etc that the financials hold, this cancer and write them off and accept the consequences. The Fed and Treasury taking this paper, which is code for the taxpayer, is just like a rescue vessel approaching a sinking 'Titanic' as it is going down. The rescue vessel will get sucked down. This is a painful decision but it MUST BE MADE !

Please, Mr. President I beg you, back the boat away and let those ready to sink sink, before they sink us all !



Housekeeping notes;

I was stopped out of my long SRS position this morning, as it gapped down, at $54.95 and $54.74 for loss of 3/4 of a pt on 1 unit and a flat trade on the other.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70

Monday, January 26, 2009

Rotton to the Core

I realize many readers can get a little sick and tired of my ranting, my complaining and my taking to task of the many who seem to think they were born with a better pot to piss in 'so to speak'. Often my schtick tends to wear thin on many, for people want to believe in the tooth fairy, the fairy godmother, the wizard behind the curtain (think Oz) and in general, happy endings. The problem with this is the real world, more often than not, fails to confirm to the storybook ending.

I want you to read this article out of the Mail online of London which I caught wind of via Karl Denninger over at Market Ticker. (thx Karl)

It is not just the lying, the cheating, the pillaging, the unbound greed and avarice but the willful deceit, the knowing fraud and it is all much WORSE than this chronically complaining trader ever imagined !

I cannot conjure up the appropriate words to describe my anger, my frustration, my outright disgust at what we are up against. I had been doing some self-reflection not only in regards to my trading but my commentary in this blog and was a little taken back by the sharpness of my barbs and the bearishness of my notes. The issue for me is that each time this happens and I think I am too over the top, news and information comes out that makes my words and my criticisms seem downright tame compared to the degree of and magnitude of malfeasance being perpetrated upon us by our own.

I know many still disagree with me so try this article by Don Bauder out of the San Diego Reader on for size. The article centers on the SEC in all in glory. Remember when John Mack was at Pequot Capital, before Morgan Stanley and the insider trading investigation and subsequent firing of the SEC investigator in charge, who months prior just received a glowing review? It's all in there for you.


This is economic and financial terrorism being perpetrated upon us by our own elected officials. I wasn't going to post the following link to a recent note published by Gerald Celente entitled Code Red: Economy in Collapse-Drastic Actions Will be Taken. but the above 2 linked articles out of London and the SEC made me change my mind. For those unfamiliar with Mr. Celente I would counsel that you ignore him at your own peril.

The money honey of TV Maria Bartiromo has another blockbuster interview today with another from dirt bag central. The former NYSE and Merrill CEO John Thain. He of 5 figure toilets and other assorted office furnishings. I wonder what grovelling, boot licking, hard ball questions she intend to lob at John "like watching paint dry" Thain. I'll hazard a wild guess she will work her tail off and pull out the Paulson interview transcript. Truly fitting.


I have witnessed some economic and market lunacy over time but the news today regarding Chrysler from the NADA meeting in New Orleans is breathtaking in its idiocy. I realise that the boyz at Cerberus are everywhere and always the smartest guys in the room but this takes the cake. Sales are down over 30%, dealers lots are filled with cars and the take away is order more vehicles to help survive.

I am at a loss for words to describe this. You are running a business that is bloated with inventory, you cannot sell what you have so what do you do ? Of course you order more product. Yes, dear readers, more supply. Just think back to when I took to task Cerberus's hiring of Bob Nardelli to run Chrysler. Obviously I was not critical enough.

To be truthful I really am not shocked by this at all. Everyday investors in the stock market, both novice and professional, employ the time honored playbook of averaging down their losers.

Hey Liz Claiborne having trouble selling dresses ? ..... no problem, order more !
Hey Starbucks having trouble selling latte's and espressos ?.....no problem, order more !
Hey Coach having trouble selling handbags ? no problem, order more !

Someone pinch me so I can wake up from this nightmare.


Housekeeping notes;

I was stopped out of my long SRS position at $148.05 for a gain of about $46 pts on 1 unit long.

I was stopped out of my short MANT position at $60.20 for a loss of 43.5 pts on 1 unit short.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70

Saturday, January 24, 2009

Confetti and Streamers

Regular readers know I have been less than subtle in taking to task some of the country's leading academics for their market and economic idiocy through the current economic debacle. I have been highly critical of not only their appraisal of how we arrived here but also their solutions which most often employ Keynesian "more of the same" garbage.

I want readers to know that not that I am an equal opportunity offender and will not hesitate to identify economic lunacy when it is on display regardless of your place in the food chain. In all fairness, not all of our leading academics should be painted with the same 'ignoramus brush' as I have done with the likes of Ken Rosen of Cal-Berkeley and Roger Farmer of UCLA.

So just so you all know I am not only a nit-picker and naysayer only finding fault, I want to get out the confetti and streamers for David C. Rose and Lawrence H. Wright.

David C. Rose is Professor of economics at the University of Missouri-St. Louis and Lawrence H. Wright is the F.A. Hayek (now talk about a real economist !!) Professor of economic history at University of Missouri and a fellow at the CATO Institute.

I would normally only post a link to their article entitled 'We Can't Spend Our Way Out of This Quagmire'. Instead, I am reprinting their piece below, in it's entirety for your enlightenment. I encourage you to take the time to read it. It is elegant in its simplicity.

We can't spend our way out of this quagmire


The cause of the economic crisis was not the collapse of the secondary mortgage market, policies aimed at increasing home ownership or the rise of exotic financial instruments. These factors affected the nature of the crisis, but the ultimate cause was the bursting of a real estate bubble made possible by excessive money growth.

Abundant money and lower interest rates spur buying, pushing up prices. Since the supply of housing is relatively inflexible, housing prices rise quickly. Beginning in 2001, rising house prices and a rallying stock market increased homeowners' perceived net worth. People believed they didn't have to save as much for retirement or for their children's college education. And they could borrow more against their increased home equity, allowing them to buy more goods, services, stocks and real estate. Credit-fueled spending reinforced the rising prices of everything, but especially real estate and stocks.

But the increase in real estate prices and the increased spending it supported were a fantasy. The economy's ability to produce real goods and services is determined by the amount of plant and equipment, the number of workers, the supply of raw materials, and so on. We inevitably moved into a period of general inflation, so the Fed eventually had to reign in its easy money policy. Borrowing became more expensive, so people scaled back their spending or began selling assets to sustain it. Either response puts downward pressure on the prices of real estate and stocks, so prices that everyone counted on to rise forever began falling. The bear stampede was on.

In 2001, the Federal Reserve began expanding the money supply. Year-over-year growth rose briefly above 10 percent and remained above 8 percent into the second half of 2003. The effect on interest rates was immediate; the Fed funds rate that began 2001 at 6.25 percent ended that same year at 1.75 percent. It fell further in 2002 and 2003, reaching a record low of 1 percent in mid-2003. But if the Fed hadn't increased the money supply from 2002 to 2006, increased demand for credit resulting from deficit spending and the increased demand for real estate would have pushed up interest rates. This would have discouraged borrowing. Rising interest rates would have thwarted the process by which an increase in borrowing by the government and by the public artificially inflates asset prices, begetting even more borrowing.


Most economists, government officials and politicians continue to believe the standard Keynesian explanation for recessions: Recessions are caused by consumers and firms becoming "spooked" for no meaningful reason, so consumption and investment spending falls below normal levels. This reduces demand for goods and services, which reduces employment, which reduces spending even further, and so on. Since the level of spending before the "spooking" was presumed to be sustainable, the solution to the problem is simple: Increase spending to where it had been during the boom.

In reality, excessive money growth drove asset prices up and drove interest rates down, making people feel richer than they really were and lowering the cost of borrowing money to facilitate more spending. Since the level of spending before the period of excessive money growth was just sustainable, the resulting level of consumption and business investment spending was unsustainable. The solution is to allow asset prices to fall to levels that accurately reflect what our economy can produce. This will make it clear to people that they are not as rich as they thought two years ago and thereby return spending to sustainable levels.

Still, virtually everyone agrees that we need to further stimulate the economy even though current attempts to solve our crisis by increasing spending is exactly the wrong thing to do. No one wants to bear the political cost for appearing to be uncaring by favoring a policy of "doing nothing." Out of political cowardice, the federal government is attempting to produce a solution that is penny-wise and pound foolish. You can't solve an excessive spending problem by spending more. We are making the crisis worse.

We have been down this road before. Most recessions start with the bursting of bubbles that grew large because of excessive money growth. But again and again, we presume a Keynesian cause and a Keynesian cure.

Our recent stock market and housing market crashes can prove to be the start of a sound and rapid recovery — if we will have the courage to let it be so.



My utmost congratulations to Professors Rose and Wright for the courage and brains to offer some meaningful, sober and common sensical ideas on addressing this issue. If only President Obama and his economic dream team were so inclined to entertain the counsel of this pair.

I also want to offer congratulations to the parents of any students enrolled in Professors Rose and Wright's classes as they most certainly learning and are getting 'value' for their tuition dollar. I would counsel the provost of the University of Missouri-St. Louis to keep these 2 happy as the school is fortunate to have these bright lights on staff.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $148.18
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

Thursday, January 22, 2009

Microsoft - Headed for $5 ?



Much of the attention today was focused on the Microsoft, ticker MSFT, earnings miss. Given that I thought it might be fruitful to have a look at the chart. The chart (above) is a 20 yr monthly view. This should suffice in giving us the proper perspective in making an assessment. In fairnes I would caution the MSFT bulls, "it ain't pretty" and may want to skip clicking on the chart above as it may cause severe nausea.

Many will find the my Microsoft price target outlandish but then again, many thought the same of my call on Deutsche Bank AG - headed for $44? as well when it was trading at $94. For the record, Deutsche Bank closed at $23.33/share today so yes I was wrong on DB but only in how conservative.

What also should catch your eye was the fact that Microsoft is cutting 5000 jobs and further has decided to withdraw revenue and earnings forecasts for the rest of the year.

I was listening to the details surrounding the Merrill Lynch/Bank America saga. In particular the paying of bonus' to Merrill executives 3 days before the B of A closed. CNBC, in particular Charlie Gasparino detailed John Thain's travails regarding the redesign of his office and all its attendant goodies. He also reported that the NY attorney general Andrew Cuomo is starting an investigation into the sordid matter.

This all got me to thinking of the sheer greed involved by these characters. I want to state that when you risk WHAT IS YOURS, you fully deserve the most unimaginable windfall REWARDS ALONG with the risk of abject ruin. This is what made our country great, it is what has made it the economic juggernaut it once was. The sheer greed of these vipers got me to thinking of one quote in particular from one of my favourite movies ever 'Scarface'.

In the movie, Al Pacino played the young drug hoodlum Tony Montana was having a conversation about their competition in the drug trade with his new drug boss Frank Lopez played by Robert Loggia in which Lopez said the following " never underestimate the other guys greed." Quite appropriate given our current circumstances, don't you think?


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $148.18
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

Is Cheap Really Cheap ?

I had a break this morning and was poking around some of my favourite blogs to see what was what and caught Barry Ritholz's post Celebrating Incompetent Insider Stock Buys over at his excellent blog The Big Picture. I had just posted on my blog regarding insider buying in the banks and Barry had done similar. Besides his post being head and shoulders above mine, Barry's opening line is a classic where he says;

"The investor capacity to lie to themselves is truly an awesome thing to witness."

I wish I had said it myself Barry. I urge you to check out his blog, The Big Picture, as it is full of wit, candor and insight.


Pom Pom TV (CNBC) has now had on 2 guests this morning, one an analyst/fund manager named Anton Schutz and the other the head of Stifel Nicholas brokerage. Both were promoting the bank shares to viewers. The comments emanating from their mouths was beyond laughable and in fact was downright frightening.

Schultz called bank share prices like Citi and Bank America call options or leaps. For the uninitiated call options and leaps are very cheap ways to give the buyer the right but not the obligation to buy shares in the future at a set price. One pays a faction of the price to lock in that right. Okay. Now lets forget the fact that Mr. Schutz is up to his eyeballs long financials just for a moment and focus on his statements.

That is that bank shares are a low priced call option. I remember hearing similar chatter on Fast Money from the panelists regarding Washington Mutual among others. My question here is when will we learn. When will we learn that just because a share price looks cheap, the absolute number like say $3 on Cit for example, does not necessarily make it so.

The Stifel Nicholas representative stated that bank stocks can only go to zero. Now he is absolutely correct but I would humbly counsel that with Citi hovering around $3/share, a move to zero would represent a 100% loss for long stock holders, or gain for a short sellers if you're inclined. Now this return is much, much more than the paltry 36% gain I made shorting Citi last year just north of $44 and covering just south of $29.

The point here is don't be fooled by shills and charlatans claiming that something is cheap just because it is basically a single digit stock and they own it! Remember Jesse Livermore's admonition that the average boob measure his bargains by how many points off the top it has sold. Using this logic C is a screaming bargain !! Not!!

The pundit discussion then went on to the issue of the banks Tier 1 capital and other capital measures (tangible) and the fact they are better than the market gives credit for. Anyone who claims he can tell what the financials capital positions are is lying to you plain and simple. The banks refuse to fess up, refuse to bring back onto the books all the off balance sheet, Enronesque shenanigans. The kicker in the capital conversation was the comment, I believe from Mr. Schutz, that the banks have written down assets that is not permanent and can come back an be worth a lot more. (hope and prayer strategy)

In contrast to these gurus, I would counsel that the banks are insolvent. That the vast majority of assets on and OFF their balance sheets are overvalued and carried at fantasy marks. But that matters not a whit as long as one can hold onto the dream. The dream similar to one that many, many tech investors who held Nortel, INTC, CSCO (post bubble) alongside many others like them continued to drink this Wall St. Kool-Aid of long dated call option can only go to zero baloney. Unfortunately Nortel's recent bankruptcy put the kibosh on its recovery.

Again to quote Barry Ritholz, "the investor capacity to lie to themselves is truly an awesome thing to witness." Investors are not the only ones so let's add Wall St. and Washington to investors as well to make the quote complete.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $148.18
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

Insider Buying ?

I had to laugh yesterday at the 'breaking news' regarding Bank America that got the CNBC anchors all lathered up. The news that the bank CEO Ken Lewis and some other yes puppet executives went out and purchased just north of 500,000 shares in the $6 neighbourhood which amounts to the staggering dollar amount of $3 million. Now if this is not the biggest show of confidence I know not what is. Lets just call this what it is, token buying and be done with it.

I will not that one Dylan Ratigan was not impressed with the purchase of stock nor the rally yesterday. Readers know I heaped praise upon Mr. Ratigan for "finally getting it" recently. It really is amazing how you really do not need an advanced degree to figure out you are getting swindled and have been used as a pawn in the big fraud. Congrats again to Mr. Ratigan who I encourage to call these thieves out.

We also get news Jamie Dimon bought 500,00 shares of JP Morgan around the $23 mark totalling $11.2 million. That seems, on the surface, to be a more significant amount but remember that insider purchases are always best viewed as a function of ones net worth. When one has a quarter or a third of ones stake tied up it carries more weight, at least with this speculator.

We got IBM's numbers yesterday and in the view of the market were quite good. I caught a piece indicating that about 2/3's of the Dow's advance yesterday was courtesy of IBM. My gut instinct tells me it was shorts running for cover alongside zombie institutional fund managers buying the politically correct. Yes, most probably the manager of that fund in your IRA or 401k account. Sorry, but that's the way it is.

As I am finishing this piece Microsoft has released it's numbers earlier than anticipated and they are not pretty. Again, another zombie manager favourite, along with the CNBC pundit crowd. You know you could get recommendations like these from your 7 yr old nephew or niece rather than paying outlandish fees to the Hampton crowd, that is, if they have not skipped town and are AWAL. I hope you are not still listening to the shills on CNBC calling for a 2nd half recovery this year for if so you may want to skip the MSFT report. Just a thought.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $148.18
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

Wednesday, January 21, 2009

Geithner's Big Day

Did you catch head of the FDIC Sheila Bair on CNBC this morning? I got a kick out of her quote "the banks are well-capitalized and solvent". This leads me to my word of the day...

prop⋅a⋅gan⋅da

[prop-uh-gan-duh]

–noun
1. information, ideas, or rumors deliberately spread widely to help or harm a person, group, movement, institution, nation, etc.
2. the deliberate spreading of such information, rumors, etc.
3. the particular doctrines or principles propagated by an organization or movement.



Propaganda dear reader, nothing more. I am using the word propaganda as opposed to something more harsh and derogatory due to the fact that I like Ms. Bair. she seems to be sober and thoughtful regarding the issues we face and has comported herself well through this fiasco but propaganda is propaganda no matter how you slice it or spin it. You can repeat the phrase 'well-capitalized and solvent over and over again as many times as you wish it will not make it so when it is not.


I keep hearing the Tim Geithner apologists grovelling daily though the real shock for me is Larry Kudlow's opposition to the Geithner nomination and the fact he should be dumped immediately. Readers know I rarely if ever agree with Mr. Kudlow on the economy and basically can make the blanket statement that if Larry Kudlow has a position on the economy I need not know what it is just know I will be the opposite.(You can also throw Dennis Kneale and Don Luskin into that category but once again I digress)

This is a rare case where I wholeheartedly agree with Mr. Kudlow regarding Geithner, who is the poster child for what is wrong with U.S. financial markets. A yes man through and through, who no doubt has paid his dues in his meteoric rise through the ranks of public service at the Fed. Forget his tax issues for a moment, and let's look at his recent duties as President of the NY Fed. This Fed is responsible for the Wall St. banks and brokers domiciled there blew up. I hate to use this word but this is ground zero for the giant "boiler room" American finance had become. Mr. Geithner may be immensely qualified to write textbooks and papers on the ins and outs of ultra high finance but I can assure you having him as Treasury Secretary is synonymous with having Chris Cox from the SEC head up the FBI.


I want to touch on the mantra of emanating from D.C. that "he's the only man for the job". I have only one response to this line of bunk which is, if one of the greatest nations on this earth, home to some of the world's finest educational institutions, with over 350 million entrpreneurial and innovative inhabitants and all we have to offer for Treasury Secretary is Tim Geithner as a solution, well then heaven help us all !

In the end I have no doubt Mr. Geithner will be confirmed. I have unfettered faith in men like Schumer and Baucus, men wholly unemployable in any other fashion other than swining at the public trough, to grovel with the best of them and do what is right for them and not what is right for our country. This is our just desserts so to speak.

Take this as you will from a distanced onlooker who does not know Mr. Geithner, who is most probably a generous, likeable fellow, but knows a company man when he sees one.

I have oft referred readers over to Karl Denniger's excellent blog Market Ticker. Karl has been extremely vocal regarding our current circumstance and penned an excellent post yesterday entitled There is Only One Solution to the Banking Crisis. I strongly encourage you all to read it as it is spot on. I would only only hope that people like Geithner and Bair might do the same.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $148.18
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

Tuesday, January 20, 2009

More Financial Woes

It seems we have discovered another rogue hedge fund manager in our midst. Mr. Arthur Nadel has "gone missing" along with a reported $350 million in client assets. I do hope his clients realise that Mr. Nadel, an attorney by trade, was disbarred back in 1982 for violating the terms of an escrow agreement. What is that Latin phrase again, oh yeah, caveat emptor.

Yesterday we got news that Royal Bank of Scotland had losses of 22 billion pound sterling absolutely hammering their stock. All this, according to Mr. Steve Forbes, this is nothing more than a liquidity crisis, and if only the accountants and regulators would ease the mark to market restrictions all would be glorious !

Remember now, according to the pundits like PhD (papa has dough) Steve Forbes, it's all just a liquidity crisis. Mr. Forbes I want to introduce you to a concept called insolvency, yes a hard concept to grasp when the money is not yours but try it out.

The U.S. treasury is demanding monthly lending reports from the banks who have received bailout funds. How brilliant in its simplicity. It's sheer elegance. Lets force the banks to do more of what created this mess. At least it's all consistent in one big sort of twisted, perverse, twilight zone sort of way.

We get more news today on the financials with State Street's losses (ticker STT). I remember a reader email claiming State Street was immune to the woes of other banks due to their prominent position in custodial services. I sure hope he had some stops in, but either way it is another example of when the psychology changes, no one and I MEAN NO ONE is immune to it's ravages. You can tell yourself otherwise but facts speak for themselves. But hey, why lets facts get in the way a nice dream.

Hey there's nothing to worry about as the banks are trading below intrinsic book value. This is a buying opportunity of a lifetime. Wait, sorry, I missed that chance. That was back in March of 2008 according to Dick Bove. Considering the decline since then it must be the buy of the millennium.

Given the concerns here and overseas regarding the financials, I am raising my stop on the ultrashort financials ticker SKF to $148.18.

Housekeeping notes;

I was stopped out of my APOL position at $88.70 for a loss of just shy of $3.5 pts on 3 units.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $148.18
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

Friday, January 16, 2009

Wells Fargo - WFC


Friday last week I opened a post with the following statement;

"Is anyone out there paying attention to JP Morgan? ticker JPM. I suggest you might want to !"

Well this morning I would like to say; Is anyone out there paying attention to Wells Fargo, ticker WFC?

Yes that same Wells Fargo the Oracle of Omaho (re: Warren Buffett) likes. I humbly suggest to do pay attention to it's action, as not doing so could be extremely hazardous to your financial health. (20yr weekly chart above)


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $102.60
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 3 units Apollo Group ticker APOL @ $85.36 stop @ $88.61
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

Thursday, January 15, 2009

Getting Short Mantech - MANT

In my post yesterday I hilighted Mantech's, ticker MANT, bearwedge pattern. I am using this late day strength in Mantech as it pops into the upper bound of that wedge to get short 1 unit at $56.90 with a stop at $


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $102.60
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 3 units Apollo Group ticker APOL @ $85.36 stop @ $88.61
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

Another Light Goes On

I am pleased to announce that another 'pretty face' at CNBC has had the proverbial light go on! The Bank of America back-to-the-trough news seems to have been the tipping point for "The Brain" David Faber hence his rant this morning.

Like his colleague Mr. Dylan Ratigan, it seems Mr. Faber is finally coming to the realization that the banks are lying. That not only that are they liars but they are pathological liars as well or as former President Andrew Jackson put it "are a den of vipers and thieves".
His disgust at the situation, in my opinion, for being lied to but also for being played the fool was on display for all to see.


You are witnessing the pollyannas falling one by one as they can no longer ignore the patently obvious. I just want to caution Mr. Faber to be very careful with his criticism of the banks, the Fed or Treasury, as challenging the consensus view can be extremely hazardous to one's career prospects. Just ask Michael Metz at Oppenheimer and Charlie Clough at Merrill.

Either way just as we did for Mr. Ratigan, 3 cheers are in order for Mr. Faber this morning. Congratulations David, now lets see if you can follow the clues.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $102.60
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 3 units Apollo Group ticker APOL @ $85.36 stop @ $88.61

Wednesday, January 14, 2009

Couple of Thoughts


Readers know that I think CNBC's Fast Money is one of the better if not THE best market show on television. Hosted by one of the few pretty faces on CNBC who is finally "gettting it", Mr. Dylan Ratigan, the show gets some excellent guests and have some lively discussions worthy of your time.

What prompted this post was the news early this evening that Steve Jobs, CEO of Apple is taking a medical leave of absence. I want to wish Mr. Jobs well in his battle with cancer for we all know too well the toll this disease takes on not only the affected but the surrounding family. That said, I want to touch on the discussion the Fast Money regulars are having regarding Apple's stock.


Back on Nov 17 I posted a chart on AAPL in which I remarked; "is AAPL headed for $50, the broken trendline suggests so." I bring this up because the Fast Money regulars are recommending buying AAPL 'for a trade' based on the weakness following the Steve Jobs health leave news. So, let me make sure I understand this... they want me to buy a stock that, having closed at $85.33
and is trading down afters and unless something changes drastically before the open tomorrow, stands poised to take out not only its recent reaction low ($84.55), but its recent absolute low ($79.14) which is it's 52 week low. See chart above and sorry for the run on sentence.

Now I don't have all the answers but one guy who sure did was Jesse Livermore and he tended to buy that which was making news highs and sell that which was making new lows. My friend Dennis Gartman, often remarks that he always like to put his rocks in the wettest paper bags for they break most easily.

I bring this up because Fast Money is a "TRADERS" show, geared towards the active speculator. Now call me crazy but Jesse Livermore, might be shorting AAPL here, or might be adding to his short, or might just be sitting tight but I would bet dollars to doughnuts he would NOT be buying it.

I just thought I would throw this out because, and call me crazy for saying this, but maybe, just maybe buying a consumer discretionary stock in the midst of the worst recession and consumer retrenchment many alive will see and many pundits are still loathe to admit, might just be silly.


And if the Apple news wasn't enough for you there's more. To many this will come as a real shocker, I mean out of left field type stuff. That is, that Bank America (BAC) is coming back to the all-you-can-take buffet that is the Fed and Treasury for more taxpayer money to stay afloat.

Just as subprime borrowers went to Countrywide, IndyMac and Golden West for their no doc NINJA (no income, no job, no assets) loans, we are witnesses a perverse form of deja vu where Citi, Bank America, Morgan Stanley are the new subprime borrowers and the Fed and Treasury play the role of Countrywide and IndyMac.

Sadly and ominously, we know how Countrywide and IndyMac turned out and most assuredly Wachovia knows how Golden West fared.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $102.60
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 3 units Apollo Group ticker APOL @ $85.36 stop @ $88.61

Change at the Treasury

You catch some of the money honey's exit interview with Henry Paulson? What a joke. Mr. Paulson, will you prefer to water ski or snow ski in retirement? Will you spend more time at the villa in Austria or Paraguay?

Here Maria, my dear journalistic juggernaut, are a few questions a novice like myself thought might just be appropriate to ask his eminence, Treasury Secretary Paulson.

1. How is it Mr. Secretary that as CEO of Goldman Sachs you could sell one security to clients out the front door, yet short sell, the same security you just sold, out the back door for the house account and hence your own pocket?

2. How is it Mr. Secretary, that as CEO of Goldman Sachs you could lobby for leverage limit restrictions to be removed, only to be rebuffed yet return years later only to get said restrictions removed, directly responsible for enhancing your income during these years and which directly led to Wall St.'s implosion, which you are now bailing out?

3. How is it Mr. Secretary that you
repeatedly told lawmakers that you did not plan to use bailout funds to inject capital directly into financial institutions. Privately, however, your staff was developing plans to do just that, and which you acknowledged in an interview?

4. How is it Mr. Secretary that having been on Wall St. and knowing all the players you can one day proclaim that the banking system is safe and sound, yet only to appear before lawmakers shortly after proclaiming and here is your quote "that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally."?

This is just a start Maria. You can reach me at the above email if you need any other suggestions.
While on the subject Maria, when talking to Paulson and others of his ilk, why do you and your minions refer to him as "sir". I am not a disrespectful person but it strikes me as the irony of all ironies to refer to a thug, and make no mistake Maria, men like Paulson who are responsible for this mess are thugs, as sir. Maybe even an oxy moron, no?


Tim Geithner is President-Elect Obama's nominee for treasury secretary. So let me see if I got this straight cause I'm not the sharpest knife in the drawer.

Geithner failed to pay self-employment taxes for money he earned from 2001 to 2004 while working for the IMF. He paid some of these taxes in 2006 after the IRS discovered the discrepancy for taxes paid in 2003 and 2004.

Okay.

Then after Obama taps him for treasury he scurries over to pay the taxes for years 2001 and 2002, his first 2 years at the IMF, before anyone is the wiser.

Okay.

So the way I see it, he knows he was wrong and didn't pay and then pays for his last 2 years owing at the IMF when he gets busted by the IRS. But he doesn't' know he owes for the first 2 he was there (huh?), but then pays whats owing for those first 2 years only when the treasury gig comes up.

And the position Obama wants him for is Treasury Secretary right?... and not secretary in the true sense of the word, like the hard working ones who keep the vast majority of offices and executives in business running but I digress.

Wasn't Geithner head of the New York Fed? Doesn't the NY Fed preside over Wall St, which resides in his jurisdiction? Didn't those Investment banks under his watch create this toxic cess pool we find ourselves in?

Yup same guy.

Seems to me that Geithner is simply more of the same ol' same ol', status quo, back scratching, look the other way, take care of me and I'll take care of you bull we have had for decades. Call it anything you want just don't call it change, as it insults my room temp IQ.

How dare I say all this you exclaim !

Easy.

You see, unlike grovelling CNBC journalists (apologies to Rick Santelli, Diana Olick, and Phil Lebeau for using that phrase as they really are journalists), unlike the Keystone Cops at the SEC, unlike the spineless attorney generals, I am not beholden to men like Paulson, Rubin, Greenspan, Bernanke, et al.

I am not looking for a patsy appointment to the World Bank or the IMF. I am not looking to ride some coattails to a cushy job at the New York Fed like so many others. I try with all my might to call it like it is. Like it or not.

I hear the morning, noon and night crew on CNBC ridicule the bloggers as, to quote Carl Quintanilla, "they can write anything they want."

Well, not exactly Carl. I would humbly suggest that the majority of financial blogs, have higher ethical and professional standards than most of your grovelling, gopher, educationally elite co-workers Carl. Quite frankly, if real financial journalists did their job, most bloggers might have nothing to do and most assuredly would have no audience. Feel free to pass my comments on to Charlie Gasparino, who in addition to being a tireless worker, and decent journalist in his own right, knows very well the threat bloggers pose, hence his animosity to them.




Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $102.60
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 3 units Apollo Group ticker APOL @ $85.36 stop @ $88.61

Chart on Mantech - MANT

The daily picture of Mantech International, ticker MANT, (chart above) shows an interesting looking bear or rising wedge formation. As my notes on the chart indicate, we may want to keep our watch over this one with an eye towards the $58-59 area where we (hopefully) might get a crack at.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $102.60
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 3 units Apollo Group ticker APOL @ $85.36 stop @ $88.61

Tuesday, January 13, 2009

Short a Final Unit of Apollo.

APOL is now into the gap created last Friday as it has broken that day's low of $84.50. As per my prior notes, I have shorted my 3rd and final unit upon this break at $84.40.

For as Jesse Livermore always counselled; "it was never my thinking that made me the big money, it was my sitting, got that!"

And so I shall sit.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $102.60
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 3 units Apollo Group ticker APOL @ $85.36 stop @ $88.61

Shorting more Apollo Group - APOL

Apollo Group, ticker APOL, took out $85.50 and as per my prior post this morning I shorted a 2nd unit at $85.35 and will sit tight watching $84.50 (Friday's lows) as the next trigger.

Housekeeping notes;

I am raising my stops to break even on all my Ultrashort positions. Why let a winner become a loser?

I am also lowering my stop on Darden, ticker DRI to to 28.70, basically breakeven less a point.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $102.60
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 2 units Apollo Group ticker APOL @ $85.90 stop @ $88.61

Another Look at Apollo Group- APOL

The above chart is a daily view of Apollo Group, ticker APOL. The gap has now held for a 2nd day. I cannot help but suspect that this may be an exhaustion gap but the rule is to buy the 3rd day of a gap that holds. That said, if this gap holds a 3rd day it must be respected hence I am lowering my stop to the recent (Friday's) high plus a point. Gotta remember that a lot of hedge fund boyz are looking in the abyss and are chasing any trade that shows signs of life. B

But, if this is an exhaustion gap I stand at the ready to add to my short. So lets have a closer look a the action of late.

The above is a 10 day/10 min view of APOL. We have not made a new high nor a new low since Friday. Hence I stand ready to get further short on a break of $85.50 and then once again at $84.50



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $84.67
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $99.47
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $63.77
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $47.93/$51.68
Short 1 unit Darden ticker DRI @ $27.70 stop @ $30.12
Short 1 unit Apollo Group ticker APOL @ $86.55 stop @ $88.61

Monday, January 12, 2009

Kellogg - K



A friend asked me to have a look at Kellogg for him. (ticker K). The long term view (top chart) should help by giving one some perspective. The daily (chart above) paints an interesting though negative picture. Watch out below if this recent consolidation breaks it's lower boundary.

My friend Dennis Gartman had an interesting comment recently, which reminded me not only of his humility but also of his wisdom.

"As we have long said, there is nothing materially wrong with being wrong, there is something very materially wrong with remaining wrong.... and we are when our positions are unprofitable."

I suggest that you all read and re-read this statement as it will save your hide in most every endeavour. Business, trading, warfare, sports. etc. Very wise counsel indeed.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $84.67
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $99.47
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $63.77
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $47.93/$51.68
Short 1 unit Darden ticker DRI @ $27.70 stop @ $30.12
Short 1 unit Apollo Group ticker APOL @ $86.55 stop @ $90.83

Friday, January 9, 2009

Some Random Thoughts


Is anyone out there paying attention to JP Morgan? ticker JPM. I suggest you might want to !

I keep wondering whether the pom pom network has become the official information organ of Pimco? Are there no other managers available with which the CNBC pretty faces can grovel to? Gross, McCulley, El Erian have a nice set up going. Congrats to them on pulling it off. Nice to have a free venue to spout your position enhancing propaganda. Guys like these will sell out all principles they might have had to further a position they may hold, yet these are kind we hold up and worship. Pathetic.


Yeah, yeah I know. I'm just jealous. There could be absolutely no rational basis for my incessant whining now could there? Now don't get me wrong the braintrust of Pimco mentioned above are brilliant but where I get angered is their seemingly nonchalant attitude to the destruction of the Fed and government's balance sheet. Do they not care? Are they not outraged as I am? If so, then lets see it, or in the least show some giddy in your up when speaking on the subject.

I caught retail analyst Howard Davidowitz yesterday on CNBC waxing about the debacle that is retail. He also repeated his previous comments about commercial real estate being in a depression. He specifically cited General Growth properties (ticker GGP) as bankrupt. Now fancy that, funny how that happens when you owe more than you make, or spend more than you earn, with all due apologies to the incoming President's mantra that we can spend our way out of this. Based on his logic GGP should borrow their way out of it.

The whole mess at it's roots, is so remedially simple, the remedies so stupefyingly lacking in foundation it boggles the room temp IQ. Take away all the fluff and pomp and get down to the crux of the issue. That is, to just blindly believe as a article of faith, that the problem of too much debt, too easy credit, negative savings, can be solved by more of the same, is just, well, preposterous.

I am no neurosurgeon nor a Nobel winner in economics, but suffice that....

DEBT IS NOT WEALTH..... SAVINGS IS !!!

This is fact, no matter how often, nor how many nor how vehemently the Nobel prize winning, 5 star fund managing charlatans tell you it is not.

The sooner we get this through our thick skulls the better we will all be for it !

These do more of the same rocket scientists, yes the same ones that orchestrated this quagmire, must be the same people that believe you can fix a long stock position you have at $100 by buying more at $90 and then more at $80. Why stop now for heaven's sake, buy more!! at $60 and then $40, all the way down!

Kinda like Bill Miller over at Legg Mason funds did with Fannie and Freddie...and AIG....and Bear Stearn. Oh yeah,,,, and Lehman, and any other financial stock he could get his hands on. Greenspan put anyone? Brilliant in its simplicity, no? Not unless you're a unit holder in his fund that is.

Housekeeping update,

I was filled on a 2nd unit long of SRS at $55.60 with a stop at $51.68


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $84.67
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $99.47
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $63.77
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $47.93/$51.68
Short 1 unit Darden ticker DRI @ $27.70 stop @ $30.12
Short 1 unit Apollo Group ticker APOL @ $86.55 stop @ $90.83

Getting Short Apollo Group - APOL

I am using this mornings bout of inordinate strength (as the shorts get taken to the woodshed) and get short 1 unit of Apollo Group ticker APOL here at $86.65 with a stop at $90.83. I am watching for a break of the days lows of $84.50 to add a 2nd unit short.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $84.67
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $99.47
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $63.77
Long 1 unit Ultrashort Real Estate ticker SRS @ $54.75 stop @ $47.93
Short 1 unit Darden ticker DRI @ $27.70 stop @ $30.12
Short 1 unit Apollo Group ticker APOL @ $86.55 stop @ $90.83

Getting Long SRS .... again.

I am getting back into my Ultrashort real estate position, ticker SRS, this morning here at $54.65. I am also looking to add another unit on a move above $55.50.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $84.67
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $99.47
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $63.77
Long 1 unit Ultrashort Real Estate ticker SRS @ $54.75 stop @ $47.93
Short 1 unit Darden ticker DRI @ $27.70 stop @ $30.12

Thursday, January 8, 2009

Charts on APA and APC

The daily chart on Anadarko ticker APC (chart above) does not paint the rosiest of pictures. We seem to be forming a bear flag of some consequence here over the last few months. The waning volume as this has occurred does not bode well for a contradictory bullish view. Deep down I want to believe that the oils, the oil servicers, drillers et al are cheap but as any novice should know they can get much, much cheaper than we ever dream possible.

The next chart is of Apache ticker APA (chart above) where we seem to be having a moment of deja vu with another flag formation. As my notes indicate the lows of this recent formation better hold or a move down to the mid to high $20's would be in order. That said, if APA can take out $90, a move to $120 would be in store. Confused yet? I sure hope not.


Hat tip to Mish for catching the following Porn industry seeks federal bailout.

Just gotta love the sheer magnitude of the preposterousness of what we are witnessing. My guess is that with the inhabitants of congress and the senate, this has a better chance of passing than most others. Hey, politicians have needs to no?

I suggest you pay attention to the ADP numbers that were reported yesterday, even thought the like of Larry Kudlow will paper them over. Ignore them at your own peril.

I chuckled at the commentary yesterday on CNBC regarding Intel's news. The pundits claiming that the market is forward looking and prices all in. I guess maybe it just missed this one. Intel a one off affair you say?


Well then, I won't get into the Walmart news then, as it most surely is factored in by this forward looking market. And you thought I was just being mean, spiteful and overboard by calling the equity boyz short bus riding boobs. The facts speak for themselves whether you agree with them or not. Only in the government, or financial media or Wall St. can you ignore the facts and continue to succeed at staying employed.

Just remember this little exercise the next time cool breeze Bob Pisani tells you "the news was better than expected" or "we should be down much worse on this report".


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $84.67
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $99.47
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $63.77
Short 1 unit Darden ticker DRI @ $27.70 stop @ $30.12