Friday, October 30, 2009

Just a Couple of Facts

In what can only be termed keeping the faith, after quite a day on Wednesday, CNBC along with Bloomberg were out in full pom pom mode.

First up we get this "breaking news" video of Tyler Matheson of CNBC in which he has taken it upon himself, given the egregious sell off in the indices, (DOW down 119 mind you) to do an informal survey of a 1/2 dozen or so TOP Wall St. strategists.

The survey shows the market HAS NOT peaked for the year there's almost universal agreement there" that the market will be higher by year end.

See it and hear it for yourself here.


Next up we get Bloomberg pouncing on the wonderful rally Thursday, (Dow up 200) with this beauty of a piece in which a couple of critical thinkers had this to say;

“The fourth quarter will be the Waterloo of the bears,” said E. William Stone, who oversees $102 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “We are in economic recovery both in the U.S. and globally, so you will eventually see revenue growth because you are seeing the recovery hold.”


“The stock rally is not over yet,” said Jeffrey Kleintop, who helps oversee about $247 billion as chief market strategist at LPL Financial in Boston. “The stock market can celebrate. This news is an important confidence boost, in particular to individual investors.”


Never fear dear reader as its only the funds in your IRA/401k that critical thinkers like this are managing. Heads they win tails you lose.


Yesterday was without question a wonderful rally for the bulls, with the Dow up 200, just remember to note a couple of small overlooked facts by these purported objective analysts quoted above.

  • The volume on the Spiders, ticker SPY was 25% higher on Wednesday's down day (248.7 million shares) vs Thursday's up day (198 million)
  • The volume on the Naz, ticker QQQ was 40% higher on Wed. (143.5 million) vs Thurs. (85.1 million)
  • The volume on the Russell ishares, ticker IWM was 13% higher on Wed. (84.9 million) vs Thurs. (73.6 million)
  • The volume on the Diamonds, ticker DIA was 24% higher on Wed. down day (17.17 million) vs Thurs. up day (12.92 million)

But why let a couple of innocent little facts like lacklustre volume get in the way of a good pump. Further why let the inside days that the QQQQ, IWM and MDY experienced yesterday prevent a celebration.

I want you to consider this thought if only for a moment. Wednesday's big down day unleashed lots of concern, lots of palpitations, lots of worry. What better way to embolden the bulls, what better way to squelch the skeptical bulls, what better way to humiliate the bears than to reverse course immediately, gun the market up shaking loose all the worry warts who had trailing stops and make look stupid (remember Art Cashin said looking stupid is the biggest fear on Wall St. more so than losing money !!) those that sold and then missed the next day rally.

Yesterday was what some call "the hook", where participants will now ignore and be desensitized to the next sell off expecting the recovery rally soon after. The tech bubble was full of them, until it wasn't any more.

Ahhh heck, none of this means anything other than the ranting of a delusional perma bear, right? Just remember to be consistent and keep calling me such, even when I do get 'pounding the table bullish', which I will. Odds are when I do that, most won't have the nerve to come out of their house, let alone buy stocks.

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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Direxion Financial 3X Bear ticker FAZ @ $19.09
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Wednesday, October 28, 2009

Guilty of Sedition

U.S. Steel (X) daily chart above. My apologies as for some reason my notes cut off on the above chart. It should read,

"Does this chart of U.S. Steel tell us all we need to know about the economy?"

Nucor (NUE), daily chart above.

Transports i-shares (IYT) daily chart above.


Noteable Noteables

IBM - gapped down last week. Yesterday in the face of a further $5billion stock buyback, near all time highs mind you, barely finished up on the session.

RIMM - breaking July lows.

GDX - failing to make new highs as GLD has. Note SLV has not made a new high either. By the way, I see Jim Cramer likes gold, does that make anyone out there nervous as all hell.

RGLD - the undisputed leader of the golds failed to make a new high.

AA - Gap and crap still intact.

INTC - the same as AA though tech is still the go to pitch for most fund managers.

GS - has Stephen Friedman, that stock picker extraordinaire sold his position yet? (52,600 GS shares @ $76.66)

GMAC -needs another $3 billion, is this just a bad dream. Yup, keep poring money into that winner, just what every prudent businessman would do, right? Sorry I forget the politicians run that baby now, in that case expect $5 bill.


Financials

The big banks and financials have simply become gambling crack houses. I will exclude for the moment, but have not forgotten the pension funds with their market losses and unfunded liabilities. With taxpayer money as their backstop they are gambling on markets and assets pure and simple. I call it gambling and not speculating because when you do it with someone else's money and never suffer the consequences it is gambling, heads they win, tails, you and I lose.

To use a blackjack metaphor, there is an enormous hand of double down going on by many of these institutions. Trading, as they like to call it as it is coctail party inappropriate to call it gambling, accounts for the lions share of their revenue as all other arenas have dried up. This has to stop right now.

As I have said before like children playing a pee wee soccer game, all participants chase the ball, or in their case, the same trade. This is now being facilitated via the dollar. I cannot say this any more succinctly, WHERE ARE THE ADULTS? Are there none in Washington who see this grand heist of the century? Are there no patriots in power who see this for what it is?

Sedition

I have read and listened to how Time writer Joe Klein has accused the Fox News channel of being guilty of sedition, which is absolutely comical, but since we are on the subject lets talk about sedition.

Yes Mr. Klein, let's talk about the those who are really guilty of sedition. They reside in Washington and Wall St. and the Treasury and the Federal Reserve. I have said before that the policies, the remedies, the fixes we continually get from our elected and unelected leaders are so perverse, so counter productive, as to lead me to believe they have designs to see the republic implode.

They saved us from armageddon you say? Prevented us from falling into the abyss.
Really ?
How?
By papering it over with money they don't have?!
With FASB suspension of accounting rules by a shocking 5-0 vote?!
With trickery and gimmicktry?

I have previously counselled on numerous occasions that the answer to it all is to do NOTHING, absolutely nothing !

Let failures go under. The dead must not be kept on life support.
Stop the bailouts. Stop the handouts.
Immediately close insolvent institutions the minute they are discovered.

Am I such a simpleton as to make DO NOTHING the answer?

Or is the answer so sophisticated that only the 435 house of representatives and 100 senators, most of which are lawyers, are only qualified to figure it out? With the advice and counsel of their trusted lobbyists of course.
How else could a house representative vote for a bailout bill that was opposed by his/her contituents by a 99 to 1 margin only to be charged after the fact by King Henry and the clowns!

But back to Mr. Klein and his accusations of sedition. You want sedition charges Mr. Klein?

How about you try starting with a government agency responsible for supervision who aids and abets fraud. Like the obfuscation and obstruction that the Office of Thrift Supervision did with IndyMac.
When banks that a freshman accounting major knows should be closed and are not leading to exponentially larger losses due to this is akin to knowingly letting the cancer spread from the foot to the calf and then to the thigh and now having to amputate the leg.

Or how about you try with Goldman looting the treasury in broad daylight via a pass thru from AIG to the tune of $13 billion on derivatives that were worth a pittance of that !

Or how about former head of the NY Fed who was DIRECTLY responsible to regulate the banks activities in that district (re: Bear Stearns, Lehman, Merrill) yet does not. Is that not sedition when it threatens our economic viability. No Mr. Klein, in our system, that person is not charged with sedition, rather he is promoted to Treasury Secretary !

Or how about a Fed chairman who refuses calls for details (from elected officials mind you!) as to who has borrowed from the Fed and what was posted as collateral for said loans and yet REFUSES to answer these questions. In what can only be termed the height of hubris, then he goes to court to prevent it.

Is any of this not sedition Mr. Klein?

I am no defender of Fox News Mr. Klein but I would humbly suggest you aim your charges of sedition at more appropriate targets.

Just wanted to get that off my chest.


Housekeeping notes;

Yesterday I was stopped out of 1 unit of UEC at $3.09 for a loss of just over 1/2 pt on 1 unit.



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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Direxion Financial 3X Bear ticker FAZ @ $19.09
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Monday, October 26, 2009

Art Cashin


No mattter how many times I get to hear Art Cashin it never gets old. I mean here is a cat with 50 years experience. Seriously, this phrase gets tossed around haphazrdly but this dude has truly forgotten more than most on CNBC will ever know.

This recent interview with Mr. Cashin is must viewing. even considering Bob Pisani was conducting it and who would do well to ditch his incessant dining with hedge fund traders and just follow Art Cashin around all day with a pad of foolscap and a pen as he would learn more in an hour with Art than a lifetime with the Canali wearing, cupcakes from Ivy league row.

The classic absolute classic line of this interview is wherer Mr. Cashin's line of;

"people actually risk money not to be thought stupid."

I have often said this but as usual Art Cashin does it in a way that only he can! I want to re-read that quote again and again so it burns into your brain so you can remember that this is the mantra of the guy or gal managing that growth fund in your IRA account or that balanced fund in your 401k. It is the foundation for the mindset of the vast majority of Wall St. and Ivy League MBA programs. You would do well to understand this as then things will start to become clearer, most especially (and I say this yet again), as to why we find ourselves in the pickle we are in.


Housekeeping notes;

Monday Oct 19 of last week, I was stopped out of my TWM position at $26.40 for a loss of just over a pt. on 1 unit long.
My apologies for not posting that properly at the time.

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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Direxion Financial 3X Bear ticker FAZ @ $19.09
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09

Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Friday, October 23, 2009

Could it Really be This Simple

My niece, who has recently entered the work world from college brought the following article, out of the New York Times by a Calvin Trillin entitled Wall Street Smarts, to my attention.

In the piece Mr. Trillin proffers via his friend, imaginary or not, such a simple explanation for the Wall St. debacle that many would dismiss it as almost too juvenile to even consider. but maybe just maybe he is onto something.It is a quick read which in no way should diminish the enormous amount of sense the writer makes. You can click the link above and go straight to it.


I offer my Congratulations to Mr. Trillin for his simple yet clever explanation of the issue and as readers know all too well simple everywhere and always resonates very well with this cat! Maybe it could be this simple !

This now leads me to this next piece, compliments of the Temple of Mut blog, which was brought to my attention by W.C. Varones blog. (thanks indeed)

The article Vote? What Vote? I don't Need NO STINKIN' VOTE! details the hubris of yet another of the privileged few who believe they were born with a better pot to piss in and the politicians are their exclusive property, there to do their bidding. And the voters? Hell, they're just an inconvenient little nuisance.

Only a mindset like this could permit a statement like the following;


'A key backer of building San Diego a new $432 million City Hall argued against a public vote on the project Thursday, saying the general public won’t be able to understand it.

“There’s less than 1 percent of the citizens in the United States of America that understand the complexity in how to put these kinds of projects together, so why would we want to ask the other 99 percent?” said real estate mogul Malin Burnham.'


This quote comes from real estate mogul Malin and sums up succinctly how the politicians, the bureaucrats and the elite of this country view the masses. The tip toe around it, they never come out and say it, but if you have a room temp IQ, which I do, you can hear it..... "let them eat cake".

Didn't the last person to utter that have a date with a guillotine? My memory is kinda spotty lately.

So in putting these 2 seemingly unrelated pieces together you get one big game of Baffle em' with Bullshit, on a scale so grand as to make Charles Ponzi himself blush. Yes, make the deal seem to be so intricate, make it so convuluted and opaque that you need to be sitting in a marble chair with the thermostate set at 55 degrees to even begin getting a handle on it, thus convincing the boob on the other end, (Jefferson County et al. anyone?) sophisticacy = intelligence.

Time out while I flashback, in my former life as a broker, to an Italian client of mine who has passed on, (rest his soul) who had very little formal education but who managed to do quite well by anyones standards. One day I was explaining some fixed income investments to him, and before I could even get started he emphatically interrupted me and stated with no hesitation that if I could not show it to him with a pen and pencil on a scrap of paper in front of him he wanted nothing to do with it.


You want to talk about the type of man that should be running our public finances at all levels! Work ethic, humility and street smarts, at least enough smarts that allowed him to stay out of the clutches of the cash'carry thugs on Wall St. and K Street.

Now how do you think a man like this, lets say had fallen victim to either a momentary lapse in judgement or a stunning exhibition of baffle em' with bullshit, would react when he finally realized a baffle em' with bullshit fraud had been pulled on him?

Exactly !!

Now imagine how 'Mr. Market' will react when it finally awakens to a similar realization, that being the MBA hawkin', formulae talkin', buzzword droppin', Dr. Frankensteins has bamboozled. Just as Mr. Trillin over at the Times described. Can you say "no bid".

I don' t even want to consider how 'Mr. John and Jane Q Public' will react to a similar realization, don't even want to consider it!

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

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Direxion Financial 3X Bear ticker FAZ @ $19.09
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09

Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

The Music is Playing..... Are you Still Dancing?



I want to bring your attention to a chart of the S&P tracking stock the Spiders, ticker SPY. (chart above). I have adjusted the chart to a color function which will show the up days as black and the down days as red. Just as, if not more importantly, the volume is also color coded for you.

As my notes indicate notice how the volume expands on the down days (red) and contracts on the up days (black). As Art Cashin always says "volume equals validity" and as I was always taught, it takes a lot of volume to put a market up and a mere lack of volume to put a market down.

Further if you look at the entire volume trend of the market since the lows in March, it has been steadily declining. This can only go on for so long. I realize I am the ultimate simpleton focusing on such uselessly mundane items like lacklustre volume. It is much sexier to focus on how cheap the market is against metrics like 'operating earnings'.

Oh yeah, just in case you forgot, operating earnings is the funny little thing concept that got popular in the tech bubble to justify valuations which excludes write offs. You will never hear any of these cheer leading, book talking, stock selling shills on CNBC give the reported earnings because the hair on your neck would stand up.

You can listen to the stock jockeys on CNBC, the purported experts everywhere and always touting that buy stocks. The same ones who were singing the same song back at Dow 14,000, 13,000, 12,000, etc. All the way down.

I would also remind you, as I have blogged before on this, that both Intel (INTC) and Alcoa (AA), have gapped and crapped on their earnings. Both are now below where they were prior to the earnings release.

IBM and Goldman Sachs(GS) both ran up prior to their earnings release and have both since gapped down lower.

Rising unemployment
Rising foreclosures
Rising commercial real estate vacancies
Rising bankruptcies
Rising credit card delinquencies
Rising debt to income ratios
Rising government hubris that more heroin (credit and debt) will fix the addicted patient (this could be the most dangerous of them all)

Ignore these little nuggets of facts and subscribe to the hope and fantasies of the vested interest parties (politicians for votes, Wall St. and NAR for commissions) at you own peril.

This has been an extraordinary rally, the type dreams are made of with the SPX trading just shy of 1100. I would counsel that one think back to how they felt back in March when the S&P was trading under 700. My guess is you were saying things like, if this sunavabitch ever gets back up to (fill in your number here) I am out of this shit. Am I close? Did it sound something like that?

I would strongly urge you to ask yourself how you will feel if you sit tight and we ride back down to 700. I have counselled many friends and associates (who have asked and believe me, given the buoyant run many have stopped, which is standard operating procedure in rallies) that selling into this strength might be an opportunity we might not see again for a very long time. Its too bad I cannot bring over some Japanese retail momma san and papa san investors from the late 80's who might be able to offer one some counsel on their experience with the Nikkei since then. In case you are not aware the Nikkei was just shy of 40,000 back in 1989 and currently stands at 10,300. And yes, you are reading that correctly it is not a typo!

Speaking of how you feel. Think back to 1999-2000 when the tech bubble was frothing over. Was anyone talking about gold, crude oil, commodities? I thought so. Think back to the surrounding circumstance of that era. The "story" on tech stocks and stocks in general was phenomenal and no matter what the naysayers had to say, of which I was one, stocks powered higher and higher, defying all logic and reason. Eventually it ended.

The first leg down of the markets in this return to equilibrium if you will really roughed up the individual stockholders or what was left of them after the tech bubble. The current rally that CNBC rams down your throat, is very similar to the relief rally the market experienced in 1930 after it's first leg down. Like the rally in 1930 drew in the professionals who thought the coast was clear to buy stocks, this relief rally will take care of the professional investor once again. Back then they were called trusts and today we call them mutual funds. These along with pension funds and various hedge funds are the ones buying today, on your behalf mind you, for they have nothing to lose as they get a pink slip more quickly for missing out on a rally than sitting though a decline.

So yes dear reader, loathe the banks, loathe the private equity boyz, loathe the insurers and whatever else has benefited or is about to benefit from your benevolent administration, (republican or democrat mind you!), you most probably own em' anyway. The irony of this is almost too much to bear.


The point here what all my mumbo jumbo about how you feel is this. This current rally, no matter how much the vested interest, commission chasing, my livelihood depends on a vibrant stock market shills and hacks repeat over and over to you, is not how major, true blue, bonifide, lasting bull markets are born.

Rather they arise out of abject pessimism. Under the environment where you have to be loonie toons to buy them. Where people swear off stocks for good. Where the employment ranks on Wall St. plummet. Where applicants for broker licensing and CFA designations plummet to nothing. Hey, kinda like we saw at the bottom of that energy market back in 1999-2000. That flush out decimated both the skilled and unskilled labour in that field and what the economics didn't do time did, as those who did survive and stick now are passed on or retired, hence the massive shortage of skilled labour in the field as things recovered.

It took some serious onions back in late 1999 to buy gold in the mid 300's or crude as it was trading around $12. You would have been flying in the face of legendary performing names like Nortel, JDSU, Qualcomm, Razorfish, Foundry, etc, etc... Surely you remember how Microsoft's market capitalization was larger than the entire publicly traded gold sector. How many paid attention to that type of extreme? Few I can assure you.

It is of course possible that this was and continues to be the start of a new mother of bull markets. I just do not see the parallels regarding sentiment, participation a general swearing off off or revulsion to stocks for good by the public, which generally occurs at MAJOR bottoms.

CNBC and that NASA employment candidate Dennis Kneale did me a huge favour the other day, as they were discussing the number of bank failures. Mr. Kneale was emphasising how few there have been to date compared to the prior S&L crisis. To which I say; "my point EXACTLY!"

How can you come out of the mother of all credit and debt bubbles and have only, what, a hundred or so bank failures? How many home builders have failed so far? How many loaded to the gills with commercial real estate insurers have dropped? You can count em' on one hand which just fails the smell test on a true bottom, for me that is.

Wall St. like Vegas, needs a constant flow of sheep to shear. Please don't fall victim to the virus that affected many like the legendary Chuck Prince, former CEO of Citicorp who said so memorably back in July of 2007 the following;

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing".

Everyone always thinks they are smart enough to find that chair when the music stops. Please take care of yourself and make sure you have a seat when the music stops because none of the shills on CNBC ever will.


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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Direxion Financial 3X Bear ticker FAZ @ $19.09
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09

Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Wednesday, October 21, 2009

More is Always Better

Been listening to a lot of banter about extending the home buyer tax credit by the bought and paid for shills on CNBC and the shill of all shills the National Association of Realtors (NAR). Heck with extending it, why not triple it, just like a relative of mines ex-wife who used to think, if the recipe says 1 teaspoon of cinnamon in the apple pie is good, then 10 teaspoons should be ten times as good!

Yes my readers more must always be better. Bless her heart, she was very intelligent but just not that bright(there is an enormous difference there), which would make her eminently qualified to run the Fed, the Treasury and better yet the House Financial Services committee.

In the "More Green Shoots' department, we got news today that 23 yes 23 states reported higher unemployment in the month of September. But why would we let such a lagging indicator, yeah right!, get in the way of a good, market wide, pump and dump scheme.


So just in case you think I am exclusively focusing on such lagging, mundane, useless indicators like rising unemployment numbers I thought you might find this piece on deserted shopping mall interesting. Again the complaints will most surely come that I am focusing on yet another useless indicator, vacant commercial real estate.

Before I forget I want to take a moment to wish a very Happy Birthday to Jr. Deputy Accountant blog which turns 1 today !

For those that do not have this one on their daily reading list Jr. Deputy is one of the best out there, one which I visit multiple times daily. She is to the Federal Reserve and its regional governors as the slave was who walked behind the Caesar (Marcus Aerelius I think) reminding him how mortal he was.


Happy Birthday again Jr. Deputy.... you go girl !




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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerg Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Direxion Financial 3X Bear ticker FAZ @ $19.09
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09/$3.18

Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Tuesday, October 20, 2009

Nothing Has Changed

Much thanks to Karl D. over at one of the best blogs on the net, Market Ticker (which is a daily must read for me and should be for you as well) for bringing to my attention the following news that can only be classified under the file Preposterous.

The news (via the WSJ) is that the IRS is investigating over 100,000 suspicious claims for the first time home buyers tax credit. As if that was not enough, (yes dear reader it gets worse) and in what can only be termed as the inmates are running the asylum, we get this further story, (again thx to Market Ticker) of a 20 yr old buying a home with 3.5% down FHA loan.

Without question, Tejada's loan is toxic--to her and to the taxpayers who are backing the loan. Her house cost $155,000. Tejada's loan was apparently made on a micro-down payment of just 3.5%, the minimum down payment to qualify for an FHA loan. On top of this, however, she got an additional government backed loan to make improvements. Her total loans amount to $183,0000. In short, she was immediately underwater on her new house.

The monthly payments on her debt amount to $1328. Her income is $2470, leaving her with just $285 a week to live on. She's paying 54% of her income to make the mortgage payments. She earns that income by holding down one full time and two part time jobs. Obviously, this woman has a strong work ethic. But it also means her income is precarious. With unemployment still rising, she obviously should be worried about losing one of her three jobs. A loss of one of them would likely leave her unable to make the debt payments.

Tejada appears to be using imaginary numbers about the value of her house. She says that when she bought it, the house was just a “box” with no kitchen or bathroom. Now it is "gorgeous". She claims the renovation has increased the value of her home from $155,000 to $255,000.

"I bought my house for $155,000. And now, after all the fixing, after all the remodeling, my house is worth $255,000. So just within a month period, I made a $100,000," she tells Market Place's Scott Jagow.

and finally in an pseudo tribute to former make-believe real estate magnate Casey Serin we get this doozy:


Tejada sees her house as an investment rather than a home. And she is planning on buying more homes, despite the fact that her income is already strained by her debt. This three bedroom house is just her "first house" and is "a little too big for me." This is the opposite direction house buying traditionally moved in, with young people buying a small fixer-upper or renting and moving into larger homes as their incomes and family size increased. Tejada has started big.

I had to re-read the article twice to get it to sink in. Nothing, and I mean nothing has changed. I agree with Karl that it's laudable that she is willing to work 3 jobs but this does not take away from the fact that we are on the hook via FHA for a loan that only an absolute imbecile would make. So what are we left with, complete imbeciles in charge or pervasive criminal fraud that has infected all arenas of public finance. Now don't even get me started on the likes of Chris Dodd, VIP mortgage customer at Countrywide, and Barney 'Fife' Frank as they sit idly by cashing banking lobbyist and donor cheques.

Ya think the boobs and boobs over at CNBC are gonna cover this story? Ha ha ha that is tooo funny! Of course I jest as covering a story like that would take real journalists who dig up clues and fact check leads, which coincidentally seems to be only be done with SNL skits anymore but yet again I digress.

All kidding aside the boobs at CNBC are far too busy fawning over Paulson's thug of an attache named Khaskari, for those interested phonetically it is pronounced cash and carry, which coincidently I think is the Goldman Sachs mission statement, no?

The irony of the name of the individual, Cash'carry, co-ordinating the heist of the century by the bankers, of the U.S. public treasury is, not lost on this writer. You just cannot make this shit up dear reader, you really can't! To listen to Sir Khaskari, believe me if we had a monarchy he would have been knighted by now, is to know all that is wrong with us and why we as a nation find ourselves in the pickle we're in. To listen to Cash'carry is to know what a true boot licking yes man looks like, walks like, acts like and talks like. After listening to him you can see the mold from which grovelling, trough suckling, leeches move up the food chain in the hierarchy of government. Mark my words he will be a senior government official, mark my words.

Back to our new homeowner with her new taxpayer funded loan, excuse me, I meant FHA loan. I recall the new FHA chief recently as saying the FHA is solvent and doesn't need any bailout money. I also recall a recent Ken Langone interview in which he stated that if heads of public traded companies made the same comments government officials are making they would be in jail.


And yet in the face of all this, people continue to ask and wonder why I am so bearish on stocks and the economy.


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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerg Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Direxion Financial 3X Bear ticker FAZ @ $19.09
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09/$3.18

Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Long Some FAZ


I am wish to get long 1 unit of FAZ, the Direxion financial 3x bear etf here at $18.99


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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerg Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Direxion Financial 3X Bear ticker FAZ @ $19.09
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09/$3.18

Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Getting Short (y)



The time has come to test the short waters yet again, a basket of shorts if you will, by getting long 1 unit each of the following:


BGZ @ $19.24
TZA @ $11.25
EDZ @ $5.95
FXP @ $8.22
SRS @ $9.72

I will post stops later today. Actions today have a little something to do with the U.S. dollar.

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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 1 unit Direxion Small Cap 3X Bear ticker TZA @ $11.35
Long 1 unit Direxion Emerg Mkts 3X Bear ticker EDZ @ $6.05
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrshort Real Estate ticker SRS @ $9.82
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09/$3.18
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Oath Keepers

Back on February 3rd of this year I wrote a post entitled 'The Constitution'. In it I specifically said the following:

"I got to thinking about our current predicament and the potential unrest that could result from it. Articles like this, US Military Preparing for Domestic Disturbances detailing military preparations for unrest got me to thinking as it should everyone.I hope the military members realize the significance of the oath of enlistment they took upon entering military service which reads as follows;

I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; and that I will obey the orders of the President of the United States and the orders of the officers appointed over me, according to regulations and the Uniform Code of Military Justice. So help me God."


I then went on to say:


"I understand the military must take orders from the President which is defacto the constitution as we all know his oath is to the Constitution first and foremost, but it is clear their allegiance is to the Constitution, which is the people and the flag.

What I most certainly do know is that they have no allegiance protecting the current crew of lying, bribe taking, thieves, thugs, tax cheats, and scum that wander the Halls of the House, the Senate and the Cabinet.

I truly hope the families who have brave sons, daughters, brothers, sisters, nephews, nieces, bothers-in-law, sisters-in-law, cousins, and grandchildren serving realize where their duties and loyalties lie and make sure they remind them in case they have forgotten."

I bring all this up because I came across a piece out of the Las Vegas Review-Journal entitled Oath Keepers pledges to prevent dictatorship in the United States. The article describes the group called Oath Keepers as:

"Launched in March by Las Vegan Stewart Rhodes, Oath Keepers bills itself as a nonpartisan group of current and retired law enforcement and military personnel who vow to fulfill their oaths to the Constitution."


Please note this is not some group of crystal meth hippies but rather ex-law enforcement and military personnel. You may be thinking that either way these guys are loonie. Well, you are entitled to you opinion, but I am sure there where many who saw what was coming from men like Mao, like Hitler, like Stalin, like Pol Pot. Men like Marshall Tito, like Idi Amin, like Fidel Castro... (shall I go on?) and were called tin foil hat conspiracy loons as well.

According to the group's founder Stewart Rhodes,

"Oath Keepers is not preaching violence or government overthrow, Rhodes said. On the contrary, it is asking police and the military to lay down their arms in response to unlawful orders.
"

Please note carefully that last line. They are asking police and military to lay down their arms in response to unlawful orders. I care not whether you are democrat or republican as their policies only differ as to who is cashing the cheques and arbitraging their influence and none of it benefits you and me, it only benefits them.

I can hear you already. Crazy am I? Well if I'm 'so off the reservation' how do we have what we have in this country today.

Banks who should be BK doubling down at the casino with taxpayer money (re:Goldman Sachs).

Car dealerships closed arbitrarily.
Explain to me how viable businesses in this country can be closed (auto dealerships) arbitrarily. Without rhyme or reason, unless of course your name might be Mack McClarty and you might be uber-connected to the current czar, but again I digress. You say you don't care. Well, you most surely will when your hot dog stand, your bakery, your hair salon is targeting for closing by decree!

Remember that Chrysler dealer in Florida who simply asked what the rationale was for his dealership being closed. He didn't ask for a bailout. He didn't ask for welfare. What he did ask for was that someone provide him with the metrics (which is a synonym for facts) by which his dealership was slated for closure. As far as I am aware he has not received any answer.


Remember the GM unsecured bondholders being leapfrogged by the politically connected unions in the debt hierarchy. Shock and Awe all Right!

This type of shit is not supposed to happen here. We're supposed to read about this in Honduras or Venezuela. Not the United States of America.

So where does this leave us. Well to start, as the saying goes, when men lose everything they start to lose it! Dennis Gartman used to say, most often regarding unrest in 3rd world nations, that men who have homes and jobs don't usually pick up assault rifles. I am quoting Dennis from memory but it might behove us to think of the flip side of his comments.

You can be most assured that politicians NEVER do what is right, they only will do what will get them re-elected and keep them in the swill that is the public trough and that which they have become accustomed to and feel entitled to. Further they will do what they need to preserve and protect their station in society, at your expense if need be, history bears this out repeatedly, and as Santayana said aptly "those that don't learn from history are doomed to repeat it".

So to the many out there who have family members serving, be it in the armed forces, national guard, or local law enforcement, I ask you this:

Please remind them to re-read the Constitution.
Please remind them to repeat their oath of enlistment.
Please remind them where their loyalties lay.
Please ask them to read the article on the Oath Keepers.

For as Thomas Jefferson once said;

"When the people fear their government, there is tyranny; when the government fears the people; there is liberty. "


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


Open Positions:
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09/$3.18
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Monday, October 19, 2009

Nothing Like a Harvard MBA

Harvard

I came across this piece in Bloomberg entitled 'Harvard's Bet on Interest Rate Rise Cost $500 Million to Exit in which the details of the debacle that is the Harvard endowment fund are coming to light.

Back on February 17 in a piece I penned a piece entitled 'It's Sir to You' I took CNBC to task, what else is new right?, over their incessant recycling of the same old guests touting the same old lines. In that piece I said the following:

"Watever you decide over there at CNBC just keep on recycling the same ol' same ol' guests with the same ol' same ol' lines of thinking. You know the crew, Bill Gross, Mohommed El-Erian, Paul McCulley, Bob Doll, Vince Farrell, et al. More importantly, do not dare ask Mr. El- Erian any questions pertaining to the mushroom cloud above the Harvard endowment lest you impair your advertising revenue stream via Pimco, the authority on bonds.

Don't get me wrong the 3 boyz of Pimco are extraordinarily bright, BUT... they are not immune from criticism, they are not immune from having their ideas challenged, they are not immune from talking their book, and above all they are not immune from being wrong. The markets have a nasty habit of doing that to people, making them wrong to the point of embarrassment. The trick is the ability to STOP BEING WRONG before your reputation and account are left in tatters."

My point here is this, how many times has El-Erian been on CNBC? A dozen, 2 dozen? I have lost track. Has any of the boobs and boobs in chairs over at CNBC even broached the subject with them. Now I understand Pimco is a major advertiser with CNBC and I can understand their reticence to ruffle the feathers of such a prized customer but El-Erian was the lead manager of the endowment from around early 2006 to December 2007. Is this not financial news for these purported journalists or are questions like this exclusively the domain of 'idiot bloggers' like myself?

And while on the subject, wasn't the purported 'smartest man in the room' Larry Summers over at Harvard when this debacle was being concocted in the lab. Yes, dear reader, the same Larry Summers advising the Commander in Chief all things economic.

Yup, brilliant when I succeed, unpredictable, once in a lifetime, Haley's Comet type excuses when we fail. oh yeah where's the taxpayer when we need em'.

An Ivy League MBA from Harvard can summed up in one easy sentence.
Masters in Bullshit and Alchemy. With men like this in charge and orchestrating the band Heaven help us.

Earnings

It sure looks like Intel is pulling an Alcoa. Remember my comment the other day on Alcoa regarding its gap and crap and is trading right back where it started prior to earnings. Well, don't look now but INTC closed at $20.49 prior to its earnings release, gapped up to $21.26 the next morning and finished the day Friday at $20.18.

Nothing to worry, just more green shoots.

Did you catch the piece by Audit Integrity's list of top candidates for bankruptcy. Well, it seems da boyz over at Hertz are none too pleased with Audit Integrity's work, so much so they have filed suit. As many of the events of the past 18 months have shown us, there is a lot you can do on Wall St. and get away with but the one thing you absolutely unequivocally cannot do under any circumstances is holler sell!

A friend of mine forwarded me this quote from a commenter named SteveNYC over at the Zero Hedge blog regarding the Hertz/Audit Integrity brew ha ha in which he said;

"The Hertz transaction was a classic PE rip-off.

1) Ivy League boys at Carlyle, CDR etc. pickup the asset, leverage the guts out of it, and get it to a point of "performance" in order to sell back to the public.

2) Ivy League boys at Fidelity, Vanguard etc. managing 401k money buy the IPO stock from their mates at Carlyle, CDR etc. as a "solid investment" to add to their portfolios.

3) All of "the boys" cash out on the transaction, while the public is stuck with the swill, without any say (except by ticking the box on their 401k selection paper that says "Growth Fund") at all.

Nice job if you can get it."

Beautiful comment SteveNYC, absolutely spot on.


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


Open Positions:
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09/$3.18
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41


Thursday, October 15, 2009

The Beat Goes On

The big flush is coming. I repeat the big flush is coming. There is nothing, absolutely nothing the Administration previous or current, the congress, the Fed, the Treasury, the banking interests and their lobbyists can do to stop it.

It has been set in motion. The credit and debt bubble has burst and no matter what the illuminati try to tell us to the contrary. It is as C.V. Myers once said;

"Every penny of every debt must eventually be paid - if not by the borrower then by the lender"


That illuminati, elected and unelected y can try to paper it over with script (dollars), they can try to cover it up with monetary and fiscal ease, easing and elimination of bookkeeping standards, and the like. They can offer all sorts of tax incentives for home buyers, cash for clunkers, and other inch deep, mile wide remedies but you cannot eliminate the elephant in the room that none want to address. The extraordinary overhang of debt and our lack of abiltity to repay.

The alcoholic cannot be cured with more alcohol. A debt problem cannot be solved with more debt no matter how many letters the pundit trying to sell you on the premise has behind his last name.

The market knows all and senses recovery does it? Well... if so, one might be inclined to respond to that with, What was the market sensing in the fall of 2007 before it went off a cliff? Nirvana? Full blooms? Bumper crop?

On the most basic level most market participants are classified as focusing on either fundamentals or technicals. I think this leaves out one of the major influences on the markets and its participants. That being the led by the nose, bonus chasing, taxpayer backstopped prop desks of the world. These guys say they follow fundys or technicals when in reality they are nothing more than plug their nose, close their eyes and buy whatever is moving. Making bonus trumps all other considerations period and for those that think fiduciary responsibility factors into the equation I can only offer them, once I stop laughing uncontrollably of course, a bridge for purchase slightly used of course but in fine working order!

It is this type of market participant, the bonus chaser, that can ignore rising unemployment, falling income growth, and other like news. Hey, kinda like the what we just got from RealtyTrac that foreclosures are getting worse not better with "Foreclosures : Worst 3 months of all Time".

Have a look at Alcoa stock ticker AA. They released purported fantastic numbers earlier this week to kick off the earnings season. The day before the earnings results (Oct 7), the stock closed at $14.20 and da boyz proceeded to gap and crap Last night it closed at $14.32.

Under the subject of you just can't make this stuff up, here is what was on the front page of the Lansing State Journal this morning as a teaser.

The Dow closed above 10,000 Wednesday, the most visible sign yet that investors believe the economy is making its way back. "Its almost like an announcement that the bear market is over" said Arthur Hogan, chief market analyst at Jeffries & Co., in Boston.

Yes dear reader this is what passes for analysis and for which you pay full commission. The sad part is this is this quote didn't come from some rookie in the mail room or the atache to the atache of the chief strategist. No, it came directly from a chief strategist himself of a major Wall St. firm. I am at a loss for words to comment on the juvenile shallowness of Wall Street and the lapdog media's focus ability to swallow whole anything fed to them. Wall St. and their pimps in the mainstream media led by CNBC are celebrating the 10,000, consider this your contrarian indicator.

But then again when you contemplate it all, it is shallow empty, all sizzle no steak, churn em' and burn em' ideas that got us into this mess and worse and as I have stated previously, the culprits who burned the house down are showing up to put the fire out and worse co-ordinate the rebuilding. Their audacity, their hubris defies explanation.

No one has the onions to start locking them up, and letting some adults take care of the problem, which is quite simply, sever the diseased and infected limbs and SAVE THE HOST for heaven's sake!

Housekeeping notes;

Yesterday I was stopped out of my long dollar position UUP at $22.44 for a loss of just shy of 1/2 a pt. on 1 unit.

This morning I was stopped out of 1 unit of UEC at $3.18 for a loss of just over 1/2 pt on 1 unit as it had quite the trading session yesterday.

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


Open Positions:
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Uranium Energy ticker UEC @ $3.60 stops @ $3.09/$3.18
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Tuesday, October 13, 2009

Adding to Uranium Energy - UEC

The more I look at the Uranium Energy chart the more I like it. Therefore I am adding a 2nd unit long to Uranium Energy ticker UEC here at $3.60 with a stop at $3.19


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


Open Positions:
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit US$ Index bullish ticker UUP @ $22.75 stop @ $22.44
Long 2 units Uranium Energy ticker UEC @ $3.65 stops @ $3.09/$3.18
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Uranium Energy



The weekly chart on Uranium Energy ticker UEC (above) shows what looks to be a cup with handle formation. Based on the above chart and said formation I am punting 1 unit long of UEC here at $3.50 with a stop at $3.09


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


Open Positions:
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit US$ Index bullish ticker UUP @ $22.75 stop @ $22.44
Long 1 unit Uranium Energy ticker UEC @ $3.60 stop @ $3.09
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Monday, October 12, 2009

Another Look at Gold


I thought it might be interesting to have a look at one of the leaders of the bull run in gold. Royal Gold (ticker RGLD) has been an absolute standout in this regard. the 10year weekly view (chart above) illustrates the same negative divergence or non-confirmation exhibited by the GDX and HUI which I noted previously in my post Gold and the Buck with the charts in Ooops.... Forgot the Charts.

RGLD needs to take out $50 convincingly on VOLUME. It is one of the clear leaders in the sector and as such needs to lead not lag. If I one takes a step back from the excitement of the buffett table and starts to add up the clues, clues such as:


one might be inclined to be a tad cautious. I know the gold bulls will consider this anathema, pure heresy as they believe gold is going to 3, 4, or 5,000/oz. I have a hard time refuting that argument but as long as the above mentioned discrepancies remain I cannot rule out that gold may in fact go to 3, 4 or 5,000/oz...... but may do so via $650 or 750/oz.

Hence my cautiousness on gold.

Housekeeping notes;

I was stopped out of my SKF position at $23.49 for a loss of just over a pt on 1 unit long.


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


Open Positions:
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit US$ Index bullish ticker UUP @ $22.75 stop @ $22.44
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Weekend Thoughts

The recent rally, which I continue to believe is simply a cyclical bounce in the context of a larger secular bear market. It has made mince meat of all who contradict or doubt it. I recall an interview with the noted technician Louise Yamada recently, where she commented that the current trading environment was one of the more difficult and challenging she had ever experienced. Take that for what it's worth.

I bring her remarks up, not to defend myself and excuse my errors, but rather to remind you that it is not just 'you' who is frustrated with this market. There are many crosscurrents in this market and as such it is a violent state of flux. There is a massive battle being waged currently by the bullish forces, who see nothing but
sunshine and roses ahead, and bearish forces who see the opposite. Both sides believe they are correct.

Then there are also those funds out there simply scalping the fractions that are available to them via high frequency trading (HFT). The major investment banks no longer may money from, investment banking fees, IPO's and secondaries, etc, etc are left to their own devices trading and speculating in the capital markets. Backstopped of course by you and I, the taxpayer.

Technical patterns both bullish and bearish are failing with regularity in both directions. Rules that used to apply seem to be failing. The reality on main street seems to be at a complete disconnect from what is transpiring on Wall St. What I do know is that all of this cannot go on indefinitely. One side will prevail.


Did you catch the recent interviews (on CNBC of all places!) with Ken Langone and Carl Icahn. If not I strongly urge you to did them up on the net as they are worth your time. You may not agree with what they have to say but you must pay attention to what they are saying. The close your eyes, hold your nose and buy crowd are really telling you stop thinking, stop analysing, stop using logic. When was the last time this strategy was in place. Hmm..... dot com 1999-2000? Yes, I do think so!

The quantitative easing and monetization of debt by the Fed and the rise in the S&P500 seem to be moving in lock step with one another. Do you think this might have something to do with so many false signals and breakouts/downs we have witnessed recently? It can only go on so long.

I will not close my eyes and hold my nose and buy because I will not know when to get out. Anyone with any respect for history in the markets knows the door can slam shut hard and fast leaving participants awestruck and devastated.


Here are some things I have noted as plain as the nose on my face;

  • Unemployment continues to rise.
  • Mortgage delinquencies and foreclosures continue to rise.
  • Income growth is non-existent.
  • The FDIC is basically broke.
  • The government is the ONLY lender now.
  • FHA continues to make risk laden garbage loans. An 8,000 tax credit that serves as your down payment seems to me as simply more of what IndyMac was doing .
  • The too big to fail banks are insolvent period, supported only via accountant gimmickry and a willful suspension of all reason and logic by fund managers.
  • Corporate Insiders are selling stocks at a furious pace.
  • Spreads between corporate and government debt paper are at minimal spreads as fear has subsided and fund managers have gotten aggressive yet again.
  • Consumer credit is contracting.
  • Banks are not lending but rather speculating in markets.
  • Tax receipts by state and municipalities are falling
  • Pensions, in significantly shortfalls are pressing their bets basically doubling down.
  • Househeld net worth numbers are falling and bankruptcies are rising.
Now it you can buy, buy, buy in the face of items like those noted above, with YOUR OWN MONEY that is, then you are a better man/trader than I.

An inflation concerned reader asked me why commodity prices have been rising if we are in a deflationary environment. First of all, many of the commodity price rises have been mixed with some falling so it must be taken in totality. Also, one must remember that short term supply disruptions can present a field day for the high frequency traders and investment banks with price spikes(both up and down). But boiling this issue down to basics and remembering we live in an environment of mistrust where solvency is a concern everywhere commodities can and I believe do serve as money or a medium of exchange if you will.

Think of a barter system. you trade me grain or rice for diesel fuel or heating oil. I know what grain and rice look like and you know what diesel and heating oil look like. The ivy league created financial Dr. Frankensteins cannot alchemize rice and grain and heating oil like they can a mortgage or a CD. The rice will always be an asset on your books and will never turn into a toxic mushroom cloud. We don't have to live in a barter system for people to think that way, especially when trust has been lost. Just something to think about.



Housekeeping notes;

I was stopped out of my TLT position Friday at $96.74 for a loss of just over a pt on 1 unit long.

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


Open Positions:
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Ultrashort Financials ticker SKF @ $24.55 stop @ $23.49
Long 1 unit US$ Index bullish ticker UUP @ $22.75 stop @ $22.44
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

Thursday, October 8, 2009

Jim Chanos at the SEC ?

Regular readers know all too well my thoughts on the SEC so with that in mind I thought you might enjoy the following piece, re-printed below, which comes to you courtesy of Jeff Matthews investor and author of the blog Jeff Matthews Is Not Making This Up.

Thursday October 1, 2009
Jim Chanos For SEC Chairman

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
—The Securities and Exchange Commission


That’s not just us here at NotMakingThisUp talking, that’s what the SEC itself says right on its very own website.

And as part of that mission, the agency just wrapped up a two-day forum on “short-selling and securities lending.”

Never mind that short-sellers had nothing to do with—absolutely nothing—the sub-prime lending crisis or the Bernie Madoff fraud.

And forget entirely that it was a short-seller—not a public bureaucrat or a college professor—who first warned, well ahead of its collapse, of the dangers lurking in the Lehman Brothers balance sheet.

Public respect-wise, short-selling simply seems to be a no-win business model.

In bull markets, naturally, nobody wants to hear the bad news that is the short-sellers’ stock in trade. After all, what parent wants to be told they have an ugly baby…and what investor, or CEO, or working stiff, wants to be told they own, or run, or work for an over-rated company?

In bear markets, on the other hand, investors, CEOs and working stiffs alike look for scapegoats on which to blame their problems…and who better to blame than the short-sellers who profit from such calamity?

Indeed, having practiced short-selling as a hedging tool over nearly 30 years of investing, we were not a bit surprised by the efforts of some politicians and at least a few corporate CEOs to blame the entire financial crisis on the short-sellers who actually saw the thing coming, warned about what could happen, and made money as a result.

In those 30 years, every corporate big-wig we’ve ever observed who sat at the helm of a controversial, and sometimes fraudulent, business—convicted felons Jeff Skilling, Richard Scrushy and Dennis Kozlowsky among them—have at one time or another fingered “the shorts” for their problems. They do it the way bloated, fading home-run hitters blame positive steroid tests on errant trainers and bad doctors...anything but their own malfeasance.

Now, one method for more effectively regulating markets was proferred in a recent New York Times piece by the formidable Gretchen Morgenson, “But Who Is Watching Regulators?”

Instead of creating more regulations to try to prevent this kind of mess from recurring, why not figure out how to hold regulators accountable when they perform as poorly as they did in recent years?

Edward J. Kane, a professor of finance at Boston College and an authority on the ethical and operational aspects of regulatory failure, has some ideas about how to do this and right our damaged system in the process. He outlined them in a recent paper titled “Unmet Duties in Managing Financial Safety Nets.”...


Now, we here at NotMakingThisUp have enormous respect for Morgenson: she’s a tough, no-holds-barred financial reporter who takes nothing at face value.

But Kane’s ideas seem to have a little less oomph than what the financial markets need. First among these ideas, for example, is an “oath of office”:

Mr. Kane suggests that financial supervisors take an oath of office in which they agree to perform four duties. First is the duty of vision, under which they would promise to adapt their surveillance practices to respond to the creative ways financial institutions hide their dubious practices.

Regulators must also promise to take prompt corrective action, and to perform their work efficiently. Finally, there is what Mr. Kane calls the duty of “conscientious representation,” whereby regulators swear to put the interests of the community ahead of their own.

—But Who Is Watching Regulators? by Gretchen Morgenson, The New York Times, September 12, 2009

All of which seems, to real-world practitioners in this business, crushingly naïve.

After all, every elected representative in Congress swears an oath of office to defend the Constitution of the United States—yet the head of the House Ways and Means tax-writing committee of this country is, by public accounts, a tax cheat. And the current Treasury Secretary of the United States—likewise an oath-taker upon assuming office—was, until nominated for the post and forced to pay up, likewise not exactly obeying the letter of the laws he was swearing to defend.

Now, this isn’t about Republicans versus Democrats—Republicans have plenty of their own on the honor role of oath-taking scoundrels. It’s simply about how to regulate markets in order to “protect investors.”

And it seems to us that the best way to protect investors is not to require particularly severe oath-taking on the part of regulators: instead, it is to appoint to the head of the SEC somebody who knows where to look to find the problems before they can hurt the investors the SEC is charged to protect.

Thus it is that—no offense to Mary Schapiro, who has provided an admirable spark of life into what had been rendered comatose by the previous regime—we here at NotMakingThisUp nominate Jim Chanos as next head of the SEC.

A professional short-seller, Chanos first made his bones nearly 30 years ago sniffing out fraud at Baldwin-United when that highflyer was beloved by Wall Street’s Finest. Jim did this by doing what Wall Street’s Finest did not: digging through mundane state insurance filings and piecing together a far less pretty picture of the business than Baldwin’s charismatic CEO was painting to Wall Street’s Finest and the investors who ultimately lost their shirts on the stock.

More recently, Chanos was the first to publically call out the accounting scam underlying Enron’s so-called “earnings” (“a hedge fund in drag,” I believe he called it), and he performed the same service in the case of Tyco, for which he received nothing but grief from Wall Street’s Finest—until that story likewise fell apart.

So, who better than Jim Chanos to spot—early, when it matters—the next Madoff, or Scrushy, or Skilling, or Kozlowsky?

It certainly isn’t going to be a finance professor from BC, or even a securities lawyer from GW, no matter how many oaths they take.

Of course, our proposal is, in itself, as crushingly naïve as that of Mr. Kane’s.

The very fact that the SEC just devoted a day and a half to the issue of short-sellers—the one investor class that publicly warned against the lending practices that nearly brought down the entire financial system—tells you everything you need to know about where short-sellers stand in the eyes of regulators.

And Jim Chanos himself will probably choke on his coffee, if and when he reads this. (Full disclosure: Jim is a professional acquaintance, and our paths cross once a year or so—usually in the breakout session of some extremely controversial company, where his presence tends to cause the CEO’s eyes to twitch.)

Still, in our opinion, competence—not oaths—is what makes a great anything, whether it’s a member of Congress or a general or a CEO or a school teacher.

And in the world of “protecting investors,” we can’t think of anyone more competent to spot a problem than one of the best short-sellers who ever practiced the craft.

Now, for the record, we here at NotMakingThisUp have no problem with ideas on the table for tightening up the stock-lending process that has resulted in near hysteria about “naked shorting” among Congresspeople who wouldn’t know a short sale from a tomato.

And we lived with the “up-tick” rule for 25 years or so before the wizards of the Bush Administration decided to revoke that rule at the absolute top of the market—so restoring the up-tick rule would seem to us to be no skin off anybody’s nose.

But the way you “protect investors” is not to shackle short-sellers. These are, after all, professionals who’ve made it part of their business model to sniff out the kind of fraud the SEC wishes to abolish from the system.

It’s hard to imagine that if Bernie Madoff had been running a public company, his scam would have gone on for two and a half years—let alone 25 years—with shorts on the prowl.

Or a Jim Chanos at the helm of the SEC.

Jeff Matthews
I Am Not Making This Up




Absolutely fantastic piece Jeff ! Thanks.


Housekeeping notes;

I was stopped out of my SPY short position earlier at $107.06 for a loss of just over a point on 1 unit short.

I want to raise my stop on TLT to $96.74

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


Open Positions:
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Ultrashort Financials ticker SKF @ $24.55 stop @ $23.49
Long 1 unit i-shares Barclay 20yr ticker TLT @ $97.80 stop @ $96.74
Long 1 unit US$ Index bullish ticker UUP @ $22.75 stop @ $22.44
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41

The Waters Warm.... Come on In !

I continue to sit here and listen and watch the markets. I am trying not to think as it makes my head hurt. This is nothing new though, as we have gone through bouts of this collective disconnect from reality in the past and will continue to do so in the future.

I continue to listen to the talking heads of the financial mainstream media, telling you and I to close our eyes, plug our collective noses and just buy. Remember now this is institutional money that probably is managing a piece of your retirement portfolio. It is called buying for their bonus, heads they win, tails you lose. This is all so staggeringly unbelievable I don't know what to say.


Sidenote: I have a friend back in Canada who manages money, smart cat and a good guy. He was calling me, lets just say on a higher than previous frequency back in late 2008 and early 2009 as the market was tanking. Ironically I have not heard from him lately. It seems the phone calls have an inverse correlation to the market. Calls rise as market falls and vice versa. Are you in this camp?


I continue to hear the drumbeat of the U.S. dollar's death.

I continue to hear the about the fear of bonds, the bubble in bonds and the love of equities.

I heard one intellectual on CNBC, one Brian Shactman, remark how Las Vegas Sands (ticker LVS) was trading $18 plus since it move from its lows of around a $1.50. Mr. Shactman furthered this with the gambling analogy of "imagine if you went all in there". This is exactly what hollow, cup is always half full cheerleaders do. He dare not mention LVS has fallen from a high of $145 to its current position of $18 plus, to which I would humbly counter in a instance of balance, imagine if you had gone all in there !


This is how it all unfolds. The desire to participate trumps the fear of loss. Everyone is invited into the water for a swim as it is nice and warm. Problem is the cats doing the inviting are standing in front of the sign that says, Danger ! Shark Infested Waters!

I continue to bet with the side of the bond boyz and girlz preferring to be "left behind" if you will. The bonds have broken out and are telling this trader deflation is the play no matter how much the equity lovers and strategists on Wall St. pound the "reflation trade".

Do not simply assume gold is telling you inflation for gold can speak out of both sides of its mouth. It can speak fear, safety, inflation, deflation, liquidity, insurance, etc. You name the need and one can make a valid, cogent argument that gold can satisfy it.

My point is that just because gold is running doesn't necessarily portend inflation. Gold ran in the deflationary depression of the 30's (Homestake as the proxy) even though inflation was no where.

Commodities can spell inflation and they can spell economic growth (doesn't copper have a PhD in economics with nickel possessing a Masters?) but they could also spell scarcity? Could they also spell fear, fear of financial alchemists creating paper assets into Frankenstein monster. No matter how much the brain trust at Goldman may have tried, as I surmise they have, they not been able to turn cattle dung into a pound of copper.


Housekeeping notes;

I was stopped out of my long COST position at $60.11 for a loss of $2 1/4 pts, as it gapped open yesterday and peaked within a few minutes of trading, only to deteriorate as the day progressed.

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


Open Positions:
Long 1 unit Ultrashort Russell 2K ticker TWM @ $27.50 stop @ $26.40
Long 1 unit Ultrashort Financials ticker SKF @ $24.55 stop @ $23.49
Long 1 unit i-shares Barclay 20yr ticker TLT @ $97.80 stop @ $94.94
Long 1 unit US$ Index bullish ticker UUP @ $22.75 stop @ $22.44
Short 1 unit i-shares Russell 2K ticker IWM @ $61.70 stop @ $63.80
Short 1 unit Vornado ticker VNO @ $68.30 stop @ $70.71
Short 1 unit Bed Bath ticker BBBY @ $37.75 stop @ $38.41
Short 1 unit Spiders ticker SPY @ $106.00 stop @ $107.06