Monday, November 30, 2009

Back from Thanksgiving

I hope everyone out there had a safe and joyous Thanksgiving holiday ! We are all truly blessed and have much to be thankful for every day. My apologies for my lack of posting as my wife and I have had a house full of family.

The news that has everyone's angst up is from the Middle east that Dubai World cannot pay its bills. The news broke Thanksgiving day and most are probably fully apprised of it by now. This news was a shock only to those that worship at the alter of the Fed and their all-knowing omnipotence. Too funny.

Couple of interesting notes on the subject of Dubai. First that the debts are equal to their GDP, that is if you EX-clude the off balance sheet items. Boy, was Enron a trailblazing maverick or what. Secondly did you notice that Art Cashin was at his post, on the floor of the NYSE on Black Friday morning (I saw him on CNBC). Forget what Art said that day and let us take special note of the fact that he was in on a day most take off. This is a big tell for me. Lastly, the implicit government guarantee of Dubai World debt everyone believed in and which we now learn this morning is worth about as much as a name dropping, D list, celebrity from the bottom of the Hollywood bucket.

Yup, markets sure are rational aren't they. They always foresee everything. Yes the music is playing so one must get up and dance. With others money of course !!

Have you been paying attention to the yield curve over here, in particular the short end.

Here's the gig and it's simple. It is the bond crowd vs the equity crowd. Regular readers know which one is Paris Hilton and which one is Albert Einstein and right now the Einstein crowd (hint: bonds) is scared witless. You think the Paris Hilton crowd (equities) has even taken a moment to wonder why this is. Keep watching short rates as they continue to drop.

Further, I urge you to punch up 1 month, 3month, 6month, 1year, and 2year yields. Please note
that 1 yr notes have broken their old lows in yields. As I said before, why so scared, what do they see that the polyannic stock boyz don't. Remember the equity boyz ride the short bus for a reason, they dance not because they want to or because they can. They dance simply because the music is playing. Kinda like that really drunk girl at the wedding. Gee where's Chuck Prince when you need him.

Back to the Dubai story and this implicit guarantee which really is not there and is just a carrot one can use to pound toxic waste, garbage debt paper down the throats of those lower on the financial food chain. Ya just gotta love global Frankenfinance !

I all has really just become one big, global Charade !



Cha - rade [shuh-reyd; especially Brit. shuh-rahd]
–noun

1. charades, (used with a singular verb) a game in which the players are typically divided into two teams, members of which take turns at acting out in pantomime a word, phrase, title, etc., which the members of their own team must guess.
2. a word or phrase acted out in this game.
3. a blatant pretense or deception, esp. something so full of pretense as to be a travesty.

I kinda like #3. But I can be a bit particular.

Let us look around and count the ways we see.... charades.

  • AAA rated mortgage backed securities = charade
  • AIG counter party guarantee = charade
  • FASB rule changes for bank accounting = charade
  • Greenhouse gas climate change = charade and outright fraud.
  • Acorn = too funny, kinda like psychedelic charades or charades hippies
  • U.S. econ. numbers, re:unemployment numbers but take your pick = charade
  • Stimulus job creation numbers = charade or rather outright farce
  • Housing market recovery in the face of rising delinquencies = charade
  • Commercial real estate = more like a game of Marco Polo for now but charade no less
  • Chinese auto sales in the face of declining fuel consumption = charade
  • FDIC $250,000 deposit insurance guarantee = charade
  • FHA solvency debate = charade
  • and now Dubai debt = charade


Next up we have the IMF. Regular readers know I am not a big fan of blood sucking entities like the World Bank and the IMF (Int'al Monetary Fund) but sometimes a blind squirrel can find a nut once in a while. It is along this vein that the comments by a Dominique Strauss-Kahn managing director of the IMF were that all that more shocking.

About a week ago at the CBI conference of business leaders, Strauss-Kahn had the following to say;

another huge call on public finances by the financial services sector would not be tolerated by the “man in the street” and could even threaten democracy. "Most advanced economies will not accept any more [bailouts]...The political reaction will be very strong, putting some democracies at risk," he told delegates.



But don't you worry over incidentals like the above, things are so much better than a year ago. Keep repeating this to yourself to make sure you don't let any doubts about it creep in.


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 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Direxion Tech 3X Bear ticker TYP @ $10.68
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
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, November 20, 2009

Defending the Golden Boy, Geithner

I woke this morning to catch a news piece on the Post Office and how it appears they will need a taxpayer bailout as well. Do we laugh or do we cry. What really caught my eye was a quote from Illinois congressman Danny Davis who had this to say on the subject;

"It's just not generating the money that you need in order to keep operating," he said.

Davis said he was open to cutting Saturday service - perhaps on a rolling basis, so that certain communities would lack Saturday delivery once or twice a month - as well as loosening the health benefit requirements. He also backed a government bailout for the embattled agency if that's what it takes to keep it afloat.

"We've bailed out a lot of things, and I think the Postal Service is probably as important in one sense as some of the other places where we have put public money," he said.

Added Davis: "I'm not afraid of spending public money to keep money flowing."

Don't you just love these guys in congress. They just don't get it. Either too stupid or too arrogant, take your pick.

Moving on may readers have written me asking, "if you hate CNBC so much, why do you watch?" Well, for one, every so often they get a guest on that is truly worth listening to. On a daily basis Art Cashin and Rick Santelli are absolute must sees but for the most part, one needs to know what the other side is thinking or preaching. Intel so to speak. Besides, CNBC is guaranteed to get you laughing your ass off at least a couple of times a day with a comment or quip from one of the many boobs and boobs in chairs. (hat tip to Mike Morgan on that one!)

I was lucky enough to catch the Squawk Box show this morning on CNBC and the discussion between "what's it like to be a billionaire" Carl Quintanilla, and MIT biology grad Joe Kernan. Included in this was their esteemed guest, former Fannie Mae CEO Daniel Mudd. Yes, in case your were wondering, he is the son of famed newscaster Roger Mudd but I will not get into the boyz club network in this post.

Rather today, I will focus on Joe Kernan's ridiculing of congressman Kevin Brady from Texas due to his grilling of Wall Street's 'golden boy' Treasury Sec. Geithner. It seems many within the "get with the program" crowd feel it their moral obligation to defend Geithner. At least they know where their bread is buttered or in the least have been told so.

I find it perplexing how Tim Geithner's role as president of the New York Fed somehow escapes the immense faculties of our MIT alum and CNBC anchor. What part of- the New York Fed directly supervises the banks in its jurisdiction, outfits like Bear Stearns, Lehman, Goldman et al., ergo Geithner was responsible-do you not comprehend Joe?

Not to be outdone in the discussion, Mudd, who succeeded Franklin Raines at the helm of Fannie Mae, who when asked, shockingly admitted that he too supported the work done by Geithner. Wow ! Now thats a shocker! And for Anderson Cooper over at CNN, this is what you call tea bagging.

Quick Quiz Time. - So after so aptly taking the reigns (no pun intended) over from Raines, Mudd, who was fired after the taxpayer bailout, has resurfaced as ....

a) grill boy at Arby's
b) valet attendant at Caesar's Palace
c) senior economic advisor to the President
d) CEO of fund manager Fortress Group

The correct answer is d, CEO of fund manager Fortress Group but you do get a special acknowledgement if you said c, senior economic advisor to the President because you can bet your ass he was on a short list for that job. Just keep recycling the same old vipers and thieves, this way the charade continues.

As if all this is not enough to make one puke all over one's self, we get that cerebral heavyweight Kernan, doing his part, reciprocating this mornings' all around circle jerk, remarking to Mudd how he and no one else at Fannie could have seen this all coming. First class journalism or first class tea bagging I know not which. Acutally I do but I like asking rhetorical questions.

Here and now, today, if the captain of the Titanic had miraculously survived, today he would be lauded and then promoted. Sadly this is how far we have fallen with our standards as this is how our system works now.

Ahh, but I am too harsh. I am too critical. So be it, but can we finally put an end to the question of, why (the lamestream financial media) won't they ask the serious questions. the answer seems patently obvious, they have no conscience, no moral obligation to anyone or anything other than themselves. Simply beholden to covering thy ass and ingratiating thy self with anything higher up the food chain. Yet more proof of what I said the other day regarding a 'get rich or die tryin' environment.

Lets leave this on a positive note. Anyone notice how Dylan Ratigan, now at MSNBC, has seen the light. I guess my post 3 Cheers for Dylan Ratigan wasn't too far off mark. Well done Dylan, just don't stop digging. It's all there in front of you and you have the public forum to do it with. Be a patriot and continue to do the right thing, we will all be better for 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 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Direxion Tech 3X Bear ticker TYP @ $10.68
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
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, November 19, 2009

Japanese Equities

Japan Smaller Capitalization fund, ticker JOF (chart above).

MSCI ishares Japan, ticker EWJ (chart above).

Japan Equity fund, ticker JEQ (chart above).

Many market watchers, much smarter and well versed than I have opined that Japanese equities are cheap based on many metrics of valuation. In many cases trading at or below book value offering the best values globally in the equity arena. I do not disagree as on a relative basis they are much cheaper than most elsewhere.

The problem is, as we all know, the markets can remain irrational far longer than you and I can remain solvent. Japanese equities continue to be in a secular bear market, only interrupted briefly by cyclical bull markets the return the oversold nature to equilibrium. That said, the 3 benchmarks I readily follow to gauge Japan seem to have enjoyed their run off the March lows (coincidence?) and look to have rolled over once again as they have done so often in the past.


Yes I know the 'we're smarter over here in the U.S.' crowd deny we are heading down the path of Japan, but it looks to be a spot on sequel to me. Funny how the same ones who say we're not making the mistakes of Japan, were the same ones who didn't see sub prime coming, didn't see the housing bubble, yet we continue to seek them out for counsel and prognostication.

Regular readers know I believe we are headed down the Japanese path, where ZIRP (zero interest rate policy) leads to POAS (pushing on a string). What this means is you can lower rates to nothing and yet still no one borrows. This is how you end up with multiple lost decades. People who need the money cannot borrow due to their credit risk and people with worthy credit risk are smart enough to know not to borrow. Catch 22 so to speak for the money shylocks.

I understand that a Goldman, JP Morgan or a Morgan Stanley will continue to borrow, or rather take, taxpayer money and ride the roulette wheel, fully confident there is more where that came from, courtesy their concubines in congress and the senate. But this will happen for only so long before even the most Prozac ridden, Ritalin addled, American idolized among us wake up from the stupor and say... What the f@%#& !


As my notes above indicate, is this the canary in the coal mine we should be paying attention to. With the high frequency algorithm traders absolutely dominating our markets, price is all that matter, until one day it doesn't. So lets pay attention to Japanese equities and see if they tell us something.

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 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Direxion Tech 3X Bear ticker TYP @ $10.68
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
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, November 18, 2009

Do Birds of a Feather Flock Together?

I have bitten my tongue for far too long regarding the all around good guy, smartest guy in the room (apologies to Hank Paulson) Oracle of Omaha, as his minions call him, Warren Buffett. So today I stop. I write this knowing full well I am about to criticize one who many think walks on water, but whom I feel deserves to be taken to task. The news this morning compels me to do this.

Let us put aside the fact that he will only do interviews with, the soon to be chief NASA scientist, CNBC hostess Becky Quick. Two short career advancement points for all the aspiring, make-believe financial journalists out there jockeying for position within the mainstream financial media. Your first order of business to make sure you marry your executive producer as this ensures job security and your second, no less important move, is to cozy up to an octogenarian who is wildly popular in financial circles who will only do interviews with cute blondes, but alas I digress once again.

Here we have, who many call the greatest investor of our generation, a man who via his holding company Berkshire Hathaway has amassed quite a fortune and whom yet, is directly involved with some of the integral parts of the financial crime wave that has swept our financial markets.


Moody's

Buffett has an interest in the ratings pimp, eerrr, excuse me, purveyor Moody's. You remember Moody's, it's the rating agency where Wall St. thugs like Goldman, Merrill and others went to get absolute toxic shit rated as triple A. They paid handsomely for this, which Buffett had no complaints about and did this so they could sell it to the zombie fund managers who oversee your pension fund, but not before they would simultaneously short the same piece of toxic shit they sold you pension fund of course as a hedge, right Charlie Gasparino?


Why has no one called Mr. Buffett out on this one. Could it be Buffett didn't know about what Moody's was doing? Or could it just possibly be that birds of a feather flock together.

Heck, let's not pass judgement just yet on Mr. Buffett. The Moody's debacle is just one piece of evidence and could very well just be an outlier.

Goldman Sachs

Buffett stepped up to the plate with Goldman Sachs when they were on deaths doorstep, investing money into this indispensable cog of American society. Goldman mind you was the one, whose chairman Henry Paulson undetered by being told no in 2000, succeeded in 2004 in having all manner of broker-dealer leverage limits lifted, thus allowing sky's the limit gambling in derivatives.

But wait you say, wasn't it Mr. Buffett the one who called derivatives weapons of financial mass destruction?

So why would Mr. Buffett invest in a company who did business in a product he publicly loathed and claimed could cause widespread financial harm? Further to this, why would Buffett himself buy derivatives for the Berkshire portfolio?

Good question. Maybe we send forward that to Ms. Quick.

Or maybe Mr. Buffett is just one of those do as I say not as I do types. You know the type, kinda like an Al Gore, that love to tell you and I to be green, to be environmentally friendly but then get on their private jet, but not before transiting the ride from the airport in a 4 SUV motorcade, to go to their 15,000 square foot carbon footprint minimalist home, dammit again I digress.

But heck, lets not pass judgement just yet on Mr. Buffett. The Goldman fiasco is just one piece of evidence. Or is that two now? I forget.

Fannie Mae

This is the same Warren Buffett that was aggressively trying to buy over $3 billion in tax credits from taxpayer lavished Fannie Mae with - now this might come as a shocker so you may want to sit down - Goldman Sachs! I am at a loss for words on this one, but the words that do come to mind are criminal and syndicate.

Yes I know buying tax credits from an insolvent, yet we continue to throw money down a bottomless pit GSE, is a deal only a real dyed-in-the-wool, Ivy League MBA could appreciate. Just for kick lets say you or I try to pull that one off!! Might I suggest some heavy duty lobbying to the likes of Mssrs. Dood, Frank, Conrad and Jefferson, (ooops... strike Jefferson as he got caught already but the other 3 are good to go) as a precursor.

But let's not pass judgement just yet on Mr. Buffett. The Fannie Mae scam is just one piece of evidence, or is that 3 now? Hey wait a minute! Naaah it's Warren Buffett for crying out loud. He wouldn't.....

Mr. Buffett has no qualms feasting on the leftovers of congressional generosity and this is whom we laud as a leading light in all things finance. Think of how many companies Buffett has a stake in who have been the beneficiary of taxpayer funded bailouts. Hmmmm let me count;

Goldman Sachs
Wells Fargo
General Electric
American Express
Bank America
US Bankcorp

to name just a few.

So given all this, the Moody's debacle, the Goldman fiasco, the Fannie Mae scam, the bail my stock out portfolio, what does the congenial, ever likeable, benevolent one do? He does want any self-respecting public citizen of the year does, you join hands with your partners in crime in a public relations campaign of generosity called the 10,000 Small Businesses Initiative. I would simply call it a 'Feed them Cake' campaign, but I can be a little harsh at times.


Quick side note, anyone know the over/under on how many times CNBC will run this Buffet, Goldman humanitarian story today? Just curious.


Yes, dear reader we now get to witness the Buy your Salvation trade. Let this be a lesson to all that one cannot loot the land without making a small token of charitable appreciation to the masses. Steal 10's upon 10's of billions of dollars and you simply buy your salvation with $500 million. I have said it before and will say it again, when you steal a million and the fine is $10k or even a $100k, even a 2 bit city college undergrad can be as smart as a Harvard Endowment Fund MBA and figure out it's a fantastic trade, conscience be damned.

So Buffett worshippers will undoubtedly find fault with much of this article. They will point to his goodwill, his track record, his good nature. They will most assuredly point to my conclusion that his investments in enterprises like Goldman and Moody's does not make him a criminal. To which I would counter, if I invest in an business that I think is legitimate but then I discover it is illegitimate am I guilty if I reap the benefits of such. If I finance a fraudulent enterprise am I then fraudulent.

In the least, how much of an investor am I if as the most visible market player on the planet, who can get any CEO to tremble in his boots when I call, I don't know the duplicity, corruption and outright fraud that is taking place at and within my investments.

If Buffett is so lily white. so esteemed why is he keeping the company he is keeping via these investments?

In closing I would humbly counsel the small businesses of this great country who do most of the employing, to hang tough. I would also counsel them to politely tell the Oracle and Goldman to shove their $500 million up their collective asses. That way Ms. Quick would have yet another reason to go visit Howard Marshall, eeeerrr, excuse me Warren Buffett once again for another "exclusive".

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 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Direxion Tech 3X Bear ticker TYP @ $10.68
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
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, November 17, 2009

Have We Lost Our Way?

Over the past weekend I was doing some reading and came across an article "Goldman pays Junior CDO's Before Junk Senior Classes" via Bloomberg. Step back for a moment and 'forget the legality of it' because legal or not Goldman does not get the short end of the stick in deals and focus on the foundation, that of right and wrong.

Buried deep within the financial alchemy of it all is a clause that lets one party supersede another.
Oh its legal all right, but is this what our capital markets have become.? Make the bill (in congress) or the contract so convoluted, so opaque, that you need a team of lawyers fluent in latin just to read it let alone begin to understand it, and one wonders why we have to graduate as many lawyers as China graduates geologists. Helloooo!

I read recently the former University of Michigan football coach Bo Schembechler operated with a handshake agreement. Yes you read that correctly, no contract. A handshake! How far we have come, or is it regressed? You wanna try operating with a handshake agreement with a unit like Goldman Sachs, but of course they're just doing God's work.


It is easy to sit back and do nothing but complain about what is going on around us. Asking what has this great nation come to? But there comes a time when one gets to, the apex as it were, where complaining morphs into something more. Are we there yet? Who knows as it is hard to time when the mood rolls over from anger and frustration and into something worse.

I have been sitting here watching and listening to this developing Galleon insider trading situation. The details continue to come out and it does not seem to be ending anytime soon. Hedge Fund valet boyz and girlz, senior executive at IBM, former CEO of Advanced Micro (AMD) just to name a few.What I find interesting is something a friend asked me the other day regarding the subject, "why are they winding Galleon down if the charges are in regards to approx. $20 million in trades when the fund(s) are worth 3 billion?" Can they not just pay a fine, and this has to go down as the all time best line, "neither admit nor deny wrongdoing!", Kinda like JP Morgan did after raping and pillaging Jefferson County.

Now I am no Christopher Cox, he being the former chief eunuch at the SEC, but it seems to me a good question, why wind down the fund? So what could this signify? Is this just the tip of the iceberg? Is the dollar figure a low ball one? Are there bigger names involved?

Have you noticed how the SEC and the feds go after bottom of the totem pole pikers like Cioffi and Tannin from Bear Stearns. Absolutely hilarious if it were not so insulting.
Here's a hint Mary Shapiro, stop wasting your time with a a couple of Ferrari owning street hustlers like Cioffi and Tannin. Get some onions, stop wasting resources chasing down the couriers, runners and lookouts while the drug kingpins sit comfortably ensconced in their palaces.

Here's another hint Madam SEC Chair Shapiro, the list of guys you can commence arraignments for are thugs like Mozilo, Raines, Dodd, Conrad, Mudd, Syron, Blankfein, Geithner, Paulson and Greenspan. Is this enough of a start for you? Or do you need more?

Buy hey, who am I kidding. You don't want the truth. We don't want the truth, or as Col. Nathan R. Jessep in the movie A Few Good Men would say "YOU CAN"T HANDLE THE TRUTH ! "

Yes unfortunately we can't handle the truth. We don't want the truth, as we would rather live in a complete fantasy land. I can assure you that this charade absolutely cannot and will not go on forever. Or alas maybe I am wrong and it can go on as we might just be gallactically stupid a la Lt. Cdr. JoAnne Galloway.

Quick side story time.

Once upon a time, circa 1999, back when I was a retail broker back in my previous life I had a conversation with a rookie broker, excuse me, developing I.A. (investment advisor) as you are not allowed to call them rookies as that is demeaning. Kinda like giving a trophy to placing 13 out of 15 contestants but yet again I digress.

Anyway in this conversation we were discussing the market, in particular tech stocks and their valuations, if you could call it that. I was counselling him in the arena of risk and the potential danger some of these issues could inflict on a portfolio and a young broker's career. Seeing as how I was not getting through I offered the following analogy.

If someone told you it was going to rain for 40 days and 40 nights. What would you do or could you do? Well, you could build an Ark or not build an Ark. Now if you built the Ark and it did not rain what are you out? Labour, materials, your time (we can assume you needn't insure it nor get a permit for it!) Now if you don't build the ark and it does rain..... well, you're dead.

Back to my point about
trust. How can markets function under this type of environment? How can a participant make a decision with any amount of confidence? A wizened trader/friend often comments that confusion breeds contempt. So does this start to explain how this market rises on basically fumes and vapor (re: lack of volume)

Has this become a 50 Cent market, that some have called a 'get rich or die trying" environment for hedge fund valets and pension managers?


I have no idea what is coming down the pipe for us whether it be for our markets, our nation or as a society, but might I humbly suggest that one be prepared for all outcomes, both good and bad. (hence my side story about the ark !)


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 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Direxion Tech 3X Bear ticker TYP @ $10.68
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
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, November 13, 2009

Getting Longer FAZ

The time has come for me to add a 2nd unit to my long FAZ position here at $20.11 and sit tight.


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 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 1 unit Ultrashort Xinhua China ticker FXP @ $8.32
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 1 unit Direxion Tech 3X Bear ticker TYP @ $10.68
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
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 the Dollar


The time has come for me to punt the U.S. dollar on the long side once again. It (the dollar) seems to have digested its recent trend line break out by backing and filling, frustrating those that jumped in as the break occurred.

Therefore I am punting long 1 unit of UUP here at $22.42 with a stop at $21.97



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 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
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 Direxion Tech 3X Bear ticker TYP @ $10.68
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
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, November 12, 2009

Punting TYP and more TZA




I am prepared to punt 1 unit long of the Direxion Tech 3x Bear ticker TYP here at $10.58

I am also prepared to add a 2nd unit long of TZA here at $12.67

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 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
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 Direxion Tech 3X Bear ticker TYP @ $10.68
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, November 11, 2009

Sandbagging

The dollar and the market seems to be the topic de jour. Karl Denninger over at the blog Market Ticker had a couple of excellent posts, which his regular readers know is commonplace at his blog. The first post yesterday's FedSpeak Translation - There is No Recovery and today's Strong Dollar Lies both deserve your attention.


Please focus on the charts in his post which are overlays of the U.S. dollar and the broad based S&P500 index. I agree with him in that this is no recovery at all it is simply a mirage. I also agree that the currency is a reflection of the country in question. I was counselled many years ago, by a very wise chap, that the thermometer of a country economically was its currency.

You can agree or disagree with KD but the one thing he will do is make you think, which is more than I can say for the mainstream financial media. His post did just that with me, it got me to thinking. In particular about something I have oft written, that if one were inclined to wearing tin foil, one might easily come to the conclusion that people in charge are sandbagging us. That they know what the remedies for our dilemma are yet are purposefully and with premeditated calculation doing the opposite, thereby sabotaging the economy. As in a game a chess where you make a move that elicits your opponents next move. For those that don't play chess go see Law Abiding Citizen to see what I mean)

That snakes like Geithner, Bernanke, Paulson, Summers, Blankfein, the Fed governors et al know what the correct remedies and solutions yet refuse to implement them. Could it be that someone or somebodies stand to gain enormous by this. Whats that phrase again?.... Oh yeah, follow the money!

In the aftermath of the tech bubble it was widely reported that approximately 22% of us held tech stocks. In the aftermath of the housing bubble it is reported 64% of us own our own homes. (I could stand to be corrected on this one so take it with a grain of salt). Where am I going with this? Okay, how many of us own dollars.


The story regarding the whistle blower from the IEA (Int'al Energy Agency) that oil production statistics are manipulated by the U.S. seems to be gaining traction. To which all I can say is really? Maybe kinda like the unemployment numbers. Of course not, they're sacrosanct. No politician would do that? Would they?

And yet again another block of the foundation of our financial system, trust, crumbles away. I have commented before that trust is the most crucial element is capital markets. People have to be able to believe that the information they are being provided is legitimate and untainted, Zales (ticker ZLC), Apollo (ticker APOL) anyone?

Sure, you're absolutely correct, they're just one off circumstances. Lets just ignore the FASB changing the accounting rules for banks on non performing loans and now changing the rules for commercial real estate, but I digress.

Let me step further and get a couple of things straight here....

The state of California is on the verge of bankruptcy,
The state of New York is on the verge of bankruptcy,
The City of Houston is on the verge of bankruptcy,
The City of Detroit is on the verge of bankruptcy,
Unemployment is 10.2% if you believe the government, and if you don't, well then its closer to 20%.
Commercial real estate is comatose
The largest pension funds in the country, like Calpers are an unfunded shambles.
The taxpayer, via King Henry and his merry band of thieves and thugs owns GM, AIG, Citi and bushel upon bushel of Fannie and Freddie paper backed by next to worthless mortgages.

And yet in the face of all this evidence I am supposed to buy stocks? Because they are going up. All yet in the face of this evidence the manager of that growth/value/small cap/large cap fund in your IRA or 401 k is buying stocks. Not because he wants to but because he has to or pink slip she a comin'. Again because they are going up. Isn't that what Chuck Prince did, dance just because the music was playing.


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

Thursday, November 5, 2009

The Dollar

A couple of very interesting developments have occurred on the UUP, which is the U.S. dollar bull fund. The down trend line was broken to the upside back on Oct 26th on better than average volume. Next up, we have since backed, filled and tested that break out area, and today have blasted off that area with monster volume. For what it's worth, volume today was the highest in UUP's history and this speculator is paying attention to it.

I am also paying attention to the lacklustre volume in all the major indices tracking shares. The SPY's, the IWM's, the DIA's and the MDY's all experienced lower volumes today as the cheerleaders rejoice. The one exception is the QQQQ's which had heavier volume, attributable to Cisco, who knows, who cares. I only am noting that 4 0f the 5 index tracking shares showed significantly lower volume on today's rally.

Ahhh what the heck, maybe this is just all useless drivel and one should just stop thinking and simply buy the dips like Bill Miller over a Legg Mason likes to do with pensioners money. (or maybe not!)

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

Tuesday, November 3, 2009

Some Golds

Goldcorp, ticker GG weekly view (above)
.
GG daily view (above)
Agnico Eagle Mines, ticker AEM weekly view (above)

AEM daily view (above)
Kinross Gold, ticker KGC weekly view (above)

KGC daily view (above)

Royal Gold, ticker RGLD weekly view (above)

RGLD daily view (above)

Regular readers know my affinity for gold. I believe gold is money. Gold is also peace of mind. Gold is insurance. Gold also cannot be turned into a collateralized piece of toxic garbage, (though many would vehemently argue an Ivy league MBA with a large enough carrot ($$$) dangled in front of his/her nose by Goldman Sachs may very well succeed)

When I place a bet with a bookie, I want to make sure he can pay if I am right cause you can bet your ass I will have to pay if I am wrong. So unlike AIG and all the other assorted fictitious wanna be playaz, gold is the ultimate bookie. It always pays!! It always honors it obligations. It always pays its claims, it always cashes its withdrawal slip.

That said, and this is not new news to regular readers, I am extraordinarily concerned with gold here.

Yes I know the gold bulls are pounding the table and rightly so. Forget for a moment that buy, buy buy Jim Cramer is bullish on gold. The difficulty I have is that we are in a deflation depression and every time in history every inflationary or hyperinflationary scenario was immediately preceded by a deflationary depression.

The current mantra is to de-leverage, (in spite of Wall St. trying in vain to lever up with their government via taxpayer sponsored back stop) and pay down debt. Wealth destruction is vastly outpacing money creation by the Fed and Treasury.

I fully accept the argument that gold can and should go to $1200, $1300, $1800, $2200 or even much higher. The issue I have is that gold may do this, only it may do it via a scenic detour down thru $720 or $770 first. I know the bulls don't want to hear this but the fact remains it could do it, all without damaging the longer term picture.

I bring this up because the average market participant cannot sit thru this type of event, emotionally nor financially. I bring this up because the bullish gold drums are being beaten quite loudly. This is happening in the face of a massive negative divergence between gold and the gold stocks which continues today, ( re: my post Gold and the Buck) in which bullion is making new high yet the stocks, as measure by GDX and $HUI are not.

I continue to remind speculators that in a healthy gold bull market, the stocks should be leading the bullion not the other way around which is exactly the scenario we have currently. Now this may correct itself with gold shares busting to new highs but I humbly counsel that you can ignore this if you wish but it could very well come at a high cost.

I have hi-lighted some of the leading gold stocks (above) along with some comments on their current state(s). I would also encourage some of the gold bulls to consider how they would analyze their charts if they didn't know what they were looking at was a gold stock. Just a thought.

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