This Week in Barrons – 1-31-10:
Thoughts – “I believe that our President will someday make this country what it once was... an arctic wilderness.” …Steve Martin
I have no idea what President Obama is going to point to as being a success:
- Coming into office the unemployment rate was 7.7% - it’s now 10.2%
- Coming into office the public debt was 10.2 trillion – it’s now $12.6 trillion.
- Coming into office foreclosures were 274,399 – they’re now 349,519.
- 2009 produced the largest deficit in our entire history
- in 2009 Bankers posted their single biggest profit levels EVER – AND Sam’s Club recently laid off another 1,100, VZ another 10,000 jobs.
- There is no healthcare, no cap and trade, we’re still in Iraq and we’ve added another war in Afghanistan!
- Obama told us that his administration would be completely open – yet we don’t even know how the TARP transactions were paid out.
- Last month existing home sales fell 17% - the largest drop in 40 years.
“Boy, those French: they have a different word for everything!” …Steve Martin
All we did over a year – was:
- spend money we don't have,
- help out Obama’s banker buddies,
- push through things no one wanted, and
- NOW we are in worse economic shape than when we started.
“You know the President’s problem is, it's that he hasn’t seen enough movies - all of life's riddles are answered in the movies.” …Steve Martin
Now, is that because Obama had a lot of great ideas that went wrong, or was this the original plan? Obama ran on a platform of making the tough choices:
- The tough choice would have been to let the big banks fail, and let the hundreds of well-run Regional banks take over.
- The tough choice would have been to tell AIG "no thanks" and let Goldman take it on the chin.
- The touch choice is to declare a ‘freeze’ on the entire budget – not just 18% of it (if that). And - how do you have a stimulus and a freeze?
“Well, excuuuuuse me, Mr. President! We are the wild and crazy guyz!” …Steve Martin
And thank you Mr. Bernanke (who was just re-appointed this week) for your insight:
- "Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited," …Dr. Bernanke, May 2007
- “It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions." …Dr. Bernanke. October, 2007
- “I expect there will be some failures. I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system." …Dr. Bernanke, February, 2008
“I believe that sex is one of the most beautiful, natural, wholesome things that money can buy.” … Steve Martin
So you ask: “How did GDP increase by 5.6% in the 4th Quarter?” Most companies in 2009 were simply selling existing inventory and NOT replenishing it. Well, according to Uncle Sam – a ‘SLOWDOWN’ in inventory growth is viewed as an increase in actual economic growth (GDP). So removing that 3.4% depletion of inventory - you’re left with 2.2% growth – and that will be whittled down with "revisions". Oh, the Government stimulus IS included in GDP calculations – wonder if that is more than 2.2%?
“Don't have sex – it leads to kissing and pretty soon you have to start talking to them.” …Steve Martin
In my view what we’ve seen from March ‘09 to last week is NOT a bull market – but rather a bounce in a massive bear market. Most bear markets are punctuated with runs of 40 to 60% that seem to prove to everyone that the pain is over – then they sink even lower.
The Market:
How has the market taken all the news this week – honestly, not so well. How many times have you heard me say: "The market doesn't belong at these levels." If the market was a true reflection of the economy, we'd have the DOW at 7500 as we speak, and on it's way to 4500 over the next couple years. There was never any question in our minds that the market was going to roll-over, it was simply a matter of when. As the 2009 run up began getting long in the tooth, and every time the market looked ‘vulnerable’ - “someone” (wink-wink) stepped in and purchased 280,000 S&P futures, and with the stimulus and bail out money not being lent, but being put to work in the markets, there was (honestly) no telling how far they ‘elite’ could push this rally.
When we hit that high a couple weeks back – we sold out of all our positions except our 401K – and we began to sit on our hands. We didn't go short, simply because with all the crosscurrents, and "free money" sloshing around from the Fed, we didn't want to get it tossed back in our face with another blast higher. But what is different about this ‘sell-off’ is the fact that we can't even manage a silly bounce. The market has blasted thru support at 10,500 and then at 10,200 – and is left with defending 10K as the last bastion of hope.
“A day without sunshine is like, you know, Night.” …Steve Martin
Now, I think they are going to make a bigger stand here at 10K – but I’m not looking for ‘higher highs’ – but potentially a 300 to 400 point bounce. And, if we get it – I’m going to sell out of my 401K’s and start loading the boat on shorts and puts. Because even if we bounce for 500 I think that we'll see 9500 soon. In the short term we have become oversold – and at some point the market will reflex snap back a bit.
TIPS:
We sold out of everything except our 401K – and we’ll do that on the next bounce – honestly. I think ‘shorting and buying long term puts’ is almost upon us.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Saturday, January 30, 2010
Sunday, January 24, 2010
This week in Barrons - 1-25-10
This Week in Barrons – 1-25-10:
Thoughts – “When I was a kid I used to pray every night for a new bicycle – then I realized that the Lord doesn't work that way so I stole the bike and asked Him to forgive me.” Andrew Dice Clay.
This week the biggest news in many years hit the wires. Obama challenging the banks – nope. Ben Bernanke potentially NOT being re-appointed to the FED – nope. The market falling 500+ DOW points in 3 days – nope. It was the Supreme Court’s 5 to 4 decision on Thursday to allow Corporations to spend any amount of money they please on the Politician of their choice – deciding that corporations are people and people are entitled to “free speech”. This decision could eliminate the last vestige of any integrity in our election system. It throws out over a century of restrictions imposed by Congress against corporations so that they could not influence the outcome of elections. Corporations have an unfair advantage over the small guy, over real people, in the amount of money they control.
What does this all mean? It means future Supreme Court Justices will be appointed by presidents who have been bought, purchased, and are controlled by corporations, and confirmed by U.S. senators who also have been purchased by corporations. It means Exxon Mobil, who earned $45 billion last year, can spend any amount of money they want on advertisements supporting a political candidate, and if they want a candidate elected – they have billions to spend on that candidate. How on earth could an honest man compete? It means candidates will cut deals with Google, Microsoft, General Electric, Exxon Mobile in order to get elected. It also means these same companies can place people in our government, who will pass and enforce legislation favorable to their special interests. Consider that there may be more wars because companies love getting giant military contracts, and there may be less labor rights because they just ‘get in the way’ of profitability.
Andrew Dice Clay: “I don't drink to get happy or to forget the pain, I drink to stop the voices in my head. The bad part about the voices in my head is that they stutter.”
So what about the Democrats losing Massachusetts: it was a true “rebellion” by the masses giving the message: "no more!" But what about Obama coming out strongly for his new financial reform at the banker level. Potentially you could dismiss this as politics – losing Massachusetts – striking out at Wall Street so that he looks good to the voters. But after looking at the transcripts of the speeches – I get the impression that Obama was personally wronged. In other words, what if when Congress bailed out the banks, Obama made one of those back door "deals" where the banks had to do something to make Obama look good when it was over – such as lower bonuses or understate profits. And let’s assume the banks did not keep up their end of the bargain. And now it’s Chicago Politics gone wild – it’s PAYBACK time. Heck, Ben Bernake is Wall Street’s best friend – giving them money when (and even if they don’t) need it – and now his appointment is clearly in jeopardy. So we fell 500+ points in 3 days – blasting thru 10,200 on the DOW as a level of support – because the idea of “Helicopter Ben” not giving out free money to Wall Street scared all the bankers – and honestly Wall Street could be saying to Obama: “Let's see how many people love you after we crash this market and take the 401K's down to next to nothing." Obama wants rules and regulations that would seriously crimp the bankers style, instead of going along with every agenda they have. Something's brewing folks, you can feel it, smell it, sense it. I smell a bit of warfare between Obama and his Banker elite handlers. And do I think that the ‘paper dollar’ can withstand the onslaught of all the ills we face right now – honestly – I’ll continue to trust gold.
The Market:
Andrew Dice Clay: “It takes only one drink to get me drunk. The trouble is, I can't remember if it's the thirteenth or the fourteenth drink.”
Look how fast things can change. It was just 5 short trading sessions ago that the market was at 10,723, and the bullish crowd was preaching DOW 15,000. In just 5 sessions we've fallen 561 points – the single biggest pull down we've seen in a year. So, the market is in a funk, Washington is at war with Wally Street, our Political parties are coming apart at the seams, so what is an investor to do? Now, I truly believe that we will see DOW sub 5,000 between now and 2012, and even if this week was indeed the beginning of that monster slide, it's not going to be a straight line down. We are already short term "oversold" from last week’s carnage, and we should see a fairly meaningful bounce at the beginning of this coming week. And that will be the nature of the entire race to the bottom – we will have periods of free fall, punctuated with periods of wicked bounces. This will take a long time to play out.
My guess is that we will bounce, next week, but not terribly far. Friday night the founders of Google registered to sell 5 million shares each. Oh, and by the way, insiders in ALL areas of business have been bailing out of this market for a year. Just last week insiders bought $1million worth of shares and sold $419 million. If they thought their shares were going to go up, wouldn't those numbers have been reversed? If you're a trader, after some wild volatility on Monday, it's my guess you can go long for a day or two, but by Wednesday afternoon, the steam should come out and we roll lower again.
Andrew Dice Clay: “I don't want to achieve immortality through my work. I want to achieve it through not dying.”
I think it's time to start jotting down your longer-term short list. Remember, we can go short in two ways, literally selling shares short, or buying puts. The single best trade I’ve ever put on was being in long dated put options against the DOW and S&P during 90% of 2008. The returns were incredible. An example trade for you to consider: HOG is the symbol for "Harley Davidson". They just announced terrible earnings – and duh – who has $20k sitting around for a motorcycle? So I think HOG – currently selling around $24 – has a date with $10 in the not too distant future.
TIPS:
We sold out of everything except our 401K. We’re still buying hard gold and silver (but what else is new).
If you’re thinking long then:
REXX over 14 is still attractive
ORCL over 25.50 still looks good
CLNE over 19 would pull me in
FMCN over 18 would be interesting.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts – “When I was a kid I used to pray every night for a new bicycle – then I realized that the Lord doesn't work that way so I stole the bike and asked Him to forgive me.” Andrew Dice Clay.
This week the biggest news in many years hit the wires. Obama challenging the banks – nope. Ben Bernanke potentially NOT being re-appointed to the FED – nope. The market falling 500+ DOW points in 3 days – nope. It was the Supreme Court’s 5 to 4 decision on Thursday to allow Corporations to spend any amount of money they please on the Politician of their choice – deciding that corporations are people and people are entitled to “free speech”. This decision could eliminate the last vestige of any integrity in our election system. It throws out over a century of restrictions imposed by Congress against corporations so that they could not influence the outcome of elections. Corporations have an unfair advantage over the small guy, over real people, in the amount of money they control.
What does this all mean? It means future Supreme Court Justices will be appointed by presidents who have been bought, purchased, and are controlled by corporations, and confirmed by U.S. senators who also have been purchased by corporations. It means Exxon Mobil, who earned $45 billion last year, can spend any amount of money they want on advertisements supporting a political candidate, and if they want a candidate elected – they have billions to spend on that candidate. How on earth could an honest man compete? It means candidates will cut deals with Google, Microsoft, General Electric, Exxon Mobile in order to get elected. It also means these same companies can place people in our government, who will pass and enforce legislation favorable to their special interests. Consider that there may be more wars because companies love getting giant military contracts, and there may be less labor rights because they just ‘get in the way’ of profitability.
Andrew Dice Clay: “I don't drink to get happy or to forget the pain, I drink to stop the voices in my head. The bad part about the voices in my head is that they stutter.”
So what about the Democrats losing Massachusetts: it was a true “rebellion” by the masses giving the message: "no more!" But what about Obama coming out strongly for his new financial reform at the banker level. Potentially you could dismiss this as politics – losing Massachusetts – striking out at Wall Street so that he looks good to the voters. But after looking at the transcripts of the speeches – I get the impression that Obama was personally wronged. In other words, what if when Congress bailed out the banks, Obama made one of those back door "deals" where the banks had to do something to make Obama look good when it was over – such as lower bonuses or understate profits. And let’s assume the banks did not keep up their end of the bargain. And now it’s Chicago Politics gone wild – it’s PAYBACK time. Heck, Ben Bernake is Wall Street’s best friend – giving them money when (and even if they don’t) need it – and now his appointment is clearly in jeopardy. So we fell 500+ points in 3 days – blasting thru 10,200 on the DOW as a level of support – because the idea of “Helicopter Ben” not giving out free money to Wall Street scared all the bankers – and honestly Wall Street could be saying to Obama: “Let's see how many people love you after we crash this market and take the 401K's down to next to nothing." Obama wants rules and regulations that would seriously crimp the bankers style, instead of going along with every agenda they have. Something's brewing folks, you can feel it, smell it, sense it. I smell a bit of warfare between Obama and his Banker elite handlers. And do I think that the ‘paper dollar’ can withstand the onslaught of all the ills we face right now – honestly – I’ll continue to trust gold.
The Market:
Andrew Dice Clay: “It takes only one drink to get me drunk. The trouble is, I can't remember if it's the thirteenth or the fourteenth drink.”
Look how fast things can change. It was just 5 short trading sessions ago that the market was at 10,723, and the bullish crowd was preaching DOW 15,000. In just 5 sessions we've fallen 561 points – the single biggest pull down we've seen in a year. So, the market is in a funk, Washington is at war with Wally Street, our Political parties are coming apart at the seams, so what is an investor to do? Now, I truly believe that we will see DOW sub 5,000 between now and 2012, and even if this week was indeed the beginning of that monster slide, it's not going to be a straight line down. We are already short term "oversold" from last week’s carnage, and we should see a fairly meaningful bounce at the beginning of this coming week. And that will be the nature of the entire race to the bottom – we will have periods of free fall, punctuated with periods of wicked bounces. This will take a long time to play out.
My guess is that we will bounce, next week, but not terribly far. Friday night the founders of Google registered to sell 5 million shares each. Oh, and by the way, insiders in ALL areas of business have been bailing out of this market for a year. Just last week insiders bought $1million worth of shares and sold $419 million. If they thought their shares were going to go up, wouldn't those numbers have been reversed? If you're a trader, after some wild volatility on Monday, it's my guess you can go long for a day or two, but by Wednesday afternoon, the steam should come out and we roll lower again.
Andrew Dice Clay: “I don't want to achieve immortality through my work. I want to achieve it through not dying.”
I think it's time to start jotting down your longer-term short list. Remember, we can go short in two ways, literally selling shares short, or buying puts. The single best trade I’ve ever put on was being in long dated put options against the DOW and S&P during 90% of 2008. The returns were incredible. An example trade for you to consider: HOG is the symbol for "Harley Davidson". They just announced terrible earnings – and duh – who has $20k sitting around for a motorcycle? So I think HOG – currently selling around $24 – has a date with $10 in the not too distant future.
TIPS:
We sold out of everything except our 401K. We’re still buying hard gold and silver (but what else is new).
If you’re thinking long then:
REXX over 14 is still attractive
ORCL over 25.50 still looks good
CLNE over 19 would pull me in
FMCN over 18 would be interesting.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Sunday, January 17, 2010
This week in Barrons - 01-18-10
This Week in Barrons – 1-18-10:
Thoughts – “It’s Wabbit Season, and I’m hunting wabbits, so be vewy, vewy quiet!”… Elmer Fudd (cartoon character)
Narrator: It is a well-known psychological fact that people's behavior is strongly affected by the way they dress.
Elmer Fudd: Bang, bang, bang! Come out of your holes, you cowardwy wabbits! Bang, bang! And I'll bwow you to smitteweenies!
Buoyed by strong post-Christmas bargain hunting, retail store sales rose 1.5% from the previous week and 2.3% Y/Y. Now, what didn’t say was: Vacancies at U.S. strip malls hit an 18-year high in Q4, with a vacancy rate of 10.6%, worse than the vacancy rate of the "commercial real estate depression" of the early 1990s. Unemployment and inconsistent consumer spending are expected to continue weighing on retail properties for at least another 18-24 months. And in the commercial space in general – the square footage of space available for office rent in Manhattan is 38% higher than a year ago, totaling 43.8M square feet for lease (11% of the city's total office space). Oh – I forgot - people without jobs don't spend money, and small businesses don't need to lease office space if there is no business.
Well surely all the stimulus money that's about to come roaring down the pike will solve all these problems yes?
Bugs Bunny: Hey, Lemme see the rabbit, mister! Can I see da rabbit?
Elmer Fudd: Awright.
[Bugs goes inside basket, comes out other side]
Bugs Bunny: No rabbit in there, Doc! You've been robbed!
Recently – a huge study finds stimulus dollars spent on road construction had no material impact on local unemployment. The analysis reviewed $21B in stimulus projects in every state, and found no statistical difference between counties that received the most money and those that received none. Now why is that – well, when Uncle Sam decides he wants to go spend money, he doesn't look for bargains, he doesn’t analyze the market – he simply waves his hand and spends the money. Now, because there are no market or pricing decisions being made – why would you believe that any government stimulus projects would have any effect on a market-driven economy? If Uncle Sam waves his wand, produces 100K dollars and hands it to you to dig trenches – more often than not you won't be researching the digging of trenches, and manufacturing a new more efficient way to do it. Yet if that trench was being bid to all the known trench diggers, chances are good someone would invent something quite efficient to help him get the job done quicker and easier. Government spending stifles that type of ambition, slows invention and progress. Not to mention, it's a zero sum game for the most part.
Okay, a while back I said that at "some" point, things would get so dire at the Treasury that they would impose rules that pension plans MUST buy our Treasuries. They would have to because no sane investor around the globe wants to lend money to Uncle Sam at the ridiculous rates he offers. So, in the past couple months, the FED has been buying between 40 to 80% of our own debt – but this isn’t enough. And just this week Rick Santelli hit the wires with this very discovery. You’re seeing the first steps towards Uncle Sam moving to capitalize on the trillions of dollars sitting in pension funds, by first "allowing" them to roll into a Gov't backed annuity (buying our treasuries) which I believe will be followed by a move to "make" them invest a certain percentage into the market.
Daffy: It's a lie. It's a lie. My name is Jack, Jack Rabbit.
Bugs: Oh, no. You're Jack, all right.
Daffy: I’m not. You're Jack.
Bugs: You are Jack and you know it, because it is a fact.
Elmer: I guess I'll have to open up with a pair of Jacks.
Finally, sometimes the baloney is so incredibly bizarre, that even the media can't get their arms around it. On Wednesday, while the big bankers were testifying to congress about how they saved the known world, we received this news blurb: “The White House this morning congratulates itself on last year's stimulus package. The stimulus package has allowed nearly 38M people, or one in eight Americans, to rely on food stamps.”
The Market:
They say history doesn't repeat itself, but it sure can rhyme. My stance during this ‘bear market bounce’ has been that it’s stimulus injected, fiat currency manipulated, a Federal Reserve based run up – that MUST end badly.
My original feeling was that coming into the New Year, they'd move us up into earnings and they did. Now will the market move us up – past earnings – before rolling over – the jury’s still out on that one for me – and here’s why.
Elmer Fudd: Gaze deepwy into my eyes.
Bugs Bunny: Heh, Dracula.
Elmer Fudd: You are getting sweepy, sweepy.
[Bugs goes into his hole, Elmer sticks his head in]
Elmer Fudd: You are Asweep. Asweep and helpwess.
A Chicago floor trader remarked this week that “out of the blue” someone purchased 228,000 S&P e-mini future – and seconds later the market shook off it’s ‘funk’ and ran higher. The trader then remarked – “with that kind of Government intervention, the path of least resistance seems to continue to be up". So someone with substantial backing – goosed / manipulated the market and made it go up. And, if it weren't for that kind of back door dealing, it would be VERY simple to tell you that: "it's time to go short and buy long dated puts".
But, how can I say the 2010 run up is over, when it's still clear that Uncle Sam is letting the banks goose the market when ever it seems ready to roll over? At "some" point the collective running for the exits will overpower the dark pool stimulus that keeps getting injected.
I am just not ready to say ‘now’. We sold out all our short term positions this week, it seems to be a really good time to think thru the miners for signs of life. (Often when the market drops - gold and silver will go higher, and mining stocks might go with it.)
TIPS:
We sold out of everything on Tuesday of last week. I looked at ORCL on Friday but didn’t pull the trigger just yet. So, right this second, I am technically out of the market except for our brokerage accounts. Now, this is an interesting development on the heels of Intel beating estimates – so there is a ton of ‘secret selling’ going on in the background.
I might go right back into ORCL if it crosses 25.50 again, I like it.
We’re still buying hard gold and silver – fyi.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts – “It’s Wabbit Season, and I’m hunting wabbits, so be vewy, vewy quiet!”… Elmer Fudd (cartoon character)
Narrator: It is a well-known psychological fact that people's behavior is strongly affected by the way they dress.
Elmer Fudd: Bang, bang, bang! Come out of your holes, you cowardwy wabbits! Bang, bang! And I'll bwow you to smitteweenies!
Buoyed by strong post-Christmas bargain hunting, retail store sales rose 1.5% from the previous week and 2.3% Y/Y. Now, what didn’t say was: Vacancies at U.S. strip malls hit an 18-year high in Q4, with a vacancy rate of 10.6%, worse than the vacancy rate of the "commercial real estate depression" of the early 1990s. Unemployment and inconsistent consumer spending are expected to continue weighing on retail properties for at least another 18-24 months. And in the commercial space in general – the square footage of space available for office rent in Manhattan is 38% higher than a year ago, totaling 43.8M square feet for lease (11% of the city's total office space). Oh – I forgot - people without jobs don't spend money, and small businesses don't need to lease office space if there is no business.
Well surely all the stimulus money that's about to come roaring down the pike will solve all these problems yes?
Bugs Bunny: Hey, Lemme see the rabbit, mister! Can I see da rabbit?
Elmer Fudd: Awright.
[Bugs goes inside basket, comes out other side]
Bugs Bunny: No rabbit in there, Doc! You've been robbed!
Recently – a huge study finds stimulus dollars spent on road construction had no material impact on local unemployment. The analysis reviewed $21B in stimulus projects in every state, and found no statistical difference between counties that received the most money and those that received none. Now why is that – well, when Uncle Sam decides he wants to go spend money, he doesn't look for bargains, he doesn’t analyze the market – he simply waves his hand and spends the money. Now, because there are no market or pricing decisions being made – why would you believe that any government stimulus projects would have any effect on a market-driven economy? If Uncle Sam waves his wand, produces 100K dollars and hands it to you to dig trenches – more often than not you won't be researching the digging of trenches, and manufacturing a new more efficient way to do it. Yet if that trench was being bid to all the known trench diggers, chances are good someone would invent something quite efficient to help him get the job done quicker and easier. Government spending stifles that type of ambition, slows invention and progress. Not to mention, it's a zero sum game for the most part.
Okay, a while back I said that at "some" point, things would get so dire at the Treasury that they would impose rules that pension plans MUST buy our Treasuries. They would have to because no sane investor around the globe wants to lend money to Uncle Sam at the ridiculous rates he offers. So, in the past couple months, the FED has been buying between 40 to 80% of our own debt – but this isn’t enough. And just this week Rick Santelli hit the wires with this very discovery. You’re seeing the first steps towards Uncle Sam moving to capitalize on the trillions of dollars sitting in pension funds, by first "allowing" them to roll into a Gov't backed annuity (buying our treasuries) which I believe will be followed by a move to "make" them invest a certain percentage into the market.
Daffy: It's a lie. It's a lie. My name is Jack, Jack Rabbit.
Bugs: Oh, no. You're Jack, all right.
Daffy: I’m not. You're Jack.
Bugs: You are Jack and you know it, because it is a fact.
Elmer: I guess I'll have to open up with a pair of Jacks.
Finally, sometimes the baloney is so incredibly bizarre, that even the media can't get their arms around it. On Wednesday, while the big bankers were testifying to congress about how they saved the known world, we received this news blurb: “The White House this morning congratulates itself on last year's stimulus package. The stimulus package has allowed nearly 38M people, or one in eight Americans, to rely on food stamps.”
The Market:
They say history doesn't repeat itself, but it sure can rhyme. My stance during this ‘bear market bounce’ has been that it’s stimulus injected, fiat currency manipulated, a Federal Reserve based run up – that MUST end badly.
My original feeling was that coming into the New Year, they'd move us up into earnings and they did. Now will the market move us up – past earnings – before rolling over – the jury’s still out on that one for me – and here’s why.
Elmer Fudd: Gaze deepwy into my eyes.
Bugs Bunny: Heh, Dracula.
Elmer Fudd: You are getting sweepy, sweepy.
[Bugs goes into his hole, Elmer sticks his head in]
Elmer Fudd: You are Asweep. Asweep and helpwess.
A Chicago floor trader remarked this week that “out of the blue” someone purchased 228,000 S&P e-mini future – and seconds later the market shook off it’s ‘funk’ and ran higher. The trader then remarked – “with that kind of Government intervention, the path of least resistance seems to continue to be up". So someone with substantial backing – goosed / manipulated the market and made it go up. And, if it weren't for that kind of back door dealing, it would be VERY simple to tell you that: "it's time to go short and buy long dated puts".
But, how can I say the 2010 run up is over, when it's still clear that Uncle Sam is letting the banks goose the market when ever it seems ready to roll over? At "some" point the collective running for the exits will overpower the dark pool stimulus that keeps getting injected.
I am just not ready to say ‘now’. We sold out all our short term positions this week, it seems to be a really good time to think thru the miners for signs of life. (Often when the market drops - gold and silver will go higher, and mining stocks might go with it.)
TIPS:
We sold out of everything on Tuesday of last week. I looked at ORCL on Friday but didn’t pull the trigger just yet. So, right this second, I am technically out of the market except for our brokerage accounts. Now, this is an interesting development on the heels of Intel beating estimates – so there is a ton of ‘secret selling’ going on in the background.
I might go right back into ORCL if it crosses 25.50 again, I like it.
We’re still buying hard gold and silver – fyi.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Sunday, January 10, 2010
This week in Barrons - 1-10-10
This Week in Barrons – 1-10-10:
Thoughts – “I Pity da Fool” (Mr. T … B.A. Baracus from ‘The A-Team’)
Murdock: Looks like we're going to crash.'
Face: No, what's *really* going to happen?
Murdock: Looks like we're going to crash and die.
I was first notified of the Governments Plunge Patrol Team ( the PPT – officially known as the ‘President’s Working Group on Financial Markets) back in early, 1995. I found this to be the answer to a lot of questions I had that just could NOT be answered in logical fashion. The Group was built in 1988 to: give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence.” And on this group is: (1) the Secretary of the Treasury, (2) the Chairman of the Board of Governors of the Federal Reserve System, (3) the Chairman of the Securities and Exchange Commission, (4) the Chairman of the Commodity Futures Trading Commission, and The Secretary of the Treasury shall be the Chairman of the Working Group. And ‘supposedly’ the law states that this group can only give ‘recommendations’ – however in 1989 Robert Heller stated: “instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thus stabilizing the market as a whole." In 1997 Alan Greenspan stated: “We have the responsibility to prevent major financial market disruptions through development and enforcement of prudent regulatory standards and, if necessary in rare circumstance, through direct intervention in market events." And Ben Bernanke himself said in 2009: “consumer confidence will rise with the gradual rise of the equity market.”
B.A. Baracus: I pity da fool who goes out tryin' to take over da world, then runs home cryin' to his momma.
It has been my position that the Presidents Working Group is VERY active in the day-to-day manipulations of many markets, from stocks, to metals. And think who is on this group: The Treasury Secretary - Timmy Geithner – who on Thursday instructed AIG to remove documentation from e-mails showing how much Uncle Sam was going to be paying for toxic assets – former Goldman Sachs. Then we have the head of the SEC - the group that couldn't figure out Bernie Madoff, and were no-where to be found when banks were selling toxic assets to the world. The head of Commodities Exchanges – a place where (to this day) 4 major institutional banks can be short more silver than is produced in the whole world, despite it being illegal. Well, it seems that others have been thinking about the PPT: “The unusual circumstances that led the U.S. market to rally powerfully in 2009 might be explained by secret government moves to buy stocks”, according to Charles Biderman, the founder and chief executive of TrimTabs, a research firm that tracks liquidity flows in the market. “The Federal Reserve or the Treasury could have easily manipulated the stock market by purchasing $60 to $70 billion worth of futures of the S&P 500 on a monthly basis.” How many times in the past have we said: There simply was no way the market could do what it was doing without being "manipulated".
B.A. Baracus: They're closin'. They got us! We're almost out of gas.
Hannibal: Now, why did you pick a truck with no gas?
B.A. Baracus: 'Cause I liked the paint job.
Well, let's look at Friday's Jobs Report – it appears that some 85K jobs were lost in December – really – just 85K? There are two major employment reports, the Governments non-farm payroll, and the "household" survey. Well, when you use the ‘Household Survey’ report – it says we lost 589,000 jobs in December! But wait – it gets better – approximately 600K people "fell off" the unemployment rolls, which is why the unemployment rate stayed at 10%. How did 600k ‘fall off’ the unemployment roles – well – they just gave up looking for a job, and if you are no longer looking for a job, you are no longer considered unemployed – which would have naturally driven that 10% figure much higher.
Now onto The Market:
Face: In no time, he'll be running around like a Mexican Jack Rabbit - one that just got out of therapy.
We're entering a new year, with some huge gains from 2009 – and all some people need is a reason to ‘exit’ this market. Well Friday’s Jobs Report provided that reason. The jobs report was horrible, but the market didn't crash – it didn't even dip. The market ended the day ‘green’ on a day when job losses mounted, the unemployment level rose, and frankly there were no "green shoots" in the number. The spin was: If the numbers stink, Bernanke and the FED cannot raise rates, the stimulus money will continue, low rates will continue and the party can continue.
Hannibal: B.A., there's an old saying - The best defense is a good offense.
B.A. Baracus: You got that wrong, man. A good offense is the best defense.
Now we face earnings season. You're going to see creative accounting reach new levels of absurdity, and it will all be designed to make things sound rosy. UPS on Friday increased their guidance – and also cut 1,800 jobs! So it’s our guess that they move us higher this next week.
Lean long and keep a finger near the sell button.
TIPS:
Our Current holds are:
2000 PTEN at 18.03 Hard stop at 18.05
2000 WFR at 14.19 Hard stop at 14.20
2000 CRS at 28.40 Hard stop at 28.45
2000 STEC at 17.64 hard stop at 18.49
2000 UYM at 33.59, Hard stop at 34.40
2000 CLR at 40.56, HARD STOP AT 43.80
We’re watching:
CY over 11.45
ATPG over 20.60
BRCM over 32.25
ADTN over 24.00
NVDA over 19.00
CAT over 60.02
DRIV over 28.00
GGB over 18.00
SLW over 17.35
CLD over 16.55
We will be buying the GDXJ’s / and SGOL’s – but wait until gold settles a bit here – also we’ll be looking at the Silvers … PAAS / SLW – etc.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts – “I Pity da Fool” (Mr. T … B.A. Baracus from ‘The A-Team’)
Murdock: Looks like we're going to crash.'
Face: No, what's *really* going to happen?
Murdock: Looks like we're going to crash and die.
I was first notified of the Governments Plunge Patrol Team ( the PPT – officially known as the ‘President’s Working Group on Financial Markets) back in early, 1995. I found this to be the answer to a lot of questions I had that just could NOT be answered in logical fashion. The Group was built in 1988 to: give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence.” And on this group is: (1) the Secretary of the Treasury, (2) the Chairman of the Board of Governors of the Federal Reserve System, (3) the Chairman of the Securities and Exchange Commission, (4) the Chairman of the Commodity Futures Trading Commission, and The Secretary of the Treasury shall be the Chairman of the Working Group. And ‘supposedly’ the law states that this group can only give ‘recommendations’ – however in 1989 Robert Heller stated: “instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thus stabilizing the market as a whole." In 1997 Alan Greenspan stated: “We have the responsibility to prevent major financial market disruptions through development and enforcement of prudent regulatory standards and, if necessary in rare circumstance, through direct intervention in market events." And Ben Bernanke himself said in 2009: “consumer confidence will rise with the gradual rise of the equity market.”
B.A. Baracus: I pity da fool who goes out tryin' to take over da world, then runs home cryin' to his momma.
It has been my position that the Presidents Working Group is VERY active in the day-to-day manipulations of many markets, from stocks, to metals. And think who is on this group: The Treasury Secretary - Timmy Geithner – who on Thursday instructed AIG to remove documentation from e-mails showing how much Uncle Sam was going to be paying for toxic assets – former Goldman Sachs. Then we have the head of the SEC - the group that couldn't figure out Bernie Madoff, and were no-where to be found when banks were selling toxic assets to the world. The head of Commodities Exchanges – a place where (to this day) 4 major institutional banks can be short more silver than is produced in the whole world, despite it being illegal. Well, it seems that others have been thinking about the PPT: “The unusual circumstances that led the U.S. market to rally powerfully in 2009 might be explained by secret government moves to buy stocks”, according to Charles Biderman, the founder and chief executive of TrimTabs, a research firm that tracks liquidity flows in the market. “The Federal Reserve or the Treasury could have easily manipulated the stock market by purchasing $60 to $70 billion worth of futures of the S&P 500 on a monthly basis.” How many times in the past have we said: There simply was no way the market could do what it was doing without being "manipulated".
B.A. Baracus: They're closin'. They got us! We're almost out of gas.
Hannibal: Now, why did you pick a truck with no gas?
B.A. Baracus: 'Cause I liked the paint job.
Well, let's look at Friday's Jobs Report – it appears that some 85K jobs were lost in December – really – just 85K? There are two major employment reports, the Governments non-farm payroll, and the "household" survey. Well, when you use the ‘Household Survey’ report – it says we lost 589,000 jobs in December! But wait – it gets better – approximately 600K people "fell off" the unemployment rolls, which is why the unemployment rate stayed at 10%. How did 600k ‘fall off’ the unemployment roles – well – they just gave up looking for a job, and if you are no longer looking for a job, you are no longer considered unemployed – which would have naturally driven that 10% figure much higher.
Now onto The Market:
Face: In no time, he'll be running around like a Mexican Jack Rabbit - one that just got out of therapy.
We're entering a new year, with some huge gains from 2009 – and all some people need is a reason to ‘exit’ this market. Well Friday’s Jobs Report provided that reason. The jobs report was horrible, but the market didn't crash – it didn't even dip. The market ended the day ‘green’ on a day when job losses mounted, the unemployment level rose, and frankly there were no "green shoots" in the number. The spin was: If the numbers stink, Bernanke and the FED cannot raise rates, the stimulus money will continue, low rates will continue and the party can continue.
Hannibal: B.A., there's an old saying - The best defense is a good offense.
B.A. Baracus: You got that wrong, man. A good offense is the best defense.
Now we face earnings season. You're going to see creative accounting reach new levels of absurdity, and it will all be designed to make things sound rosy. UPS on Friday increased their guidance – and also cut 1,800 jobs! So it’s our guess that they move us higher this next week.
Lean long and keep a finger near the sell button.
TIPS:
Our Current holds are:
2000 PTEN at 18.03 Hard stop at 18.05
2000 WFR at 14.19 Hard stop at 14.20
2000 CRS at 28.40 Hard stop at 28.45
2000 STEC at 17.64 hard stop at 18.49
2000 UYM at 33.59, Hard stop at 34.40
2000 CLR at 40.56, HARD STOP AT 43.80
We’re watching:
CY over 11.45
ATPG over 20.60
BRCM over 32.25
ADTN over 24.00
NVDA over 19.00
CAT over 60.02
DRIV over 28.00
GGB over 18.00
SLW over 17.35
CLD over 16.55
We will be buying the GDXJ’s / and SGOL’s – but wait until gold settles a bit here – also we’ll be looking at the Silvers … PAAS / SLW – etc.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Sunday, January 3, 2010
This week in Barrons - 1-3-10
This Week in Barrons – 1-3-10:
Thoughts – Happy New Year to all…And the Beat Goes on…
Each year we try and make a few predictions about the upcoming year. And each year I always look back and compare:
Example #1: “Little Johnny” takes apart leftover firecrackers from the Fourth of July, puts them in a model airplane paint bottle and blows up a red ant bed.
1967 - Ants die.
2009- ATF, Homeland Security and the FBI are all called. Johnny is charged with domestic terrorism. The FBI investigates his parents - and all siblings are removed from their home and all computers are confiscated. Johnny's dad is placed on a terror watch list and is never allowed to fly again.
Example #2: A boy and his dad go fishing one evening. Dad builds a fire on the beach and drinks 3 beers. The boy talks "man talk" with his father, and they fish and bond as friends sharing a night of fishing, and chatting.
1967 - Dad puts out the fire, cleans up the area, all drive home with a few nice fish and a lot of great memories
2009 - Dad is arrested for building a fire on the beach, and fined for having a beer in a public place.
President Obama ran on a platform of change – and we certainly have. And nowhere has the change been as dramatic as in the world of "money".
- I think the recession gets worse – a lot worse. Right now 75% of all the economic activity we see is Government printed money sloshing around the world. This year is an election year and you can bet they are going to pour as much money as Bernanke can possibly print into the economy, hoping that they can make it look good enough that you forget the pain of 08/09.
- Gold runs to 1500, then to 2500.
- We will be in another war.
- The DOW will trade below 5000
- Inflation will come and interest rates will top 12%
- Unemployment will continue higher - hitting 15% officially and 25% unofficially.
- One of the major banks will fail
- The FDIC will declare itself insolvent
- More Foreign nations will default on their sovereign debt
- And After a brief rally the dollar will continue to fall.
Okay – in what timeframe? How much of it is going to occur in 2010, while the rest takes place between 2011 and 2012?
- I think "they" will keep the market humming along for as long as they can into 2010. It's not unreasonable to think they clear DOW 11K in the first quarter – but by the end of 2010, we will be flirting with 7500 to 8500.
- Gold will make it to about 1700 by the end of 2010.
- The EU will struggle to stay together while fringe players like Greece, and Ireland do all and anything they can to not declare outright bankruptcy.
- At some point in 2010, the US or Israel will take a first action against Iran.
- DOW below 5,000 and true inflation hits in mid 2011
So, 2010 is going to be an odd year. One where every logical bone in your body would say "we have to crash, everything's terrible" but then you think again and know Bernanke and the Fed will jack so much money into the system it "has" to give the appearance of working, even if just for a short while.
So, what do you do about it?
- Buy gold and silver on dips.
- Trade the market long for as long as it's working and then go "short" when they can no longer keep the charade alive.
- Build a personal nest egg – keeping at least 2 months living expense money "at home" in a personal safe.
- Crime will begin to soar – so you might want to consider “learning” the proper use of a gun. I know that sounds all "dire" and all, but hey, the reality is that as this economy slowly grinds lower and lower, all manner of crime will escalate.
2010 is going to be even more bizarre than 2009 if you can imagine that. We are in the end game of a very good plan. Food shortages are going to start making headlines around the world. Politicians will sign more bills they haven't read at 11:59 at night, to an empty chamber. We'll toss out a lot of lousy politicians in November, and it will be a start. A good old-fashioned depression will bring a stop to this – and the good news is that if you play your cards right, you should be able to come out of it in good shape.
Now onto the Market:
For two weeks the market was flat then on Thursday a round of selling hit as the dollar ramped higher, and we lost a hundred points for the first time in over a month – was that the start of something bad? First off, please realize that the market doesn't belong at 10450, and is there only because the Presidents working group have pushed it there. Now, when they come back on Monday are they going to get busy buying, or get busy selling? It's my guess that there are a lot of funds that wanted to sell in December but didn't so they could postpone their tax liability from April, 2010 to April, 2011. So they will probably be selling during the first week of January. But on the other hand there's a lot of "new year money" that a lot of funds will be looking to employ. So it will be interesting to see who gets the upper hand. My bet is that the first week might be choppy, but then we see some form of move "up" as they get ready to hear earnings, and as is the case, stocks often run up into their earnings reports. So, we feel that there are gains coming in January, we just don't know if they'll start right off the bat, or if we'll have some chop first, then a move up.
Now would could throw a ‘wrench into the works’ is if the dollar were to stage a big counter trend rally. The major players have been borrowing dollars for virtually nothing and then using them to buy up tangible assets. As long as the dollar stays weak, it all works. But if the dollar soars, they have to return those dollars at a higher price, and that means selling some assets to "get" the dollars. This is why each time the buck bounces, stocks fall. If the dollar was to really surge, it would indeed put a whoopin’ on the stock market, and even the FED wouldn't be able to stem that tide. So, the wild card here is indeed the dollar.
We feel that there will be market gains in the first quarter barring a massive dollar surge, but we also feel that sometime into the second quarter the reality creeps in again and the wheels start coming off. So we should be leaning long for most of January/ February even March, and then reassessing for the possibility of scaling into shorts and puts from then on out.
Let me wish all of you a Happy New Year, and make sure you share it with the people that matter.
TIPS:
I might take KOPN at 5 or slightly over
I might take DRIV at 28.10
I might take ARTG over 5.00
I might take CIEN over 11.50
I might take ELGX at 5.50
I might take WFR at 14.05
I might take SYNM over 2.50
We will be buying the GDXJ’s / and SGOL’s – but wait until gold settles a bit here – also we’ll be looking at the Silvers … PAAS / SLW – etc.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts – Happy New Year to all…And the Beat Goes on…
Each year we try and make a few predictions about the upcoming year. And each year I always look back and compare:
Example #1: “Little Johnny” takes apart leftover firecrackers from the Fourth of July, puts them in a model airplane paint bottle and blows up a red ant bed.
1967 - Ants die.
2009- ATF, Homeland Security and the FBI are all called. Johnny is charged with domestic terrorism. The FBI investigates his parents - and all siblings are removed from their home and all computers are confiscated. Johnny's dad is placed on a terror watch list and is never allowed to fly again.
Example #2: A boy and his dad go fishing one evening. Dad builds a fire on the beach and drinks 3 beers. The boy talks "man talk" with his father, and they fish and bond as friends sharing a night of fishing, and chatting.
1967 - Dad puts out the fire, cleans up the area, all drive home with a few nice fish and a lot of great memories
2009 - Dad is arrested for building a fire on the beach, and fined for having a beer in a public place.
President Obama ran on a platform of change – and we certainly have. And nowhere has the change been as dramatic as in the world of "money".
- I think the recession gets worse – a lot worse. Right now 75% of all the economic activity we see is Government printed money sloshing around the world. This year is an election year and you can bet they are going to pour as much money as Bernanke can possibly print into the economy, hoping that they can make it look good enough that you forget the pain of 08/09.
- Gold runs to 1500, then to 2500.
- We will be in another war.
- The DOW will trade below 5000
- Inflation will come and interest rates will top 12%
- Unemployment will continue higher - hitting 15% officially and 25% unofficially.
- One of the major banks will fail
- The FDIC will declare itself insolvent
- More Foreign nations will default on their sovereign debt
- And After a brief rally the dollar will continue to fall.
Okay – in what timeframe? How much of it is going to occur in 2010, while the rest takes place between 2011 and 2012?
- I think "they" will keep the market humming along for as long as they can into 2010. It's not unreasonable to think they clear DOW 11K in the first quarter – but by the end of 2010, we will be flirting with 7500 to 8500.
- Gold will make it to about 1700 by the end of 2010.
- The EU will struggle to stay together while fringe players like Greece, and Ireland do all and anything they can to not declare outright bankruptcy.
- At some point in 2010, the US or Israel will take a first action against Iran.
- DOW below 5,000 and true inflation hits in mid 2011
So, 2010 is going to be an odd year. One where every logical bone in your body would say "we have to crash, everything's terrible" but then you think again and know Bernanke and the Fed will jack so much money into the system it "has" to give the appearance of working, even if just for a short while.
So, what do you do about it?
- Buy gold and silver on dips.
- Trade the market long for as long as it's working and then go "short" when they can no longer keep the charade alive.
- Build a personal nest egg – keeping at least 2 months living expense money "at home" in a personal safe.
- Crime will begin to soar – so you might want to consider “learning” the proper use of a gun. I know that sounds all "dire" and all, but hey, the reality is that as this economy slowly grinds lower and lower, all manner of crime will escalate.
2010 is going to be even more bizarre than 2009 if you can imagine that. We are in the end game of a very good plan. Food shortages are going to start making headlines around the world. Politicians will sign more bills they haven't read at 11:59 at night, to an empty chamber. We'll toss out a lot of lousy politicians in November, and it will be a start. A good old-fashioned depression will bring a stop to this – and the good news is that if you play your cards right, you should be able to come out of it in good shape.
Now onto the Market:
For two weeks the market was flat then on Thursday a round of selling hit as the dollar ramped higher, and we lost a hundred points for the first time in over a month – was that the start of something bad? First off, please realize that the market doesn't belong at 10450, and is there only because the Presidents working group have pushed it there. Now, when they come back on Monday are they going to get busy buying, or get busy selling? It's my guess that there are a lot of funds that wanted to sell in December but didn't so they could postpone their tax liability from April, 2010 to April, 2011. So they will probably be selling during the first week of January. But on the other hand there's a lot of "new year money" that a lot of funds will be looking to employ. So it will be interesting to see who gets the upper hand. My bet is that the first week might be choppy, but then we see some form of move "up" as they get ready to hear earnings, and as is the case, stocks often run up into their earnings reports. So, we feel that there are gains coming in January, we just don't know if they'll start right off the bat, or if we'll have some chop first, then a move up.
Now would could throw a ‘wrench into the works’ is if the dollar were to stage a big counter trend rally. The major players have been borrowing dollars for virtually nothing and then using them to buy up tangible assets. As long as the dollar stays weak, it all works. But if the dollar soars, they have to return those dollars at a higher price, and that means selling some assets to "get" the dollars. This is why each time the buck bounces, stocks fall. If the dollar was to really surge, it would indeed put a whoopin’ on the stock market, and even the FED wouldn't be able to stem that tide. So, the wild card here is indeed the dollar.
We feel that there will be market gains in the first quarter barring a massive dollar surge, but we also feel that sometime into the second quarter the reality creeps in again and the wheels start coming off. So we should be leaning long for most of January/ February even March, and then reassessing for the possibility of scaling into shorts and puts from then on out.
Let me wish all of you a Happy New Year, and make sure you share it with the people that matter.
TIPS:
I might take KOPN at 5 or slightly over
I might take DRIV at 28.10
I might take ARTG over 5.00
I might take CIEN over 11.50
I might take ELGX at 5.50
I might take WFR at 14.05
I might take SYNM over 2.50
We will be buying the GDXJ’s / and SGOL’s – but wait until gold settles a bit here – also we’ll be looking at the Silvers … PAAS / SLW – etc.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Sunday, December 27, 2009
This week in Barrons - 12-27-09
This Week in Barrons – 12-27-09:
Thoughts – I truly wish it was a Merry Christmas for all…
I'm writing this as I review real estate offerings in various coastal areas in Florida and notice that the prices are beginning their second leg of a decent (with more to come in my opinion). I’m struck by the lack of traffic at the malls, and the amazing amount of small business that aren't there any more. I’m listening to every talking head on CNBC telling me that the next two years will be years of increased merger and acquisition (M&A) activity – and them thinking that this is a ‘good thing’. What if the majority of ‘sellers’ are selling because they “HAVE TO” and not because they “CAN”? Doesn’t all of this tell you that your ability to actually ‘GET’ the price that you think you should be getting for your widget, your house, or your business is eroding very, very quickly – and this increased M&A activity could be an act of ‘survival’ and not one of ‘growth and prosperity.’
A couple facts to take us into the New Year:
- 10%+ unemployment is draining states' unemployment-compensation funds so fast that 40 state programs could go broke within two years, and will need $90B in loans to keep issuing benefit checks
- And while continuing unemployment claims dropped by 127K to under 5.1M, emergency unemployment compensation (for people who have exhausted regular benefits) rose by 142K to 4.4M, up from just 1.5M a year ago - a sign that people who have lost their jobs are having an especially hard time finding new ones.
- And remember: Stocks FALL MUCH FASTER than they rise!
Remember that last point – because there will come a time in the very near future that we will recommend shorting the market, or buying “Puts”.
For those reading this that are afraid of going short – let me describe the elements of a short sale:
- A short sale simply means that if the stock goes DOWN you will make money.
- You start by “borrowing” say 500 shares of XYZ from your broker – and sell it on the open market for say $50 per share (this is all done electronically) – you place a "sell short" order for 500 shares of XYZ at market. In a matter of moments you will have sold XYZ. For selling it, your account will take in the proceeds – 500 shares at $50 = $25,000.
- Now you sit and wait, and in a matter of a month, XYZ is now 40 dollars a share. You decide that it probably won't go lower, and you want to "cover your short". All you do is "BUY" 500 shares of XYZ at market. The moment you do, the brokerage will get back the 500 shares you borrowed from them and it's all a done deal.
- The transaction is finished - but look at what happened: You sold 500 shares at $50 = and took in $25,000. Then you bought 500 shares a month later to close out your short – but at $40 = so you spent $20,000. The difference of $5,000 is yours to keep.
It's our opinion that there's going to be a tremendous shorting opportunity coming at us in 2010. With headlines like this: "The number of borrowers that fell behind on their mortgages - including the most creditworthy - rose in Q3. And the percentage of current and performing mortgages dropped for the sixth consecutive quarter. Those that fell behind on their prime mortgage payments more-than doubled to 3.6% from a year ago. Such troubles could mount as banks and thrifts remain unable to match modifications with the number of struggling borrowers who need help.” You don’t have to be a rocket scientist to know that things are actually getting worse not better, and one day the market will align itself with that reality. That means stocks will fall, and the people that get rich off it will be the ones that understand shorts and buying puts.
Moving to the market itself:
So, they ran us sideways and up into Christmas, the next question is, what about New Years week? My guess is that we'll be pretty flat, with certain individual stocks moving up on their own merits – but a wholesale sell off, is sort of off the table, because who's going to want to pay the tax penalty of selling now, when they can sell in January if they want, and push the tax burden out to 2011?
For weeks AMAT has been playing around in the 12 - 14 area with 14 acting like a brick wall. It simply got repelled each time it got there. But with Thursday's close "at" 14.00 – if AMAT were to climb up and over 14.15 – I would consider that a pretty good buy in area, and AMAT could reward us.
The commodity plays are still acting well as are some of the technology plays. We thought that if CTXS ever got over 40.00 it would probably be a runner and tack on a few bucks – and sure enough it 40, we hopped in and it hit a high of 42.34. Not bad work in two days – and I think it's got some more in it.
As you appreciate your holidays, I hope you have a wonderful time with family and friends. Potentially you can find a way to give something to someone who needs it. They will appreciate it, and it will give you something positive in return – I guarantee it.
Have a joyous and prosperous New Year!
TIPS:
We sold our SPY’s and our CY’s for a handsome profit – so we’re sitting with:
CTXS at 40.04 Hard Stop at 40.44
ANR at 40.04 Stop at 43.45
CLR at 40.56 Stop at 41.90
AMAT over 40.15
That said, we're looking at DRIV, CLD, WFR, STEC, CIEN and a couple others.
We were tempted to sell some ANR (as it opened at the 46 level), but I resisted – it’s hard to "sit tight" when you're looking at 5 dollars per share in gains!
We will be buying the GDXJ’s / and SGOL’s – but wait until gold settles a bit here – also we’ll be looking at the Silvers … PAAS / SLW – etc.
And we have about 70% of our money at work in the 401k’s – the rest in cash.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts – I truly wish it was a Merry Christmas for all…
I'm writing this as I review real estate offerings in various coastal areas in Florida and notice that the prices are beginning their second leg of a decent (with more to come in my opinion). I’m struck by the lack of traffic at the malls, and the amazing amount of small business that aren't there any more. I’m listening to every talking head on CNBC telling me that the next two years will be years of increased merger and acquisition (M&A) activity – and them thinking that this is a ‘good thing’. What if the majority of ‘sellers’ are selling because they “HAVE TO” and not because they “CAN”? Doesn’t all of this tell you that your ability to actually ‘GET’ the price that you think you should be getting for your widget, your house, or your business is eroding very, very quickly – and this increased M&A activity could be an act of ‘survival’ and not one of ‘growth and prosperity.’
A couple facts to take us into the New Year:
- 10%+ unemployment is draining states' unemployment-compensation funds so fast that 40 state programs could go broke within two years, and will need $90B in loans to keep issuing benefit checks
- And while continuing unemployment claims dropped by 127K to under 5.1M, emergency unemployment compensation (for people who have exhausted regular benefits) rose by 142K to 4.4M, up from just 1.5M a year ago - a sign that people who have lost their jobs are having an especially hard time finding new ones.
- And remember: Stocks FALL MUCH FASTER than they rise!
Remember that last point – because there will come a time in the very near future that we will recommend shorting the market, or buying “Puts”.
For those reading this that are afraid of going short – let me describe the elements of a short sale:
- A short sale simply means that if the stock goes DOWN you will make money.
- You start by “borrowing” say 500 shares of XYZ from your broker – and sell it on the open market for say $50 per share (this is all done electronically) – you place a "sell short" order for 500 shares of XYZ at market. In a matter of moments you will have sold XYZ. For selling it, your account will take in the proceeds – 500 shares at $50 = $25,000.
- Now you sit and wait, and in a matter of a month, XYZ is now 40 dollars a share. You decide that it probably won't go lower, and you want to "cover your short". All you do is "BUY" 500 shares of XYZ at market. The moment you do, the brokerage will get back the 500 shares you borrowed from them and it's all a done deal.
- The transaction is finished - but look at what happened: You sold 500 shares at $50 = and took in $25,000. Then you bought 500 shares a month later to close out your short – but at $40 = so you spent $20,000. The difference of $5,000 is yours to keep.
It's our opinion that there's going to be a tremendous shorting opportunity coming at us in 2010. With headlines like this: "The number of borrowers that fell behind on their mortgages - including the most creditworthy - rose in Q3. And the percentage of current and performing mortgages dropped for the sixth consecutive quarter. Those that fell behind on their prime mortgage payments more-than doubled to 3.6% from a year ago. Such troubles could mount as banks and thrifts remain unable to match modifications with the number of struggling borrowers who need help.” You don’t have to be a rocket scientist to know that things are actually getting worse not better, and one day the market will align itself with that reality. That means stocks will fall, and the people that get rich off it will be the ones that understand shorts and buying puts.
Moving to the market itself:
So, they ran us sideways and up into Christmas, the next question is, what about New Years week? My guess is that we'll be pretty flat, with certain individual stocks moving up on their own merits – but a wholesale sell off, is sort of off the table, because who's going to want to pay the tax penalty of selling now, when they can sell in January if they want, and push the tax burden out to 2011?
For weeks AMAT has been playing around in the 12 - 14 area with 14 acting like a brick wall. It simply got repelled each time it got there. But with Thursday's close "at" 14.00 – if AMAT were to climb up and over 14.15 – I would consider that a pretty good buy in area, and AMAT could reward us.
The commodity plays are still acting well as are some of the technology plays. We thought that if CTXS ever got over 40.00 it would probably be a runner and tack on a few bucks – and sure enough it 40, we hopped in and it hit a high of 42.34. Not bad work in two days – and I think it's got some more in it.
As you appreciate your holidays, I hope you have a wonderful time with family and friends. Potentially you can find a way to give something to someone who needs it. They will appreciate it, and it will give you something positive in return – I guarantee it.
Have a joyous and prosperous New Year!
TIPS:
We sold our SPY’s and our CY’s for a handsome profit – so we’re sitting with:
CTXS at 40.04 Hard Stop at 40.44
ANR at 40.04 Stop at 43.45
CLR at 40.56 Stop at 41.90
AMAT over 40.15
That said, we're looking at DRIV, CLD, WFR, STEC, CIEN and a couple others.
We were tempted to sell some ANR (as it opened at the 46 level), but I resisted – it’s hard to "sit tight" when you're looking at 5 dollars per share in gains!
We will be buying the GDXJ’s / and SGOL’s – but wait until gold settles a bit here – also we’ll be looking at the Silvers … PAAS / SLW – etc.
And we have about 70% of our money at work in the 401k’s – the rest in cash.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Sunday, December 20, 2009
This week in Barrons - 12-20-09
This Week in Barrons – 12-20-09:
Thoughts – “If You Can’t Say Something Nice About Someone…”
I assume at this point – “If you can’t say something nice about someone – don’t say Anything At All” must be what all the talking heads are practicing right before the holidays. On Tuesday morning, James Paulson, of Wells Management. (a $3B fund) was convinced that by April, 2010 the consumer was going to be swinging for the fences and this recovery will be much stronger than anyone believes. And Mr. Paulson tells us that the weak dollar is going to be good for our manufacturers because we can export more goods. Now Factually: (a) Capital One's credit-card debt that the company doesn't believe it will be able to collect - rose to 9.6% in November from 9.04% in October, while 30-day delinquencies rose to 5.87% from 5.72%. Mr. Paulson – if the consumer is so strong – why can’t he pay off his credit cards? (b) Only 24% of companies are giving holiday bonuses this year, down from 42% a year ago. Mr. Paulson – if everyone is going to be rolling in it in 4 months – why not celebrate a little early? (c ) Well the Empire State manufacturing index fell back substantially, and the orders component also showed a slowing declining to 16.6 from November’s 34.57. Could it be Mr. Paulson that the only real activity we saw was the rebuilding of inventory for the Holiday shopping season and without that stimulus, they wouldn't need to produce anything?
Honestly, when you push trillions of anything into one side of a pipe, "something" has to come out the other side. When you push trillions of dollars into the economy, two things come out the other side. One is a jump in economic activity, and this produces a ripple effect. The people that receive the money first, rush to spend it, which creates a ripple around the immediate area of commerce. Then those people spend their new-found money in their local economy creating a second ripple. But somewhere along the third ring of ripples, people see the money coming and ‘increase their prices' a bit to take advantage of the wave of money coming. That is the second part of what always happens when fiat money is printed and pushed into the system. Unfortunately by the time the money reaches the outer rings of ripples, the money has no effect, increased prices at all levels ‘eat up’ the advantage of having more of it. Now Factually: the Producer Price Index rose 1.8 percent in November. The index less food and energy rose 0.5 percent in November. So, taken annually, that’s 6% inflation at the core. Isn't 6% inflation a bit of a problem considering our T bills are paying eseential 0%? It means that for every dollar you put in the bank, you're losing 5.5% a year – wow – so save enough like that and you'll be bankrupt in no time.
That is why you always need more and more and more stimulus to have the same desired level of economic increase, and that is why it’s ultimately doomed. So I truly understand Mr. Paulson not telling you the truth. He can’t tell you the truth or you'd take your money out of his fund and go buy gold and silver and the poor man would have no job. There's not much work for a fund manager with no fund, so it's in HIS best interest to keep telling you that the promised land is just around the next corner. Heck, just this week the Financial Accounting Standard Board (FASB = the group that sets the rules on our accounting guidelines) declared that banks should be able to "decouple" from those ‘Generally Accepted Accounting Principals’ and be allowed to use more flexibility in reporting their worth. So Banks should be allowed to have 2 sets of books – one set for investors and another to tell the truth. Shouldn't the guy who's going to buy 10K shares of a banking institution really know what things are really worth? The Chairman of FASB doesn't think so – he finds it too annoying. And finally – this week we learned that the IRS was going to let Citibank off the hook for some $38 Billion in taxes, so that it would be easier for them to repay the TARP and therefore keep their stock price high. Frankly the way things are shaping up, it looks to me like they will throw the kitchen sink at this market in order to keep it at least flat through the end of the year.
The Market:
As we come to the end of 2009, it's been a VERY good year for us. There's little doubt that some of the biggest gains of all next year will be in shorting stocks. I'm already half through a list of stocks and ETF's I am going to be shorting ( and buying puts against) and I truly believe that if you've never done any shorting or buying of put options, you better learn quick, or you're going to miss a tremendous opportunity. In the meantime, we've witnessed a market that is trying to "hold up" while slowly the big funds (that did well this year) have been pulling back, locking in their gains. The market appears tired – and just wants to survive the balance of the year. The chart guys will tell you that the market has developed some very ugly patterns in the past few months, patterns that suggest a massive downward movement. I'm not a "chart slave" but I think it’s indeed coming and just a matter of when.
Will there be a "January effect" this year? If so how long will it go? If not, when does the real selling start? These are all great questions, and of course no one but Bernanke knows the answer. Our guess is that we remain fairly flat till year end, experience some form of New years run up, and then the wheels start coming off – my guess is around March, 2010.
In the meantime, Let me wish you all the Happiest of Holidays.
TIPS:
We have SPY from 109.30 Stop at 111.11
We have CY at 10.0 Stop at 10.35
We have ANR at 40.04 Stop at 41.75
We have CLR at 40.56 Stop at 40.60
We will be buying the GDXJ’s / and SGOL’s – but wait until gold settles a bit here – also we’ll be looking at the Silvers … PAAS / SLW – etc.
And we have about 70% of our money at work in the 401k’s – the rest in cash.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts – “If You Can’t Say Something Nice About Someone…”
I assume at this point – “If you can’t say something nice about someone – don’t say Anything At All” must be what all the talking heads are practicing right before the holidays. On Tuesday morning, James Paulson, of Wells Management. (a $3B fund) was convinced that by April, 2010 the consumer was going to be swinging for the fences and this recovery will be much stronger than anyone believes. And Mr. Paulson tells us that the weak dollar is going to be good for our manufacturers because we can export more goods. Now Factually: (a) Capital One's credit-card debt that the company doesn't believe it will be able to collect - rose to 9.6% in November from 9.04% in October, while 30-day delinquencies rose to 5.87% from 5.72%. Mr. Paulson – if the consumer is so strong – why can’t he pay off his credit cards? (b) Only 24% of companies are giving holiday bonuses this year, down from 42% a year ago. Mr. Paulson – if everyone is going to be rolling in it in 4 months – why not celebrate a little early? (c ) Well the Empire State manufacturing index fell back substantially, and the orders component also showed a slowing declining to 16.6 from November’s 34.57. Could it be Mr. Paulson that the only real activity we saw was the rebuilding of inventory for the Holiday shopping season and without that stimulus, they wouldn't need to produce anything?
Honestly, when you push trillions of anything into one side of a pipe, "something" has to come out the other side. When you push trillions of dollars into the economy, two things come out the other side. One is a jump in economic activity, and this produces a ripple effect. The people that receive the money first, rush to spend it, which creates a ripple around the immediate area of commerce. Then those people spend their new-found money in their local economy creating a second ripple. But somewhere along the third ring of ripples, people see the money coming and ‘increase their prices' a bit to take advantage of the wave of money coming. That is the second part of what always happens when fiat money is printed and pushed into the system. Unfortunately by the time the money reaches the outer rings of ripples, the money has no effect, increased prices at all levels ‘eat up’ the advantage of having more of it. Now Factually: the Producer Price Index rose 1.8 percent in November. The index less food and energy rose 0.5 percent in November. So, taken annually, that’s 6% inflation at the core. Isn't 6% inflation a bit of a problem considering our T bills are paying eseential 0%? It means that for every dollar you put in the bank, you're losing 5.5% a year – wow – so save enough like that and you'll be bankrupt in no time.
That is why you always need more and more and more stimulus to have the same desired level of economic increase, and that is why it’s ultimately doomed. So I truly understand Mr. Paulson not telling you the truth. He can’t tell you the truth or you'd take your money out of his fund and go buy gold and silver and the poor man would have no job. There's not much work for a fund manager with no fund, so it's in HIS best interest to keep telling you that the promised land is just around the next corner. Heck, just this week the Financial Accounting Standard Board (FASB = the group that sets the rules on our accounting guidelines) declared that banks should be able to "decouple" from those ‘Generally Accepted Accounting Principals’ and be allowed to use more flexibility in reporting their worth. So Banks should be allowed to have 2 sets of books – one set for investors and another to tell the truth. Shouldn't the guy who's going to buy 10K shares of a banking institution really know what things are really worth? The Chairman of FASB doesn't think so – he finds it too annoying. And finally – this week we learned that the IRS was going to let Citibank off the hook for some $38 Billion in taxes, so that it would be easier for them to repay the TARP and therefore keep their stock price high. Frankly the way things are shaping up, it looks to me like they will throw the kitchen sink at this market in order to keep it at least flat through the end of the year.
The Market:
As we come to the end of 2009, it's been a VERY good year for us. There's little doubt that some of the biggest gains of all next year will be in shorting stocks. I'm already half through a list of stocks and ETF's I am going to be shorting ( and buying puts against) and I truly believe that if you've never done any shorting or buying of put options, you better learn quick, or you're going to miss a tremendous opportunity. In the meantime, we've witnessed a market that is trying to "hold up" while slowly the big funds (that did well this year) have been pulling back, locking in their gains. The market appears tired – and just wants to survive the balance of the year. The chart guys will tell you that the market has developed some very ugly patterns in the past few months, patterns that suggest a massive downward movement. I'm not a "chart slave" but I think it’s indeed coming and just a matter of when.
Will there be a "January effect" this year? If so how long will it go? If not, when does the real selling start? These are all great questions, and of course no one but Bernanke knows the answer. Our guess is that we remain fairly flat till year end, experience some form of New years run up, and then the wheels start coming off – my guess is around March, 2010.
In the meantime, Let me wish you all the Happiest of Holidays.
TIPS:
We have SPY from 109.30 Stop at 111.11
We have CY at 10.0 Stop at 10.35
We have ANR at 40.04 Stop at 41.75
We have CLR at 40.56 Stop at 40.60
We will be buying the GDXJ’s / and SGOL’s – but wait until gold settles a bit here – also we’ll be looking at the Silvers … PAAS / SLW – etc.
And we have about 70% of our money at work in the 401k’s – the rest in cash.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
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