Stick Save

I know, I know... it was strange there for a moment.

It appears between the hours of 1400 and 1525 sellers detached from the Matrix in quadrants 6h, 18c, and 32n.  Our sentinels tracked them down and they have since been quashed.... as was seen in the closing 30 minutes of the day.  Sorry for the inconvenience.

Of course volume surged during the selling as humans were allowed to be part of the game for an hour, which is the only time we see any real volume anymore.  Otherwise we just drift ever upward on little volume as automated trades dominate.

Both the 5 day and 6 day exponential moving average held at the end of the day and really that's the only thing that matters. Back to your normally scheduled melt up.  Premarket futures have been down 2 days in a row... this is unacceptable.  Time to get one of those nice +0.3%+ premarket's tomorrow. 

Larry.... we're sorry and still love you. (ok not really... but do your job)

x

Could Larry Summers Be Leaving?

I found the reason for the selloff - it appears Larry Summers is throwing a temper tantrum and took his finger off the "buy SPY futures" button at any sign of weakness.

Rut Roh Raggy - looks like Larry's ego is being hurt and he doesn't want to play house anymore.  Obama and Timmy Geither [Oct 15, 2009: All of Tim Geithner's (Wall Street) Men]  are apparently in a bromance and Larry seems to be the third wheel.. Widely thought to be biding his time for the Fed chairmanship, once a knife was inserted in Bernanke's back ("Et tu, Larry?") obviously that plan did not work out. 

Stifling proud old men who care about the country (Paul Volcker) [Jun 26, 2009: Bloomberg - Paul Volcker Marginalized; Major Push Back on Curbing Excess. Our Life of Financial Oligarchy Does not Change] can only be entertaining for a man of such prodigious ego for so long.  Using his wealth of knowledge on how to make HAL9000's across the globe work in concert from his days at quant hedge fund DE Shaw [Apr 6, 2009: Larry Summers - No Conflict of Interest; He Pinkie Swears] to make good on President Obama's March 2009 "I think it's a really good time to buy stocks" (wink wink) has more or less run its course.

So now what? I know the optics would be terrible but a "thank you for your service to our oligarchy" advisory position at Goldman Sachs (GS) or JPMorgan (JPM) would be the only fair thing.  But even Larry probably knows going directly from White House to the financial oligarchy (without stopping at another position first for appearance sake) would be much too obvious.

The most important question to markets....who runs point at the Plunge Protection Team once Larry goes?  Someone has to wake up early 4 out of 5 mornings to gun SPY futures.   [Mar 18, 2010: (Video) Scott Bleier - Behold the Zombie Market]  Or make sure to hit the "buy buy buy" button each time the market swoons more than 0.5%.  Larry are you being naughty today?  Your petulance is legendary.



(p.s. I never knew Mark Zandi had such sway in the White House... news to me)

Via The Atlantic's Joshua Green (blog)

• One angle in my recent profile of Tim Geithner concerned his relationship with Larry Summers, his former mentor and the director of the National Economic Council. I contend that Geithner, not Summers, has emerged as Obama's key adviser on financial matters, and that Summers isn't happy about it.
• Since my piece appeared, the buzz that Summers is looking to leave--or is being pushed out--has picked up. Earlier today, my colleague Marc Ambinder wrote about this, defending Summers against his critics while leaving open the possibility that he may, indeed, leave. My own view is a bit less sanguine. I think Summers is going to leave sooner rather than later, possibly before the mid-term elections, and if not then, soon afterward.
• Why? Because Summers is frustrated by his role, and his colleagues are clearly frustrated with him. Alexis Simendinger had a devastating item in last week's National Journal suggesting that Summers's "legendary self-regard" and "ego the size of the national debt" had gotten out of control.
• Some of Summers's frustration no doubt stems from his wanting to be Treasury secretary. When that plum went to Geithner, Summers cast his eye on the Fed chairmanship and agreed to bide his time until Ben Bernanke's term ended at the NEC--a staff position well below his old job as Clinton's Treasury secretary.

• Most administration officials tactfully avoid pointing this out, because Summers has a fragile ego. But that's why Joe Biden is so great. "How many former Secretaries of the Treasury would come in not as Secretary of the Treasury?" Biden blurted out to the New Yorker's Ryan Lizza last fall. (hahah!)
• But Summers didn't get the Fed job either. Apparently that didn't sit well. Administration insiders told Simendinger that Summers demanded a series of perks as compensation, including cabinet status, golf dates with the president, and a personal car and driver. (translation: "waaaah! waaaah!!! wahaaaaahhhh!!!")  In the "No Drama" Obama administration, such behavior stands out.
• And it isn't the first time Summers has been the target of leaks. Last June, only a few months into the administration, Jackie Calmes of the New York Times ran a Summers-focused piece on "tensions" in the economic team. A little later, Al Hunt wrote a column suggesting Obama was frustrated with Summers's poor coordination of the economic team. I heard the same thing from several sources, one of whom groused about the time spent "cleaning up Larry's messes."
• Summers always seemed a bad fit for NEC director because the job entails dispassionately presenting the president with the counsel of his competing economic advisers. Summers doesn't do "dispassionate" and he didn't want to limit himself to fielding others' advice--he had plenty of his own to offer. In other words, he was supposed to be the referee, but he also wanted to play power forward.   This rankled other members of the economic team, including Austan Goolsbee, Christina Romer, and Peter Orszag, enough that they're widely presumed to be the sources of many of the leaks.
• Summers maneuvered to sideline people like Paul Volcker, Joe Stiglitz, and even Orszag, behavior more characteristic of the Clinton administration than the Obama administration. Alter also reveals that Obama's nickname for Summers is "Dr. Kevorkian," which does not imply paternal fondness.
• But what really makes me believe that Summers won't stick around is that all this Machiavellian intrigue has failed to win him what he wanted most: power. Summers gets plenty of presidential face time, but he's not the nexus of White House activity that everyone expected him to be, and that doesn't sit well according to the Summers associates I spoke with.  The hand-holding of anxious lawmakers that became an integral part of the NEC job under Summers's mentor, Bob Rubin, is being handled by another economist, Mark Zandi, a former McCain adviser.
• If Summers's situtation is untenable, two questions arise: Who succeeds him at NEC? And where does he go next? I, too, heard--but, alas, could not confirm--the rumor that Rahm Emanuel has put out feelers for a possible successor.  (we could hope for Lloyd Blankfein or Jamie Dimon but that would simply be too good to be true)
• I don't know what's next for Summers, and neither did anyone I spoke with. Fed chairman is out of the question, and contra the periodic blogger hyperbole, Geithner seems ever more secure at Treasury. A university presidency isn't going to happen. So a return to Harvard, Wall Street consulting and an FT column might be the likeliest option.
• The natural time to leave would be after the mid-terms--but if Democrats get thumped, it might look like Summers got pushed out. The embarrassing leaks seem designed to bring about an announcement sooner rather than later, which might, in the end, be the best thing for all parties because it would inoculate Summers against a mid-term rout.

Bookkeeping: Selling Half of HDFC Bank (HDB)

Doing the unthinkable I am selling a stock - half of Indian bank HDFC Bank (HDB) as the stock has gone on a very nice run of late.  Then again, as I wind up my arm to throw a dart at the stock section of the Wall Street Journal pondering my next purchase, what hasn't? 

When HDB broke out over the 50 day on March 2nd, we added a batch of allocation, so I am essentially taking that allocation off the table, 5 weeks later.

Chart then

Chart now

Normally there would be a good chance the stock comes in and falls to some longer term moving average where we could buy back the stake just let go.  However the past 6-7 weeks stocks have run up, and simply gone sideways as they wait to go on a new breakout.  Until the market proves otherwise, this sale will be foolish... as is almost any sale of equity.  But I need to stick to some sort of framework - no matter how atypical the market is. 

That said a part of me wants to sell all my positions and go to cash since no one on Financial Entertainment TeeVee one can find a reason for stocks to fall.  Also the top 2 most popular stories on Seeking Alpha for the first time that I can remember are Jim Cramer "buy buy buy" stories - it's 2007 all over again. My contrary antenna are flashing "Will Robinson danger!"**

I don't even bother to talk about valuations anymore since the market could care less - 1999 style - but this bank (which is in a great market and very well run) is sporting a lovely mid 30s forward PE ratio. Shall we do 40?

** broken record alert: cursory mention that the market is overdue to fall at least 1%, which it has not done in 7+ weeks.

Long HDFC Bank in fund; no personal position

Bookkeeping & Debating Massey Energy (MEE)

A tough situation with Massey Energy (MEE) as the mining accident posts very unwanted attention on a sad situation.  The closest thing in stock terms to what happened is an earnings miss (which one can avoid by not being overweight a stock going into earnings) or a surprise news event such as what Google just went through with China (which is impossible to aviod), but obviously this accident is a lot more serious in terms of the human condition. 

Stock wise in a span of 48 hours you have a stock that went from a 52 week high to a stock that has broken support.  Bad press and regulators certain to swarm will cause uncertainty in the near term.   On a business basis this mine was full of the metallurgical coal that the market is infatuated with at this point.

• Shares of Massey Energy Co. fell Wednesday as rescuers worked to gain entry and search for possible survivors in the coal producer's mine where 25 people died in an underground explosion.  In afternoon trading Wednesday, Massey's shares fell $2.95, or 6.1 percent, to $45.50, adding to Tuesday's more than 11 percent decline.
• The blast and ongoing investigation likely will keep the mine out of production for a lengthy period. It produced about 1.2 million tons of metallurgical coal, which is used in steel manufacturing.
• The financial impact from lost production on Massey's earnings before interest, taxes, depreciation and amortization, or EBITDA, could be up to $50 million based on an estimate of a margin per ton of $40, according to Standard& Poor's Ratings Services. Late Tuesday, it said it may lower its debt ratings on Massey.

For those with a 2+ year horizon this dip will begin to present a buying opportunity since coal is not going away.  But for the next 2 weeks or months, I am not sure if Massey will partake in the sector's love fest.

Ignoring the news flow, I will simply follow the charts for now and cut back the position as the stock broke its 50 day moving average and re-assess based on how it does the next week.  If it quickly jumps back over, this will have been a "buying opportunity" (hate to couch it in those terms) - if it struggles, then it might detatch from the rest of the group and near term other stocks in the sector should be emphasized.

For today, I'll cut the position in half and take a 8%ish loss; position size was moderate so nothing tremendously awful portfolio wise.  If the stock breaks below $44 we'll have to consider dumping the rest and revisiting later.  Further, if the stock falls to the 200 day moving average, we'll have to reconsider the name - despite the near term financial fallout.

Long Massey Energy in fund; no personal position

x

Selloff Roils US Markets (Ahem) - Changing 5 Day EMA Rule to 6 Day

This is 2 days in a row with pathetic traumatic intraday selloffs of over 0.2%.  Traders are shaken to the core.... but hopefully you bought the dip hand over foot, for this once in a fortnight opportunity to buy stocks on a dip of over 0.3%.

We had mentioned about 3-4 weeks ago that this market has moved slowly but surely along its 5 day exponential moving average since mid February.  No closes below this level unless you "round down" on a point basis.   There have been a handful of days the price has broken below this moving average on an intraday basis such as last Thursday, but rallied late in the day to keep the trend going.  By and large if you can withstand that "pain" intraday this rule has kept you (a) in the market "buy buy buying" or at the worst (b) not shorting the indexes like a deranged hedge fund manager who believes the market can go down - if only for a 3 day period.

To make the rule a tad easier to not be shaken out of, especially in morning's like we had today where the market dared to falter for a moment, I've changed the rule slightly from 5 day exponential moving average to 6 day.*  Please note using either 5 or 6... nothing tells us to flee this market yet.  (we held the 5 perfectly yet again)

*In the old days, we had to buy stocks after walking uphill, both ways, in the snow, in our bare feet.  We also had to use the phone rather than our electronic brokerage account to place a trade &  HAL9000 was a movie character, not a competitor.  The market also fell below the 10 day moving average and in real times of fear, below the 20 day moving average. 

I miss those chaotic times.

[the % of stocks in the S&P 500 has gone from "overbought" at 90% to *realllllllly* overbought as now OVER 93% of stocks above their 50 day! WOW!]

Vietnam Begins to Lure Business Away from China

While certainly only a proverbial drop in the bucket, this story on Bloomberg caught my eye as the first tranche of jobs moving away from China and into Vietnam is something to monitor.   This is a trend we've mentioned over the past few years [Dec 29, 2009: NYT - Vietnam is Refining its Role on the Global Stage] and certainly China has plenty of cheaper labor in its inner western regions to work through versus the "expensive" eastern coastal.  But certainly as the Chinese worker starts making unruly demands [Feb 28, 2008: China Raising Minimum Wage] our global corporations will need fresh meat to exploit.... err, provide opportunities to, in the global race to the bottom for labor.

To review, GDP of Vietnam is about half of Singapore at $90B - or in Ameircan terms akin to one third of one round of a Citigroup (C) bailout.  But that $90B is spread over 86M people in Vietnam versus only 5M in Singapore.  Agriculture accounts for more than half of GDP; the US accounts for 20% of Vietnam's exports (Japan next at about 12.5%).   Indonesia, a country we've highlighted quite often the past year, is about 5x the GDP of Vietnam - with a far superior stock market of late.

That said, Vietnam should be an interesting country to keep an eye on over the next 3-10 years, especially if China grows increasingly hostile to foreign corporations [Mar 22, 2010: China Rules Hurt US Corporations] [Mar 17, 2010: WSJ - Business Sours on China] ... and the Vietnamese worker is content with making almost nothing.  (fingers crossed!)


Via Bloomberg:

• The communist nation drew 13.5 percent of the Association of Southeast Asian Nations’ foreign direct investment pool in 2008, up from 4.4 percent two years earlier, according to the 10-member group.  And its allure may be rising, judging from a December survey by the American Chamber of Commerce in Shanghai. Vietnam is a preferred destination for businesses looking to relocate from China, Asia’s biggest investment recipient, the report said.
• “A lot of companies from a strategic standpoint are looking at how to set up a production facility within Asean,” said James Lockett, a Hanoi-based lawyer with Baker & McKenzie LLP and a board member of the American Chamber of Commerce in Vietnam. “In a lot of product areas, Vietnam looks very, very attractive for people who are doing that.”
• Vietnam’s economy expanded 5.2 percent last year, the most in Asean, which has signed free-trade accords with China, Japan, South Korea, Australia and New Zealand.
• Santa Clara, California-based Intel, the world’s biggest chipmaker, is scheduled to open a $1 billion testing facility in Ho Chi Minh City this year that will employ about 4,000 people. (thankfully the United States does not need such low brow work, instead we have census workers)
• Intel chose Vietnam because of its proximity to customers, reliable power and water supply and skilled workers, said Nick Jacobs, Intel’s regional spokesman. (nothing to do with cost of labor, I'm sure)
• “Vietnam is a country which is very committed to education, and that gives us confidence we will continue to attract the talent we need for long-term success,” he said. (well on that front, I have to say advantage Vietnam over US...)
• Suwon, South Korea-based Samsung Electronics Co., the world’s second-biggest maker of mobile phones, opened a $1 billion factory in Vietnam six months ago.
• Redmond, Washington- based Microsoft Corp. outsources digital animation and modeling for its computer games to Vietnam.
• While Vietnam’s one-party state and its jailing of more than a dozen democracy activists since October have drawn criticism from groups like Human Rights Watch, some regard it as a model of stability. (I won't even touch the irony of that statement...)  They contrast it with Thailand, where demonstrators have shut airports and blocked streets in sometimes violent political protests. (darn that democracy - just so inconvenient for our global corporate citizens!)
• The number of foreign companies in China with plans to relocate plants inland or outside the country because of rising costs doubled last year, according to a survey of 202 foreign manufacturers by the American chamber. The poll found 8 percent of respondents reported plans to relocate or expand outside of China compared with 28 percent considering moves to lower-cost areas in southwest or central China.

These type of stories - while on the surface appear completely unrelated to the employment situation in America - are VERY important to understand as people wonder where all those jobs not anchored by what are effectively ponzi schemes of unsustainable costs (healthcare & government) have gone.  Eventually even China will face the same issues high cost Western countries are facing today as the world flattens and capital "flies" wherever it finds people to do it for less.  Just another small example of why the global middle class is going to converge...slowly but surely.  [Dec 8, 2007: Do the Bottom 80% of Americans Stand a Chance?]

Now if only some of these African nations could have the same political "stability" as Vietnam, they could begin to undercut the wages of the Vietnamese.  Let's cross our fingers and hope the day comes where 28 cent a day labor is available to our global corporations.  According to the *always accurate* Wikipedia, the annual mininmum wage in Vietnam is $1054, whereas Zambia is $1043.  Cmon Zambia; that's $87 a month - egregious! You can do better than that, you're only $11 below Vietnam! $750 or less a year, and Intel might bless you with a few thousand jobs too.

Malawi's down there at $519 a year salary ($43 a month if you're counting at home)....mmm, now we're talking.

No position

Pledge Update April 2010

April 2010 pledge update below; as mentioned in previous posts we are on track for a (late) summer 2010 launch.  .

Last month brought in $525,000 of pledges; this takes the total amount to 121% of the initial goal of $7M.  The "fund is funded" - at least virtually, will need to wait until the real thing this summer for the real iteration.   The total number of investors is now about 280.  I will continue with my normal conservative projection of a $300-350K monthly run rate of pledges go forward for the next 4 months.  From here, hopefully a buffer of pledges can be built in case some proportion of people will not follow through.

If you are a person potentially interested and new(er) to the website, here are the pertinent posts to become familiar with the specifics.

1. The overall goal and why I'm aiming for $7 approx million [Jan 7, 2008: Reader "Pledges" Toward Mutual Fund Launch]
2. Frequently Asked Questions [May 26, 2008: Frequently Asked Questions] Very important to read
3. Why I need your state [May 23, 2008: Investment Pledges by State] Keep in mind a state's eligibility can be turned "on" overnight once we're up and running
4. Most recent updates (this November)  [Nov 4, 2009: General Updates]
5. Our story in Barron's [A New Kind of Fund Manager]

Let me copy the same caveats for pledges as always:

1. Assume a pledge amount that is firm based on a fund opening in summer 2010.
2. Assume at any point in 2010 the market may be down 30% from here
3. Make your pledge based on liquid assets that are not currently in some high octane mutual fund that loses 40% when the market falls 30%, nor gains 50% when the market gains 40%. That money is not something that can be counted on in a volatile market.
4. Please have whatever monies are pledged to the fund, in money market or equivalent by April/May 2010 so it is not at risk in the market.

Format for fund pledge: first name, last initial, pledged amount, and state you live in. To be clear, you are not sending me money that I'm going to hold until launch when you 'pledge' - you are simply making a verbal commitment: "when you are up and running, I have $X amount ready to invest". You can attach a comment to this post or as most people do, send me an email (my email address is found on the upper right of the blog) with the above information. I'd prefer an email if possible.

Name	Amount	State/Country
John R	3,000	AK
Bob B	50,000	AR
Ed S	5,000	AZ
Alan N	15,000	AZ
Armour B	50,000	AZ
Dharminder M	100,000	AZ
Pat L	10,000	AZ
Ron G	10,000	AZ
Werner C	10,000	AZ
Jake P	10,000	AZ
Art H	50,000	CA
Benjamin W	5,000	CA
Dave K	100,000	CA
Greg B	25,000	CA
Kurt C	10,000	CA
Ron W	10,000	CA
Tom L	25,000	CA
Ted C	5,000	CA
Brian L	50,000	CA
Rich P	30,000	CA
Shannon V	5,000	CA
Sunil K	10,000	CA
Anatoly S	10,000	CA
Wesley W	20,000	CA
Burt B	10,000	CA
John L	5,000	CA
Alven Y	5,000	CA
Piyush M	5,000	CA
Paresh P	5,000	CA
Dinesh K	5,000	CA
Naresh P	5,000	CA
Jay S*	5,000	CA
Shang C	50,000	CA
Henry C	3,000	CA
Charles Y	100,000	CA
George	5,000	CA
Ross T	5,000	CA
James H	5,000	CA
Dana K	25,000	CA
Walt C	30,000	CA
Charles L	20,000	CA
Greg W	20,000	CA
Raj	10,000	CA
Judy M	20,000	CA
Dave H	20,000	CA
Akash A	6,000	CA
Adam S	5,000	CA
F.A.	100,000	CA
Brian C	25,000	CA
Mark R	10,000	CA
Steven L	25,000	CA
Diane H	100,000	CA
Giancarlo S	2,500	CA
Scott W	50,000	CA
Henry C	8,500	CA
Jason N	30,000	CA
Marvin L	10,000	CA
Mike C	10,000	CA
John G	2,500	CA
George H	5,000	CA
Dean D	25,000	CA
Peter S	2,500	CA
Dan W	5,000	CA
Adam B	50,000	CO
Alecia C	75,000	CO
Seth	3,000	CO
Dieter	5,000	CO
David H	50,000	CO
Mike H	15,000	CT
Michelle T (Bob)	20,000	CT
Chris P	100,000	CT
Mark B*	25,000	D.C.
Elaine C	20,000	D.C.
Tom E	5,000	DE
Vic C	10,000	FL
Wes T	10,000	FL
Ron S*	100,000	FL (sailing)
Olivier N	10,000	FL
Bob H	3,500	FL
Chris I	20,000	FL
Dave C	25,000	FL
Kevin D	5,000	FL
Patrick L	100,000	FL
Matt D	5,000	FL
Gordon P	25,000	FL
JH	25,000	FL
Sandy S	150,000	GA
Andrew L	5,000	GA
Mark L	2,500	IA
Jeff M	20,000	IA
Ian J	5,000	ID
Jay S	10,000	IL
Mike P	500,000	IL
Vivek G	75,000	IL
Art K	30,000	IL
Ben	10,000	IN
Matt L	5,000	IN
Jake R	50,000	KS
Bruce L	25,000	KY
Bill H	5,000	MA
Bruce W	2,500	MA
John B	20,000	MA
Don D	50,000	MA
Rain Lan	30,000	MA
MB	20,000	MD
Raeann	10,000	MD
Mark P	30,000	MD
Mark	60,000	MI
Ralph B	50,000	MI
May L	30,000	MI
Rich S	5,000	MI
Y.O.	15,000	MI
Elia K	25,000	MI
Garret B	2,500	MI
Scott L	7,500	MN
Tom S	20,000	MN
James W	5,000	MN
Ritchie H	2,500	MN
Mark M	5,000	MN
Marshall H	5,000	MO
Wolfgang S	7,500	MO
Nathan J	10,000	MO
Neil B	50,000	MO
George L	10,000	NC
Brian C	5,000	NC
Colleen P	5,000	NC
Paul F	5,000	NC
Scott G	80,000	NC
Lenin T	2,500	NC
Adam B	10,000	NJ
David B	50,000	NJ
Frank G	500,000	NJ
Henric B	25,000	NJ
Ryan T	7,500	NJ
B Shah	2,500	NJ
Rama R	4,000	NJ
Richard H	100,000	NJ
Vijay K	75,000	NJ
Howard A	5,000	NJ
Jordan L	2,500	NJ
Andy/Diana H	12,000	NJ
Jack L	10,000	NJ
Josh R	5,000	NJ
Lisa W	50,000	NJ
Tony D	15,000	NJ
Hui C*	100,000	NJ
Frederick S	20,000	NJ
Pranav S	30,000	NJ
Albert W	5,000	NJ
Andrew	100,000	NV
Arun K	25,000	NV
Tom S	25,000	NV
Dennis T	2,500	NV
Michael S	5,000	NV
Gary M	10,000	NY
Rob T	20,000	NY
Igor O*	500,000	NY
Chris Y	10,000	NY
Tim C	20,000	NY
Atul R	5,000	NY
Rob #2	6,000	NY
Marc E	7,500	NY
Bob M	100,000	NY
Felipe V	5,000	NY
Lester B	100,000	NY
Matt Z	5,000	NY
Tariq	5,000	NY
Joe C	5,000	NY
Bill A	2,500	NY
Josh S*	25,000	NY
Chris W	10,000	NY
Ken T	15,000	NY
Peter G	25,000	NY
Adam M	10,000	OH
Justin K	30,000	OH
Robert S	2,500	OH
Dan W	5,000	OH
Tom K	5,000	OH
David O	100,000	OH
Dilip K	5,000	OK
Blake V	100,000	OK
Ryan	3,000	OK
Nelson W	10,000	OK
Michael G	2,500	OR
Joe V	50,000	OR
Darin P	20,000	OR
Bill G	10,000	PA
Jatinder M	10,000	PA
V.K.K.	20,000	PA
Bruce R	100,000	PA
Joe C	10,000	PA
Nathan S	3,000	PA
David M	2,500	PA
Robert T	75,000	RI
Heidi H	25,000	RI
Doris S*	100,000	SC
Steve	100,000	SD
Dave S	20,000	TN
Matt S	10,000	TN
Pankaj S	5,000	TN
Lukas V	5,000	TN
Ben M	10,000	TN
Joe P	10,000	TX
Doug M	40,000	TX
H.S.	2,500	TX
Ian*	50,000	TX
"Phong"	10,000	TX
Jason D	5,000	TX
AZ	10,000	TX
Glenn J	5,000	TX
Samba V	20,000	TX
Coby S	50,000	TX
Alex T	10,000	TX
Shane V	25,000	TX
Greg R	20,000	TX
Brian J	5,000	TX
C Dilber	5,000	TX
Kenton K*	25,000	TX
Robert T	20,000	TX
Scott V	30,000	UT
Greg P*	100,000	UT
Chair	20,000	VA
Lisa	5,000	VA
Zhong L	10,000	VA
Madhu I	50,000	VA
Brian D	50,000	VA
Jake D	37,500	VA
Matt G	10,000	VA
Paul Z	10,000	VA
Robert W	5,000	VA
Jack T	10,000	VA
Kenneth Y	10,000	VA
Don G	25,000	VA
Mike M	50,000	VA
Kevin L*	125,000	VT
Ron	20,000	VT
Linda A	15,000	WA
Scott R	100,000	WA
Mike H	2,500	WA
Eric S	50,000	WA
Cathy K	20,000	WA
"Himalayas"	20,000	WA
Tyler	10,000	WA
Danny N	10,000	WA
Charlie W	5,000	WA
Dylan L	10,000	WA
David I	100,000	WA
Jason E	5,000	WI
Gary S	10,000	WI
Erle H*	25,000	WI
Karl W	25,000	WI
Jason	10,000	WV
Paul	100,000	Z-Austria
Stan T	10,000	Z-Canada
Steve L	10,000	Z-Canada
Brian M	5,000	Z-Canada
Stockspeter	7,500	Z-Canada
Kaz O	10,000	Z-Canada
Anurag V	20,000	Z-Germany
Johannes K	10,000	Z-Germany
Ken	250,000	Z-Hong Kong
Kumar K	25,000	Z-India
Barry R	10,000	Z-Ireland
Shlomo S	25,000	Z-Israel
Antoine F	10,000	Z-Luxembourg
Nick E	30,000	Z-New Zealand
Adrian C	75,000	Z-Romania/EU
S.E.H.	12,500	Z-Singapore
Junyuan	2,500	Z-Singapore
David G	5,000	Z-Singapore
Tomaz K	20,000	Z-Slovenia
Ward P	2,500	Z-Sweden
Anil	25,000	Z-Switzerland
KP	5,000	Z-UK
Howard L	10,000	Z-UK
David X	5,000	Z-UK
Duncan M	5,000	Z-UK
Nestor T	25,000	Z-Uruguay
Harsh N	5,000	Z-UAE
Total	$8,495,000
Goal	$7,000,000
% of Goal	121.4%
To Go	($1,495,000)

Just Don't Sell Us (JDSU) Continues Lazarus Like Move

Back in the day (1999) there used to be a stock that was viewed as Apple (AAPL) is today... it was called JDS Uniphase (JDSU).  Actually since it was a Canadian firm (now changed to US), perhaps Research in Motion (RIMM) would be an even better fit since it came to dominate the Toronto Index in the last part of the 90s.  A "can't miss" stock that had a decade+ of growth ahead of it as the internet buildout revolutionized the world.  Unlike Pets.com or other stocks that were valued on # of eyeballs or cuteness of its sock puppet, JDS Uniphase actually was a legit company that seemed a threat to the Cisco Systems (CSCO) of the world.

• JDS Uniphase:  Its stock price doubled three times and three stock splits of 2:1 occurred roughly every 90 days during the last half of 1999 through early 2000, making millionaires of many employees who were stock option holders, and further enabling JDS Uniphase to go on an acquisition and merger binge.

Those were the days when I was a genius who could do no wrong in the stock market (so were many others!). 

Traders affectionately called it (J)ust (D)on't (S)ell (U)s.  Many people made many bucks on this stock; I assume it had to be one of the most widely owned stocks by the retail crowd... and then March 2000+ happened.  I don't know what its market cap topped out of (I am sure hundreds of billions of dollars) but surely something much higher than the current $3 billion - by multiples.  Here is a multi decade chart... frankly even this amazing "inverse V" does not do it justice.  As I scroll my mouse across the Yahoo Finance page I see JDSU topped out near $1050. [accounting for a large reverse split in mid 2000s]  Today's price is $13... and that's after a huge run the past year.

[click to enlarge]

After a decade of swimming in its own cesspool, Just Don't Sell Us is back... in Lazarus like fashion.  [Apr 1, 2010: 52 Stocks Returning 50%+ in 2010]  If it can rally a few thousand percent from here, a few investors still holding from 1999 might even make it back to even.

I've actually been reading up a lot on the name the past month since many of the same themes that worked in the late 90s are true again today in Web 2.0 (slash) mobile web, and it still has an intoxicating story to tell.  For 99% off the old price. ;) It was highlighted about 5 weeks ago, around $11 in [Mar 1, 2010: Fantastic Action in Small and Mid Cap Networking Space]  Just Don't Sell Us is even back to causing pitter pattering in analysts' hearts.

•  An analyst raised his price target on shares of communications equipment provider JDS Uniphase Corp., sending the stock modestly higher to a 52-week peak Tuesday. RBC Capital Markets analyst Mark Sue increased his price target to $16 from $12, based on prospects that the company will integrate its acquisition of the network testing equipment business of Agilent Technologies Inc. earlier than previously expected.  The Agilent unit provides equipment to help monitor and troubleshoot networking gear. The deal is set to close in June.
• Sue said the Agilent division has a higher gross margin and that would help improve JDS Uniphase's corporate gross margin to 47 percent from 44.5 percent.

To complete the circle of life I feel almost obligated to purchase the stock....

For any of you who are experiencing a Rip Van Winkle decade and just woke up... no worries, you didn't miss a thing!  In fact those Dow 10,000 hats we busted out are still quite useful.

JDS Uniphase Corporation provides communications test and measurement solutions, and optical products to telecommunications service providers, cable operators, and network equipment manufacturers.

No position

Massey Energy Accident Pushes HAL9000 to Run into Chinese Coal Producers

I'm keeping a handful of smaller Chinese coal producers on my radar as potential investments; due to their size (300M and 175M market caps) I have not jumped into either but the Massey accident seems to have triggered the algorithms to jump into L&L Energy (LLEN) and Puda Coal (PUDA).  (volume on the latter compared to normal is immense)

I've been watching LLEN for about 5 points now without jumping in... starting to gnaw at my fingers...

At first I thought it was a "Chinese" thing but since Yanzhou Coal (YZC) [$12B] is doing nothing today (-1.25%), it looks like a speculative algo thing....

p.s. I hope all readers made it through this morning's traumatic selloff (-0.3%) in the S&P 500 ok.  I know it was a scary time for everyone involved but the market seems to be back to it's normal "up or sideways only" action.  Glad to see things are back to normal... I had to be talked down from the ledge...

No positions

x

Matt Taibbi: Looting Main Street

Love him or hate him, Rolling Stone's Matt Taibbi always offers an interesting read.  [Dec 11, 2009: Obama's Big Sellout][  In this latest article, the man who brought us Goldman Sachs as America's "vampire squid wrapped around the face of humanity" (which surely is taken as a badge of honor inside 85 Broad) ,offers a look at how our financial oligarchs investment banks are creating predatory loans sounds transactions at America's municipal level that benefit themselves at the expense of the taxpayer everyone.  Of course this is where the investment bank lobbyists and publicists come to the rescue saying "we are only providing what the cities/states/country ask of us" - a similar defense that crack dealers use, but with far more success.  Granted crack dealers are not among the politicians top campaign contributors... it seems when you replace "financial innovative product" with "crack cocaine" somehow the transaction becomes ok. 

Or, another favorite: "Joe in accounting in Muncie, Indiana is a sophisticated investor - cleary this is a 2 sided transaction between 2 equals... Joe and his merry band of accounting clerks and city managers - some of which even have 2 year degrees at the local CC, versus our armies of Harvard MBAs whose only purpose in life is to walk in the door each day & spend 10-12 hours a day thinking how to extract every ounce of monies from our unsuspecting customers errr.... clients".  Clearly a balanced transaction between 2 sophisticated parties... what could ever go wrong? [Feb 25, 2010: Banks Bet Greece Defaults on Debt they Helped Hide]

p.s. While Taibbi's Goldman piece (some assumptions are a bit over the top) thrust him in the public spotlight his story in March 2009 entitled "The Big Takeover" is the one people should have been reading.


It's a 6 page article - some snippets via Rolling Stone

• If you want to know what life in the Third World is like, just ask Lisa Pack, an administrative assistant who works in the roads and transportation department in Jefferson County, Alabama. Pack got rudely introduced to life in post-crisis America last August, when word came down that she and 1,000 of her fellow public employees would have to take a little unpaid vacation for a while. The county, it turned out, was more than $5 billion in debt — meaning that courthouses, jails and sheriff's precincts had to be closed so that Wall Street banks could be paid.
• As public services in and around Birmingham were stripped to the bone, Pack struggled to support her family on a weekly unemployment check of $260. Nearly a fourth of that went to pay for her health insurance, which the county no longer covered. She also fielded calls from laid-off co-workers who had it even tougher. "I'd be on the phone sometimes until two in the morning," she says. "I had to talk more than one person out of suicide. For some of the men supporting families, it was so hard — foreclosure, bankruptcy. I'd go to bed at night, and I'd be in tears." 
• The sewer bill, in fact, is what cost Pack and her co-workers their jobs. In 1996, the average monthly sewer bill for a family of four in Birmingham was only $14.71 — but that was before the county decided to build an elaborate new sewer system with the help of out-of-state financial wizards with names like Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase.
• "Yeah, it (sewer bills) went up about 400 percent just over the past few years," she says.
• The result was a monstrous pile of borrowed money that the county used to build, in essence, the world's grandest toilet — "the Taj Mahal of sewer-treatment plants" is how one county worker put it. What happened here in Jefferson County would turn out to be the perfect metaphor for the peculiar alchemy of modern oligarchical capitalism: A mob of corrupt local officials and morally absent financiers got together to build a giant device that converted human sh** into billions of dollars of profit for Wall Street — and misery for people like Lisa Pack
• And once the giant sh** machine was built and the note on all that fancy construction started to come due, Wall Street came back to the local politicians and doubled down on the scam. They showed up in droves to help the poor, broke citizens of Jefferson County cut their toilet finance charges using a blizzard of incomprehensible swaps and refinance schemes — schemes that only served to postpone the repayment date a year or two while sinking the county deeper into debt.
• In the end, every time Jefferson County so much as breathed near one of the banks, it got charged millions in fees. There was so much money to be made bilking these dizzy Southerners that banks like JP Morgan spent millions paying middlemen who bribed — yes, that's right, bribed, criminally bribed — the county commissioners and their buddies just to keep their business.
• Hell, the money was so good, JP Morgan at one point even paid Goldman Sachs $3 million just to back the f*** off, so they could have the rubes of Jefferson County to fleece all for themselves.
• Birmingham became the poster child for a new kind of giant-scale financial fraud, one that would threaten the financial stability not only of cities and counties all across America, but even those of entire countries like Greece. While for many Americans the financial crisis remains an abstraction, a confusing mess of complex transactions that took place on a cloud high above Manhattan sometime in the mid-2000s, in Jefferson County you can actually see the rank criminality of the crisis economy with your own eyes; the monster sticks his head all the way out of the water.
• Here you can see a trail that leads directly from a billion-dollar predatory swap deal cooked up at the highest levels of America's biggest banks, across a vast fruited plain of bribes and felonies — "the price of doing business," as one JP Morgan banker says on tape — all the way down to Lisa Pack's sewer bill and the mass layoffs in Birmingham.
• Once you follow that trail and understand what took place in Jefferson County, there's really no room left for illusions. We live in a gangster state, and our days of laughing at other countries are over. It's our turn to get laughed at.
• In Birmingham, lots of people have gone to jail for the crime: More than 20 local officials and businessmen have been convicted of corruption in federal court. Last October, right around the time that Lisa Pack went back to work at reduced hours, Birmingham's mayor was convicted of fraud and money-laundering for taking bribes funneled to him by Wall Street bankers — everything from Rolex watches to Ferragamo suits to cash. But those who greenlighted the bribes and profited most from the scam remain largely untouched. "It never gets back to JP Morgan," says Pack.

Canadian Dollar Hits Parity with US Dollar for First Time Since July 2008

A lot of trades - especially of the commodity kind - seem to be picking up right where they left off pre-Lehman, AIG, Fannie, Freddie.  Canada is one of those countries with a heavy emphasis on said commodities.  [Oct 2, 2009: David Rosenberg Makes Case for Canada as Low Beta Emerging Market Play]  We pointed out late last year there was some hand wringing occurring as the Canadian dollar was in sight of parity with the US dollar.  [Oct 15, 2009: NYT - Anxiety in Canada over Near Parity with US Dollar]  For the first time since July 2008, it has happened. 

In a related note, Timothy Geithner just repeated the US strong dollar policy... ahem.

• The Canadian dollar rose to one-for-one footing with the U.S. currency on Tuesday, hitting its strongest level since July 2008, boosted by rising commodity prices and expectations for higher domestic interest rates.
• "It's been heading toward parity for weeks and it was inevitable. There's no surprise," said Jon Gencher, director of foreign exchange sales at BMO Capital Markets.  Canada’s dollar, dubbed the loonie for the aquatic bird on the C$1 coin, last traded at par with the greenback on July 22, 2008, 11 days after crude, the country’s biggest export, reached a record $147.27 a barrel.
• Canadian economic fundamentals and an improving international economic outlook have provided support for the Canadian dollar as a string of stronger-than-expected data raised expectations for higher interest rates.
• The Bank of Canada has a conditional pledge to hold the key interest rate at an all-time low of 0.25 percent until the end of June, provided inflation stays tame, but market players have begun to price in an earlier rate hike as the economy heats up fast after the recession.
• "The Canadian dollar remains better placed on almost every front, including the monetary policy outlook, a healthy banking system and rising commodities," said Audrey Childe-Freeman, strategist at Brown Brothers Harriman.
• The central bank will boost its target overnight rate by 2 percentage points to 2.25 percent by the middle of next year, according to the weighted average of eight economists in a Bloomberg News survey of economists.
• Canadian employers added 25,000 jobs in February, the third straight monthly gain.
• The loonie traded on a one-for-one basis with the U.S. currency in September 2007 for the first time in three decades, capping a five-year run on the back of booming demand for the nation’s commodities.
• Canada, the largest trading partner of the U.S., has benefited over that period from rising demand for copper, gold, wheat and oil from the U.S. and emerging economies such as India and China. The country is the world’s largest producer of uranium, the second-biggest exporter of natural gas, and sits on the largest pool of oil reserves outside the Middle East. Canada is also the world’s second-largest exporter of wheat.
• Canada is on course to be the first Group of Seven nation to erase its budget gap after the global financial crisis. Finance Minister Jim Flaherty presented on March 4 a budget that forecasts the budget deficit narrowing to C$1.8 billion ($1.78 billion) in 2014 from a record C$53.8 billion last year.
• Commodity producers including Australia, Brazil and Canada are forecast by strategists to grow faster than larger economies such as the U.S. and Europe as China’s accelerating expansion drags the world out of its worst slump since World War II, pushing up prices for raw materials.

No position