Fred Wilson, How Internet Disrupts Industries

Here's some Memorial Day entertainment. Fred Wilson did a speech at Google's headquarters about the Internet and how it disrupts industries. He is a venture capitalist and managing partner at Union Square Ventures. Current investments include Twitter, Tumblr, Boxee, Disqus and Covestor. They recently sold Del.icio.us and FeedBurner (to Google). Also back in 1999 Fred and his venture capital firm sold Geocities to Yahoo for $3.5 Billion. He has a blog AVC.com. In his talk he gets into the new era of accredited education, online journalism, virtual currencies etc. I don't see how the floor couldn't drop on the whole accredited school concept lol (crowded tuition trade?). I also provided a USV talk about "Hacking Education" below. Very interesting stuff from a VC worth listening to. Below is the video and his slides.




(Source: Audio Recordings From Event)

American Casino Movie Trailer

American Casino movie trailer from Leslie and Andrew Cockburn on Vimeo.


http://www.americancasinothemovie.com/

H/T Bigpicture.com

I.O.U.S.A Video, UK, U.S AAA Rating At Risk

Hate to be spewing US debt Armageddon stuff but after today's action in Treasuries and the USD maybe people should know what's going on w/ our Federal debt. Pimco's Gross: Sell-off (US Dollar, Stocks, Bonds) driven by fears US could lose AAA (Reuters, Bloomberg Phone Interview).


In other news:

Rosenberg Says U.S. Stock Market May Test March 9 Low (Birinyi is bullish) (Bloomberg)


UK risks losing AAA rating (S&P but Fitch/Moody's Disagree) (Reuters)

Goldman Expects Large Drop In Rents; REITs Impacted (Zero Hedge)

N.Y. Fed says bought $7.398 bln Treasuries Thurs (Reuters)

Kokusai Cuts Treasuries as Fukoku Sees End to Rally (Bloomberg)

Commercial Mortgage Bonds Rally on Fed’s Legacy Assets Plan (Bloomberg)

U.S. Economy: Leading Indicators Index Gains as Recession Eases (Bloomberg)

Here Comes the Option ARM Mortgage Explosion (Business Insider)

US's Geithner- obligation to sustain strong dollar (Reuters)

Cheaper to finance a house than U.S debt (Zero Hedge)

Geithner Says TARP Can’t Help U.S. States Solve Budget Crises (Bloomberg)

Birinyi Says S&P 500 May Surge 88% in Three Years (Bloomberg)

U.S. Dollar to Fall Further on Stimulus Spending, Says Windheim (Bloomberg)

Fed Unconvinced Economy’s ‘Stabilization’ to Persist (Bloomberg)

U.S. 2-Year Range Break Could Steepen Curve: Technical Analysis (Bloomberg)

Watch for a break out in the yield curve (2s - 10s - Bloomberg.com)



Thousands Of Hecla Mining Calls Open ($2.50-5.00 - June, Sep '09, Jan '10)

There is large open interest in Hecla Mining's June and Sep $2.50 - $5.00 calls. Check out the $HL option chain via Yahoo Finance today. Something is up here, either someone is hedging a large short position, putting on vertical call spread or bulls are salivating to own this thing between $2.5-5. June has over 40,000 calls open vs 9,000 puts. September is also active with over 12,000 calls open vs. 1,000 puts. If you look way out to HL January 2010 options there are about 67,000 $2.50 calls open w/ last bid at $1.05. As always for better info on how these contracts were bought or sold to open hit up optionmonster.com, schaeffersresearch.com or investingwithoptions.com.

Hecla Mining June, Sep, Jan (2010) Option Chain (Yahoo Finance)

Hecla Mining Chart (Stockcharts.com)

H/T Schaeffers Research (Bulls Gold-digging with Hecla Mining Call Options)

Hecla beat Q1 earnings estimates on the top and bottom line and silver production surged 126% QoQ. They also paid off a $40 million bridge loan with an equity offering (credit markets froze up making this an issue). Also from the release, "In early February, Hecla also announced that it had reached an agreement with its banking syndicate to reschedule debt payments of $66.7 million due in 2009 to 2010 and 2011." Hecla also wants to buy some silver/mining assets. The stock is up 2 fold from earlier this year and closed at $3.17 today. If traders can't successfully move this over the 200d it could revisit the $2s but Hecla could be a long term play if they keep their business risk in check and gold/silver fundamentals improve. Below is the Q1 Earnings Release and presentation at European Growth Forum on 4/30/09.

Hecla Mining - Q1 Earnings Press Release

Hecla Mining - European Growth Forum


Articles of interest:

Hecla Mining reports first quarter results (IdahoBusiness)

Hecla mulls potential acquisitions in silver, gold (MiningWeekly)

Roger Wiegand: On the Cusp of a Significant Rise in Gold (Likes Hecla) (Gold Report)

Paulson Buys $GLD, $GDX. Laidi Long Gold/Oil Pair Trade (DistressedVolatility)

Paulson Buys GLD, GDX. Laidi Long Gold/Oil Pair Trade

It's time to look at gold as a possible break out candidate. I'm talking about the BIG one this time. Timing might be pre-mature but the commodity still deserves a spot on your screen as it flirts with the $1,000 resistance level, a level going back about 2 years. Gold spot is at $930.

With USD dilution, central bank demand, possible green shoot/reflationary pressures and a safe haven bid less equity rally re-allocation, lets take a look.

Ashraf Laidi of CMC Markets was on Bloomberg TV last week and was bullish on the risk aversion trade (higher yen/stabilizing US Dollar/lower equities). He thinks we reached a peak in the 2 month up cycle. Laidi also touched on the gold/oil ratio. He believes gold could outperform oil in the coming weeks and gold could test and successfully break the $1,000 level. We'll see.

Oil is interesting here at $60. Watch out for the potential contango dump (1) Close to 150 million barrels oil, products stored at sea, (2) Flattening crude curve may unleash flood of U.S. oil (Reuters). If the USD continues to fall it could support crude here. I provided a Gold/Oil chart below with the 200d moving average support level. On 10/29/2008 I embedded a video w/ Ashraf Laidi featured on Tech Ticker talking about gold, USD, etc.




2 Year Gold Chart (above moving avgs) (Stockcharts.com)


Gold:Oil Ratio On 200d Moving Average (Stockcharts.com)


Paulson & Co scooped up GLD, GDX and a bunch of miners during the first quarter. At 3/31/09 Paulson & Co. owned 31.5 million shares of GLD (gold etf, 8.7% of the fund/$2.8B), 17.3 million shares of GDX (miners), 18.2 million shares of Gold Fields (GFI), 30.7 million shares of Kinross (KGC) and 2.9 million shares of AngloGold (Source: GuruFocus, 13F).

Here's another interesting factoid, the firm said in a statement that the GLD holding was a hedge against one of his funds denominated in gold Source: Bloomberg).

Also check out the CBOE Gold Volatility Index chart from curvingfutures.com. As with all other markets implied volatility is being liquidated which is bullish if it sticks. In conclusion, it's going to be a fight up to the $1,000 level and if I were to try something here I'd def be hedged w/ puts/stops. Also watch the Ivolatility, it's hitting support levels not seen since early '08 but you can't rule out a 180° turn.

Paulson's got the hot hand.... Good luck.

Macke's Voice Of Reason Guiding Kneale On CNBC

Jeff Macke got off the bus in crazy town tonight. This is a funny CNBC clip. What the hell is going on over there?

Fed Adds Older CMBS to TALF, The Shoe Dropped! (Trepp)

This is good news for CMBS and the funding mechanism.

"Release Date: May 19, 2009

The Federal Reserve Board on Tuesday announced that, starting in July, certain high-quality commercial mortgage-backed securities issued before January 1, 2009 (legacy CMBS) will become eligible collateral under the Term Asset-Backed Securities Loan Facility (TALF).

The TALF is designed to increase credit availability and support economic activity in part by facilitating renewed issuance of consumer and business asset-backed securities (ABS) and CMBS. The Board authorized the TALF on November 24, 2008, under section 13(3) of the Federal Reserve Act. Under the TALF, the Federal Reserve Bank of New York (FRBNY) has extended loans secured by triple-A-rated newly issued ABS backed by certain consumer and business loans and leases. On May 1, 2009, the Board announced it would expand the range of acceptable TALF collateral to include newly issued CMBS starting with the June subscription.

On March 23, 2009, the Federal Reserve announced that it would evaluate extending the list of eligible collateral for TALF loans to include certain legacy securities. The objective of the expansion is to restart the market for legacy securities and, by doing so, stimulate the extension of new credit by helping to ease balance sheet pressures on banks and other financial institutions. Tuesday’s announcement marks the first addition of a legacy asset class to the list of eligible TALF collateral.

The CMBS market, which has financed approximately 20 percent of outstanding commercial mortgages, including mortgages on offices and multi-family residential, retail and industrial properties, came to a standstill in mid-2008. The extension of eligible TALF collateral to include legacy CMBS is intended to promote price discovery and liquidity for legacy CMBS. The resulting improvement in legacy CMBS markets should facilitate the issuance of newly issued CMBS, thereby helping borrowers finance new purchases of commercial properties or refinance existing commercial mortgages on better terms.

To be eligible as collateral for TALF loans, legacy CMBS must be senior in payment priority to all other interests in the underlying pool of commercial mortgages and, as detailed in the attached term sheet, meet certain other criteria designed to protect the Federal Reserve and the Treasury from credit risk. The FRBNY will review and reject as collateral any CMBS that does not meet the published terms or otherwise poses unacceptable risk.

Eligible newly issued and legacy CMBS must have at least two triple-A ratings from DBRS, Fitch Ratings, Moody’s Investors Service, Realpoint, or Standard Poor’s and must not have a rating below triple-A from any of these rating agencies. More broadly, the Federal Reserve is formalizing procedures for determining the set of rating agencies whose ratings will be accepted for various types of eligible collateral in the Federal Reserve’s credit programs.

The initial subscription date for TALF loans collateralized by newly issued CMBS will be June 16, 2009. The subsequent subscription dates for TALF loans collateralized by newly issued and legacy CMBS will be announced in advance. The subscription date for loans collateralized by all other ABS will remain toward the beginning of the month.

A new term sheet and a frequently-asked-questions document, specific to legacy CMBS, are attached. Also attached are a revised term sheet and frequently-asked-questions document for newly issued asset-backed securities and CMBS." (FederalReserve.gov)

Still, CRE is not looking good WITHOUT these interventions. Hopefully the Fed can put a floor under this shoe. Here's a chart of commercial real estate loan delinquencies w/ data from the Federal Reserve. Trepp LLC also analyzes this data (article and video below).




Commercial Mortgage Delinquencies in U.S. Rise to 11-Year High (Bloomberg, May, 7, 2009).
Commercial mortgage delinquencies in the U.S. climbed to the highest level in at least 11 years in April as scarce credit made it difficult for landlords to refinance loans, according to property research firm Trepp LLC.

The percentage of loans 30 days or more behind in payments rose to 2.45 percent, Trepp LLC said in a report. The delinquency rate was more than five times the year-ago number, Trepp said. The New York-based researcher’s records go back to 1998.

“It’s about as bad as it’s ever been,” said Thomas Fink, a Trepp senior vice president. “I don’t think we’re done yet. Where it’s going to top out, I don’t know, but we’re not done.”

Properties bought in 2006 are now worth on average 11 percent less than their original price, and those bought in 2007 are worth almost 20 percent less, Moody’s said." (Source: Bloomberg)

Here's Tom Fink, TREPP LLC, senior vice president on CNBC (CNBC.com).




More News..

Local Banks Face Big Losses in CRE (WSJ)

RealPoint Downgrades Hundreds of CMBS Classes, CRE Deterioration Accelerates (Zero Hedge)

Stronger focus on fundamentals cools REIT rally, for now (Deal Reporter)

Rising U.S. CMBS Delinquencies Concentrated in Distressed States (Fitch)

U.S. CMBS Loan Defaults Spike in 1Q, to Exceed 5% in 2009 (Fitch)

S&P Says CMBS Ratings May Suffer Amid Refinancing Woes (Dow Jones)

Bank Loans More Vulnerable to Commercial Real Estate Losses (ResearchRecap)

Stimulus Programs, Financial Market Intervention to Benefit CRE--But Not Right Away (Commercial Property News)

VIX Around Pre-Lehman Bankruptcy Levels, $29.14

All of the Government stimulus injections and programs definitely brought down fear factor during the past 6 months. $VIX cash is trading at $29.14 or pre-Lehman bankruptcy levels. It looks like there's support around $26.86 (2007 channel, now resistance). The one question I have is will there be an aftershock after this huge earthquake we experienced..

By the way in Dec, 2008 OptionMonster Volatility Sonar reported some great May 30 Put trades , nice timing there.

VIX (Volatility Index) 3 Year Chart

S&P Channel Is Your Friend Until It Breaks

Look at the nice channel the S&P built over the past few months. The 200d moving avg 943 is right near 930 resistance. The S&P was up over 3% today on positive news out of Lowe's, higher homebuilding sentiment and upbeat bank comments by analysts AP. The bulls have most of the bears held hostage. So in conclusion, the S&P channel is your friend until it breaks. I wrote earlier that the UltraShort Real Estate ETF (SRS) looked like a nice set up on the long side, au contraire, it went the other way and tanked BIG today. As always protect yourself before you wreck yourself w/ stops. SRS is still testing a double bottom at the 52 week low ($19.55). So what will the next big catalyst be? Or is the VIX going to 10.

S&P 500 Daily (Stockcharts.com)


S&P 500 Weekly (Stockcharts.com)