Tuesday, February 8, 2011

VIX Made a New Low This Morning (14.86), Futures Curve Update

At 9:32 this morning, VIX cash tumbled to 14.86, below the April 2010 low (15.23), but quickly recovered. It closed at 15.84. Was that a mini VIX flash crash? It hit a low of 8.23 in December 2006. Jamie Tyrrell of OptionMonster gave an update on the VIX futures curve in the video below. VIX contango is tightening and in the 20s.

The VIX (Volatility Index) "is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices." (CBOE). Click the image for a larger view, courtesy of FreeStockCharts.com.

AOL Buys Huffington Post For $315 Million (Animation)

AOL bought The Huffington Post for $315 million. They also bought TechCrunch recently. NMAtv reported on the story below.

Monday, February 7, 2011

Mike Ryan of UBS: S&P Earnings To Hit 165, S&P 2,450 By 2020 (Video)

This post is for the bulls. Michael Ryan, head of UBS Wealth Management Research, was on CNBC today. Here are a few of his thoughts on the market and economy from the video (not from an official transcript). See the video below.
U.S. Will Remain Dominant Power In World: "We still think that the U.S. equity market will continue to do well. Remember U.S. corporations will continue to benefit from the environment here in the U.S., but also the ability to leverage some of the strong growth prospects outside the U.S. because of the fact that they are really multi-national corporations with a global footprint."

Watch Social Media Week New York Live

Since it is hot right now, watch Social Media Week New York live on Livestream from 2/7-2/11/2011.

Soros On State Deficits, US Stock Market and QE2 Ending (Davos 2011 - CNBC)

George Soros, founder of $27 billion hedge fund Soros Fund Management, was on CNBC in Davos, Switzerland on 1/26/2011. Watch the interview after the jump. Here are a few quotes from the interview.

1) On U.S. States and Municipalities: "This going to be the drama of the next year or so. The State's can't run deficits. And they do have very big deficits. They can't increase taxes because that's very strongly resisted. So they'll have to cut services and also put pressure on the unions to renegotiate the deals they have. So, State's can't go bankrupt. You can't do what you could do for General Motors and get rid of the accumulated liabilities. So, how do you to do it. It's going to be a lot of pain and conflict."

[Regarding State bankruptcy, some policymakers are trying to change the Federal law. Read these posts: Is State Bankruptcy Law In Play?First GM, now states? Pros and cons of bankruptcy. Also Illinois just raised income taxes.]

S&P Has Two Strikes, Is It 2000 and 2007 All Over Again? (SPY Chart)

First, an interesting read at Comstock Partners:
"It's 2000 and 2007 All Over Again

The stock market is at a highly vulnerable point, both fundamentally and technically. Fundamentally, the current rate of economic growth is unsustainable and the valuation of the S&P 500 is significantly above its long-term average. Technically, the market is overbought and is losing momentum. We cite the following points."
(read more)
Now look at the SPY chart from 1990 to last Friday.

Sunday, February 6, 2011

Look At Light Crude Oil and S&P Gap ($WTIC vs. $SPX Chart)

LOOK AT THIS GAP PEOPLE. How does it close. An oil spike, S&P crash or a different variation. Should've charted out the ratio.

$WTIC (Light Crude Oil) vs. $SPX (S&P 500)
Courtesy of StockCharts.com

Saturday, February 5, 2011

Watch Boiling Water Turn Into Snow In Mid-Air, Birth Of An Island (Videos)

Science Volatility: I thought I had to post something today. How about some science videos. Watch someone in Northwest Canada, in -30 celsius weather, throw boiling water into the air and watch it turn into snow (h/t Capitalogix). The second video shows a volcanic eruption under the ocean and just barely breaking above sea level. If the eruption was stronger it could have formed an island but waves pushed it away (h/t Paul Kedrosky via BBC). Videos after the jump.

Thursday, February 3, 2011

Waste and Scrap Carloads Correlate With Economic Growth (GDP), Weekly Chart Update

via Weekly Railfax
Track weekly North American rail traffic data and trends (via AAR) at railfax.transmatch.com. At the bottom they provide a chart of waste and scrap material carloads (4-week rolling average). According to this Bloomberg infographic, "shipments by train of waste and scrap have a higher correlation with economic growth than coal or copper". There's an 82% correlation between waste carloads and GDP.

"The correlation coefficient between carloads of waste and year-over-year growth in gross domestic product from the first quarter of 2001 through the same period of 2010 is 0.82, according to Bloomberg calculations." (Bloomberg)

The 2010-2011 waste and scrap chart just spiked and is matching the cyclical rise/fall from Q3-2009 to Q1-2010 (so far). When comparing waste and scrap shipments during Q2-2009 and Q2-2010, you can see the divergence, which accounted for the soft-patch in GDP growth during Q2-2010. Click on the chart above for a bigger view and watch this indicator going forward.

From CNN Money on 8/10/2010:

"NEW YORK (CNNMoney.com) -- The U.S. economy sputtered to a near stop in the second quarter, according to new estimates from the government released Friday, although the slowdown wasn't as bad as many had feared.

The nation's gross domestic product, the broadest measure of economic activity, was revised sharply lower to an annual growth rate of 1.6% in the three months ending in June. The initial reading had been for a 2.4% growth rate in the period."

What about this statistic. Could the U.S. ship waste and scrap just to feed China's growth?

"According to data provided by the U.S. International Trade Commission, Chinese imports of U.S. cast-offs (scrap metal, waste paper, and the like) surged by an eye-popping 916 percent over the 2000-2008 period, with most of that expansion occurring after 2004." (US News

Robert Shiller at Davos: Everything is Overpriced (Stocks, Bonds, Real Estate)

Robert Shiller, Professor of Economics at Yale and co-founder of the Case/Shiller Home Price Index, was interviewed by Henry Blodget in Davos, Switzerland. Listen to the CinchCast at Business Insider. Shiller thinks housing could resume its downward trend and said everything is overpriced.

"It seems like everything is overpriced: stocks, bonds, and real estate. And index bonds were given a negative yield recently; maybe they’re coming back. Nothing looked attractive." (Business Insider)

Recent posts on Robert Shiller:

Robert Shiller Sees S&P 500 At 1,430 In Year 2020! CAPE Ratio (January 3, 2011)

Home Prices Make New Lows In Six U.S. Cities, Shiller On The Trend-Video (December 29, 2010)

Ben Bernanke's Speech at National Press Club with Q&A (2/3/2011)

Ben Bernanke, Chairman of the Federal Reserve, gave a speech at the National Press Club today. Text from the Q&A session can be found at Reuters or Business Insider. I found the full speech video at CSPAN.org.

Chairman Ben S. Bernanke
At the National Press Club, Washington, D.C.

February 3, 2011

The Economic Outlook and Macroeconomic Policy

Good afternoon. I am pleased to be here at the National Press Club, and I'm especially glad for the opportunity to have a conversation with journalists who write about economic policy from our nation's capital. Your job is not easy, but it is essential. Virtually every American is affected by developments in the economy and in economic policy. But contemporary economic issues can be highly complex, and few nonspecialists have the time or the background to master these issues on their own. The public must therefore rely on the diligent reporting, clear thinking, and lucid writing of reporters determined to go beyond dueling bumper stickers and sound bites to help people understand what they need to make good decisions, both in their personal finances and at the polls. These are weighty responsibilities, and the journalists I know take them very seriously.

Today, I will provide a brief update on the economy and how I expect it to evolve in the near term. Then I will turn to the implications for monetary policy. Finally, I will briefly discuss the daunting fiscal challenges that we face as a nation.

The Economic Outlook
The economic recovery that began in the middle of 2009 appears to have strengthened in recent months, although, to date, growth has not been fast enough to bring about a significant improvement in the job market. The early phase of the recovery, in the second half of 2009 and in early 2010, was largely attributable to the stabilization of the financial system, the effects of expansionary monetary and fiscal policies, and a strong boost to production from businesses rebuilding their depleted inventories. But economic growth slowed significantly last spring as the impetus from inventory building and fiscal stimulus diminished and as Europe's debt problems roiled global financial markets.

"Devil's Bargain" by Bill Gross of PIMCO (February 2011 Investment Outlook)

"Devil’s Bargain
  • Money has become the economic and political wedge for profound changes in American society.
  • Perhaps the most deceptive policy tool to lessen debt loads is the “negative” or exceedingly low real interest rate that central banks impose on savers and debt holders.
  • Old-fashioned gilts and Treasury bonds may need to be “exorcised” from model portfolios and replaced with more attractive alternatives both from a risk and a reward standpoint."
Read full report at PIMCO.com

Wednesday, February 2, 2011

Live Streaming Tweets On #Egypt Anti-Government Protests

I embedded a Twitter search widget monitoring the hashtag #Egypt. They are the the top tweets scrolling live.

Wikileaks Founder Julian Assange on 60 Minutes, WikiRebels Documentary (Part 1)

Watch Julian Assange, founder of Wikileaks, on 60 Minutes after the jump. Find the transcript and extras at cbsnews.com. Assange hacked into the U.S. Military's internet for two years in the 1990s. Watch the WikiRebels documentary (part 1 via SVT/Swedish Television) after the 60 Minutes video.

Baltic Dry Index Down 60% On Excess Shipping Capacity (BDI, CCI and Shanghai Composite Comparison)

Since my previous post on BDI vs. Copper on 1/6/2011, the Baltic Dry Index has continued its descent toward the December 2008 low. Remember the good old days? In late 2008, when the credit freeze started to thaw, the BDI bottomed first, then commodities and then the stock market. I'm not sure if the same pattern holds true today. There are a bunch of moving parts that affect freight rates. The BDI is down 60% from the November 2010 peak, and it appears to be due to excess shipping capacity (tonnage) and potentially growth concerns out of China.

"“Even given the increased demand for iron-ore from China, there is far too much (ship) tonnage available,” said Simon Penn, a strategist at UBS." (WSJ/The Source)

"The increasing amount of ballasters appearing in the Atlantic trading region from Asia are not being met with many fresh minerals or grain orders, said one broker." (Lloyds List DCN)

"Maritime sector still in distress: 37% more capacity in two years, UAE tops the orderbook" (Emirates 24/7)

Dry Bulk 2011: Working Through the Glut (TheStreet.com)

Iron-ore port inventories, new vessels coming to sea, China inflation (tightening) and Australia shipment disruptions due to floods (and now Cyclone) could all be factors as well.

Tuesday, February 1, 2011

James Simons' Speech at MIT (Renaissance Technologies, Medallion Fund Founder)

James Simons, founder of Renaissance Technologies, gave a speech at MIT on 12/9/2010. He started the Renaissance Institutional Equities Fund (RIEF) and Medallion Fund that use proprietary trading algorithms. Renaissance is one of the most successful hedge funds. From Wikipedia: "Since 1989, the company's $5 billion Medallion Fund has averaged 35% annual returns, after fees." According to a document at Market Folly, the Medallion Fund made a 21%-98% annual return from 1993-2004 and made 80% in 2008 and 39% in 2009. Decent..

Monday, January 31, 2011

Tom DeMark On CNBC Predicting a Market Top, 11% Decline (1/26/2011)

Source: CNBC
On 1/26/2011 on CNBC, Tom DeMark, creator of the DeMark Indicators, said "we see at least an 11% decline from current market, if not more. Everything is aligning such that the market could experience a precipitous decline as early as tomorrow."

According to DeMark's chart of the S&P 500, there was a 13, or "major turning point", at the 2009 low and now when using the daily and weekly time series. The snapshot is of the "combo weekly".  Watch the video for more charts. According to Bloomberg, Steven A. Cohen (SAC Capital) and John Burbank (Passport Capital) are partners in Demark's firm, Market Studies. Watch the full interview after the jump.

Keep Eye On Crude Oil Futures If Unrest Spreads to Middle East (Dennis Gartman on CNBC)

CLH1 March 2011 Crude Oil Future
On CNBC's Fast Money last Friday, Dennis Gartman said Crude oil futures could rise if social unrest in Egypt spreads to the Middle East. He said to watch WTI specifically (West Texas Intermediate Crude Futures). Quotes of crude oil futures are at CMEGroup.com. Crude oil futures from March 2011 to February 2012 are in steep contango (89.93-98.67). Consumers and businesses globally (except oil producers) probably won't like oil above resistance right now (imho). Dennis said check out Canadian oil producers like Suncor ($SU). See the video and the April oil future after the jump (March is to your left)

Sunday, January 30, 2011

Israel and Saudi Arabia CDS Spike On Friday, Keep Eye On Contagion Risk

via Bloomberg
According to CDS quotes on Bloomberg.com, Israel Government 5Y CDS (credit default swap) spiked 17% to 145 basis points ($145,000 to insure $10 million of debt against default) on Friday 1/28/2011. Keep an eye on the protests in Egypt for potential contagion risk, as well as oil prices.

I also see that Saudi Arabia 5Y CDS jumped 48% on Friday to 109.83 basis points (CMA Datavision) and Egypt CDS spiked as well (Zerohedge). You can't trade CDS on Scottrade but they are interesting to watch.

Watch Live Coverage Of Egypt Anti-Government Protests Online

Watch live coverage of anti-Government protests in Egypt at Al Jazeera (English) http://english.aljazeera.net/watch_now/.

If for some reason the live stream doesn't work watch it at LiveStation.com http://www.livestation.com/channels/3-al-jazeera-english-english.

Saturday, January 29, 2011

$SPY, $FXI, $VIX Option Activity, SPY Chart Analysis (S&P, China and Volatility Futures)

Watch VIX, FXI and SPY option alerts courtesy of optionMONSTER TV (Volatility Sonar Report and RMBrenna). To your left (click for larger view) I put up a 6-month chart of $SPY. There was big red volume today on the 1.7% sell off. The riots in Egypt, earnings, economic data or market exhaustion all could have been catalysts. SPY's Relative Strength Index (RSI) took a sharp fall on Friday, closing at 52.88. The RSI was above 70 for a month. Watch the uptrend line and 50 day moving average for potential support or violations. Maybe the trader believes SPY will find support at the 50DMA like it did in November, before February expiration. Lastly, on 1/26/2011 Tom Demark (DeMark Indicators) told CNBC that the market could fall by 11%. The S&P lost 1.79% today. Seems like yellow lights are flashing. We shall see.

Friday, January 28, 2011

Marc Faber Breaks Down U.S./Emerging Markets, Gold, Treasuries and Economy (1/25/2011)

Marc Faber (Gloom Boom Doom Report) on BloombergTV 1/25/2011 (video after the quotes).

U.S./Emerging Markets: "And now we have a change, where I think for a while the U.S. may outperform, may not go up, but it may go down less than emerging markets."

"In the longer run, for sure, U.S. Treasuries and most Government bonds are a suicidal investment. But there's a shorter term time frame. And I think for the next 3 months or so we have a situation where stock markets have become way overbought and emerging markets in January, most of them failed to make a new high above the November/December highs. And that is a negative sign."

Chart Updates: UUP/SPY Ratio and UUP/SPY Versus US Dollar Index

UUP/SPY (US Dollar ETF/S&P 500 ETF) is very close to testing the May 2008 low of 0.167. It is currently at 0.17. Also check out the relationship between UUP/SPY and $USD (US Dollar Index) since May 2008.  (UUP/SPY)/$USD started to decouple in the beginning of 2010, just before the Euro Zone crisis hit (UUP volume in 12/09). It's interesting that the US Dollar Index has made two (or for the time being 3) higher highs since May 2008, while $UUP tested the May lows twice (see last chart). $UUP is based on the "Deutsche Bank Long US Dollar Index (USDX®) Futures Index™" (link). I thought these relationships were interesting. I'd say that UUP/SPY support level is important to hold, as well as UUP support in general. The UUP/SPY chart only goes back 3 years.

David Stockman and Moody's Warn About U.S. Budget Deficit, National Debt

David Stockman, former Budget Director under the Reagan administration, thinks the U.S. is "borderline" bankrupt and bond vigilantes are "just around the corner". The national debt hit $14 trillion in January and we're running a "$100 billion deficit" a month, he said. The national debt is expected to hit the debt ceiling in a few months. Watch the Bloomberg clip after the jump.
"One of these the days the global bond market or currency market is going to have a huge upset, a Greek moment, and then it will be too late because of the massive scale of what we're doing."

"It's not a matter of defaulting, it's a matter of what we have to pay to the global bond market in order to carry and add to this huge debt we already have."

Also from Reuters today: "Moody's Investors Service warned on Thursday that lack of U.S. government action on the budget deficit increases the likelihood of a negative outlook on the country's top AAA credit rating".

Thursday, January 27, 2011

Borders To Get $550 Million Refinancing From GE Under Certain Conditions (BGP)

Borders could get a $550 million senior secured credit facility from GE Capital, Restructuring Finance if they meet certain conditions. The stock was up 34% at $1.08 in after hours trading. Publishers have by February 1, 2011 to "exchange missed payments for notes" (1 2 PublishersWeekly).
"ANN ARBOR, Mich., Jan. 27, 2011 /PRNewswire via COMTEX/ -- Borders Group, Inc. (NYSE: BGP) today announced that it has received a commitment from GE Capital, Restructuring Finance to provide a $550 million senior secured credit facility that, upon completion, including the obtaining of $125 million of additional junior debt financing via the conversion of vendor payables and/or external sources, will provide Borders with the financial flexibility and an appropriate level of liquidity to move forward with its strategy to reposition its business model and the Borders brand. GE Capital provided its financing commitment following a comprehensive review of the company's strategic plan to restructure its business model by focusing on core business areas in order to improve profitability and cash flow".

"The new $550 million senior secured credit facility, once funded, will mature in 2014, and will replace the company's existing revolving senior credit and term loan facilities.

The commitment provided by GE Capital is subject to certain conditions, including:

Peter Schiff On Inflation, Oil, Gold/Euro and U.S. Markets (1/24/2010)

Peter Schiff on Tech Ticker

Wednesday, January 26, 2011

Fed: Progress Toward Objectives Has Been Disappointingly Slow

FOMC Statement 1/26/2010: "Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow."

Release Date: January 26, 2011

For immediate release

Information received since the Federal Open Market Committee met in December confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions. Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward.

Tepper: Dean Foods Undervalued, Cautious and Optimistic on Stocks (DF, SPY)

David Tepper, who runs the $15 billion hedge fund Appaloosa Management, was back on CNBC on January 21. On September 24, 2010, Tepper correctly predicted the stock market would rise on better economic data or Fed support (QE2). Both ended up happening.

Tepper is still optimistic on the U.S. market through 2012 based on earnings estimates. If 2012 S&P EPS hits 100+ with a 14-15 multiple, that's 1,400+ on the S&P. We are at 1,300. However, Tepper thinks there are downside risks:

Tuesday, January 25, 2011

President Obama's State of the Union Video (1/25/2011)

Watch the State of the Union video via Whitehouse.gov (1/25/2011)

Read: Ambac vs. EMC, St. Joe Squeeze?, John Paulson Makes Money, Cotton, Domino's, Post Office Closures, Market Pullback

Headlines for 1/25/2011

JP Morgan Sold Investors MBS Covered By "SACK OF SHIT" Loans... Then Shorted All Those With Exposure: A Goldman-AIG Redux (Zero Hedge) *Lawsuit: Ambac vs. EMC Mortgage (formerly part of Bear Stearns who's now part of JP Morgan)

E-mails Suggest Bear Stearns Cheated Clients Out of Billions (The Atlantic)

Bank of America Sued for Countrywide's Mortgage Sins, Again (Daily Finance) *New York Insurance Company, TIAA-CREF vs. Countrywide (now part of Bank of America)

No Audit At All: Deloitte and Bear Stearn (Francine McKenna at Forbes.com)

Cotton Is Pulled to Another High $1.6789 (WSJ)

Paulson Posts More Than $1 Billion in Citi Gains (Financial Times)

Interesting posts regarding a potential St. Joe short squeeze. In the end, does JOE need to take impairment charges or not? Einhorn thinks the company is worth $7-10 per share!.

Fairholme, Brookfield, GGP and St. Joe’s (Valueplays.net)

St. Joe ($JOE) May Be Ripe for a Short Squeeze in 2011 (Morningstar)
SAC acquired a 5.3 percent stake in Domino’s Pizza ($DPZ) (New York Times/DealBook)

Monday, January 24, 2011

S&P, Treasury Yields Rising In Tandem, 30-Year Yield Testing Descending Channel Resistance

Since August 2010, the S&P and 30y Treasury yield have been rising in tandem. TNX was a little late to the party. QE2 (Federal Reserve buying Treasuries) was the catalyst for higher yields and equities. So the goal was to get everyone to sell their bonds and buy equities? Although borrowing costs are now higher, at least household net worth is up from the equity rally.

The second chart is of the 30-Year Treasury Yield Index (TYX). It is bumping up against resistance in a descending channel that goes back 25 years. Watch the Yield/SPX relationship going forward. I also threw up a snapshot of the Fed's Treasury buying schedule from January 24 to February 10, 2011. Good day.

Robots Are The Next Tech Revolution (See Videos)

Will Robots powered by Google (or Qwiki?) be the next technological revolution? Look at these humanoid robots. These robots are future household and company assistants. Videos below:

1. HRP-4" Humanoid Platform for Robotics
2. Honda ASIMO
3. ACTROID-F in AIST Open Lab 2010 02
4. Telenoid Robot
5. DIRK the homeless roboter - ARS Electronica 2010 - repairTV

Sunday, January 23, 2011

Qwiki TechCrunch Disrupt Presentation, Founder Interviews, Looks Like The Future

The Qwiki "information experience" looks interesting (http://www.qwiki.com/). They take static information and turn it into a multimedia rich, interactive experience. I embedded the 2010 TechCrunch Disrupt presentation (they won), Mashable interview with CEO/Founder Doug Imbruce and a YammerInc interview with CTO/Co-Founder Louis Monier (who also founded Alta Vista in 1995). From their website:

"Qwiki's goal is to forever improve the way people experience information.

"Whether you’re planning a vacation on the web, evaluating restaurants on your phone, or helping with homework in front of the family AppleTV, Qwiki is working to deliver information in a format that's quintessentially human – via storytelling instead of search."

"We've all seen science fiction films (or read novels) where computers are able to collect data on behalf of humans, and present the most important details. This is our goal at Qwiki – to advance information technology to the point it acts human."

They have samples out. Here are popular topics, natural wonders, artists and cities (check out a Black hole). This looks like the future, in a way. I like it. One day robonauts powered by Qwiki and Google will be personal assistants imo.

QE2 Explained, Fed Buys Treasuries From Banks (Marketplace Video)

To prep ya'll for the potential of QE3. Paddy Hirsch, Senior Editor at Marketplace, explained how QE2 (quantitative easing part 2) works in the video below (from 10/07/2010). In summary: The Fed buys Treasury bonds from the banks which, in turn, gives banks a fresh wad of cash reserves to lend. As money gets lent out, it's supposed to stimulate the economy. I'd like to see a video explaining how QE2 makes stocks rally. I'm posting a chart comparing Treasury yields and the S&P next.

Saturday, January 22, 2011

Jon Stewart Segment On States And Municipalities (Daily Show Video)

On The Daily Show a few days ago, Jon Stewart mentioned how States and local municipalities are taking drastic cuts and raising taxes to close budget deficits. Watch the video after the jump. Here are few headlines he brought up, and you can understand why: Camden lays off nearly half of its police force (Philly.com), Ariz. governor moves to cut 280,000 Medicaid recipients (Modern Healthcare), Cutting class: Do Texas high schools really need senior year? (KVUE.com), Detroit Public Schools proposal would close nearly half its schools by 2013 (upping classroom count and abandoning closed buildings would save $12.4M) (Detroit News).

Jimmy John's Not Happy About Illinois Tax Hike, Fitch Gives "Stable" Rating To Illinois

ILLINOIS: Jimmy John's, Beelman Truck Co., CouponCabin and Amazon are not happy about the Illinois income tax hike. Fitch, however, upgraded Illinois' credit rating to "stable" from "negative". Remember when Meredith Whitney talked about State arbitrage?

Tax hike lifts state’s credit rating (Crain's Chicago)

Jimmy John's founder contemplates moving headquarters out of Illinois (The News Gazette)

Listen to an interview with Jimmy John's founder, Jimmy John Liautaud, on WDWS-AM (1/19/2011). He is not happy at all.

Beelman Truck Co. owner on tax hike: Illinois is 'one of the worst states to do business' (BND.com)

Amazon, CouponCabin Threaten As Illinois Moves To Tax Internet Sales (Forbes)

Other reading: O'Hare bond rating depends on relationship with airlines, S&P warns (Crain's Chicago)

Photo credit: Wikimedia

Friday, January 21, 2011

Is State Bankruptcy Law In Play?

Read this New York Times article by Mary Williams Walsh: Path Is Sought for States to Escape Debt Burdens (1/20/2011).
"Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign." (read more at NYT)

Bankruptcy code won't cure what ails U.S. states (WestLaw News & Insight)

On the GOP, bankrupt states and government unions by James Pethokoukis (Reuters)

Misunderstandings Regarding State Debt, Pensions, And Retiree Health Costs Create Unnecessary Alarm (The Center on Budget and Policy Priorities)

Newt's remarks at the Institute for Policy Innovation (Newt.org)

Gingrich seeks bill allowing state bankruptcy to avert bailouts (Pensions and Investments)

A Bankruptcy Law—Not Bailouts—for the States by Law Professor David Skeel (Wall Street Journal)

Default and bankruptcy in the municipal bond market (part one) (Self Evident)

Default and bankruptcy in the municipal bond market (part two) (Self Evident)

Google Launching Groupon Competitor, Larry Page Now CEO (GOOG)

Google Offers via Mashable
Interesting day yesterday for Google (GOOG). Here's what happened.

1) They beat earnings estimates

Google Announces Fourth Quarter and Fiscal Year 2010 Results and Management Changes (Google Press Release)

Instant view: Google profit beats, Page becomes CEO (Reuters)

2) Co-founder Larry Page replaced Eric Schmidt as CEO (remains Executive Chairman)

Schmidt Named Executive Chairman of Google as Co-Founder Page Becomes CEO (Bloomberg)

Power Shifts Atop Google (WSJ)

Google’s Management Shift: What Now for M.&A.? (DealBook)

Presidents Obama, Hu Meet with Business Leaders (Video/Text)

Attn: Business Leaders: "President Obama and President Hu of China meet with American and Chinese business leaders at a roundtable meeting in the Eisenhower Executive Office Building". Video and transcript after the jump. Enjoy.

Thursday, January 20, 2011

President Hu and President Obama Joint Press Conference Video/Text (1/19/2011)

President Obama and President Hu Jintao of China held a joint press conference in the East Room of the White House on 1/19/2011 (from Whitehouse.gov). Video and transcript after the jump.

Stocks Near Top Says Market Timer Tom DeMark, Sees 11% Fall

Tom DeMark, creator of the DeMark Indicators at Market Studies, told Bloomberg on 1/18 that stocks are near a top. He currently serves as "special advisor" to Steven Cohen who runs the $12 billion hedge fund SAC Capital. The Bloomberg article said Cohen and John Burbank of Passport Capital were partners in the firm. Protect yourself! From Bloomberg:
U.S. stocks are within a week of “a significant market top” that is likely to precede a drop of at least 11 percent in the Standard & Poor’s 500 Index, said Tom DeMark, creator of a set of market-timing indicators.

DeMark’s Sequential and Combo indicators, designed to identify market tops and bottoms, are giving a sell signal on the main U.S. stock benchmark for the first time since mid-2007, he said in a telephone interview." [read more at Bloomberg]

Benzinga interviewed Tom DeMark on 5/20/2010.

Niall Ferguson at Aspen Ideas Festival (ForaTV Video)

Harvard's Niall Ferguson was at the Apsen Ideas Festival on July 8, 2010 speaking at a lecture (with Mort Zuckerman) titled: The Financial Crisis: Will It Lead to America's Decline? The full video can be found at Fora.tv (hat tip zero hedge). In summary, Niall thinks the catalyst for America's decline could be the credibility of fiscal policy. That makes sense. He said to watch when the cost of servicing the debt exceeds the defense budget, which could occur in the next 5 years. On a positive note, Niall said there's a way out for the United States: 1) technological innovation and 2) entrepreneurship. Niall even brought up the possibility of a new Dark Age if the U.S. declines: "When the Roman Empire in the west collapsed, civilization collapsed." "I'm talking about how your daily life is affected. What happens when the aqueducts stop working, metaphorically. What happens when the roads are no longer maintained? That's what happened in the post-Roman world and I don't think the post-American world would be so very different." Wow, so municipalities shut down during the dark ages. Would there still be Facebook?

Rising Energy Prices Could Cause 2008 Redux (Margin and Credit Squeeze)

Oil analyst, Gregor Macdonald, was featured on Max Keiser's show on 1/14/2011 and it's a must see. He mentioned how lower oil production and higher energy prices could affect the credit markets, global stock markets, U.S. economy and oil revenues. Who remembers 2008? Here's a quote by Gregor from video #2 (embedded below):

"As energy prices rise, it crowds out all consumption outside of energy and food purchases. And that will soon enough make global stock markets choke" (due to "margin compression from U.S. corporate profits" and the "declining ability for OECD consumers to increase consumption outside of energy and food")

Wednesday, January 19, 2011

Commercial Property Price Index Still At 2002 Levels (Moodys/REAL)

Commercial real estate prices are still around 2002 levels and in a sideways channel (3-months delayed). The Moodys/REAL Commercial Property Price Index (CPPI) rose 1.3% to 1.11 in October 2010 (month/month), but it's still down 42% from the 2007 peak (1.91). The index started at 1.0 in year 2000. Find apartment, industrial, office and retail property price indexes at web.mit.edu. Apartments have outperformed all segments. MIT also has a "Transactions-Based Index (TBI)" that uses data from NCREIF.

CPPI All Properties/National

CPPI Apartments/National

Tuesday, January 18, 2011

Carl Icahn Comedy On Drexel, Texaco/Getty, US Steel In 1980s (Videos)

Famed hedge fund manager / "shareholder activist", Carl Icahn, did stand up financial comedy at Caroline's Comedy Club in Manhattan in 2003. He talked about trading options back in the day, doing business with Drexel Burnham Lambert in the '80s, Leon Black (Apollo IPO coming?), trying to take over US Steel, David Roderick, the Texaco/Getty Oil lawsuit (funny stuff) and Joe Jamail. Read these interesting articles and watch the videos after the jump.


"this was followed by a takeover proposal from raider Carl Icahn. By most accounts the company won the strike. Roderick, 63, punctured Icahn's balloon by piling up $3 billion in debt due if the company changed hands. He used the money to restructure the company yet again"....

Houston Lawyer Joe Jamail Sued the $10.5-Billion Pants Off Texaco and Stands to Pocket a Record Fee (People Magazine, 1986)

1) Carl Icahn wants to own US Steel
2) Carl Icahn settles the Texaco/Getty Oil lawsuit (hat tip Livermore Report)

US National Debt Above $14 Trillion, Debt Ceiling In Play Soon ($14.29T)

The U.S. National Debt is a serious issue right now. On 1/13/2011 the U.S. Treasury reported that Total Public Debt Outstanding hit 14,007,216,975,377.59 ($14 Trillion). $9.3 trillion was held by the public and $4.6 Trillion was intergovernmental (source: TreasuryDirect.gov). According to the real-time U.S. National Debt Clock at USDebtClock.org, the National debt is at $14,049,024,219,550. The main problem right now is there's a debt limit in place. Last year Congress raised the debt ceiling to $14.29 Trillion and it is expected to hit that level in May. So Congress will be making major moves in the next few months. I found an interesting fact sheet from the Heritage Foundation that explains what is going: The Debt Ceiling: Time, Options, and Action:
Congress Has Time: Gross federal debt has reached $14 trillion. Ongoing deficit spending (projected at $1.4 trillion for 2011) means the ceiling of $14.29 trillion will initially be reached around mid-March. Treasury’s traditional financial toolbox and revenue surges in April and June should delay the final moment of reckoning to mid-May and possibly as late as July.

Monday, January 17, 2011

Reads: David Rosenberg Likes Muni Bonds, Assange Gets Swiss Bank Info, Hu Visiting U.S.

Articles/Videos 1/17/2010

Apple Media Advisory (Steve Jobs Press Release) - BusinessWire

Barron's 2011 Roundtable - Barron's

David Rosenberg Says This Is A Fantastic Time To Buy Beaten Down Muni Bonds - Business Insider

Argentina farmers in grain export quota strike - BBC

Albert Edwards: "I Have Been Wrong – I’ve Been Too Bullish" (SocGen) - Zero Hedge

The Financial Crisis: Will It Lead to America's Decline? (Niall Ferguson, Mort Zuckerman at Aspen Institute) - Fora.tv (ht Zero Hedge)

Apple In Germany Falls 8% On Steve Jobs' Medical Leave (APC.F Chart)

Steve Jobs, Apple's CEO, is taking a medical leave and Time Cook (COO) is filling in. Here is the media release from Steve Jobs. Apple's stock on the Frankfurt Stock Exchange fell 7.96%. U.S. markets were closed for Martin Luther king Day.  Click the chart for a larger view (APC.F, Apple Inc. - Yahoo Finance).

"Apple Inc. Chief Executive Officer Steve Jobs took a leave of absence as his health deteriorates from battling a rare form of cancer and the effects of a liver transplant he had almost two years ago, according to a person with knowledge of the situation." (read more at Bloomberg.com)

Nasdaq 100 E-Mini March 2011 Future -1.13%, 2293.75
S&P 500 E-mini  March 2011 Future -0.35%, 1285.25

*UPDATE: ES (S&P) +0.29% and NQ +0.36% at 3:30am eastern. Carry on as usual? We'll see what happens tomorrow. AAPL is 19.74% of the Nasdaq 100 ETF, QQQQ.

Gary Shilling: Commodities Clearly In A Bubble

Gary Shilling thinks "commodities are clearly in a bubble" and "stocks aren't there yet, but we could be if things keep up at this rate". He also talked about Inventory/Sales and the savings rate, which he thinks could hit double digits. At what level is bubble territory on the S&P? SPX EPS 107x12 = 1,284, 107x15 = 1,605 or EPS 107 x 18 = 1,926? It is currently trading at 1,293. See the interview with Tom Keen after the jump.

Tunisia, Algeria Protests Due To Unemployment, Rising Food Prices and Politics (Videos)

If you've been following the news recently, Tunisia's ex-President, Zine Al-Abidine Ben Ali, fled the country as violent protests hit Tunis, the nation's capital. Rising food prices, high unemployment and political corruption are to blame, according to the articles below and Al Jazeera English / Euronews videos. Tunisia has a 14.7% unemployment rate and 23% for higher education graduates. Algeria also saw protests and a protestor mentioned rising sugar prices.

Sunday, January 16, 2011

Global Agriculture: Adecoagro Files $400 Million IPO (AGRO)

This company will be interesting to watch, especially if the agricultural commodities (and renewable energy?) trend sees another leg higher. If interested, look at the Economist commodity-price index (one month and one year % change) from January 13, 2010. And as you know, rising food prices are causing people to riot in Tunisia and Algeria. Will monetary tightening in emerging markets cool down commodity inflation? Gary Shilling thinks commodities are in a bubble. If interested, the ticker symbol is AGRO according to the DealBook article.
"An agriculture company backed by the billionaire George Soros on Thursday filed to go public in an offering of more than $400 million.

The company, Adecoagro, based in Luxembourg, but with extensive farm holdings in South America, is selling 21.4 million common shares".....
(Read More)

From their website: "Adecoagro is currently one of the leading companies in the production of food and renewable energy in South America. Present in Argentina, Brazil and Uruguay, our main activities include the production of grains, rice, oilseed, dairy products, sugar, ethanol, coffee, cotton and cattle meat."

Photo from website.

New Jersey Gov. Chris Christie vs. Teachers (Town Hall Videos, CNBC)

Below are New Jersey Town Hall videos and a CNBC squawk box video featuring New Jersey Governor Chris Christie. It's getting serious. Christie was featured on 60 Minutes a few weeks ago, along with analyst Meredith Whitney, talking about New Jersey's financial situation and munis in general. These are old videos, but it shows the real life affects of spending cuts due declining state revenues, a stressed tax base, deficits, debts and a State aid squeeze.
"Governor Chris Christie responds to a teacher's question during a town hall meeting at Raritan Township. Discusses the teachers' union and the need for shared sacrifice. September 8, 2010.

MUB Breaks Dec 2010 Low, SEC Looking At Muni Bond Disclosures

On Friday, MUB, the National Municipal Bond ETF, took out the December 2010 low of $96.59 and closed at $96.26. Big red volume is making lower highs (not sure that means much or not), the RSI (relative strength index) is at 26.31 (it hit 10 in December) and the MACD is still in downtrend mode. See the chart after the jump. Last Wednesday Meredith Whitney gave an update on the muni market on CNBC.

According to Charlie Gasparino on Fox Business, the SEC is looking at muni bond disclosures.

"The Securities and Exchange Commission is ramping up its efforts to monitor disclosure problems in the municipal bond market, worried that cities issuing municipal debt are failing to properly disclose budget problems and other issues, thus affecting the price of bonds purchased by small investors, Fox Business has learned." [read more]

Friday, January 14, 2011

BSE Sensex and CSI 300 Down 1.6%, PBoC Raises Bank Reserve Ratio

Jim Rogers and Marc Faber win again. They were short emerging markets.

China Raises Bank Reserve Ratios to Fight Inflation (Bloomberg)
China raises bank reserves again (Reuters)
INSTANT VIEW - China raises bank reserve requirements (Reuters India)
BSE Sensex below 19,000 level, at 4-month closing low (Reuters India)
Sell-off Continues; India's Sensex Down 1.7% (RTT News)

BSE Sensex (Bombay Stock Exchange, India)

CSI 300 Index (Shanghai, Shenzhen A-Shares)

Meredith Whitney On Municipal Bankruptcies (Ch. 9), State Arbitrage (CNBC Video)

Meredith Whitney was back on CNBC talking about municipalities. She doesn't see states defaulting on their debt, or Federal bailouts, but she still sees local municipalities declaring bankruptcy (not all of them). "It's not a severity issue, it's a frequency issue" she said. State governments are confirming her thesis. See the articles below.

She also mentioned state flight risk (state arbitrage), where companies or people leave for more favorable business conditions. Imagine if people left a city in mass exodus. What would happen to the tax base? Would defectors be treated like short sellers? Detroit is going through a similar event, but it was years in the making. They are shrinking the city, shutting down services and offering incentives for people to move. FYI: Illinois increased business taxes by 46 percent and the individual income tax by 66% (Fox Video). Watch the CNBC interview after the jump.

Jamie Dimon Interviewed On CNBC About JPM's Dividend (1/13/2010)

More on the new golden age of banking. Jamie Dimon, CEO of JP Morgan (JPM), is hopeful that JP Morgan will be able to "reinstate a dividend" in the second quarter.

Dick Bove: We're In A Golden Age Of Banking, C, BAC, STT, NTRS, BK Trading Below Cash Per Share

Dick Bove of Rochdale Securities thinks we're in new "golden age" of banking. He mentioned that bank shares are trading below cash.

"There's so much cash in some of the banks in the United States that they're actually selling at below their cash value per share. For example, Citigroup, Bank of America, Bank of New York, State Street, Northern Trust. They all sell at below their cash per share. What that means is, these companies now have a tremendous amount of liquidity which ultimately can be put to use to generate further earnings growth. And I think for the next 2-3 years what you will see, is that banks will actually increase their earnings at about a 20% rate per year, which will be far faster than what you're going to see from the industrial averages."

"Banks have more capital as a percentage of assets since anytime since 1934"

More bullet points:
  • 28% of bank assets are in cash
  • Non-performing loans are down
  • Net charge-offs are down
  • Delinquencies are down
  • Reaching point of being over reserved

Watch the CNBC interview after the jump, and the bankers vs. consultants rap battle in honor of the new golden age of finance.

Wednesday, January 12, 2011

SEC Conducts Inquiry Into St. Joe's Land Impairment Practices (JOE)

The SEC is checking out St. Joe's impairment practices. David Einhorn of Greenlight Capital, who is currently short St. Joe shares, believes $JOE needs to recognize significant impairment charges on their land. He thinks the stocks is worth $7-10 per share and it's trading at $24.60. Read: Einhorn's Presentation On Why He's Short St. Joe Vs. Bruce Berkowitz Who Owns 30%. This is getting interesting. Hat tip Going Concern.
"The Securities and Exchange Commission (the "SEC") has notified The St. Joe Company ("St. Joe") that it is conducting an informal inquiry into St. Joe’s policies and practices concerning impairment of investment in real estate assets. St. Joe intends to cooperate fully with the SEC in connection with the informal inquiry. The notification from the SEC does not indicate any allegations of wrongdoing, and an inquiry is not an indication of any violations of federal securities laws." (SEC.gov Form 8K)

St. Joe Reports Informal SEC Inquiry of Accounting for Land Impairments (Bloomberg 1/10/2011)
The St. Joe Company Dropping On SEC Concerns (JOE) (Benzinga)

Financial Links - Jeff Gundlach, David Einhorn, Illinois, EUR/USD, Spain, China (1/12/2010)

Jeff Gundlach’s Doubleline Presentation: Must Read "Bonds, 2011 Bonds", 1/1/2011 (Stone Street Advisors)

An Exclusive Interview With Green Light Capital's David Einhorn (Motley Fool)

David Einhorn - Federal Reserve’s Policies are Quite Dangerous (KingWorldNews)

China’s Chongqing Plans Tax for Used Homes, CCTV Says (Bloomberg) h/t Nuibi

Illinois Lawmakers pass income tax hike; Rep. collapses on Senate floor (Chicago Sun Times)

"Illinois lawmakers OK 66% income-tax increase in budget crisis. The rate increase from 3% to 5% will generate about $6.8 billion a year. A taxpayer who used to owe $1,000 would owe $1,666 instead." (AP / LA Times)

JP Morgan chief investment officer says EUR to drop to USD 1.20 by end-Aug - (hat tip Ran Squawk/Zero Hedge)

Euro May Fail if Spanish Economy Collapses, Nobel Winner Pissarides Says (Bloomberg)

Japan May Buy More Euro Bonds to Help Region, Officials Say (Bloomberg)

Spanish Bank Debt Costs Spur Doubt on Ability to Sustain Profit (BusinessWeek)

German Economy Grew at Fastest Pace in Two Decades in 2010 (Bloomberg)

Portugal Borrowing Costs Fall at Auction as Bailout Speculation Diminishes (Bloomberg)

St. Joe’s ($JOE) Accounting for Real Estate Impairment to Get the ‘Informal’ SEC Inquiry Treatment (Going Concern)

JGB CDSs are rising. See quotes and charts: JGB CDS USD SR 5Y and JGB CDS USD SR 10Y (h/t dutch book). *JGB CDS = Japanese Government Bond Credit Default Swaps

Tuesday, January 11, 2011

Federal Reserve Banks Earn $80.9 Billion In 2010, Up From $53B In 2009, Distributes $78.4 Billion To Treasury

The Federal Reserve Banks made $80.9 billion in 2010, up from $53.4 billion in 2009 (audited). "After providing for the costs of operations, payment of dividends, and the amount necessary to equate surplus with capital paid-in", they distribute profits to the U.S. Treasury (see chart below). Are Fed Bank shares on Second Market?

"Release Date: January 10, 2011

For immediate release

The Federal Reserve Board on Monday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $78.4 billion of their estimated 2010 net income of $80.9 billion to the U.S. Treasury. This represents a $31.0 billion increase in payments to the U.S. Treasury over 2009 ($47.4 billion of $53.4 billion of net income). The increase was due primarily to increased interest income earned on securities holdings during 2010.

Monday, January 10, 2011

David Rosenberg Prefers US Dollar Over Euro, Bonds Not In Bubble (EUR/USD, UUP)

David Rosenberg, Chief Economist and Strategist at Gluskin Sheff, was interviewed at The Globe And Mail this morning. He sees more "financial spasms out of Europe" on debt concerns and the Ireland elections, a flight to safety bid back into the US Dollar (lower EUR/USD) and fixed income as an attractive investment. He said "bonds are not in a bubble". Link to the video (hat tip Zero Hedge)


*Rosenberg is also bullish on Japan when using price valuation and interest rate comparables to the U.S. and Europe. Read more at Business Insider.

Dhaka Stock Exchange Index In Bangladesh Falls 20% In One Month, DGEN Chart And Protest Video

The DSE General Index (DGEN) lost 20% (8,918 to 7,135) from 12/5/2010 to 1/9/2011 and according to AP it is sparking protests.
"The government regulator, the Securities and Exchange Commission, held an emergency meeting Monday with merchant bankers and institutional stockbrokers to decide what actions to take to save the market from further falls." (Source: AP via myway.com)

Here is the 6-month chart of DHAKA:IND courtesy of Bloomberg.com. More at Reuters: Bangladesh police, investors clash as stocks go into free fall. See people riot in the streets outside the Dhaka Stock Exchange courtesy of Russia Today.

Portugal CDS, 10 Year Government Bond Yield and Bank Watch (Charts)

Credit protection on Eurozone sovereign debt is rising and banks are under pressure. Portugal is hitting the wires hard this morning (see below). I provided snapshots of Portugal's 5Y CDS and 10-year Government bond yield with direct links to Bloomberg. Bailout coming? It looks like Portugal's 10-year yield is lower at 7.05% from 7.17% earlier. *Here's your answer: Portuguese bond spread tightens, ECB seen buying (h/t Toni).

Jim Rogers Is Long The US Dollar, Short Emerging Markets ETF (Short Term)

In an interview with The Economic Times on 1/3/2011, Jim Rogers said he was long the US Dollar and short an Emerging Market ETF. He also mentioned sugar, rice, silver, oil, China, the Renminbi and more. Watch the full interview with text at their website: Jim Rogers outlines hot commodities for 2011 trade.

*Related: Marc Faber told CNBC TV18 India on 12/10/2010 that emerging Markets could fall by 20-30% (video)

$BGP February Call Option Activity, Watching Borders Group News

Expect big news soon from Borders Group (BGP). Bill Ackman of Pershing Square Capital Management owns 37%, their General Counsel and Chief Information Officer resigned, they halted payments to certain vendors to refinance debt and something needs to be done about declining revenues and shareholders equity (see chart comparison since 2001 below). Articles:

*More red flags up at Borders Analysts: Chapter 11 an option; company needs a strategy, too (Crains Detroit)

*Borders Group bankruptcy filing may be inevitable, University of Michigan expert says (AnnArbor.com)

BGP closed at 0.92 on Friday and $1 call options were active from February to August. February activity was over open interest. I'm not sure what this activity means. Are investors positioning for a pop on news? Is someone hedging their short positions? Either way, hopefully something interesting happens with this company, including more land for Laptopistan. Massive retail commercial real estate space is involved here as well. See my previous post for more news and information. BGP option chain snapshots and fundamental data after the jump.

Financial News and Research Links (1/9/2010)

Eclectica's Hendry Turns Greece Profit Into China Failure Bet (Bloomberg)

Freight Rates Tumbling as 35 Miles of Ships Passes Ore Demand (Bloomberg)

THE BEST RISING INTEREST RATE TRADE - Credit Suisse (Pragmatic Capitalism)

Goldman Sach's Abby Joseph Cohen January 2011 Research (Zero Hedge)

Goldman traders to leave to start hedge fund- FT (Reuters)


Christie Targets Medicaid to Close $10.5 Billion New Jersey Budget Deficit (Bloomberg)

Illinois may dig deeper credit rating hole (Pensions & Investments)

In Illinois, a Giant Deficit Leads to Talk of a Giant Tax Increase (New York Times)

For more headlines see my Twitter handle in the Wibiya toolbar below.

Sunday, January 9, 2011

Higher Bond Yields, Dollar Could Trigger Gold Sell Off (Keith McCullough On CNBC)

Keith McCullough (Hedgeye Risk Management) told CNBC last week (1/7/2010) that higher bond yields and US Dollar could trigger a sell off in Gold. Watch the video below for more. LaSalle Futures Group and Doug Kass agree. Here's a 3 year chart of $GLD courtesy of stockcharts.com.

GLD (SPDR Gold ETF) - 200DMA 123.67 

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