Lemley Yarling Management Co
309 W Johnson Street Apt 544
Madison, WI 53703
Bud: 312-925-5248
      Kathy: 630-323-8422
|
31 July 2009
Model Portfolio Update
30 July 2009
Model Portfolio Update
29 July 2009
Model Portfolio Update
28 July 2009
Thoughts
Well, for the second time in a
month we lost our post for the day. Unfortunately, we will be on a mini vacation for the rest of the week
and so our site visitors will have to go without our words of wisdom until
August 3.
*****
We closed out our SH
(S&P 500 1x short) position for a plus or minus scratch depending.
*****
The bulls remain in control and we won $100 with a $200
stake in Blackjack yesterday.
*****
27 July 2009
Thoughts
We are heading to
the casino at Wisconsin Dells for a day of Blackjack and visiting with a friend
from long ago and so there will be no post today.
*****
24 July 2009
Thoughts
In what some on Wall Street are calling the biggest
blockbuster deal in the history of the financial sector, Goldman Sachs
confirmed today that it was in talks to acquire the U.S. Department of the
Treasury. According to Goldman
spokesperson Jonathan Hestron, the merger between Goldman and the Treasury
Department is "a good fit" because "they're in the business of
printing money and so are we." The Goldman spokesman said that the merger
would create efficiencies for both entities: "We already have so many employees
and so much money flowing back and forth, this would just streamline
things." Mr. Hestron said the only challenge facing Goldman in completing
the merger "is trying to figure out which parts of the Treasury Dept. we
don't already own." Goldman recently celebrated record earnings by
roasting a suckling pig over a bonfire of hundred-dollar bills.
Elsewhere, conspiracy theorists celebrated the 40th
anniversary of NASA faking the moon landing. And in South Carolina, Gov. Mark
Sanford gave his wife a new diamond ring, while his wife gave him an electronic
ankle bracelet.
*****
It’s been a long year.
*****
And in real news:
Asian markets were higher overnight and European bourses are
higher at midday. U.S. futures indicate a flat opening. Oil has a $67 handle.
American Express
reported second-quarter net fell 48% to $337 million, while revenue dropped 18%
to $6.09 billion. AmEx said its loan-loss provisions totaled $1.6 billion,
compared with $1.8 billion, reflecting lower average card member receivables
and loans.
"Given the cutbacks in discretionary spending among
affluent consumers, small businesses and corporations, our overall level of
billed business is performing well relative to most of the other major card
issuers," said CEO Kenneth I. Chenault in a press release.
Given that they only wrote off $1.6 billion in the quarter
we would guess that Chenault is in line for another $30 million payday.
*****
Microsoft late
Thursday reported fiscal fourth-quarter results that fell short of Wall Street
expectations and reflected a sharp slowdown in
software sales, as demand for new
personal computers waned in the ongoing recession. Net income for the period
ended in June fell to $3.05 billion, or 34 cents a share, from $4.3 billion or
46 cents a share in the same period a year earlier. Revenue fell 17% to $13.1 billion. Analysts had expected earnings
of 36 cents a share on $14.37 billion in revenue.
Amazon.com said late Thursday that earnings
for the second quarter fell 10%
from the same period last year, in part due to a charge related to a recent
settlement. Amazon reported net income of $142 million, or 32 cents a share,
down from $158 million, or 37 cents a share, a year earlier. Revenue rose 14%
to $4.65 billion, slightly short of the $4.69 billion consensus.
Schlumberger reported
a 57% drop in net income to $613 million, or 51 cents a share, from $1.4
billion, or $1.16 a share, hurt by the drilling slowdown in the energy sector
as it also took a 7 cents-a-share charge for severance costs. Quarterly revenue
dropped to $5.53 billion from $6.75 billion. Analysts had been looking for
earnings of 63 cents a share on revenue of $5.5 billion.
Ericsson reported a
56% drop in second-quarter profit, hurt by restructuring charges and losses
at two half-owned ventures that make mobile
phones and microchips. The group said profit fell to 831 million Swedish kronor
($111 million), while revenue rose 7% to 52.1 billion kronor.
*****
If you have the time this is an
interesting article and one on many reasons we are leery of the markets:
http://www.nytimes.com/2009/07/24/business/24trading.html?hp
This
computer trading allows certain firms to see orders before others and thus to
exacerbate trends both to the upside and downside. These programs are the
reason that the NYSE and large firms don’t want the old uptick rule since with an uptick rule the programs wouldn’t
be able to front run by selling short. The development of the programs and the
financial and political power of the folks who own and use them are obviously
the reason the uptick rule was removed.
*****
And another reason:
http://www.nytimes.com/2009/07/24/business/24calpers.html?hpw
*****
And another reason:
Jim Cramer proffers this reasoning for buying stocks now:
People
are way too worried that we won't see top-line growth. The great earnings
numbers that we have seen are being dismissed repeatedly because -- with the
exception of Apple -- they aren't being driven by sales, just margins. I
say if you are waiting for top line, forget it. Not in this rally. Not going to
happen. Doesn't mean a thing.
Here's the deal. Companies have fired and fired and fired
people again and again and we have only seen a few months -- the last two of
this quarter -- of impact in the cuts while we have seen myriad charges. Next
quarter, even if there is no top-line growth, should be amazing as we see the
full benefits of the firings. We could be looking at gigantic earnings per
share without any growth because no one
is hiring. In fact, they are still laying off.
... Don't kid
yourself. Companies are going to continue to fire and continue to benefit from
the stabilization.
So, forget the
top-line fret. Don't use it as an excuse not to buy. Wait until a down moment,
like the one everyone thought would come from Amazon.com and Microsoft
and American Express, and then go in and buy the companies that have
fired the most people and are saying that things have stabilized.
*****
We think the
following news is a wry complement to Cramer’s fire’em and watch your stock price rise advice:
JPMorgan’s investment
bank is having a record year, with revenue in the first half of $15.7 billion.
In the first six months of 2009, the unit set aside $6.01 billion for
employees’ compensation, equal to 38 percent of revenue in the period.
Goldman Sachs allocated $11.4 billion, or 49 percent of
revenue, and Morgan Stanley put
aside $5.91 billion, or 71 percent of the half-year revenue, for employee
salaries, bonuses and benefits.
*****
Last fall the Treasury lent Goldman Sachs $10 billion at 5% interest and took back warrants to
buy 12 million shares of stocks at $122. A month before the Treasury deal last
fall when Goldman was trading at a higher price Warren Buffet lent Goldman $5
billion at 10% interest with a 10% repayment penalty and was given warrants to
buy Goldman stock at $115 per share.
*****
Timmy Geithner repeated the Goldman mantra that the Treasury
earned a 23% annualized return this morning in testimony before Congress. money
managers are not allowed to report less than 12 month returns on an annualized
basis. In fact the Treasury now has the
money and a year has not expired so they could not possibly earn 23% on an
annual basis.
*****
Confidence among U.S. consumers fell in July for the first
time in five months as mounting unemployment and depressed wages shook
households.
The Reuters/University
of Michigan final index of consumer sentiment decreased to 66, in line with forecasts,
from 70.8 in June. A preliminary reading was 64.6.
What is amazing is that there is a preliminary and then a
final consumer confidence reading every month.
*****
Roubini on
joblessness: http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=/data/opinion/2009/July/opinion_July91.xml§ion=opinion
*****
Who is Barry Diller and why does CNBC spend so much time
interviewing and commenting on his actions. He is so 1990s.
*****
European shares
ended mostly lower, breaking a nine-day rally as markets weakened amid sharp
losses for Ericsson and (German) Merck.
*****
U.S. health officials say swine flu
could strike up to 40 percent of Americans over the next two years and as many
as several hundred thousand could die if a vaccine campaign and other measures aren't successful.
Those estimates from the Centers for Disease
Control and Prevention mean about twice the number of people who
usually get sick in a normal flu season would be struck by swine flu. Officials said those
projections would drop if a new vaccine is ready and widely available, as U.S.
officials expect.
The U.S. may have as many as 160 million doses of swine flu
vaccine available sometime in October, and U.S. tests of the new vaccine are to
start shortly, federal officials said this week.
The infection estimates are based on a flu pandemic from 1957, which killed nearly
70,000 in the United States but was not as severe as the
infamous Spanish flu pandemic of 1918-19. But influenza is notoriously hard to
predict. The number of deaths and illnesses would drop if the pandemic peters
out or if efforts to slow its spread are successful, said CDC spokesman Tom
Skinner.
*****
Oil closed at $68.01 up 85 pennies. Gold lost $3 to $951.
*****
We switched the double short
S&P 500 (SDS) for a $2 to scratch loss to the one times short S&P 500
(SH). We decided we don’t’ want the leverage.
*****
The DJIA
was up 25 at 9080. The S&P 500 gained 3 to 980 and the NAZZ dropped 8 to 1965.
Breadth was
flat and volume was light.
The bulls
went home happy.
*****
23 July 2009
Thoughts
Did the markets really collapse
last year? Was it all a dream? Did the Feds lend the bank system trillions of
dollars because of all the bad loans the large banks made? Are folks losing
jobs and homes? We ask these questions because the Washington Post reports:
Wall Street's biggest banks are setting aside billions of dollars more
to pay their executives and other employees just months after these firms were
rescued with a taxpayer bailout, renewing questions about compensation
practices in the aftermath of the financial crisis.
The recent outcry over bonuses at bailed-out firms prompted public
alarm and promises of reform from financial leaders, who acknowledged that pay
and bonuses should not reward risky short-term business decisions -- such as
those that contributed to the meltdown -- but instead longer-term financial
performance.
But Wall Street, helped by improving profits, is on track to pay
employees as much as, or even more than, it did in the pre-crisis days. So far
this year, the top six U.S. banks have
set aside $74 billion to pay their employees, up from $60 billion in the corresponding
period last year.
*****
Asian markets were higher
overnight with Hong Kong and India up 2% and European bourse indexes are mixed
at midday. Oil has a $65 handle and Gold is at $954 as the trading day
commences. Futures indicate a slightly higher open.
Ford earned money from accounting gimmickry but also gained larger
share of the U.S. market and is 10% higher in premarket trading. Bristol Myers
is going to spend $2 billion to buy a company at twice last night’s price that
has $50 million in revenue last year. A bunch of stocks beat estimates while
posting lower earnings including AT&T,
Hershey, and 3M. UPS reported a 50%
drop in profits.
*****
An hour into the trading day the
major measures are up over 1% as the bulls continue their stampede.
*****
Dow industrials top 9,000 level for first time
since Jan. 6. It was all downhill after that.
*****
In a bull phase it is not the
actual numbers but the guessed at numbers that count:
McDonald's Corp. reports
second-quarter profit falls 8.1% as currency headwinds hit the top and bottom lines, even as customer traffic
and operating income rise.
AT&T posts a 15% drop in second-quarter profit owing to further
declines in its wire line business as well as heavy subsidies to sign up new phoned
customers.
3M Co. second-quarter profit
falls 17% on the back of its
transportation, security and consumer electronic-related businesses, but manages to exceed Wall Street
expectations.
*****
The National Association of Realtors reports that resale of U.S.
single-family homes and condos rose 3.6% in June to a seasonally adjusted
annual rate of 4.89 million, the highest level since last October.
*****
From http://www.huffingtonpost.com:
Less than two weeks after a congressional watchdog called attention to
backroom deals in which the Treasury Department repurchased stock warrants from
bailed-out banks at well below market value, three more such transactions have
now been reported. The big loser: The U.S. taxpayer.
The Congressional Oversight Panel reported earlier last month that in 11 transactions with small banks, taxpayers
walked away with about 66 percent of what they could have gotten.
At a hearing on the warrant repurchase program in the House on Wednesday, Herbert
Allison Jr., a senior Treasury official, insisted that the sweet deals the
banks got were needed to aid the liquidity of the smaller institutions.
But now, in three out of the four newly-reported transactions, all with
much bigger institutions, the deals have only gotten worse. The transactions
returned between 54 and 65 percent of what the taxpayers could have gotten on
the open market, according to one estimate.
BB&T agreed to buy back its warrants for $67 million, as reported
in a July 17 press release. On July 8, the Treasury sold warrants back to State Street Corporation
for $60 million. On July 15, Treasury gave up warrants to U.S. Bancorp for $139
million. The latter two transactions are listed by the Treasury in its
transactions report for the period ending July 17.
"We are very pleased to have completed the repurchase of the
warrant, effectively concluding U.S. Bancorp's participation in the Capital
Purchase Program," said Richard K. Davis, chairman, president and chief
executive officer of U.S. Bancorp, when announcing the deal.
As well they should be. The warrants that USB bought from the taxpayer
for $139 million had a fair market value of $260 million, says an academic who
has closely tracked the bailout and the warrant repurchase program. Linus
Wilson is an assistant professor of finance at the University of Louisiana at
Lafayette's B. I. Moody III College of Business and he uses essentially the
same methodology to calculate fair market value that the Congressional
Oversight Panel used -- the Black-Scholes and Merton option pricing models.
According to Wilson's
calculations, the State Street warrants, which paid the taxpayer $60 million,
should have brought in $92 million at fair market value. And the value of
BB&T's warrants was $114 million, meaning the Treasury left $47 million on
the table.
*****
Moreover if the Treasury held the
warrants for a year or two they would be worth much more if the markets
continue to recover. And the Treasury would continue to have salary leverage
over the affected banks. But Timmy doesn’t want either. He is looking forward
to starting his consulting firm in three years and counting.
*****
Gold ended down $2 at $950 and
Oil gained 1.71 to $67.11. European bourses closed mildly higher on the day.
*****
We bought more single short
S&P 500 (SH) and double short S&P 500 (SDS) in our larger accounts
today as the Major measures reached their January highs.
*****
The DJIA was up 186 at 9068. The S&P 500 gained 22 to
976 and the NAZZ was up 47 at 1973.
Breadth was 4/1 positive but volume was light.
The bulls are on a roll.
*****
 
22 July 2009
Thoughts
Earnings reports are coming fast
and furious. Apple beat to the
upside, as did Wells Fargo. Morgan Stanley disappointed. The
markets will tell us how traders interpret the reports. Asian markets were
mixed overnight while Europe is lower at midday. Oil is down $1 with a $64
handle as the trading day begins. U.S. futures are indicating a slightly lower
opening.
*****
Investors Intelligence has bulls 36% and bears 35% for the latest
week.
*****
WSJ: The nation's two largest public
pension funds suffered their worst annual performance ever, signaling poor results ahead for large
pension funds and, with that, more pressure on local governments to boost
pension contributions.
The California Public Employees' Retirement System, the nation's
largest public pension fund, reported a preliminary decline of 23.4% for the
fiscal year ending in June. The fund saw its value fall by $56 billion from the
previous fiscal year to $180.9 billion.
The California State Teachers' Retirement System reported a preliminary
decline of 25% for the fiscal year, with the market value of assets falling to
$118.8 billion, down $43 billion.
Some of the worst performing assets for both funds were private or
other "alternative" investments, which have attracted the interest of
many public pensions and endowments in recent years. Calpers's real estate was
its worst performer, falling an estimated 35.8%; private equity was next in
line with a 31.4% decline.
The Calstrs real-estate portfolio lost 43%, and its private-equity
investments were down 27.6%. Figures for these categories at both funds
reflected the 12-month period ended in March.
The best performing asset at Calstrs was fixed-income, with a 4.5%
gain. At Calpers, cash was up 1.4%, and the fund's global fixed-income earned
0.6%.
*****
NYT: General Electric said
Wednesday that it has begun to exit a program that allows companies to issue
debt backed by the federal government, a tool the industrial and financial
conglomerate used to raise money during the credit crunch.
GE said the Federal Deposit Insurance Corporation has approved its application to begin
phasing out participation in the Temporary Liquidity Guarantee Program, which
enabled financial companies to issue debt with lower interest rates using the federal
government's stable top credit rating. The program was designed to make it
easier for banks struggling during the financial crisis to find new sources of
funds.
*****
Financials are lower in the early going but retail has a
bid and defensive stocks except drugs
are in play. Cyclical companies are reporting better than earnings but also reporting 20% to 40% year over year
drops in revenues. These companies are achieving earnings by firing folks and
that can only go on for so long.
*****
The good news ma is that we made
a lot of money, the bad news ma is that we lost a lot of money.
Bloomberg: Wells Fargo, the biggest U.S. home lender this year,
said bad loans jumped in the second quarter as the recession made it harder for
borrowers to keep up with payments. The shares dropped 5 percent in early
trading.
Assets no longer collecting interest climbed 45 percent to $18.3
billion as of June 30 from the first quarter, the San Francisco-based bank said
today in a statement. The increase was disclosed as Wells Fargo reported
second-quarter net income soared 81 percent to a record $3.17 billion.
*****
Starbucks earned money in the quarter while same store sales
dropped 5%. The shares are 15% higher this morning.
*****
Robert Reich: Obamacare
Is At War With Itself Over Future Costs
Right now, Obamacare is at war
with itself. Political efforts to buy off Big Pharma, private insurers, and the
AMA are all pushing up long-term costs -- one reason why Douglas Elmendorf,
head of the Congressional Budget Office, told Congress late last week that
"the cost curve is being raised." But this is setting off alarms
among Blue Dog Democrats worried about future deficits -- and their votes are
critical.
Big Pharma, for example, is in
line to get just what it wants. The Senate health panel’s bill protects biotech
companies from generic competition for 12 years after their drugs go to market,
which is guaranteed to keep prices sky high. Meanwhile, legislation expected
from the Senate Finance committee won't allow cheaper drugs to be imported from
Canada and won't give the federal government the right to negotiate Medicare
drug prices directly with pharmaceutical companies. Last month Big Pharma
agreed to what the White House touted as $80 billion in givebacks to help pay
for expanded health insurance, but so far there's been no mechanism to force
the industry to keep its promise. No wonder Big Pharma is now running
"Harry and Louise" ads -- the same couple who fifteen years ago
scared Americans into thinking the Clinton plan would take away their choice of
doctor -- now supportive of Obamacare.
Private insurers, for their
part, have become convinced they'll make more money with a universal mandate
accompanied by generous subsidies for families with earnings up to 400 percent
of poverty (in excess of $80,000 of income) than they might stand to lose.
Although still strongly opposed to a public option, the insurance industry is
lining up behind much of the legislation. The biggest surprise is the AMA,
which has also now come out in favor -- but only after being assured that
Medicare reimbursements won't be cut nearly as much as doctors first feared.
*****
What we all have done:
Fostoria, Missouri: A local man spent Tuesday night in
jail after a phone call that allegedly went too far.
Forty-three-year-old Charles Papenfus was arrested at the Fostoria
Police Dept. and taken to St. Louis, Mo., on a charge that
he threatened to kill a telemarketer.
The St. Louis Post-Dispatch reported that on May 18, Papenfus lost his temper on the phone with
an employee from a St. Louis company. The caller was trying to get him to buy
an extended warranty for a car he owned.
The newspaper cites court documents that say an agitated Papenfus told
the sales rep he would, "burn down the building and kill the employees and
their families."
Fostoria Police Chief John McGuire says Papenfus went to the
police station on June 27 to speak to an officer and was arrested on a warrant
out of St. Louis.
News 11 crime analyst Richard Murphy says authorities had to take this
case seriously.
"No one can drop the ball because if they do and something does
happen, there's going to be a lot of finger pointing."
We went to Papenfus' home to get reaction from his wife, who told the
St. Louis newspaper that this is overkill by St. Louis police.
*****
Goldman wins
again:
Goldman Sachs settles TARP warrants with Treasury for
$1.1 billion, saying it is "delighted to be paying off warrants". The
company also said that the warrant payment and preferred dividends gave the
government a 23% annualized return.
Goldman’s stock price has rallied 500% on an annualized
basis since the March lows. The Treasury made of Gift of $13 billion to Goldman
Sachs by rescuing them from AIG’s failure and they reciprocate with $1.1
billion.
Fortune Magazine July 17: The warrants are very valuable,
especially with the recent sharp run-up in Goldman's stock price. The warrants
carry the right (but not the obligation) to buy 12.2 million Goldman shares at
$122.90 each. Goldman's closing price of $156.84 yesterday put the warrants
"in the money" by a bit over $400 million. (That's the $33.94
difference between $156.84 and $122.90, multiplied by 12.2 million.) Given that
the warrants still have more than nine years to run, they're clearly worth more
than $400 million, because its owner has years of upside. However, because
there's no existing market for such long Goldman warrants, their value is in
the eye of the beholder (and the pricing modeler).
Who did better?
*****
A further comment from Alan Sloan in Fortune: When
I say that taxpayers kept Goldman alive, I'm not talking about the $10 billion of TARP money or the $12.9
billion of AIG bailout money that Goldman got. The $10 billion was nice, but
not necessarily essential to Goldman's survival, and Goldman says it was
holding enough assets and collateral to get all or almost all of the $12.9
billion had the government not bailed out AIG.
Rather, I'm talking about the way that U.S. and
foreign governments -- in other words, taxpayers -- saved the world's financial
system, saving Goldman in the process. Had many of the world's biggest
institutions collapsed, which would have happened without taxpayer aid, Goldman
would have been wiped out because the firms that owed it money wouldn't have
been able to meet their obligations.
I'm also talking
about the Federal Reserve Board moving with lightning speed last fall to allow
Goldman to become a bank holding company. By giving Goldman access to vast
amounts of money it was making available to bank companies, the Fed ended
panicky demands from Goldman customers that the firm immediately return the
cash and securities it was holding for them. That was the equivalent of a run
on the bank, which no institution can survive.
Stopping it saved Goldman.
Now this is how
Goldman shows its gratitude. It could have shelled out a few extra bucks and
done the right thing for taxpayers (and ultimately for itself) by exercising
good business judgment and looking generous. Instead, it's behaving in a way
that brings to mind one of my favorite Biblical verses, Deuteronomy 32:15:
"So Jeshurun waxed fat and kicked...and spurned the Rock of his
salvation." In these ultra-political days, filled with economic pain for
so many Americans, that's not only the wrong way to act, it's foolish. A word I
never thought I'd associate with Goldman.
*****
Perspective:
From talkingpointsmemeo.com:
President Obama wanted his press conference on health care tonight at 9pm ET. NBC said no,
it's spent weeks getting an interview with singer Susan Boyle which is airing
tonight on America's Got Talent. The result: Susan Boyle
trumps Obama. Obama moved the time of his conference to 8pm ET. But, Fox (not the cable news network, the other one) will
skip Obama's
news conference as the new time conflicts with "So You Think You
can Dance."
*****
European shares managed to eke out an eighth straight day
of gains, with losses for mineral extractors and financials offset by gains for
firms such as TomTom and Norsk Hydro
Oil ended at $65.38 down 32 pennies. Gold gained $4 to
$952.
*****
The DJIA closed down 36
at 8880. The S&P 500 lost 1 to 953 and the NAZZ gained 10 to 1926.
Breadth was positive and
volume continued summer light.
The bulls are still in control since the minimal pullback
today was just what they wanted.
*****
21 July 2009
Thoughts
This is a less is more market.
Lower revenues and earnings derived from firing folks are being greeted with
10% jumps in stocks prices as traders cover shorts and investors (?) project
wonderful earnings when the economy turns. This morning Caterpillar reported better
than earnings and the shares are 10% higher as shorts rush to cover.
Revenues for CAT were lower than expected but the rose colored glasses group
see only the earnings beat. Merck reported
better than earnings and had a
positive surprise in that the revenues
from its two best selling drugs are dropping but at a slower pace than forecast.
The fact that CAT earnings are
down 50% and revenues down 45% from last year has no meaning to traders.
Traders are pricing stocks on their ability to beat the magic estimated
earnings numbers. Since most revenue numbers are missing estimates to the
downside traders have decided to ignore that rubric.
It does no good to argue with Mr.
Market and so we will let the rally run its course.
*****
Asian markets were mixed
overnight and European bourse indexes are higher at midday. Gold is at $950 and
Oil has a $65 handle as the trading day is under way.
*****
We tried trading GE
and KBE today but sold positions for
a scratch loss when the markets turned negative. We also switched our Short
S&P ETF to half the shares in the Double Short ETF (SDS).
*****
Oil ended at $64.72 and Gold was
$948. European bourse closed higher.
*****
The markets rallied into the close. CAT and Merck were
responsible for plus 40 points in the DJIA.
The DJIA closed up 65 at 8915. The S&P 500 was up 4 at
954 and the NAZZ gained 7 to 1916.
Breadth was slightly negative and volume was light.
The bulls remain in control.
*****
20 July 2009
Thoughts
Asian markets were strong
overnight with Hong Kong and India both up over 3% and European markets are
higher by more than 1% at midday. U.S. futures are indicating a higher opening
and Gold is up $15 with Oil up $1 and with a $64 handle as the bulls press
their gains of 6% and more last week.
*****
Goldman Sach’s chief strategist David Kostin raised his outlook on
the S&P 500 to 1060 by year end from 940. That is fueling this morning’s
rally. Of course in 2007 and early 2008 Goldman was recommending subprime
mortgage CDOs to clients while shorting them for its own account.
Bloomberg: Kostin is now tied with Frankfurt-based Deutsche Bank AG’s Binky Chadha for the second-highest S&P 500 forecasts among 10 Wall Street
strategists tracked by Bloomberg News. Only JPMorgan’s Thomas Lee, at 1,100, is more bullish. Barclays Plc’s Barry Knapp, who had been the most pessimistic U.S. strategist, boosted his
projection a week ago following the 40 percent surge in the S&P 500 between
March and June, the biggest gain since the 1930s.
*****
This summary from James DePorre at realmoney.com is an excellent
summary of where the markets are at this juncture:
Acceptance is not submission. It is acknowledgement of the facts of a
situation, then deciding what you're going to do about it.
-- Kathleen Casey Theisen
The market underwent a dramatic change in character last week as it
celebrated strong earnings from Goldman Sachs, Intel and IBM. The upbeat mood
is continuing as we kick off a new week -- CIT has cut a deal to save itself
from bankruptcy; Goldman raises its target for the S&P 500 for the end of
the year to 1060 from 940; the dollar is weak, causing oil to rally; China
reports strong housing demand; and analysts upgrade Cisco, Caterpillar and
Texas Instruments.
The quickness and intensity of last week's reversal caught a lot of
folks by surprise. We were on the brink of cracking key support when the
Meredith Whitney upgrade hit last Monday, and we haven't looked back since
then. What was particularly notable about the action last week was how limited
the pullbacks were. On Wednesday and Thursday in particular, we barely pulled
back for longer than a minute or two. A lot of folks were obviously caught
unprepared for the sudden and sustained strength and were so anxious to add
long exposure that they didn't let the market come in at all.
The great difficulty now is that so many stocks made such strong moves
for three, four or five days that they are quite extended and do not offer
favorable entry points unless you are willing to chase things that are quite
technically overbought.
Nonetheless, a lot of folks are obviously feeling left out, and that
means we should have some very strong underlying support. They may have missed
the move last week, but the psychology now is that they won't miss the next
dip.
In addition we have another flood of earnings reports coming this week,
and the market has been quite pleased with what it has seen so far. Many key
reports are already out, but both Apple and Microsoft report this week and will
likely keep the bears on the sidelines -- especially those who were burned by
Intel last week.
You always have to be a bit distrustful of strong moves on Monday
morning, especially when we are already a bit extended, but there is a lot of
positive news on the wires this morning and we should see some strong
underlying support. Many charts badly need to consolidate some gains, but with
anxious buyers under the surface, they may not do so for long.
The key this morning will be to see how quickly buyers jump on the
first dip in the first hour or so of trading. I suspect they will stay
aggressive and will not let this market fall too much. That means our challenge
will be to find stocks that offer entry points without being too extended already,
and that doesn't leave a whole lot.
*****
In the U.S. form of capitalism only the workers lose their jobs and
can’t find other work. The CEOs move on to another high playing job in the
private sector or into government leadership:
WSJ: Private-equity firm Fortress Investment Group LLC is expected to
name Daniel Mudd, former chief executive
of Fannie Mae, as CEO, according to a person familiar with the matter. Mr.
Mudd, who is on the company's board, would succeed Wesley Edens, Fortress's
co-founder and largest shareholder
Mr. Mudd, who had been chief operating officer at Fannie, was installed
as CEO there in December 2004 after an accounting scandal led to the ouster of
Franklin Raines. He spent much of his first year apologizing for the company's
past accounting misdeeds and aggressive lobbying, and instilling a more
cooperative approach to dealing with critics.
But Mr. Mudd and other top Fannie executives were worried about the
loss of market share to Wall Street firms, which were taking a bigger role in
buying mortgages and packaging them into securities. They bought more high-risk
loans, which started to sour rapidly in 2007 as housing prices slid, depleting
capital and causing the share price to collapse.
Mr. Mudd worked hard last summer to persuade the Treasury to allow
Fannie's management to try to work its way out of those problems. But federal
regulators instead chose to seize management control of
Fannie and sister company Freddie Mac. That move included the ouster
of Mr. Mudd and other executives.
WSJ: New problems are flaring up in Citigroup's private-investments division, this time involving two
funds overseen by an executive who left this year to join the Obama
administration.
Clients of a private-equity fund that amassed $3.4 billion to invest in
airports, roads and other infrastructure projects last month voted to bar it
from making new investments after its co-head quit and several high-profile
deals collapsed, according to people familiar with the matter. A second, smaller
fund geared toward sustainable development projects failed to attract clients
and was shelved late last year.
The funds were the progeny of Michael
Froman, former operations chief of Citigroup Alternative Investments, who
left in January to become a senior White House aide focused jointly on national
security and international economic affairs. Mr. Froman started the
infrastructure fund, and its two co-heads -- one of whom recently left --
reported to him before Mr. Froman left. Mr. Froman's departure generated a
high-level internal debate over how his stake in the infrastructure fund should
be valued.
*****
We hope AIG isn’t taking the opposite side of Credit Default Swaps of
Chinese banks. They wouldn’t would they?
WP: China’s top banking regulator on Sunday warned of the risks from
surging bank lending, singling out the dangers of unhealthy growth in the
property market.
“(We) must control the risk of real estate loans,” said Liu Mingkang,
the head of the China Banking Regulatory Commission, adding that measures must
be taken to better evaluate the creditworthiness of borrowers.
Liu said bank lending had helped stabilize the economy so far but made
one of his strongest calls yet to banks to guard against taking excessive
risks.
*****
Short squeezes on earnings
reports are pushing stocks higher as the bulls exact their revenge on the short
side of the street in small payback
for last fall’s carnage.
*****
Bloomberg: The index of U.S.
leading indicators rose in June for a third consecutive month, reinforcing
signs the economy may be emerging from the worst recession in five decades.
The Conference Board’s gauge of the economic outlook for the next three
to six months increased 0.7 percent, more than forecast, after a revised 1.3
percent gain in May, the New York- based research group said today. It is the
first time the index has climbed for three months in a row since 2004.
Smaller job losses, rising stock prices and stabilization in
homebuilding and manufacturing are evidence that government efforts to stem the
financial crisis and lower borrowing costs may pay off. A jobless rate that is
forecast to reach 10 percent and falling home values are a reminder that any expansion
will be muted as consumers rein in spending and boost savings.
*****
These are the morning comments of
Jim Cramer who is one of the biggest bulls on the Street:
I don't know about you, but I get nervous when I see all of these
upgrades and early-morning buying after the Nasdaq has been up for eight straight days and we had a monster
short-covering rally last week. I understand Goldman's desire to put a big
number on the S&P 500 for the end of the year because many companies
have boosted the bottom line by firing people. But the best comments I have
seen so far this quarter come from companies like PPG Industries, which
said that things are mildly better. Maybe Bank of America sees the same thing
happening for Caterpillar tomorrow, so it is worth upgrading? I guess. I know that Eaton is
perceived as beating earnings and that the dividend is safe, and Johnson
Controls, another morning reporter, took share and did well by dominating
the interior share of the auto build. I don't know if Caterpillar has that kind
of momentum, and I don't know how safe the dividend is. Second-half strength?
Given what I keep reading about ahead with commercial and residential
construction, I don't know how you get to stronger numbers. Cisco? I
have been betting that John Chambers puts on a better spin than he has, so I
get that upgrade, particularly because of the big orders coming from Asia. The
media stories out of Morgan Stanley? Sure, the business is cyclical, but if we
are going to see improvement in Disney and CBS I would rather buy Google, which will
take more than its fair share and reported a quarter that simply wasn't as bad
as the market took it.
I come back with all of these
and say, wait a second. We just rallied 700 Dow points? Wasn't the time
to be bullish then, when there were far fewer bulls and rates were lower?
Something leaves me cold on all of these upgrades. I am not a seller, but I am
sure not a buyer on any of these moves.
*****
Eaton, the car equipment supplier, is up $4 today on short covering
after better than earnings. Cramer
refers to it in the comments we printed above and Time Melvin comments more
extensively on realmoney.com on its latest report and the implications:
The real story in Eaton (ETN) is how bad the report really is if
you read the whole thing. Profits fell 92% year over year, and revenue was down
32%. The company lowered annual guidance for the third time this year. The CEO
commented that the outlook for the year was far weaker than anticipated, saying
that end-markets would decrease by 26%. The story, as with so many other
companies, was cost-cutting. This is like bleeding the patient and shaving off
a limb or two to restore health.
The stock is trading at 25 times the high end of the new forecast.
Would you pay that multiple to buy into this business? I would not, and neither
would any rational businessman I have ever known. This "less bad is
good" is starting to remind me of the Internet bubble pricing.
*****
From theleftcoaster.com:
Obama and the Economic Critics on the Left
by Mary
Newsweek has a piece about Joseph Stiglitz, one of the world's preeminent Nobel Prize
economists who doesn't believe Obama has done enough. Stiglitz was
one of the early critics that the size of the economic stimulus package was too
small and now days it is apparent that he and Krugman were more than right.
Another major criticism is that the Obama has not sufficiently restrained the
too-big-to-fail financial institutions which most leftward leaning economists
believe as well.
A senior White House official,
responding to this critique, says that the Obama administration is most often
criticized these days for intervening too much in the economy, not too little.
So, the administration is still
using the "both sides are complaining" excuse which is completely
brain-dead when all the evidence shows one side was right and the other wrong.
After all, the stimulus package was way too small to fill the hole in which the
economy has fallen and Stiglitz was right about this. And those critics that
complain the administration is interfering too much? They are the same ones
that helped create the financial debacle by deregulating everything in sight.
They are the people who think it's okay to let Goldman Sachs suck up all the
world's wealth because that's how they gain status and make their bucks off the
ill-begotten gains of the ultra wealthy.
So who has more credibility?
The guys who wrecked the economy or the guys who warned about the excesses? Why
does the administration play this game?
*****
Today is hay day (the day to get the hay in for the horses
for winter) at the farm and so we are ending early with the major measures
almost 1% higher in light trading. Tomorrow is turnaround Tuesday and so
however the markets end today - which we think will be up - we would expect the
opposite tommorrow.
*****
17 July 2009
Thoughts
June building permits were up
8.7% over May. The markets like this news but we wonder why any but a few need
to build a house when there are so many cheap ones for sale.
Asian markets were higher
overnight with India up 3% and European bourses are mostly higher at midday.
Gold and Oil are unchanged as Triple Witching Friday trading begins.
*****
Nouriel Roubini and Meredith
Whitney, both of whom forecast the financial collapse, are the most closely
watched of the current bears. One reason given for yesterday’s rally was that
Roubini had turned neutral to positive and that, coupled with Whitney’s Monday
pronouncement of a buy on Goldman Sachs (after it had tripled from its low),
suggested that the worst was over.
Roubini issued an e-mail in the
late afternoon: http://mindovermarket.blogspot.com
*****
We initiated trading positions on
Monday because of Whitney’s change of heart and took our measured profits in
Wednesday morning’s rally. Near yesterday’s close we initiated small short in
the S&P 500 in a few of our larger trading accounts. With the rally
expanding to five trading days and now above 930 on the S&P 500 we think a
pullback is in the cards as the S&P approaches the top end of its 875 to
950 trading range.
*****
it is
unconscionable that the Treasury is allowing Goldman Sachs to pay the bonuses
it plans and we are also dismayed by the power over daily trading that GS through the use of program trades. This
summer program trading ahs comprised almost half of daily trading. That means
that half the volume on the NYSE has nothing to do with investing. And that is
why we are maintaining our cash position. We are leery of the control the major
players have over daily action and we are content to try and scrounge a few
crumbs of profit from trading the range.
The artificially low interest
rates that the Fed is maintaining are a major reason Goldman and JP Morgan and
BankAmerica are profiting at the expense of individual savers who used to depend
on CD income for living. The low interest rates are forcing folks to take on
more risky long term bond funds for income. When interest rates rise, which
they will whine the economy eventually recovers, the savers who move funds to
bond funds will suffer again.
Paul Krugman on Goldman Sachs http://www.nytimes.com
And http://www.dailykos.com
has a discussion of Goldman’s program trading:
*****
The percentage of stocks above
their ten day moving averages has moved from 10% on July 9 to 97 % on July 16.
*****
From http://dealbreaker.com
Lloyd Blankfein (CEO Goldman Sachs) and Jamie Dimon (CEO JP Morgan) save
CIT over a Lovely Dinner
The duo dined together last night
at Barbone, presumably
choosing the East Village location to avoid attention and/or because of its
proximity to Superdive, which Big D had been dying to check out (keg service?
Yes please). Goldman Sachs declined to comment. Supposedly the meal was one of
pleasure and not business. No word on who paid, or if anyone got lucky, though
we do know that a couple of bottles of wine were consumed, upping the odds of something
happening. At the very least we're guessing a copping of feel in the cab.
Update: CIT is
the one that got lucky? What we'd thought was an intimate dinner for two sans
shop talk seems like it was apparently an emergency Save CIT meal, based on the
fact that Reuters is now reporting that JPM and
GS are in talks for financing of $2-3 billion, and that Richard
Cashin, JPM executive committee member and managing partner at One
Equity Partners LLC, which "manages multi-billion dollar investments and
commitments in direct private equity transactions for JP Morgan," was
there as well.
*****
Goldman and JPMorgan -- The Two Winners When The Rest of America is
Losing
Robert Reich | Jul 17, 2009
Besides Goldman Sachs, the
Street's other surviving behemoth is JPMorgan. Today it posted second-quarter
earnings up a stunning 36 percent from the first quarter, to $2.7 billion.
The resurgence of JPMorgan and
Goldman Sachs gives both banks more financial clout than any other players on
the Street -- allowing both firms to lure talent from everywhere else on the
Street with multi-million pay packages, giving both firms enough economic power
to charge clients whopping fees, and bestowing on both firms even more
political heft in Washington.
Where are the antitrusters when
we need them? Alternatively, why isn't the government charging Goldman and
JPMorgan a large insurance fee for classifying both firms as "too big to
fail" and therefore automatically bailed out if the risks they take turn
sour? Instead, we've ended up with two giants that now have most of the casino
to themselves, are playing with poker chips backed by taxpayers, and have a big
say in what the rules of the game are to be.
When JP Morgan repaid its federal
bailout of $25 billion last month it was, like Goldman, freed from stricter
government oversight. The freedom has also allowed JP, like Goldman, to take
tougher and more vocal stands in Washington against proposed financial
regulations they dislike.
JP is mounting a furious lobbying
campaign against regulations that would funnel derivatives trading through
exchanges where regulators can monitor them, and thereby crimp JP's profits.
Now the Street's biggest derivatives player, JP has generated billions helping
clients navigate these contracts and assuming counter-party risk in such
transactions. Its derivatives contracts were valued at roughly $81 trillion
at the end of the first quarter, representing 40 percent of the derivatives
held by all banks, according to the Office of the Comptroller of the Currency.
JP has played down its potential risk exposure from these derivatives
contracts, of course, but anyone who's been paying attention over the last ten
months knows that unregulated derivatives have been at the center of the storm.
The tumult on the Street has also
given both firms extraordinary market power. That's where much of the current
profits are coming from. JP used the crisis to snap up Bear Stearns in March
and Washington Mutual last fall, with the amiable assistance of the Treasury.
The deals have boosted JP's dominance in retail banking and prime brokerage, enabling
it to charge its corporate clients heftier fees for lending and other financial
services, and to corner more of the market in fixed-income and equities. JP
also bolstered its earnings by helping other financial companies raise capital
following the stress test results in May.
Antitrust law was designed to
prevent just this sort of market power and political heft. The Justice
Department or the Federal Trade Commission should investigate the new-found
dominance of Goldman and JP -- and, if warranted, break them up. Alternatively,
Congress
should impose a surtax on the newly-exclusive group of Wall Street firms, most
notably Goldman and JPMorgan, which are now backed by implicit government
bailout insurance guaranteeing that, should they get into trouble, taxpayers
will keep them afloat. The surtax would approximate the economic
benefit to these firms of such government largesse, which I'd estimate to be at
least 50 percent of their profits from here on.
*****
Gold ended flat at $925 and Oil
was $63.31 up $1.40. European bourse closed higher on the day.
*****
The major market measures meandered most of the day.
At the bell the DJIA was up 32 at 8745. The S&P 500
dropped to 939 and the NAZZ gained 1 to 1885.
Breadth was flat with most financials lower and volume was
summer light.
The bulls won by not losing.
*****
16 July 2009
Thoughts
JP Morgan beat estimates by a wide margin but markets are mixed in
pre-opening trading since CIT is on the ropes and may have to declare
bankruptcy. The Treasury isn’t going to rescue them and so the fate of the many
businesses CIT finances is in limbo. Again markets were mixed overnight and
European bourses are mixed at midday. Gold is a bit lower and Oil is flat with
a $61 handle as the trading day begins.
*****
The question for traders today is
whether the positive news from JP Morgan outweighs the uncertainty of CIT.
*****
Jobless claims were down 47,000
to 522,000.
*****
European shares rose, with gains for pharmaceuticals and banks
offsetting losses in the technology sector as investors eyed a slew of earnings
results.
*****
Meredith Whitney converted from bear to neutral/positive on Monday and
now Roubini has converted from bear today. Well maybe he has depending on how
one interprets the following comments.
From Bloomberg: U.S. stocks rose for a fourth day as
economist Nouriel Roubini said the worst of the financial crisis is over and the recession will
end this year, while takeover speculation lifted commodity shares.
From Reuters: The United States may need a second fiscal
stimulus worth $200-250 billion around the end of the year, but the worst of
the economic and the financial crisis is already behind us, leading economist
Nouriel Roubini of RGE Global Monitor said on Thursday.
Roubini, one of the few economists who foretold much of the current
financial turmoil, said a second stimulus would be necessary to boost a
deteriorating labor market. The stimulus "can not be too small, but it can
not be too large," Roubini said, or financial markets will become too
worried about the sustainability of the U.S. debt.
From WSJ: In afternoon remarks, New York University professor Nouriel Roubini,
who has been credited with predicting parts of the financial crisis, said the
economy would emerge from the recession toward the end of 2009. In the wake of
Roubini's comments, industrial and materials stocks rallied broadly. Roubini,
who is known as Dr. Doom for predicting the 2006 global economic crisis,
earlier this year said recovery would have to wait until 2010.
*****
On that news in a few trading accounts we took a 5% short
position in the S&P 500 by buying
the one times short S&P 500 ETF (SH). The S&P 500 is within 1% of
its high for the year.
*****
Oil ended a $62.02 up 52 pennies.
Gold lost $2 to 937.
*****
The DJIA gained 95 to 8711. The S&P 50 rose 8 to 940
and the NAZZ jumped 22 to 1885.
Breadth was 2/1 to the good and volume was light.
The bulls remain in control.
*****
15 July 2009
Thoughts
Intel beat last night and forecast higher margins and revenues and
the share price jumped 10% in overnight trading. That news has added a positive
tone to pre-opening trading. Asian markets were higher overnight as are
European bourses at midday. Oil has a $60 handle and Gold is better.
*****
Stocks are higher out of the gate and we are closing out
our holdings in our large accounts for a trading profit. We will keep Hain because it is too thin to sell
easily. We were in for a trade and all the closed positions are profits except Dell which is a scratch loss for some.
We noticed that our midsized accounts didn’t gain as much and that is the
result of the not having the Intel and CSX.
*****
Investors Intelligence reported a drop in bulls to 35% last week
from 40% the prior week. Bears gained to 35% from 30%. Those numbers suggest
the rally of the last three days.
*****
Jon Stewart is definitely not a
member of the Jim Cramer fan club:
http://www.huffingtonpost.com
*****
La Crosse man cited for killing rabbit with blowgun
By Tribune staff
A La Crosse man was cited
Saturday for using a blowgun to kill a rabbit with a dart. Homeowners on the
400 block of North Ninth Street reported seeing Bryant Joy kill the rabbit, La
Crosse police said. Police found a dead
rabbit in a driveway, with a dart still attached, reports stated.
Joy, 19, of 908 Badger St.,
admitted shooting the rabbit but said “he did not know why he did it,”
according to reports.
He is due in La Crosse Municipal
Court on Aug. 12 for his $164 citation. Joy was cited under a municipal
ordinance that bans city residents from discharging an air, spring or gas
cartridge gun of any description without having written permission from the police
chief. Municipal Prosecutor Peter Kisken declined to comment on the case until
he sees the report.
*****
The FED sees the recession ending
and sees growth in the economy next year while unemployment continues to grow
according to minutes of the June meeting released today.
*****
European shares staged a broad-based rally, with technology stocks
driving the gains as investors welcomed Intel's upbeat outlook. Oil gained to
$61.52 up $2 and Gold rose $16 to $939.
*****
The DJIA closed on its high and we left some money on the
table but that’s trading and.... we made a profit on the trades.
At the bell the DJIA was up 270 at 8625. The S&P 500
gained 28 to 933 and the NAZZ jumped 60 to 1860.
Breadth was 6/1 positive and volume was light.
Advancing volume was 20/1 declining volume on the NYSE
and 10/1 on the NAZZ
The bulls were on a rampage today but Intel closed at the
same price it was trading pre-opening.
*****
From dailykos.com:
Senate saves world from Manimals
By
DarkSyde
Wed Jul 15, 2009 at 07:02:03 AM PDT
Via Keith
Olbermann we're alerted that
a number of Senators are boldly saving the nation from Dr. Moreau's infamous
island of manimals and rogue
mermaids the world over with the Brownback-Landrieu
hybrid cloning ban. Proud sponsors and cosigners include
Senators Jim Bunning (R-KY), Tom Coburn (R-OK), John Cornyn (R-TX), John Ensign
(R-NV), Lindsey Graham (R-SC), James Inhofe (R-OK), John McCain (R-AZ), and
David Vitter (R-LA) among others. What do you suppose the odds are one of those
politicians happens to be diabetic?
In 1978, scientists at the Biotechnology Company Genentech cloned the
gene for Human Insulin ... After the human insulin gene was isolated from
human tissue, it was chemically joined or 'spliced' to into a small bacterial
chromosome called a plasmid. Once joined to this plasmid DNA, it essentially
became just another piece of DNA in the bacterial chromosome. Every time the
bacterial cell divides, it replicates its DNA, including replicating the human
insulin gene ... The result: tons of bacteria making tons of human insulin!
Have any of these clowns ever even owned a science book? Geez,
Coburn's an obstetrician, you'd think he'd have had to at least crack open and
leaf through an anatomy and physiology text at some point. I guess technically E.
coli is a bacterium, not an animal, and that would give the millions of
diabetic constituents some leeway between using the unholy Humulin® union everyday to stay alive and becoming
serial felons, but humanized insulin is just one notable example in a growing
list of bioengineered drugs. And something tells me that Linnaean taxonomy or
phylogeny weren't exactly determining factors for this histrionic crew.
*****
Bastille Day 2009
Thoughts
http://www.youtube.com
Goldman Sachs beat estimates and earned over $3 billion in the
quarter. Actually they just continued converting the $13 billion we taxpayers
gave them to so called profit. With $3 billion this quarter and $2 billion last
quarter in reported profits they still have $9 billion of SIG money to use as
profits. In reality they should have reported a $15 billion loss in the first
quarter.
Johnson & Johnson reported slightly lower profits for the
quarter and Dell warned that profit
margins have narrowed but thinks the bottom in computer sales has been reached.
*****
Our buy actions yesterday were
the result of Meredith Whitney turning neutral on many financials and actually
recommending Goldman Sachs. Since
she had been the loudest bear on the financials for the past year we decided to
trade the capitulation. The central word is trade.
*****
CSX earnings were lower but better
than.
*****
From WSJ: Retail sales increased
0.6% in June, the second consecutive monthly gain, mostly on purchases of
gasoline and automobiles. Excluding autos and gas, all other retail sales fell
for a fourth straight month, according to a Commerce Department report.
A separate release from the Labor
Department showed U.S. wholesale prices jumped 1.8% last month compared with
May on broad-based gains in everything from gas to vegetables. Still the data
don't necessarily presage a rise in consumer inflation, given the difficulty
businesses might have in passing higher costs along to consumers.
*****
Dell said Tuesday that weak
demand from large enterprises and small-and-medium businesses is among the
reasons why the computer giant expects to report a decline in its
second-quarter gross margins. Speaking at Dell's analyst meeting, Chief
Financial Officer Brian Gladden said that such segments of Dell's business,
"are not deteriorating, but not getting much better." On Monday, Dell
warned that its second-quarter gross margins would decline, while its sales
should increase slightly over its first-quarter results.
*****
Our tech guru who is a numbers
freak, naturally, points out that S&P 910 is the equal to the two year
S&P range between the high of 1576 and low of 666.
*****
We sold CSX for
$1.80 one day profit and bought equal Dell
and BankAmerica. We added AT&T to more accounts.
*****
Dell is down $1 and we added to more
accounts. Entering the contra hour (the hour of trading before the final hour)
the major measures continue to meander. We think the meandering is positive for
bullish trading after the large up move yesterday and are content to give our
trades room to work.
*****
Playing both sides and collecting a fee: from WSJ
Fortress Investment Group LLC is deep in discussions with lenders
to refinance a critical $1.6 billion loan on real-estate and railroads company Florida East Coast Industries,
according to people familiar with the talks. There is only one wrinkle: One of
those lenders happens to be Fortress Investment Group. New York-based Fortress,
a private-equity and hedge-fund firm with $26.5 billion in assets under
management, has until July 27 to work out a plan, when the loan matures and
Florida East Coast must pay back the amount. People involved in the
negotiations say that the company wants to extend the loan, and that it is
expected to reach an accord that will delay the maturity and increase its
interest rate.
But the people involved in the
discussions say the talks have been complicated because Fortress sits on both
sides of the negotiating table: The company already
has a $2 billion equity investment, made when it spent $3.6 billion to purchase
Florida East Coast at the height of the credit bubble in 2007. But since then,
separate investment funds managed by Fortress have been buying up large chunks
of the company's debt. They are now the company's largest lender, holding a
$600 million position.
Fortress's situation shows some
of the risks for private-equity firms that are keen to move into the world of
distressed-debt investing. With little money available to borrow and make
equity investments, these firms are instead buying up corporate debt, often
attracted to companies in which they already have significant ownership stakes.
Buyout firms Apollo Management and TPG own debt in Harrah's Entertainment Inc., the
casino operator it acquired last year. At
KKR Financial Holdings LLC, the debt-investing arm of
Kohlberg Kravis Roberts & Co., six of its seven largest corporate-debt
holdings are KKR companies, including hospital chain HCA Inc. and First Data Corp.
Private-equity firms say that
they manage these conflicts by, in some cases, recusing themselves from one
side of the negotiating table. That was the case in Masonite, the KKR-owned door maker that filed for bankruptcy
earlier this year. KKR owned a portion of the debt, but removed itself from
restructuring talks.
*****
European markets ended higher, with bank shares leading the gains after
better-than-expected earnings from Goldman Sachs. Gold gained $1 to $924 and
Oil was unchanged at $59.50.
*****
The DJIA gained 30 to 8360. The
S&P 500 rose 5 to 906 and the NAZZ was up 6 to 1800.
Breadth was 2/1 to the good and
volume was light.
Intel announces after the close
and will set the tone for tomorrow’s trading.
The bulls held serve.
*****
13 July 2009
Thoughts
We accidentally deleted our words of wisdom today and don’t know how to find the backup if there is one.
We need to leave early and so we will just say that we bought AT&T, Intel, Verizon, CSX, BankAmerica
in our large trading accounts and KBE and Chico’s in accounts in which we have been trading those issues. More tomorrow.
*****
10 July 2009
Model Portfolio Update
9 July 2009
Model Portfolio Update
8 July 2009
Thoughts
Tomorrow is our 43rd Wedding
Anniversary and so we are taking Thursday and Friday off to celebrate. Our next
post will be Monday July 13.
*****
Asian markets were lower
overnight and European bourses are lower at midday. Oil has a $61 handle and
Gold is under $920. U.S. stocks opened higher but are having second thoughts
after an hour of trading although the major measures are still positive.
*****
Google is going to offer an
operating system in late 2010 or later to challenge Microsoft on low end
computers.
*****
At 12:34pm and 56 seconds today
it was 123456789.
*****
It’s good to know some lawyers
and accountants will be able to continue to afford homes in the Hamptons:
From Bloomberg: Lehman
Brothers Holdings Inc., the investment bank liquidating in
bankruptcy, paid its advisers $262.6 million for nine months of work, according
to a filing with the U.S. Securities and Exchange Commission.
The best-paid firm through
June was New York-based restructuring adviser Alvarez & Marsal LLC, which
has taken $115 million in fees since Lehman declared bankruptcy in September,
according to papers filed today. Lehman’s primary law firm, Weil Gotshal
& Manges LLP of New York, received $63.7 million through June
for a team headed by partner Harvey Miller.
A&M’s Bryan Marsal,
who is Lehman’s chief executive officer, and Miller didn’t immediately
respond to e-mails seeking comment.
Milbank Tweed
Hadley & McCloy LLP, which advises Lehman’s creditors, has
received $17.2 million from the investment bank.
Lynn LoPucki,
who teaches bankruptcy law at the University of California, Los Angeles, and
maintains a database to calculate fees, has estimated that Weil Gotshal could
see as much as $209 million in fees from the Lehman case. Overall, the bankers,
accountants and lawyers in the case may reap record judge-approved charges of
$906 million, LoPucki has said.
*****
John Meriwether the fellow whose
highly leveraged hedge fund was the precipitator of the Long Term Capital
Crisis in 1998 has closed a hedge fund he started a year after that disaster.
Tim Melvin at realmoney.com
writes:
Meriwether Fund Closing
7/8/2009 3:25 PM EDT
I see with some amusement that
John Meriwether is closing down yet another hedge fund. It has been about a
decade since he and his Noble Prize winning economists almost wrecked the
global financial system and it seem this melt down has been no kinder. The fund
has dropped from a peak of $2.7 billion under management to just $481 million.
I am told the fund was down more than 40% last year and was near breakeven so
far in 2009. He had been trying to convince investors to stay with the Relative
Opportunity Value II fund but too many investors just wanted their cash back.
When funds lose that much money
it is more profitable for the fund manager - but not the limited partners who
lost- for the general partner to close the fund and start a new fund so that
the general partner (fund manager) can begin collecting the 2% plus 20% share
of the profits that would have to be foregone in the closed fund until it had
earned back the 44% loss.
Maybe the third time will be the
charm.
*****
CNBC is interviewing American
Express CEO Chennault who earned the sum of $30 million last year while his
company lost billions and half its market value. The interview is taking place
at Sun Valley Idaho where there is an investment conference that of course
American Express shareholders are paying for. And American taxpayers loaned
American Express money from the TARP program. Nothing has changed.
*****
Oil closed at $60.14 down $2.79.
Gold lost $10 to $918. Europeans indexes closed lower on the day.
*****
We
bought our Monopoly railroad trade in our larger accounts where we have been
trading small amounts. There are four main railroads left in the U.S. They are Burlington
Northern, Union Pacific, Norfolk Southern (Pennsylvania RR), and Chessie
System (B&O). With the price of oil dropping and the markets down 5% in
the last three trading days we think there is going to be a rally. These stocks
are volatile and thin on the upside and downside and all are down substantially
from their highs. We have been trading them at higher prices for a few accounts
over the last month with some luck. We also bought a relatively small amount of
the large bank ETF (KBE) for these same accounts.
We
do think the markets are going lower, but not in a straight line.
*****
The DJIA gained 16 to end at
8180. He S&P 500 treaded under 875 but managed to close at 879 down 2. The
NAZZ gained 1 to 1747.
Breadth was 3/1 negative and
volume light.
The bears held serve.
*****
7 July 2009
Thoughts
Asia closed mildly lower
overnight and Europe is higher at midday. Oil ahs a $64 handle and Gold is $925
as the trading day begins.
*****
After we left yesterday the
S&P 500 held above the 875 level to close up 2 on the day. And so nothing
has been settled. DJIA earnings begin tomorrow with Alcoa the leadoff.
*****
What goes around.... the Justice
Department broke AT&T into 7 different parts in 1983 because the old
AT&T was restraining competition. And then over last 15 years the Justice
Department let the Baby Bells recombine. Moreover the Baby Bells absorbed most
of the large independent telephone companies that had been competition such as
the remains of MCI and also General Telephone. According to the Wall Street Journal, "The Department of Justice
has begun an initial review to determine whether large U.S. telecom companies
such as AT&T Inc. and Verizon Communications Inc. have abused the market
power they've amassed in recent years." The investigation is in its early
stages and isn’t targeting any specific company yes. One potential benefit of
the investigation? It could free the iPhone from AT&T: "Among the
areas the Justice Department could explore is whether wireless carriers are
hurting smaller competitors by locking up popular phones through exclusive
agreements with handset makers, according to the people."
The lawyers are happy though.
*****
This won’t brighten your day but:
Dr. David Bronner, CEO of the
Alabama Retirement Systems, the 43rd largest investment fund in America:
1)
Next month (July) California hits the wall financially,
that will send a ripple effect across the US economy, AND over the next two
years one state after the other will fall to it's knees financially as the
federal government stimulus package ends by 2011. It has helped various states
at different levels comparative to their economic condition. He says the stimulus
package is what's been keeping the states alive for now...except for California
which was in such terrible shape the stimulus package wasn't enough to really
help them. "They go first" he said. Alabama would hit the wall in
February of 2011, late in the game as Alabama is in better shape than other
states. Bronner says Alabama might dodge the bullet if the economy revives
enough by then. But, he doesn't really think things will improve enough by then
to avoid a crisis. "It will be the largest economic crisis in the history
of the State of Alabama." Bronner says Alabama will experience such
significant shortfalls by 2011 that taxes will have to be raised substantially
to avoid collapse...probably on property. And that practically all states will
face a similar fate.
2)
Within 120 to 150 days from now the commercial real
estate market nationally begins to collapse as stores, malls, and shopping strips, and industrial plant have enough closures (store and
plant) and loss of rental revenue to make them unable to pay their mortgages.
They will start going into foreclosure unable to pay their mortgages in a
significant way at that time creating a second wave of economic disaster
starting three to four months from now.
3)
Unless oil stays above $70 a barrel Russian and Mexican
economics will begin to unravel as countries ("socio-economic collapse)
economies require that much from oil to have an adequate revenue stream to feed
their people and economies. AND, the only other big revenue stream for Mexico is
illegal drugs sold in the US...so their economy will intensify their focus on
selling drugs in America as a result in order to survive if oil doesn't stay
above $70...he said $90 would be better for them.
4)
The US economy (according to Bronner) is today like a
patient in the emergency room in the process of having a heart attack. He said
people tend to think of it as being in the hospital for cancer or chronic
disease. Without the huge Bush stimulus, and then the huge Obama stimulus, the
economy would have already flat lined...(i.e. we'd be experiencing a Great
Depression style economic collapse heading toward 25% unemployment or so as the
tumble would have continued and intensified at an increasing rate, with the
stock market hitting around 2,000) Bronner said the depth of the crisis was
greater than ANYONE realized and agrees today, after learning the extent of the
crisis, that the federal government simply had to start "shoveling"
money at it to prevent a true and complete collapse of our economy. He said he,
at first, was mad at this shoveling of money until he learned the truth about
the amount of money necessary to prevent a total collapse which he believes
would have happened.
5)
Inflation will not arrive for 3 to 5 years as the
economy is in a deflationary stage due to the economic plummet...and will not
experience inflation until people start "buying things" again, and
that's going to take while! He also believes 3 to 5 years is probably the term
until true economic recovery establishes in the US and world economy.
6)
China must start selling their products to people in
their own country and paying their workers enough to buy them. This would
increase their products prices, reducing their exports (and "besides they
will lose interest in having more US dollars anyway") and enabling other
countries (US) to compete with them.)
7)
The greatest threat to the US economy is one of around
9 world events that could heap misery on top of misfortune at exactly the wrong
time. A nuclear incident with N Korea, a plague, Israel attacking Iran (oil
shock), or such could still throw the US economy into a Great Depression style
situation. He said the greatest risk of this is anytime from now until the
world economy gets somewhat back on it's feet...in 3 to 5 years.
*****
From http://www.dailykos.com/
Advocacy Groups? Shut Up.
Lobbyists? Have A Seat.
by BarbinMD
Mon Jul 06, 2009 at 01:18:04 PM PDT
So, do you want to get involved in politics and help advance meaningful
health care legislation? Maybe raise a little money to run ads that target
specific lawmakers, organize petitions, or send out emails to like-minded
people, urging them to contact their representative? Well, sit down and shut up:
President Obama, strategizing yesterday with congressional leaders
about health-care reform, complained that liberal advocacy groups ought to drop
their attacks on Democratic lawmakers and devote their energy to promoting
passage of comprehensive legislation.
But if you have more than a million dollars a day to spend, have a
vested interest in stopping real health care reform, and better yet, if you
have a past, personal relationship with key lawmakers, pull up a chair:
The nation's largest insurers, hospitals and medical groups have hired
more than 350 former government staff members and retired members of Congress
in hopes of influencing their old bosses and colleagues, according to an
analysis of lobbying disclosures and other records.
Nearly half of the insiders previously worked for the key committees
and lawmakers, including Sens. Max Baucus (D-Mont.) and Charles E.
Grassley (R-Iowa), debating whether to adopt a public insurance option opposed
by major industry groups ...
A June 10 meeting between aides
to Baucus, chairman of the Senate Finance Committee, and health-care lobbyists included two former Baucus chiefs of staff: David Castagnetti, whose clients include
PhRMA and America's Health Insurance Plans, and Jeffrey A. Forbes, who
represents PhRMA, Amgen, Genentech, Merck and others. Castagnetti did not
return a telephone call; Forbes declined to comment.
That goes a long way in explaining why Baucus, one of 60 Democratic
Senators, has been fighting so hard against a public option. You know, the
one that more than 70% of all Americans support. But Baucus aides
"bristle" at the idea that lobbyists are getting any special access
or treatment:
The senator and his staff meet daily with individuals, nonprofits and
interests from across the health-care spectrum, and are proud that all
interests are treated equally and that no one receives special treatment of any
kind.
And I'm sure that Baucus would say the same thing if you show up in
Washington for a little one-on-one time - of course that's assuming you have
his personal phone number.
*****
Commodities regulators are
going to reregulate. But not too much:
U.S. commodities regulators, in an effort to crack down on excessive
speculation, plan to propose sweeping trading limits on oil, natural gas and
possibly other commodities.
U.S. Commodity Futures Trading Commission Chairman Gary Gensler said
Tuesday the agency will hold hearings this summer to consider imposing position
limits for "all commodities of finite supply." The agency will also
review whether swap dealers, index traders and exchange-traded fund managers
should be allowed to get around those limits through special hedge exemptions.
*****
Comment by Howard Simon at
realmoney.com on the position limit news:
Let me say it one more time: Commodity futures-based ETFs are an
irretrievably bad idea. I hesitate to quote General Sherman, as I was taken to
task once by someone who wondered why I was "honoring a war
criminal," but as he said, "War is cruelty, and you cannot refine
it..."
Commodity futures exist for the purposes of price discovery, risk
transfer and commerce facilitation. They do not exist to be bought, held and
rolled en masse. Keep using the donkey-end of a screwdriver as a hammer and
you'll get the results you deserve. All these ETFs do is lead to massive
distortion both in the price and in the forward curve of the futures. They
render the futures useless for the purposes for which they were designed.
Worse, they make me mad.
The commercial position limit exemption was designed with bona fide
makers and takers of delivery in mind. As these index funds and ETFs never intend
to make or take delivery, they should not receive the position limit exemption.
End of story. That would solve the problem in a heartbeat.
*****
At 11:15am the S&P 500 is
back at the magic 888 number.
*****
A fellow form Goldman Sachs stole
part of their computer trading program and has been arrested. In the story
about the arrest was this:
About 28 percent of the shares traded in the U.S. during the fourth
quarter were handled by automated brokerages using algorithms to generate
rapid-fire trading strategies, according to estimates from NYSE Euronext, the
world’s largest operator of stock exchanges. That’s up from 17 percent a year
earlier, and almost three times larger than the portion of volume generated by
individual investors, according to NYSE Euronext.
We think that currently program
trading comprises an even larger percent. These programs game the markets and
have nothing to do with investing.
*****
European markets ended lower, as losses for utility firms offset gains
for metal firms and banks.
*****
Here is long but very interesting
article on the implosion at AIG:
http://www.vanityfair.com/
*****
At five minutes and six seconds past 4am on July eighth
the time and date will be 04:05:06 07/08/09. That won’t occur again until the
year 3009, if there is a year 3009. Thanks to minyanville.com for that info.
*****
The markets have been lower all
day but the banks have been higher. That anomaly will determine the action in
the final hour of trading. Will the banks lead a rebound or will the banks give
in to the pervasive gloom. The glass has gone from being half full in May to
being half empty in early July.
*****
Gold gained $5 to 930 and Oil
lost $114 to $62.25 in Tuesday’s NYC trading.
*****
Stocks closed on their lows with
the DJIA down 165 to 8100. The S&P 500 closed at 880 down 18 and the NAZZ
dropped 42 to 1745.
Breadth was 4/1 negative and
volume was summer light.
The bears were in control today.
*****
With the election protests in Iran last week and the traffic
death of woman demonstrator Neda and the subsequent idealistic stories in the
world press about her death (http://www.nydailynews.com
) we reprint again a poem
we read many years ago:
Tumulus,
a poem by Adam Hanft
It is always the same way,
that after the armies have
settled into their homes and
the borders are shifted their
one lame mile
that talking rises that they
have found the little girl.
It is so, they have found her in a
tongue-tied corner of the woods,
and they have learned from
the palsied woman who lives with
her son by the bridge how in a
tantrum of strength she rose
to the window and saw
when the soldiers came they
killed the Mayor's little girl.
And so it starts, how the child
was gathering sunshine in her
rainbow creased dress when she
vanished,
or how,
in another town, by another bridge
the girl was sleeping in the grass
when they came and that her
smile stuck to her lips while the sky
clanged and beat around her.
And now all the schoolchildren, so
scrubbed and solemn in rows are
standing as the Mayor, with
his one good arm,
drapes a few flowers on the brick and
wooded monument that stands next to
the bridge and a
Hundred years from the window of the
old woman who first saw the
glinting helmets and heard the
halfhearted scream roll
into the grass.
*****
NYT July 7, 2009
Op-Ed Columnist
After
the War Was Over
By BOB HERBERT
Robert McNamara, Lyndon Johnson’s icy-veined,
cold-visaged and rigidly intellectual point man for a war that sent thousands
upon thousands of people (most of them young) to their utterly pointless
deaths, has died at the ripe old age of 93.
Long after the horror of Vietnam was over,
McNamara would concede, in remarks that were like salt in the still festering
wounds of the loved ones of those who had died, that he had been “wrong,
terribly wrong” about the war. I felt nothing but utter contempt for his
concession.
I remember getting my draft notice in the
mid-1960s as Johnson’s military buildup for the war was in full swing. I’m not
sure what I expected. Probably that the other recruits would be a tough bunch,
that they would all look like John Wayne. I was staggered on the first day of
basic training at Fort Dix, N.J., to be part of a motley gathering of mostly
scared and skinny kids who looked like the guys I’d gone to high school with.
Who looked, basically, pun intended, like me.
That’s who was shipped off to Vietnam in droves —
youngsters 18, 19, 20 and 21. Many, of course, would die there, and many others
would come back forever scarred.
Johnson and McNamara should have been looking out
for those kids, who knew nothing about geopolitics, or why they were being
turned into trained killers who, we were told, could cold-bloodedly smoke the
enemy — “Good shot!” — and then kick back and smoke a Marlboro. Many would end
up weeping on the battlefield, crying for their moms with their dying breaths.
Or trembling uncontrollably as they watched buddies, covered in filth, bleed to
death before their eyes — sometimes in their arms.
I was lucky. The Army sent me to Korea, which was
no walk in the park, but it wasn’t Vietnam. I served in the intelligence office
of an engineer battalion. But no one could truly escape the war. I would get
letters from home that would make my heart sink, letters telling me that this
buddy had been killed, that that buddy had been killed, that a kid that I had
played football or softball with — or had gone to the rifle range with — had
been killed.
For what?
McNamara didn’t know. My sister’s boyfriend got
shot. A very close friend of mine came back from Vietnam so messed up
psychologically that he killed his wife and himself.
The hardest lesson for people in power to accept
is that wars are unrelentingly hideous enterprises, that they butcher people
without mercy and therefore should be undertaken only when absolutely
necessary.
Kids who are sent off to war are forced to grow
up too fast. They soon learn what real toughness is, and it has nothing to do
with lousy bureaucrats and armchair warriors sacrificing the lives of the young
for political considerations and hollow, flag-waving, risk-free expressions of
patriotic fervor.
McNamara, it turns out, had realized early on
that Vietnam was a lost cause, but he kept that crucial information close to
his chest, like a gambler trying to bluff his way through a bad hand, as
America continued to send tens of thousands to their doom. How in God’s name
did he ever look at himself in a mirror?
Lessons learned from Vietnam? None.
As The Times’s Tim Weiner pointed out in
McNamara’s obituary, Congress authorized the war after President Johnson
contended that American warships had been attacked by North Vietnamese patrol
boats in the Gulf of Tonkin in August 1964. The attack never happened. As Mr.
Weiner wrote, “The American ships had been firing at their own sonar shadows on
a dark night.”
But McNamara, relying on intelligence reports,
told Johnson that evidence of the attack was ironclad. Does this remind anyone
of the “slam dunk” evidence of Saddam Hussein’s weapons of mass destruction?
More than 58,000 Americans died in Vietnam and
some 2 million to 3 million Vietnamese. More than 4,000 Americans have died in
Iraq, and no one knows how many hundreds of thousands of Iraqis. Even as I was
writing this, reports were coming in of seven more American G.I.’s killed in
Afghanistan — a war that made sense in the immediate aftermath of the Sept. 11
attacks, but makes very little sense now.
None of these wars had clearly articulated goals
or endgames. None were pursued with the kind of intensity and sense of common
purpose and shared sacrifice that marked World War II. Wars are now mostly
background noise, distant events overshadowed by celebrity deaths and the
antics of Sarah Palin, Mark Sanford and the like.
The obscenity of war is lost on
most Americans, and that drains the death of Robert McNamara of any real
significance.
*****
6 July 2009
Thoughts
Asian and European markets were
both lower on Friday and were and are lower today. U.S. markets are going to
open lower. The news about the California and other states fiscal crisis and
layoffs of teachers and health care workers is adding a somber tone to trading.
Gold is down $10 at $920 and Oil is heading south with a current handle of $64
which it still too high.
*****
Krugman has the real deal on
Health Care in today’ NYT column. Too bad Obama didn’t listen to him on the
stimulus. Joe Biden said yesterday that everyone (?) underestimated the
severity of the economic downturn. Say it ain’t so Joe.
http://www.nytimes.com/2009/07/06/opinion/06krugman.html?_r=1
*****
The Natural Gas
ETF has been acting strangely and is more complicated that our simple mind
can understand. We wanted an investment that would allow us to
participate in what we think will be the eventual long term rise in the price
of natural gas. But in our reading in trying to understand what we thought was
a simple investment we have learned of
contango
and limited availability and
front month distortion and realize that the action of this ETF is in the hands
of speculators and hedgers. We
are taking out loss and moving on.
*****
The S&P 500 traded at its 200 dma
at 875 in the early going and held and is now at 890 where it bounced a few
weeks ago. Nevertheless we sold Whole
Foods to return to cash in all accounts.
*****
Last Tuesday Oil spiked $3 when a
trader in London bought million of barrels of oil on margin to push prices
higher. Yes, that is correct a trader spent forced the price of Oil $3 higher.
The trades were unauthorized and closed out at a $10 million loss to the firm
for which the trades were made. But as we have always said, it is ridiculous
that such one trader can control the daily price of millions of barrels of oil.
*****
With markets mildly lower at noon we are taking off for
some afternoon bike riding. We don’t want to be tempted to trade a down market
today.
*****
2 July 2009
Model Portfolio Update
1 July 2009
Thoughts
We are taking the rest of the week off. The next posting
will be Monday July 6.
*****
Why change is difficult in Washington:
The financial industry cut spending on lobbying and campaign
contributions this year, even as the Obama administration drafted a sweeping
plan to tighten federal control over its players.
In the first three months of 2009, the financial sector spent $104.7
million to lobby Congress and the administration, down 8% from the same period
last year, according to a Wall Street Journal analysis of the most recent data
collected by the Center for Responsive Politics, a nonpartisan group that
tracks the lobbying business. In each of the previous five years, the
industry's spending had risen.
The health-care industry -- which three years ago surpassed finance as
the top lobbying spender and faces a major overhaul initiative in Washington --
increased outlays in the first quarter by 12% to $127.1 million. Lobbying
spending across all business sectors was flat in the period, after rising 15%
from 2007 to 2008.
*****
The story is from the Wall Street
Journal. The headline says: Wall Street Cut
Lobbying at Key Time. An 8% cut by folks who received billions of dollars
from the government is not a lot of money. On the other hand it is amazing that
lobbyists can get so much return on their dollars spent in Washington. Congress
folk sell their souls for less than pennies on the dollars that they disperse.
*****
We sold Biogen.
*****
Citigroup has increased interest rates on up to 15 million U.S.
credit card accounts just months before curbs on such rises come into effect,
the Financial Times reported citing people close to the situation.
Citigroup had upped rates on 13 million to 15 million credit cards
it co-brands with retailers such as Sears, the paper said.
*****
Oil dropped 70 pennies to $69.18
and Gold rose $14 to $940. Most European bourses
closed up 2% and higher.
*****
We are leaving 15 minutes early
with the major socks measures higher. Breadth is better than 2/1 positive and
volume is light.
The bulls won the day.
*****
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Summary of Business Continuity Plan
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