Wednesday, July 30, 2008

Hump Day Thoughts

  • Eureka's Salli Richardson... Hmm....
  • Today started out optimistically, like a Barack Obama speech.  The market stormed out of the gate following yesterday's follow-through day.   There has been an inverse relationship between oil and stocks, and with oil up $4, the market weakened.  But it was nice to see investors buy it up into the close.
  • I remain long.  Of course, this could just be another chance to lighten up before yet another drop.  But I'm going with the Black Box and keeping on.
  • Speaking of, been working on a shorter-term system in my spare time.  We'll see...  Hopefully will have a working model soon.
  • Barack Obama pushing for economic relief in Missouri.  Not sure why he's neglecting the other 56 states.  But nothing specific, of course, other than raising taxes on "the rich."
  • Yeah, when is the next Wonder Woman movie coming out?  Looks like 2009.  No lead cast yet, but the link recommends Jessica Biel, Teresa Palmer, Rachel Bilson or Megan Fox based on search numbers. 

Tuesday, July 29, 2008

Follow-Through Tequila Tuesday


clipped from www.investors.com

Preliminary figures show volume solidly higher on both the NYSE and the Nasdaq. That would meet the requirements of a follow-through to the rally attempts begun on the Nasdaq on July 15 and on the NYSE a day later.

 blog it

As "they" say, not all follow-through days lead to bull markets, but all bull markets are preceded by follow-through days.

It's an IBD thing, but it could lead to some folks closing shorts and probing longs, especially in leading stock names.

A Shot At Randomosity

  • I think all tuesdays will now be Tila Tequila Tuesdays. Until something else comes along.
  • The stock market rallied on Tuesday, lifted by a drop in oil prices, several better-than-expected quarterly earnings reports, an increase in consumer confidence, and speculation that the latest capital raise from a major financial firm is a sign that the worst is over for Wall Street.  As long as the "speculators" our on OUR side, we're okay with that, right?
  • From Dr. Jeff, Government, Crises, and Time Frames.  Ah, brings to mind the quote from President Ronald Reagan, "The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"
  • In Sacramento, they're placing a measure on the November ballot to raise the sales tax to "wipe out gangs."  Good luck with that one.
  • Adam Warner on Amanda Drury, the VIX, and Dingos.
  • 5.4 earthquake jolts Los Angeles.
  • Picking winning lottery numbers:  If it were that easy, everyone would be doing it!  Even Tila Tequila!
  • Why not place a measure on the November ballot to "make everyone filthy stinkin' rich?" 
  • I read the folks at Financial Sense to just to see what the doomsayers are up to.  This week's column from Dr. Pete compares Obama to a poker player, and McCain to a craps player.
  • I don't think any of us really believe the price of oil will continue to drop.   Which is probably why it has.  The ultimate contrarian play, the one nobody believes is possible.
  • Well, there have been more bottom calls in this market than at SoCal beaches the past few months.  Which proves that people may have lost their focus.  Anyways, today was a strong day and it'll be interesting to see how tomorrow plays out with more economic numbers hitting.  We're also about to enter the so-called "monthly strength" period where 401(k) dollars are averaged into mutual funds. 
  • I wonder if Tila Tequila is a dollar-cost average girl, or does she trade the MACD crossovers?  Maybe she trades her own proprietary black box system.  Did I really say that?

Tila Tequila Trainwreck Tuesday

Tila Tequila gets branded asa reality show trainwreck.  Most of us go through the daily grind from 8-5pm, week after week.  A girl has to make a living, and she probably pulls in more than us working less hours than most of us do.  Even if it's something ridiculous and as long as she likes it, who are we to judge?   Maybe she has it right, and we're the trainwrecks!

Well, speaking of trainwrecks, this stock market is all over the map.  Not that this recent bear market has been "the worst of times," but it's certainly not "the best of times," either.  It's a mind-numbing market malaise that feels more like we're running in place.  Maybe that's what a slow-growth economy is all about.  We go from day to day in our 8-5pm daily grind, contribute faithfully to our portfolios, and have the sensation that not much has changed.  That we've been here before. Or, that we've always been here.

The markets like to trick us.  Or maybe we're the ones easily fooled by the markets.  We get fooled into thinking that whatever has been happening most recently will continue to happen in the future.  We're now battered with statistics on how the market hasn't done much the past ten years and how our wages are stagnant.  The Republicans give us a candidate in John McCain who gets called "McSame" by the opposition party faithful.

What's my point? I'm feeling the same thing everyone else is feeling.  It's hard to not get caught in the emotion of the crowd.  I just wanted to write about it.  And maybe that's why we all seek refuge in reality shows starring Tila Tequila. 

Monday, July 28, 2008

Bequeathing the Very Best

clipped from www.nytimes.com
The White House predicted on Monday that the Bush administration would bequeath a record deficit of $482 billion to the next president — a sobering turnabout in the nation’s fiscal condition from 2001 when President Bush took office and inherited three consecutive years of budget surpluses.

By most accounts, the worst seems yet to come. The deficit announced by Jim
Nussle
, the White House budget director, does not reflect the full cost of
military operations in Iraq and Afghanistan, the potential $50 billion cost of
another economic stimulus package or the prospect of steeper losses in tax revenue or further declines in the housing market.

The deficit projected for 2009 would be the largest in absolute terms. The White House and many economists prefer to measure the deficit as a share of the economy. The White House said the 2009 deficit would be 3.3 percent of the economy. That is the largest share since 2004, but well below the percentages recorded in the mid-1980s and early 1990s.

 blog it
Yeah, but I bet W's crew doesn't steal the O's off of the keyboards in the White House!

And who said the Republicans were the party of fiscal responsibility? I realize that we've had Wars, Terror, and Natural disasters up the wazoo the past 7+ years. But Bush has also introduced a lot of domestic spending, like prescription plan for seniors, that seem at odds with the GOP rhetoric.

Eureka! Obama's Economic Answer!

Here we go...

Presidential rivals Barack Obama and John McCain shifted the campaign focus back to the faltering U.S. economy on Monday, with Obama convening an all-star panel of advisers to help him hatch new approaches to a deepening problem.

Michael Jordan, Joe Montana andNolan Ryan?  No.  Just those journeymen slackers Warren Buffet, Paul Volker and former Phillies' 3rd baseman, Eric Schmidt.

Obama, ""The economic emergency is growing more severe, jobs are down, wages are falling, the financial markets threaten to be engaged in a protracted credit crunch with long-lasting ramifications."

And he didn't even mention dinosaurs running loose or cats and dogs comingling. Barack, you make Chicken Little look like an optimist!  But the "Big O" has a specific plan:

"What I would like to do starting today is figure out how can we start taking more short-term steps and long-term steps to restore balance in our economy so that entrepreneurship is encouraged, so that the market is thriving, so that hard work is rewarded," he said.

Got it?  "Short-term steps" and "long-term steps."  That's all we need!  Boy, it was right there in front of us this whole time!  Seems like during the Bush administration, all we've been doing the past 7+ years is taking medium-term steps.  What folly!

Okay, I couldn't resist.  Barack Obama is a gifted speaker, and it looks like that's what we're going to get for our next administration.  And after 8 years of a poor communicator, maybe all we're hoping for in the next administration is an inspirational speaker.

The economy would sure like a little help with the energy situation, fellas.  But I don't think the market forces of globalization are going to slow down, no matter how wonderful the oratory is.

Friday, July 25, 2008

Better than Average Returns - Grace Park

Yes, that is Grace Park from The Cleaner and Battlestar Galactica. I haven't watched The Cleaner, but now that I know, I went to the DirecTV website and remotely programmed my DVR to pick it up. Why not?  It has to be better than So You Think You Can Dance.

Anyways, market selling off a bit late in the day from earlier gains.  Normally, I'd expect the week after an options run to be a little weak.  And next week we will get the end-of-month boost from 401(k) money.  That's assuming folks are sticking with their dollar cost averaging.  Maybe folks have given up after 10 years of low stock returns.

You know, I was thinking about how the past 10 years has averaged just over 3% annualized.  Compare that to the period from 1982-1999 where the average was much higher.  When were folks much more excited about stocks?  At the tail end of the 1990's, as the days of double-digit average gains were going away.  Meanwhile, now that we have a decade of 3% gains in, folks aren't too excited about stocks.

Overall, the market may average around 8-10%.  But does it ever return 8-10% over an intermediate stretch of time?  Or, does the market have periods of 17% gains followed by periods of 3% gains?  If investors are excited or gloomy late in the cycles, wrong emotion at the wrong time, is it any wonder that people consistantly underpeform buying and holding the index?

Anyways, Grace Park plays Akani Cuesta in The Cleaner.  Want a video?

TGIF!

  • Katy Perry kissed a girl and she liked it!
  • The Bank of America bailout bill to be signed on Saturday. Er, I mean, the bill to help those folks struggling to make their mortgage payments...  The bill — regarded as the most significant housing legislation in a generation — is designed to help an estimated 400,000 homeowners escape foreclosure by letting them refinance into more affordable loans backed by the Federal Housing Administration.
  • So, homeowners refinance their existing mortgage, with the cash going to BAC or whoever, and then get into an FHA loan backed by .... the taxpayers.  Right?
  • Washington Mutual shares slip further "Washington Mutual, the nation's largest thrift, is facing a challenge that will ultimately impair its ability to earn excess returns in the long run," wrote Morningstar Inc. analyst Jaime Peters in an investor note this week after the quarterly earnings report. "But before the company can worry about the long run, it must get past some major short-term problems."
  • Oil down again.  Of course, who gets the credit for that?  Decreased demand?  Threats of more US drilling?  T. Boone Pickens' informercial on windmills and natural gas?  Speculators jumping into financials?  All of the above?  Anyways, looks like if the trend continues, they won't be able to give the stuff away!  Who needs oil anymore?
  • You think your gasoline bill is high?  Wait until you see your electricity bill when you buy an electric car and plug that baby in every night!  (And if everyone does that, then I wonder if we'll see lots of blackouts on the power grid?)
  • So if holding a cellphone next to your head is a bad idea, what about sitting in an electric car?
  • Lunch?  Mexican!

Thursday, July 24, 2008

Bear Market Rally Over?

clipped from news.yahoo.com
Stocks tumbled more than 2 percent on Thursday after a report showing yet
another drop in U.S. home sales prompted investors to take profits in financial
shares, which had rallied over the past week.

The Dow fell the most in a month, as the rising price of oil compounded
worries about the economy. The jump in crude spurred unease that the recent
sharp declines may have run their course. Shares of companies particularly
vulnerable to higher fuel costs, such as airlines and retailers, sank.

"The bailout plan restored enough confidence in the sector to take some pressure off the stocks, but the pretty nice bounce we saw seems to have run its course," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

 blog it
The big question folks will be asking tonight is whether or not today's market action was the end of a bull market rally or just profit taking after a big move in the stock market the past week. Has the trend changed or was the past week just a pause in the bear market? Or, is this just a pause in the early stages of a rally?

I remain 100% long.

If I Had a Billion Dollars...

Cubbies! I'd buy the Cubbies!
clipped from www.marketwatch.com
The Associated Press, citing unnamed people familiar with the matter, reported Thursday that bidders who offered between $700 million and $900 million at first were bounced from the second round and that the final price tag is apt to be in the $1 billion range.
Still in the running are Dallas Mavericks owner Mark Cuban; the Ricketts family, founders of what eventually became TD Ameritrade Holding Corp.; and a group that includes baseball
great Hank Aaron and former Congressman Jack Kemp.
 blog it

Wednesday, July 23, 2008

Hair of the Dog

Hair of the Dog

  • Blame it on the booze! President George W. Bush has an explanation for the housing market meltdown that has thrown the global economy into turmoil: Wall Street got drunk.
  • Heather Locklear out of treatment"Heather has been dealing with anxiety and depression," Locklear's spokesperson, Cece York, said at the time of Locklear's admission. "She requested an in-depth evaluation of her medication and entered into a medical facility for proper diagnosis and treatment."

A Tale of Two Future Guidances

  • On one hand, Apple lowered their future guidance even with the new 3G iPhone.
  • On the otherhand, what did ATT say?  The telecommunications powerhouse, which is the exclusive U.S. carrier of Apple's popular smartphone, reported that iPhone 3G sales nearly doubled within the first 12 days after its July 11 launch, compared with the initial launch of the iPhone in 2007.  ...  The company also noted that it expects to generate ongoing strong growth in its wireless-data services, as customers snap up devices such as Apple's smartphone.
  • So, uh, hmm.

Major Signings

  • President Bush to sign housing billThe added measures would give beleaguered Fannie Mae and Freddie Mac access to an expanded credit line from the U.S. Treasury. In addition, it authorizes the Treasury to purchase equity in the two companies if necessary.
  • Jason Taylor gets new number with Redskins, #55.  Dallas Cowboys sign Jason Taylor killer, Kristi Yamaguchi, who wears the #1 jersey.

 

Tuesday, July 22, 2008

Afterhours Fun: Washington Mutual

If you thought today's market was great off of the nuclear holocaust of earnings out last night, wait until tomorrow! WM reported a $3.3B loss afterhours!  Woohoo!

The thrift's deteriorating health prompted Moody's Investors Service to say it may downgrade Washington Mutual to "junk" status, and shares of WaMu fell more than 2 percent.

Excluding a one-time adjustment, Washington Mutual said it lost $3.34 per share -- triple the $1.09 per share loss analysts on average expected, according to Reuters Estimates. Retail banking, mortgage and credit card units all posted losses.

Hallelujah!  Lock limit up!  To the Moon!

Okay, maybe I'm being a little silly.  Maybe it's all just the noise of a bear market rally within a nasty bear market.  Maybe I'm just obsessing over the Moon. 

On the otherhand, maybe most of this sort of news is priced in.  It's no secret.  Billions were lost.  Lots of folks bought homes when they had no financial means of making monthly payments.  Lots of money was made by Big Lenders.  Yeah, we get it.  The media has been banging that drum for so long as if they were playing a Playstation 3 Rock Band drum kit - expert level.

It's extremely nice to see stocks rally on what should be considered bad news.  It's a bullish sign. 

That's a Good Thing

Market to AAPL: "That was a good thing that you did.  A real good thing." (From Twilight Zone's It's a Good Life).

Well, if one wants to make a bull case here, it'd be that the market is rallying on bad earnings news.  Should't investors be running to the hills?  We've had poor earnings from AAPL, MSFT, GOOG, AXP, TXN...  Yet, the sellers seem out of juice. 

Oil dropping, too.  Maybe that's the bigger thing.  Oil down another $3 now that the storm seems to be missing the oil fields.  Oh, another storm will come along, but the trend wants to be down right here absent of Mother Nature. 

Financial stocks rallying, too.  They're a large part of the index.

Moon Over My Money

  • Moon Bloodgood is back! She'll be in the new movie Terminator Salvation.  Also in the newest Street Fighter movie.  Maybe I'm obsessing a bit here.  She's had a rough go of it with short-lived series Daybreak and Journeyman.
  • Well, the market holding up quite well considering the nuclear holocaust of earnings reports last night from Apple, American Express and Texas Instruments.  They all blamed poor future guidance on the Worst Economy Ever, and the cancellation of Journeyman.
  • Even with the 3G iPhone selling faster than Moon Bloodgood Maxim issues, Apple seems to have transitioned into a slower growing company.  Should we look to Apple's future the same we we view Microsoft's?  In otherwords, after a period of fast growth and expansion, the company may be entering a slower period of product-replacement rather than opening new markets and creating new customers.
  • Oh, and then there's the Steve Jobs health issues....  Hmm.
  • Michelle Malkin on Obama's World TourUuuuuuuuuuuh.  LOL.
  • I think it's likely that Obama wins in November.  All we know for sure is that if it happens, your taxes are going up.  But heck, since your house was foreclosed on, it's not like you needed the money for house payments anyways.
  • Jeremy Shockey gets traded to the New Orleans Saints.  What's the over-under on how many games he stays healthy for?
  • Jason Taylor gets traded to the Redskins for two draft picks and Manhattan.

Monday, July 21, 2008

Afterhours: Steve Jobs Health Watch

Update 8:25pm: Almost all Apple stores out of iPhones...

So you thought Apple earnings were on deck this afternoon?  Well, true enough, but the world seems more focused on Steve Jobs.

Apple Inc. Chief Financial Officer Peter Oppenheimer on Monday called the health of Apple CEO Steve Jobs "a private matter," and that Jobs has no plans to leave the company.

Earnings?  Who cares?

Ahead of Apple's scheduled earnings report, the New York Post revived those concerns this morning with a story quoting hedge fund managers saying they had sold Apple stock because of continuing concerns about Jobs' health. Apple has never revealed its succession plan, which aggravated the traders' worries. And a Fortune magazine story in March said Jobs and Apple's board hid the diagnosis for months.

But what about those earnings?  Looks like earnings were strong, but forward guidance was the concern:

Looking ahead, the company is expecting revenue of about $7.8 billion and earnings per share of about $1.00 in its fiscal fourth quarter, which ends in September. That's well below the $8.32 billion in sales and $1.24 earnings per share estimate that analysts are forecasting.

For the fiscal year 2009, which begins in September, Apple expects its gross margins to shrink to 30%.

I guess 4-hour lines the past week for a 3G iPhone weren't good enough.  If "beat by a penny" earnings results are good enough to beat the street and send stocks higher, maybe we should've hoped for iPhone waiting lines of 4-hours and 1-minute.

As the article notes, AAPL tends to be conservative in future guidance.  That aside, investors have shown that the financial numbers may not be as big of a concern as the health of Steve Jobs.

Saturday, July 19, 2008

Weekly Recap: Oil Falls 11%


Crude oil fell for a fourth day on Friday—capping the biggest weekly decline in more than three years—after the Bush administration decided to participate in nuclear talks with Iran.
Prospects for a dialogue with Iran eased concern about a possible conflict with Israel. A slowing global economy, faltering U.S. fuel demand and rising supplies compounded the decline.
Meanwhile, prices at the pump pulled back from record highs, dropping by nearly a penny. If crude prices hold at current levels or head even lower, drivers may see further relief at the pump in the coming days, experts said.
 blog it
One thing not mentioned is that President Bush also lifted the ban on offshore oil drilling, and Americans are putting pressure on Congress to do the same. Many things going on to put downward pressure on oil. In addition, the commodity bubble seems to be imploding.

Of course, the sad news for you and me? Oil falls 11%, prices at the pump drop a penny... Ooooh.

Friday, July 18, 2008

TGIF

  • Well, it could've been worse.  With GOOG and MSFT bringing down the Nasdaq, the DOW and SP500 managed to avoid collateral damage and finish in the green.  From Yahoo FinanceFinancial stocks led a late-session push to help the stock market finish the session just above the unchanged mark after spending virtually the entire session in the red. Though crude prices closed lower for the fourth straight session, weakness in the tech sector, the largest in the S&P 500, limited gains. Despite the lower finish, stocks still finished the week 1.7% higher.
  • I remain 100% invested. 
  • Al Gore out there pushing his plan to replace fossil fuels with alternatives.  Sounds fantastic, but without a significant increase in nuclear power plants, it won't work.  Not enough solar and wind technology available to make it work.  We're at 2.5% in solar, wind, and biofuels.  We're at 70% in coal and natural gas.  In order to replace the fossil fuels, we need something big.
  • Oil has stumbled this week, and Barry Ritholtz finds the Ethanol DeathWatch Map.
  • Jason is still on a buy signal.
  • Thank goodness it's friday...  In Sacramento, we've had a pretty cool Summer so far.   It's been a bit smokey, but that seems to have cleared out here in the valley this week.

Apple on Deck Monday

From Barron's Blog:

Apple, as it happens, provides the next big milestone for tech investors after the close on Monday, when it reports earnings for its fiscal third quarter ended June. The Street is looking for revenue of $7.36 billion and profits of $1.08 a share. The company’s guidance was for $7.2 billion and $1 a share.

Gene Munster, analyst with Piper Jaffray
, wrote in a note earlier today that the key to the quarter will be Mac sales: he sees 2.35 million units, which he says is ahead of the Street consensus of 2.2 million. He expects 10.5 million iPods for the quarter, versus the Street at 10.3 million. He puts iPhone units for the quarter at 730,000. If the company hits those numbers and turns in a gross margin of 33%, he says, Apple would post $7.67 billion in revenue and profits of $1.13, well above both the guidance and the Street.

Just an anecdotal comment, a friend stood in line for four hours yesterday in Walnut Creek to buy the new Apple 3G iPhone to replace her Palm Treo (running Windows Mobile).  She said the line went down the block, and the ATT store sent someone out to count folks.  After matching people to iPhones, the ATT employee stood at the end of the line to ensure no additional people lined up. 

I wonder if Jolene Blalock has an iPhone?

Thursday, July 17, 2008

Microsoft

clipped from www.nytimes.com

The company’s profits rose for the quarter based on strong PC sales in
developing markets and rising demand from corporate customers. The company
reported a net profit of $4.3 billion, or 46 cents a share, in its fiscal fourth
quarter ended June 30, versus a profit of $3.04 billion, or 31 cents, in the
same period a year ago.

Analysts said the company’s business appeared sound, but that it appeared to have lost control of expenses during the quarter.

“Where did they spend all this money?” said Brendan Barnicle, a financial analyst at Pacific Crest Securities in Portland, Ore. Sales and marketing, cost of revenue and research and development were all above what analysts had predicted, he said. “This was significantly higher than people expected.”

 blog it
Maybe too much R&D playing Grand Theft Auto IV on the XBOX 360. If you check the link, you'll notice that MSFT's "smartphone software" is still not profitable. I think that's going to be tough going foward up against the iPhone, as Apple gains market share.

Market Thoughts


What? Two days in a row?  Something must be broken.  It is options week, and the monthly playbook would suggest that this would be a positive week.  However, there seems to be so much in the air these days pulling the market's strings that what seems to work in normal trending or range-bound markets has been thrown out the window. 

I remain 100% long.  Fortunately, in the things that are working the best.  I may rotate into a few other leading names, but staying long.  Despite the constant drumbeat of gloom in the headlines, I believe the economy continues to grow and that earnings will continue to advance.  Yes, it'd be nicer if growth were stronger.  And lower energy prices would help put more money in consumer pockets.

Of course, this could just be yet another head fake rally to crush the bulls and allow the bears to reload on their shorts.  Imagine if there is a major earnings blow up hear in earnings season.

WAIT - AFTER HOURS CHECK...

Uh oh, Microsoft down over 5% afterhours.  Google down almost 8%.  Ouch.  Okay, there it is then.  LOL, speak of the Devil!

Looks like tomorrow may be ugly then.  Nevermind all that other stuff I wrote.  Hahah.  Ah, it all feels like a bunch of nonsense at this point anyways.  All hope is lost.

Wednesday, July 16, 2008

Recession Zombies and Inflation Doomsayers

One of my favorite daily reads and sometimes video cast watch is Chart Pattern Trader.

The CPI inflation data came out today and was much higher than previously forecasted. The headline inflation rate for CPI came in at 5.0 % rising by 1.1%. While core CPI inflation rose by .3% and came in at 2.4%. What is driving the headline number up is that energy has risen 24.7% year over year, while food has increased by 5.2 and transportion rose by 12%. I find that the CPI inflation always overstates inflation and I agree with them that the PCE inflation rate is much more accurate. That all inclusive rate is at 3.1% , while core PCE is at 2.1%.

The CPI data tends to overstate inflation. Why? Many economist believe that CPI is not merely a vehicle for measuring inflation , but it could be part of the inflation problem. And as a lay economist I agree with that assessment. Millions of union employees get COLAs in their collective bargaining agreements. When prices rise, their wages automatically increase to further fuel inflation. Moreover, CPI assumes that all of the increase in the move or nominal value of the market basket is due solely to inflation rather than quality improvements. It is because of these reasons that I personally find the PCE data much more accurate and reliable. But the recession zombies and the inflation doomsdayers sure had fun with a 5.0% headline inflation number today. It is interesting that the market rallied and ignored the data and their prophesies of Armageddon.

 

You know, there aren't many folks left out there who are paying attention to the PCE.  The PCE is said to be the Fed's favorite indicator, yet the Fed is out jawboning inflation morning, noon and night.  I'm not seeing much inflation in my daily life, outside of energy.  Except...  When the minimum wage went up in CA, the fast-food places immediately raised their prices.

Blackberry vs. iPhone

clipped from blogs.barrons.com

Needham’s Charlie Wolf this morning cut his rating on Research In Motion (RIMM) to Underperform from Hold and cut his estimates on the company to reflect the growing threat from explosive sales of the Apple (AAPL) iPhone 3G.

“Sales of Apple’s iPhone 3G appear poised to blow through everyone’s forecasts,” Wolf wrote in a research note this morning. “While RIM’s dominance of the enterprise market appears secure, at least for now, the company’s great growth driver—the consumer market—is bound to come under siege because of the iPhone.”

Wolf says RIMM will counter with “new iPhone look-a-likes.” He says those models “have no hope of matching the secret sauce of the iPhone—the tight integration of hardware and software that creates a unique user experience. Nor do they have any chance of evolving into an application development platform like the iPhone.”

 blog it
I don't know about RIMM's future "dominance" of the enterprise market, as some companies are now embracing the new 3G iPhone. But I do think AAPL will continue to increase market share to the detriment of other cellphone makers.

Core Inflation


Interesting read from the editorial page of IBD. Year-over-year, the core rate remains tame.

If we're reading him right, Bernanke is now figuring that weak growth or
outright recession is a greater risk than inflation.

But that actually makes the Fed's case. If oil continues to retreat — and President Bush convinces the Democratic-led Congress to drill for more crude — our current inflationary spurt will be over.

As the chart shows, overall inflation has indeed risen above 4% — a scary level if allowed to persist. But inflation minus energy and food — core inflation — is a tame 2.3%. This is not a problem.

 blog it

Swimming with the Market Tide

  • Nice day to swim with the tide in the market. Okay, whatever to get the Miss Universe bikini pictures in. 
  • The dramatic drop in oil prices and the good Wells Fargo report getting the credit from ForbesIn addition to sinking oil prices, investors found relief in a decision by Wells Fargo & Co. to boost its dividend that helped counter some of the market's concerns about the health of banks. The San Francisco-based bank's move to raise its payout, along with its tamer-than-expected profit decline, was seen as a bullish sign for the troubled sector.
  • Of course, the financial media will be arguing if this is just a one-day wonder, bear market rally, or the bottom.  So far, the latter hasn't shown up. 
  • I remain 100% invested.  Fun, fun, and more fun.   Despite the constant drumbeat of gloom and doom in the media and in the campaign speeches, the economy is still growing (if only slowly).  One thing that catches my eye is the tech sector.  I was following the E3 video gaming conference a bit this week, and also the Apple iPhone blogs.  Folks are out there buying tech stuff up like crazy.
  • Good luck finding a Nintendo Wii or Wii Fit game.  Or an 80-gig Playstation 3. 
  • Inflation also hit the headlines today with CPI data coming at the highest rate in 16 years.  This was, of course, led by energy and commodities.  But even the core number was up higher than expected.  Consumer prices shot up in June at the second fastest pace in 26 years with two-thirds of the surge blamed on soaring energy prices. The Labor Department reported that consumer prices jumped 1.1 percent last month, much worse than had been expected. Energy prices rocketed upward by 6.6 percent, reflecting big gains for gasoline, home heating oil and natural gas.
  • Who in the Unitied States is using heating oil in the middle of July?  Maybe it's my coworkers who show up wearing sweaters on 100-degree days.
  • I'm thinking that the inflation number isn't a secular trend, just a one-month blip.  But that's a hard argument to win today. I guess I'll let the inflation worriers have today. 
  • But folks are already talking about the Fed hiking rates.  Combine that with a sluggish economy, high energy prices and potentially a President Obama who wants to raise your taxes, not to mention troubled states like California wanting to raise your taxes, seems like that'd be the recipe for something much worse than we have today.  Or maybe that's what the stock market is pricing in.

Monday, July 14, 2008

Financials Cut Off Market's Nuts

From Yahoo finance: ...the financial sector tumbled 6.1%, marking its largest one-day percent loss in more than eight years. Financials make up a large percentage of the SP500. Maybe around 20%? Something like that. Dividend paying stock mutual funds and ETFs also suffering with the collapsing financials.

The market picks up where it left off last week. Heading into options week, the playbook would favor a strong week especially with last week being so dismal. But all that seems to be off the table as the only thng folks want to do is sell.

Does it feel a lot like 2000 all over again? Sure does. Back then we had the unwinding of the tech bubble. Now we have the unwinding of the housing bubble hitting banks.

I'm still 100% long. I'm overweighting the stronger sectors, which at least cushions the slide a bit. I look around and don't see too much individual suffering at this time. Unemployment has inched up some, but retail spending has recently been stronger. The economy continues to grow slowly. Yes, there are always people hurting and we should do what we can to help them. But I tend to believe that companies are doing okay here. The big hurt is in financials involved in subprimes, and then government that relies on property taxes and an active real estate market to bring in revenues. Oh, and energy prices. Don't get me started on this country's lack of an energy policy.

Doesn't it seem a bit silly looking back that someone making $32,000 a year could go buy a $500,000 house with no money down and a stated-income loan with a 2-year negatively amortized teaser rate? Sheez.

Almost as silly as paying those extreme multiples back in 2000 for tech stocks with no business plans other than adding a "dot com" to their company name.

A Run on the Bank!

clipped from news.yahoo.com
IndyMac Bancorp Inc customers lined up outside a branch at the company's headquarters on Monday, hoping to withdraw their money after regulators seized what was once one of the largest mortgage lenders in the United States.

Regulators seized Pasadena-based IndyMac on Friday after a bank run in which
customers withdrew $1.3 billion of deposits over 11 business days, as worries
about the company's survival grew, regulators said. The bank has 33 branches in
Southern California.

"I have $360,000 in this bank, and I was misled by this bank," said Robert Clark, a Glendale resident who was waiting on line. "I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don't know what to do. I really don't know what to do."

 blog it
Customers lining up as early as 4am to try to get their cash. So, not as big of a deal as trying to get in line *days* early for an Apple iPhone... Good read.

Sunday, July 13, 2008

Rethinking the Mendoza Line

  • Miss Venezuela Dayana Mendoza wins Miss Universe. That has me rethinking the Mendoza line thing.
  • The big news tomorrow on Wall Street will be the US plan to save Fannie and FreddieTreasury Secretary Henry Paulson said the Bush administration plans to ask Congress to enact legislation to temporarily increase the line of credit that the companies have with the Treasury. It would also allow the Treasury to buy stock in the companies. ...  In addition, the Federal Reserve announced Sunday that the mortgage finance companies can turn to the Federal Reserve Bank of New York for funds.
  • Of course, Bush better act quickly, as Congress is about to go on Summer break.  Not like they have anything else on their plate, right?
  • The first 48 hours with the new 3G iPhone.
  • Bush vs. Congress on oil prices.  Bush says the Democrats need to allow more drilling.  The Democrats say oil companies need to drill on existing land and leases.  Why not compromise on this, folks?  Quickly, please.
  • Fed heads up to the Hill.  Will Bernanke be walking on eggshellsFed chief Ben Bernanke faces a buzz-saw of criticism, derision and skepticism this week when he delivers his semi-annual testimony to Congress on Tuesday and Wednesday. ...  Bernanke will have to tread cautiously when he discusses the state of the economy and its financial markets. He needs to recognize the crisis exists, but he can't show too much concern.  And  you know there will be some stupid questions from Congress, who seem to use the occasion to spew political talking points and listen to themselves talk.  Set the DVR!
  • You know, I don't get "texting."  People pay extra for this, when they could just use free email to do the same thing.
  • No recession for Gilbert ArenasGilbert Arenas signed his six-year, $111 million contract with the Washington Wizards on Sunday, securing the return of a franchise player who is accepting less money than he was offered.

Friday, July 11, 2008

Stripper Arrested for Subway Pole Dances

clipped from news.yahoo.com
A stripper who danced on the poles of Santiago subway trains to challenge the
prudishness of Chilean society was arrested on Thursday during one of her
lightning performances.

Monserrat Morilles, 26, surprised subway riders all week stripping to skimpy
underwear, but she refused tips.

Chilean media dubbed her "La Diosa del Metro" or Subway Goddess. She called her performances "happy minutes."

 blog it
We all need a diversion from the stock market carnage. Here's one!

I really need to use mass transit more. Spare the air and fight global warming, right?

Jim Rogers

Jim Rogers thoughts. He moved to Singapore and says Asia is the future.

Thanks to Mack on a comment thread below for the link.

 

iPhone Friday


  • New iPhones snapped up. Apple Inc's new iPhone made its hotly awaited debut on Friday, with buyers storming stores in Asia and queues forming in Europe and the United States.  I'm not eligible for an ATT upgrade yet.... LOL.  No line-waiting for Muck...
  • Software problems with new iPhone release.  A spokesman for AT&T Inc., the exclusive carrier for the iPhone in the U.S., said there was a global problem with Apple Inc.'s iTunes servers that prevented the phones from being fully activated in-store, as had been planned.   Have to activate it from home by hooking it up to your computer.  Eh... You were going to do that anyways, right?  Not like the iPhone battery was charged up anyways.  But what a glitch.  Doh.
  • New iPhone opens Pandora's Box.   One of the many new apps for the faster phones is the ability to stream music from Pandora.com, a rapidly growing music discovery site that streams music based on user preferences. It was a computer-based sensation before, but now the allure of smart Internet radio becomes accessible to new iPhone buyers.  Did I mention that the service is free?  Bad news for XM?  Of course, Windows Mobile users can already do this...
  • 10 Things the 3G iPhone is Still Missing.  What?  Besides Jessica Biel's number in your contact list?  Okay, they list MMS, no stereo bluetooth, copy/cut-paste, no landscape for notes, email or GPS, etc.  Go read!
  • New iPhones Shutting Down the Network.   And more here from Engadget.  Oopsie.
  • Engadget's 3G iPhone review.
  • Blogger Rachel Elaine got one.
  • My thoughts are that the iPhone will evolve into the must-have phone.  They'll do what we want them to do as far as communications and entertainment, and combine that with an easy-to-use interface.  I think the other phone makers are in big trouble heading forward.  Especially when you consider the price drop of the new iPhone with the 2-year activation.

 

Thursday, July 10, 2008

It's a Cruel Summer


Plus, folks are spending less at Starbucks and fast food as gasoline prices have gone up and more cash gets sent to OPEC.
As summer arrives, the job market for teens is suffering along with the rest of
the economy. And those jobs will be harder to find this year for poorer kids who
need them the most as laid-off adults compete for work at the lowest rung.

The rate of teens who had jobs last year was the lowest in more than half a century, Sum said.

Among the reasons: Jobs that once went to teens now go to older or immigrant workers, he said. And some big-box stores have raised the minimum age of prospective employees they will consider.

 blog it

Wednesday, July 09, 2008

Drilling Gone Wild


I went to the dentist this morning (pictured... I wish). The cleaning appointment went fine, and the deeper pockets are gone.  But I had two chipped teeth in the back and one small cavity, so the dentist said, "Hey, want to get it done now?"  So I did. Drill here, drill now.  No novacaine!  Pretty shallow work, so didn't feel much anyways.

More pain in the portfolio today, though.  Can I get a novacaine shot for that?

I started out today thinking that I'd do a write-up of yesterday's action, and basically say that I was looking for a follow-through day to confirm that some sort of bear market bottom was in and that we were in a rally.  Basic IBD stuff, right?

Pffft.  The End of the World was only postponed by yesterday's price action.

So, besides the Democratic Congress, what caused investor panic today?  Lets look around the horn...

From da blogs...

 

 

Monday, July 07, 2008

Just Friends Randomosity

  • Sure, Madonna. Just coffee buddies.
  • Barry Ritholtz takes a look at market history after a bad month. Bold my add on the following excerpt:  As the chart below shows, we often see a healthy snap-back after significant one month sell offs 6 and 12 months later. Except when we don't, such as 1973 and 2001, where we see even larger losses one year later.   Just excerpting the bolded text, it'd read "We often see a healthy snap-back, except when we don't."  Stick that in your market timing scrapbook!
  • Are the shorts getting careless
  • Aerosmith downsizes, Steven Tyler (not pictured) laid off.   "Explaining to a longtime Aerosmith employee that his or her job is being eliminated is one of the most difficult challenges we face in this business," Aerosmith manager Trudy Green said in a statement released this morning. "We thank Steven for his many years of loyal service, and wish him the best of luck in all his future endeavors."
  • Weekly Guru Bargain Highlights
  • From Marginal Revolution, Statement of 300 Economists Supporting John McCain.  (And the rest are being called "deniers.") 
  • Treasuries moving up due to concern about financials and the economy.  You wonder if longer-term rates will be coming down?  Especially with the recent PCE showing very little inflation.
  • Crossing Wall Street notes that not only is there little inflation outside of commodities, but apparel prices are the same price they were 20 years ago!
  • ATMs Safer at Banks than Stores.  Hmm... But what about ATMs at banks within stores?
  • In the Money writes:  The Market that Couldn't Bounce.  Check out his list of sentiment indicators.  Investor's Intelligence numbers showing bears at their highest levels since 1998.
  • On the otherhand, Bespoke says maybe there is too much optimism in the outlook for the DOW 30 stocks.
  • It's just after 3pm here, but I think I've had it for a Monday-after.


Summer Market Slam Fest

  • I don't know about you, but I'm still recovering from a few Summer backyard barbeques. At least my vitamin D levels are running at full, after plenty of full-sun exposure.  Hanging out with friends poolside with a few beers is always a good time. 
  • Which is more than can be said of today's stock market.  I didn't bother to look at the market over the weekend.  Didn't update the charting software. The Barron's went unread.  Just decided to unplug from it all and reset my brain.  Not that this changes what's going on in the markets, as the bear market continues to drag down retirement dreams and college savings plans.
  • Marketwatch says, U.S. stocks turned steeply lower Monday afternoon, sending the S&P 500 into bear market territory, as worries banks would be slammed with more mortgage-related losses overtook earlier optimism sparked by a big drop in the price of crude.
  • Crude goes up, bad for stocks.  Crude goes down, bad for stocks.
  • Commodities getting slammed, too. 
  • It's a Summer Slam Fest.
  • But AAPL is up.  (Disclosure:  Long).  Big launch at the end of the week!
  • Lunch time...  Uh... Subway!