一个笨蛋的股指交易记录-------地狱级炒手

hefeiddd · 发表于 2009-3-21 16:07

November 30, 2008
ETF Newsletter in the Email (#4 Freebie)Yes, it’s that time of the week again, time to pimp my newsletter, shamelessly.
This week I’ll feature the Steel ETF (SLX). The model exited in July 2008 above $90 and is still out (last week’s close: $27.88). The model also exited the Basic Materials SPDR (XLB) and the Ultra Basic Materials (UYM) the very same week — sure, they’re all highly correlated, but it’s interesting to see how Metals & Mining (XME) and Coal (KOL) hung in there for another week or two before also reversing.
There will only be one more freebie newsletter since I’ll be going away for Christmas in early December and won’t be back until the New Year, so email me today to get on the list.

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Investing

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November 28, 2008
Cheaper than Making Rupee India’s Economy Will Likely Withstand Terror Attacks

“‘This sort of incident is not new in India,’ said Templeton Asset Management Ltd. Chairman Mark Mobius, who oversees more than $24 billion in emerging-market stocks. ‘Life does go on in India. It’s a very vibrant economy.’”

The little bald man in his snazzy white suit is good at talking his book, but one look at the chart of the rupee plunging below its 2002 lows tells you all you need to know.

Post title may be too obscure, so I’ll remind you of the full verse (by Gus Kahn):

He doesn’t make much money
Five thousand dollars per;
Some judge who thinks he’s funny
Says, “You pay six to her.”
He says, “Now judge, suppose I fail?”
The judge says, “Bud, right into jail.
You’d better keep her
You’ll find it cheaper
Than making whoopee.”

Related: Asia’s Worst-Performing Currency, June 23, 2008
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Currencies

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November 27, 2008
Fast and Heavy-handed Rate Cuts China Rate Cut Highlights Concern Over Slowdown, Unemployment

“The central bank cut the key one-year lending rate 108 basis points to 5.58 percent. The deposit rate fell by the same amount to 2.52 percent.”

Here’s a look at the three year deposit rate in China (where we park our RMB). It was possible to lock in 5.4% for nearly a year, a level at which our real returns were slightly less negative. :-)

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China

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November 26, 2008
Market Manipulation Gome Halts Shares Pending Statement on Chairman’s Detention

“Huang may have manipulated shares of Shandong Jintai Group Co., a Chinese drugmaker that is controlled by his brother, Huang Junqin, Beijing-based Caijing reported.”

A weird looking chart anyway. Locked limit-up every day for weeks?

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Investing

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November 25, 2008
Benny Says He’s Never Lost a Penny U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit

“The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.”

Keep a beady eye on the US dollar index. My guess is that it will give up all its gains and fall below 70 once it reverses. You can’t socialize losses and privatize profits without a reckoning. I have no doubt now that the USD will lose its reserve currency status in my lifetime.

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Currencies

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November 23, 2008
Stunned by SoupMy readers tend to be both better looking and smarter than me. Back when I was shredding what little credibility I have by suggesting a bunch of “cheap” stocks when the old VIX hit 50, commenter Brian wondered if Campbell (CPB) wasn’t a better idea.
Brian was absolutely right, and to make amends for poo-pooing his comment, may I suggest pairing a Bagel-ful with your bowl of soup? It should take some of the sting away from the 1000 mg of sodium you’re ingesting.

Campbell Beats Bear Market as Consumers Seek Out Soup:

“Campbell controls about 70 percent of the $5 billion-a-year U.S. soup market.”

Bonus points to those who recognized the post title from the classic Seinfeld episode:

JERRY: There’s only one caveat — the guy who runs the place is a little temperamental, especially about the ordering procedure. He’s secretly referred to as the Soup Nazi.
ELAINE: Why? What happens if you don’t order right?
JERRY: He yells and you don’t get your soup.
ELAINE: What?
JERRY: Just follow the ordering procedure and you will be fine.
GEORGE: All right. All right. Let’s - let’s go over that again.
JERRY: All right. As you walk in the place move immediately to your right.
ELAINE: What?
JERRY: The main thing is to keep the line moving.
GEORGE: All right. So, you hold out your money, speak your soup in a loud, clear voice, step to the left and receive.
JERRY: Right. It’s very important not to embellish on your order. No extraneous comments. No questions. No compliments.

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Investing

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November 22, 2008
ETF Newsletter in the Email (#3 Freebie)I have to email the newsletter over several days because Gmail identifies me as a spammer and puts me in the penalty box if I send out more than 500 emails a day, so please be patient.
This week I’ll feature the Homebuilders ETF (XHB) … the system most recently exited XHB in May and hasn’t reversed yet. Fancy pants who got short would be sitting on huge gains and wouldn’t have been shaken out during the late summer ramp back into the low 20s. People who just got out back in May would have missed a lot of pain.
There will only be two more freebie newsletters since I’ll be going away for Christmas in early December and won’t be back until the New Year, so email me today to get on the list.

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Investing

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November 21, 2008
Arrived at Dow 7500, Next Stop 5900?U.S. Stocks Plunge, Sending S&P to Lowest Level Since 1997

“The S&P 500 extended its 2008 tumble to 49 percent, poised for the worst annual decline in its 80-year history … all 10 of the index’s main industry groups slid at least 3.5 percent … The S&P 500 slid 6.7 percent to 752.44, under the low of 776.76 reached during the bear market in 2002. The Dow Jones Industrial Average sank 444.99 points, or 5.6 percent, to 7,552.29. The Nasdaq Composite decreased 5.1 percent to 1,316.12.”

Revisiting the long-term chart of the Dow Industrials with key Fibonacci retracement levels (last posted in early October), we can see that 7500 is a pretty key level, but if it gives way then 5900 is next.
On a happy note, readers of my newsletter know that last week the model said to buy the Ultrashort Financials (SKF) on Monday around $169. It’s currently $262 … not a bad return over a few days.

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Investing

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November 20, 2008
Boomers Develop Taste for Baked Beans U.S. Stocks Slide to Five-Year Lows as Banks, Carmakers Tumble

“The S&P 500 plunged 6.1 percent to 806.58 and extended its 2008 retreat to 45 percent, poised for its worst year since 1931. The Dow Jones Industrial Average lost 427.47 points, or 5.1 percent, to 7,997.28. The Nasdaq Composite Index decreased 6.5 percent to 1,386.42.”

The “support” level everyone has been watching (838.50 on the SP futures) finally gave way, with a thud. Has so much (paper) wealth ever evaporated so quickly?

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Investing

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November 19, 2008
Betting on Buffett’s Big Bet Backfiring Berkshire’s Credit Risk Soars on $37 Billion Bet

“Buffett has taken a series of bets on four stock indexes across the globe, including the Standard & Poor’s 500 Index, selling contracts to undisclosed buyers for $4.85 billion that protect the buyers against declines in those markets.
Under the agreements, Berkshire will pay as much as $37 billion if, on specific dates beginning in 2019, the market indexes are below the point where they were when he made the agreements. Berkshire hasn’t disclosed which stock indexes besides the S&P are covered under the contracts or how they’re structured.”

I’d love to know what the strike price is for any of the four indexes on which he wrote the puts. And what are the other three indexes? Any guesses?
Looking out to 2019, you’d think Buffett would be safe, though the five-year CDS chart below shows a lot of (irratonal?) fear.

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Investing

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hefeiddd · 发表于 2009-3-21 16:07

November 18, 2008
Has China’s Stock Market Seen the Lows?You can see from the chart below that since China announced its $586 billion stimulus plan on Sunday, November 9th, the stock market here has been quite strong. I’m not sure if this will mark *the* bottom, but it obviously marks some kind of significant low.
Interestingly, as my newsletter readers know, the UltraShort FTSE/Xinhua China 25 (FXP) reversed from long to short on Monday, November 3rd at $86.43, around a week before the stimulus “news.”

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November 15, 2008
ETF Newsletter in the Email (#2 Freebie)In the last shameless promotion of my new ETF newsletter, I bragged about how brilliantly the system caught the turn in Energies. This week I’m going to brag about how well it caught the turn in the Metals and Mining SPDR (XME). It sold in late July and price has dropped nearly 70% since then.
I’m no gold bug or hater for that matter, I have no axe to grind one way or another. I just try to follow the price trend. Incidentally, the system is currently long both gold (GLD) and silver (SLV) and is sitting on fat losses in both positions, but that’s the way it goes, I don’t get too emotional about any single position, win or lose.
If you’d like to join the email list (free till New Year then $199 a year thereafter), just email me or leave a comment. If you did so before and didn’t receive the second newsletter, just email me again… I’ve had to add hundreds and hundreds of names to the list in the last week and no doubt many got lost in the shuffle — thanks for your patience.

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Metals

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Gratuitous Cute Chick Pic — November 14, 2008

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GCCP

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November 14, 2008
Rinse and Repeat U.S. Stocks Surge, Led by Shares of Energy, Real-Estate Firms

“Today’s intraday low for the S&P 500 was the lowest since March 2003. The previous intraday low this year, 839.80 on Oct. 10 [regular hours session], followed a surge in money-market interest rates triggered by the Sept. 15 bankruptcy filing of Lehman Brothers Holdings Inc., once the fourth-largest U.S. securities firm.”

So 838.50 held up in an afternoon rush. As my newsletter readers know, quite a few inverse (short) ETFs reversed from long to short the other week, so maybe this bottom will stick. Only time will tell.

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Trading

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November 13, 2008
More Troubled Asses in Need of Relief Paulson Shifts Focus of Rescue to Consumer Lending

“Paulson said he has no regrets for the revised plan. ‘I will never apologize for changing a strategy or an approach if the facts change,’ he said.”

Ah yes, the ever-changing facts. Be interesting to see how well 838.50 holds up for yet another test.

Department of Unintentionally Hilarious Legislation:

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Trading

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November 12, 2008
Catching the Turn in EnergiesOne thing that clever readers did after receiving my ETF newsletter was sort the spreadsheet by date to see which ETFs reversed at the same time. Oil & Gas (IEO), US Energy (IYE), Natural Gas (UNG), Energy (XLE), and Oil & Gas Exploration and Production (XOP) all shifted from long to short on July 28 (week ending August 1). Not surprisingly, so did Russia (RSX), sold at $44.62.
You can see how valuable the signals from my unique trend following method can be and I invite you to review the newsletter for free until the New Year (I will be away for two weeks in December for Christmas, so sign up now!). When the Energies shift back from short to long, my subscribers will know. Will you?

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Energies

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November 11, 2008
GM’s Bankruptcy-like Future GM Plunges as Deutsche Says It May Become Worthless

“An analyst at Deutsche Bank recommended selling the shares and cut his 12-month price target to zero.”

I like those 12-month price targets of zero. What’s the 11-month price target? :) You can see from GM’s one year credit default swap that the market has been worried about the General for a long time now — the move off the 2007 low is a mere 10,000%.
(Explanation of what a credit default swap is.)

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Investing

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November 9, 2008
ETF Newsletter in the EmailI’ve sent the first copy of my ETF newsletter (such as it is) out this Sunday. If you’d like to be added to the mailing list (free till the New Year), just leave a comment or email me.
Ultra Financials Proshares (UYG) is a big winner for the system… if you were long and sold out back in May, you saved yourself a lot of grief. If you were a real fancy pants and then shorted it, you’d be making out like a bandit. I urge subscribers not to look at any one ETF signal in isolation, but to consider the portfolio as a whole (there are big winners AND losers).

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Investing

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November 8, 2008
Gratuitous Cute Chick Pic — November 7, 2008

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GCCP

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November 7, 2008
Las Vegas Quicksands Las Vegas Sands Plunges on Default, Bankruptcy Risk

“The casino owner said it doesn’t expect to meet a maximum leverage ratio covenant in the fourth quarter. That would trigger defaults that might force it to suspend development projects and ‘raise a substantial doubt about the company’s ability to continue as a going concern.’”

You can see that the market has been worried about LVS for awhile now; the one-year credit default swaps have moved from 50 to 1500 over the past year. This may be another excellent opportunity for the Chinese and Singaporean governments to step in and take stakes in the Sands’ Macau and Singapore operations on the cheap.

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Investing

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hefeiddd · 发表于 2009-3-21 16:09

November 6, 2008
Trend Followers Short McCainI applied my trend-following system (affectionately known as “Fuzzy”) to the John McCain to win 2008 US Presidential Election contract to see exactly when it would’ve gotten short. The answer: September 29, 2008. When did he pick Palin as VP?

UPDATE: Here’s the Obama contract, by popular demand:

Related: Obama.com More Than Doubles in Four Trading Days, January 7, 2008
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Trading

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November 5, 2008
Dollar Bear under Dubya Becomes Bull under Barry?Yen Trades Near 2-Week Low Versus Dollar on Stock Market Rally

“The U.S. currency has weakened 28 percent since Bush was inaugurated in 2001.”

Adios, Zhlubya, and thanks for nothing!
I recall some dummy writing back in July that it was a dead cinch for the dollar to tank to new lows, which was dead wrong. Since then this nitwit has gotten religion and will stop guessing and start following the trend (as best he can interpret it).

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Currencies

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November 4, 2008
Silverado Turns Desperado U.S. Auto Sales Fall 32% to Lowest Total in 17 Years

“Last month Toyota offered no-interest financing on 11 car and light-truck models. That promotion will continue at least through November.”

Is this the first time Toyota has offered 0%?
Looking at that chart makes me think that the kids hunting for their first job will be as disappointed as those of us who graduated from college between 1990 and 1992… and I can’t imagine what it was like job hunting in the late 1970s. Can any readers share their experience from 1978-82?

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Investing

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November 3, 2008
Do Bear and Bond Fund Reversals Mean the Bottom Is In?I didn’t have time to put out a complete copy of my new ETF newsletter this weekend (sorry about that), but I did look through the most active bear funds and found that eight out of eleven of them gave sell signals:

QID ~ Last Price 64.68 ~ Sell on 11/3/2008 at open ~ Bought on 9/8/2008 at 46.23
SDS ~ Last Price 84.19 ~ Sell on 11/3/2008 at open ~ Bought on 6/23/2008 at 63.01
SKF ~ Last Price 124.38 ~ Sell on 11/3/2008 at open ~ Bought on 10/6/2008 at 119
DXD ~ Last Price 70.32 ~ Sell on 11/3/2008 at open ~ Bought on 5/27/2008 at 53.67
TWM ~ Last Price 95.75 ~ Sell on 11/3/2008 at open ~ Bought on 10/6/2008 at 90.52
SMN ~ Last Price 70.20 ~ Sell on 11/3/2008 at open ~ Bought on 6/30/2008 at 28.60
FXP ~ Last Price 89.00 ~ Sell on 11/3/2008 at open ~ Bought on 5/27/2008 at 71.25
EEV ~ Last Price 86.90 ~ Sell on 11/3/2008 at open ~ Bought on 8/18/2008 at 91.38

Also the Long Bond fund (TLT) reversed:

TLT ~ Last Price 92.83 ~ Sell on 11/3/2008 at open ~ Bought on 6/16/2008 at 89.11

I’m not sure if this means a major bottom is in place, but it’s something for readers to consider. Drop me an email if you want to join the newsletter list — I hope to get a complete copy out next weekend.

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Investing

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November 1, 2008
Gratuitous Cute Chick Pic — October 31, 2008

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GCCP

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October 31, 2008
Janet Yellen Gripped by Mumbo Jumbo U.S. Stocks Gain on Better-Than-Estimated GDP Report, Rate Cuts

“The S&P 500 is still down 35 percent in 2008 and 18 percent in October, poised for its worst month since 1987 … Janet Yellen said at a speech in Berkeley, California: ‘We are in the grip of an adverse feedback loop,’ in which tighter credit conditions are exacerbating economic weakness.”

Spare me the mumbo jumbo, you lousy Baby Boomer academic. Bureaucrats who use technical terms like ‘adverse feedback loop’ to describe economic conditions should be gripped by the neck and shaken. Having a Ph.D. should automatically disqualify anyone from working at the Fed (yes, I’m talking to you too, Benny). The best candidates to work at the Fed are first-generation Korean immigrants who started running their own laundromats from scratch.
If the flag in the SP breaks on the high side, 1050ish should happen.

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Trading

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October 30, 2008
A Tale of Terrible Timing (and Greed, Hubris, Ignorance)Mizuho $7 Billion Loss Turned on Toxic Aardvark Made in America

“On Oct. 18, 2006, Rekeda and his team were offered an $11 million signing-on fee to defect to the Japanese bank … By the time the deal was consummated, the market was turning. On Dec. 11, 2006, the same day Mizuho announced it was setting up an office in the U.S. to create asset-backed debt securities, Fitch Ratings said the outlook for U.S. subprime mortgage bonds was ‘negative.’ It expected delinquencies on those loans to rise by 50 percent.
By December 2007, Mizuho had halted its U.S. CDO business. It fired Rekeda and at least four others on the team, putting an end to the bank’s one-year experiment.”

Sounds like the kid from Kiev timed it just about perfectly.
“In the prospectus, Mizuho pledged to back 87 percent of the [Aardvark] deal” — sheesh, one wonders if they had any idea what they were doing. Aardvark is mentioned here back in March 2007.

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Investing

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October 29, 2008
Best Performing ETFs, Year-to-DateHmmm, there’s something similar about all these funds, can’t quite put my short ultrashort 2x inverse finger on it though.

SDK | PROSHARES ULTRASHORT RUSSEL | +194.38%
EFU | PROSHARES ULTRASHORT MSCI EA | 189.8
SSG | PROSHARES ULTRASHORT SEMICON | 178.06
EEV | PROSHARES ULTRASHORT MSCI EM | 176.89
SMN | PROSHARES ULTRASHORT BASIC M | 172.81
SIJ | PROSHARES ULTRASHORT INDUSTR | 163.83
SFK | PROSHARES ULTRASHORT RUSSEL1 | 148.74
REW | PROSHARES ULTRASHORT TECHNOL | 142.9
RMS | RYDEX INVERSE 2X S&P MIDCAP | 142.15
SKK | PROSHARES ULTRASHORT RUSSEL | 141.67
MZZ | PROSHARES ULTRASHORT MIDCAP | 141.26
FXP | PROSHARES ULTRASHORT FTSE | 140.15
SJL | PROSHARES ULTRASHORT RUSSELL | 139.84
RSW | RYDEX INVERSE 2X S&P 500 ETF | 135.37
QID | PROSHARES QQQ ULTRASHORT | 133.92
SDS | PROSHARES ULTRASHORT S&P500 | 124.7
SCC | PROSHARES ULTRASHORT CONSUME | 111.98
RRZ | RYDEX INVERSE 2X RUSS 2000 | 109.91
DXD | PROSHARES ULTRASHORT DOW30 | 105.65
TWM | PROSHARES ULTRASHORT RUSSELL | 105.05
SJF | PROSHARES ULTRASHORT RUSSELL | 103.11
SDD | PROSHARES ULTRASHORT SMALLCA | 101.08
SDP | PROSHARES ULTRASHORT UTILITI | 98.84
EUM | PROSHARES SHORT MSCI EMERGIN | 95.99
EWV | PROSHARES ULTRASHORT MSCI JA | 95.72
SZK | PROSHARES ULTRASHORT CONSUME | 85.21
EFZ | PROSHARES SHORT MSCI EAFE | 83.67
SRS | PROSHARES ULTRASHORT REAL ES | 81.77
SKF | PROSHARES ULTRASHORT FINANCI | 79.04
SJH | PROSHARES ULTRASHORT RUSSELL | 73.84
RXD | PROSHARES ULTRASHORT HEALTH | 72.62
DUG | PROSHARES ULTRASHORT OIL & G | 67.29
MYY | PROSHARES SHORT MIDCAP 400 | 64.93
PSQ | PROSHARES SHORT QQQ | 63
SH | PROSHARES SHORT S&P500 | 59.79
RWM | PROSHARES SHORT RUSSELL2000 | 51.69
DOG | PROSHARES SHORT DOW30 | 50.43
SBB | PROSHARES SHORT SMALLCAP600 | +47.8%

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Investing

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He Who Sells What Isn’t His’n Volkswagen Overtakes Exxon as Most Valuable Company

“Volkswagen rose more than fourfold in two days. At its high today, Wolfsburg, Germany-based Volkswagen’s common shares were valued at $370 billion, more than Exxon Mobil Corp.’s $343 billion.”

That’s an even more impressive short squeeze than the one in crude back in September.

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Trading

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October 28, 2008
New Newsletter Sample Signals — Australian DollarThere’s an ETF for almost everything these days, including quite a few currencies, many of which I plan to follow. Here are the “signals” for the Australian Dollar (FXA). The FXA has only been around since the middle of 2006, but you can see that my trend-following method caught a big chunk of rise and got out before things really went bad. (Fancy pants would reverse and go short on the exit in August.)
Subscribers to my new newsletter will enjoy these kind of signals for at least 100 different ETFs.

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Currencies

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Recent Posts

Recent Comments

C. Maoxian: @craigk: Thanks for the link.
Gord: Nice. Lower than I expected.
craigk: Delinquency data 1980 - '06
C. Maoxian: @Drum: Spreads widen or narrow, right? I'm not at my machine but I'll take a look at that spread over the...
DrumMania: US will not default---the CDS spread has just jumped.

hefeiddd · 发表于 2009-3-21 16:13

September 26, 2008
Ranking Among My Biggest Failures JPMorgan Chase May Acquire Washington Mutual After FDIC Seizure

“As many as five banks had considered bids for WaMu without making an offer, balking in part because the lender faced as much as $19 billion in mortgage loan losses.”

A little wiser (maybe), a lot poorer (definitely).

(Unfortunately) Related:
Off the Charts: Washington Mutual’s Dividend Yield (November 14, 2007)
Tip the Chairman and Discover His 10 Favorite Financial Stocks (August 1, 2007)
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Investing

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September 25, 2008
The Merchant of Omaha Goldman Would Rather Not Dwell in their Necessity

“The Goldman Sachs Group, Inc. announced today that it has reached an agreement to sell $5 billion of perpetual preferred stock to Berkshire Hathaway, Inc. in a private offering. The preferred stock has a dividend of 10 percent and is callable at any time at a 10 percent premium. In conjunction with this offering, Berkshire Hathaway will also receive warrants to purchase $5 billion of common stock with a strike price of $115 per share, which are exercisable at any time for a five year term.”

Not exactly a pound of flesh, but certainly a sweet deal for Buffett.
This kindness will I show.
Go with me to a notary, seal me there
Your single bond; and, in a merry sport,
If you repay me not on such a day,
In such a place, such sum or sums as are
Express’d in the condition, let the forfeit
Be nominated for an equal pound
Of your fair flesh, to be cut off and taken
In what part of your body pleaseth me.

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Investing

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All Animals Are Equal…but some animals are more equal than others:

“While China grapples with its latest tainted food crisis, the political elite are served the choicest, safest delicacies. They get hormone-free beef from the grasslands of Inner Mongolia, organic tea from the foothills of Tibet and rice watered by melted mountain snow. And it’s all supplied by a special government outfit that provides all-organic goods from farms working under the strictest guidelines.”

Pigs standing on their hind legs?
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China

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September 24, 2008
Paulson Actively Shorting Shite Paulson Shorts 4 of 5 Largest U.K. Finance Companies

“Paulson has short positions in HBOS Plc, Lloyds TSB Group Plc, Barclays Plc, and Royal Bank of Scotland Group Plc. The disclosures were required under rules pushed through by the U.K.’s Financial Services Authority last week.
‘Paulson & Co. empathizes with financial firms as to the difficult positions in which many find themselves … Our short positions are taken on a passive basis the success of which will be determined by the merits of the particular company.’”

John Paulson is a master of PR… the empathetic and passive billionaire hedge fund manager, lol. (I respect smart guys who have legitimately made a fortune off of the stupidity of others.)

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Investing

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September 23, 2008
A Life Spent Considering My Dismal FutureFrom a 1987 interview with James Crumley:

“Sometimes I wish I was in the smaller paperback editions and more widely distributed in truck stops and supermarkets and 7-11s. I think that’s where my audience is … one of the things that has always encouraged me and made me feel good about the books that I write is that working-class people read them and are moved by them. My background is firmly rooted in the lower-middle classes, working classes, and I still remember what work was like, although I’m certainly glad I don’t have to do it anymore. I do have a great deal of respect for those people and when they like my books I’m particularly tickled.”

I’m a big fan of Crumley’s writing and recommend you read him if you haven’t already.
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Books

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Textbook Short Squeeze Oil Posts Biggest Gain as Traders Caught in End-Month Squeeze

“Crude oil climbed more than $25 a barrel, the biggest gain ever, as traders scrambled to unwind positions on the October contract’s last day of trading.”

This is one short squeeze not (directly) instigated by the Feds. That’s a 30-min. chart below: impressive, no? There are a lot of bald guys on the NYMEX floor… some of them just got a little balder.

Meanwhile, in the land of no shorting (”artificial strength”): U.S. Stocks Tumble on Concern Bailout Won’t Stop Recession

“The Standard & Poor’s 500 Index lost 3.8 percent, erasing almost half of its rally over the previous two days. Sovereign Bancorp Inc., Marshall & Ilsley Corp. and Washington Mutual Inc. sank more than 21 percent, sending the S&P 500 Banks Index to a record plunge … All 10 industry groups in the S&P 500 lost at least 1 percent … Homebuilders in S&P indexes fell 12 percent, their biggest drop on record.”

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Energies

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September 22, 2008
Buffett’s Canary in the Coal Mine Went IgnoredI thought it would be useful to post this excerpt from Mr. Buffett’s 2005 Letter to Shareholders in light of recent financial catastrophes (emphasis mine):

“We lost $104 million pre-tax last year in our continuing attempt to exit Gen Re’s derivative operation. Our aggregate losses since we began this endeavor total $404 million.
Originally we had 23,218 contracts outstanding. By the start of 2005 we were down to 2,890. You might expect that our losses would have been stemmed by this point, but the blood has kept flowing. Reducing our inventory to 741 contracts last year cost us the $104 million mentioned above.
Remember that the rationale for establishing this unit in 1990 was Gen Re’s wish to meet the needs of insurance clients. Yet one of the contracts we liquidated in 2005 had a term of 100 years! It’s difficult to imagine what ‘need’ such a contract could fulfill except, perhaps, the need of a compensation conscious trader to have a long-dated contract on his books. Long contracts, or alternatively those with multiple variables, are the most difficult to mark to market (the standard procedure used in accounting for derivatives) and provide the most opportunity for ‘imagination’ when traders are estimating their value. Small wonder that traders promote them.
A business in which huge amounts of compensation flow from assumed numbers is obviously fraught with danger. When two traders execute a transaction that has several, sometimes esoteric, variables and a far-off settlement date, their respective firms must subsequently value these contracts whenever they calculate their earnings. A given contract may be valued at one price by Firm A and at another by Firm B. You can bet that the valuation differences – and I’m personally familiar with several that were huge – tend to be tilted in a direction favoring higher earnings at each firm. It’s a strange world in which two parties can carry out a paper transaction that each can promptly report as profitable.
I dwell on our experience in derivatives each year for two reasons. One is personal and
unpleasant. The hard fact is that I have cost you a lot of money by not moving immediately to close down Gen Re’s trading operation. Both Charlie and I knew at the time of the Gen Re purchase that it was a problem and told its management that we wanted to exit the business. It was my responsibility to make sure that happened. Rather than address the situation head on, however, I wasted several years while we attempted to sell the operation. That was a doomed endeavor because no realistic solution could have extricated us from the maze of liabilities that was going to exist for decades. Our obligations were particularly worrisome because their potential to explode could not be measured. Moreover, if severe
trouble occurred, we knew it was likely to correlate with problems elsewhere in financial markets.
So I failed in my attempt to exit painlessly, and in the meantime more trades were put on the books. Fault me for dithering. (Charlie calls it thumb-sucking.) When a problem exists, whether in personnel or in business operations, the time to act is now.
The second reason I regularly describe our problems in this area lies in the hope that our experiences may prove instructive for managers, auditors and regulators. In a sense, we are a canary in this business coal mine and should sing a song of warning as we expire. The number and value of derivative contracts outstanding in the world continues to mushroom and is now a multiple of what existed in 1998, the last time that financial chaos erupted.
Our experience should be particularly sobering because we were a better-than-average candidate to exit gracefully. Gen Re was a relatively minor operator in the derivatives field. It has had the good fortune to unwind its supposedly liquid positions in a benign market, all the while free of financial or other pressures that might have forced it to conduct the liquidation in a less-than-efficient manner. Our accounting in the past was conventional and actually thought to be conservative. Additionally, we know of no bad behavior by anyone involved.
It could be a different story for others in the future. Imagine, if you will, one or more firms (troubles often spread) with positions that are many multiples of ours attempting to liquidate in chaotic markets and under extreme, and well-publicized, pressures. This is a scenario to which much attention should be given now rather than after the fact.”

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Personal

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September 20, 2008
Gratuitous Cute Chick Pic — September 19, 2008

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GCCP

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September 19, 2008
SEC: a Threat to Fair and Orderly Markets Short-Selling Crackdown Extends to New York, London

“The SEC said earlier today that it may require hedge funds to disclose short-sale positions and plans to subpoena their communications. The Financial Services Authority in the U.K. banned short selling financial shares for the rest of the year.”

Sheesh, we’ve descended back into the age of witch hunts and scapegoating (I thought the tenth day of the seventh month is the day of atonement, lol.)
I was looking through the 15-minute charts over the last several days for a bunch of stuff, and… it looks like a tough time to make a buck by day trading… especially Thursday: those whammy days are killer. But if you’re in the fray, you know this already.
(Meanwhile the TED Spread has widened to 3.14 … the markets are broken.)

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Trading

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September 18, 2008
TED Spread at Multi-decade High (Dept. of Try, Try Again)OK, I’ve got it right this time (unlike last time): the TED Spread went as wide as 3.0219.

I keep an eye on the short-term interest rate index as well as old TED. I wasn’t joking when I said you better take steps to protect yourself (including your personal safety) these days.

U.S. Stocks Plunge as Lending Freezes Up Following AIG Takeover

“U.S. Treasury three-month bill rates dropped to as low as 0.02 percent and the so-called TED spread, the difference between what the Treasury pays to borrow for three months and the amount banks charge each other for loans, widened by 0.84 percentage point to 3.02 percent.”

Cerberus’ Snow Says Markets Almost `Frozen,’ AIG `Huge Blowup’

“How could a New York regulator possibly have a vision of all the systemic risk of that company?”

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Investing

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hefeiddd · 发表于 2009-3-21 16:14

September 18, 2008
Say a Little Prayer

(When things get really bad, he can always hock the watch. [edit: I originally wrote “hawk” the watch… my English language ability is in rapid decline. :-) ] )
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Investing

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September 16, 2008
TED Spread at Multi-decade High U.S. Stocks Drop, S&P 500 Sinks Most Since 2001 Terror Attacks

“Stocks pared their losses during the first 1 1/2 hours of trading, led by gains in consumer companies including Procter & Gamble Co. and McDonald’s Corp., on speculation the Federal Reserve will reduce rates tomorrow. Traders in futures contracts gave 60 percent odds the Fed will shift its target for overnight loans between banks to 1.75 percent from 2 percent.”

Stocks pared their losses during the first 1 1/2 hours of trading… but then collapsed into the close. Lonely Staples strength… Bagel-fuls? The TED Spread is at 1.81, worse than the peak reached last August [edit: it’s been a long day, the high was 2.10 back in December 2007… maybe this mis-titled post will prove right soon enough]. Minimize your personal debt and expenses, batten down the hatches and stock plenty of bulk foods and shells for your shotgun. When $62 trillion in credit derivatives unravel, you have to take your personal safety seriously.

(Bad) news roundup:
Lehman Auctions $852 Million of LBO Loans as Prices Plummet

“Lehman has $7.1 billion of high-yield loans and bonds on its books, the bank said Sept. 10 … The price of the average actively traded leveraged loan has fallen from above face value in June 2007 to 86.64 cents on the dollar, compared with a low of 86.3 cents reached in February.”

Fed Adds Most Reserves Since 9/11 as Banks Hoard Cash

“Fed funds traded as high as 6 percent, or 4 percentage points above the central bank’s target rate for overnight loans between banks … The rate dropped to as low as 0.5 percent after the Fed added the [70 billion in] temporary reserves … The Fed widened the collateral it accepts yesterday for loans to securities firms.”

Lehman New York City Headquarters Tower May Be Worth $1 Billion

“The 32-story skyscraper at 745 Seventh Ave. has about 1 million square feet of space and was bought by Lehman from Morgan Stanley in 2001 for about $700 million. The $650 a- square-foot price was a record for Manhattan at the time.”

This Is the Day Asian Capital Woke Up: Michael Lewis

“This is the day that American financiers, from the point of view of the Asians who sit on top of the world’s biggest pile of mobile capital, became a bad risk.”

Lehman Subordinated Debt, Preferreds May Be Wiped Out

“Lehman’s $2.5 billion of 6.875 percent senior unsecured notes due in 2018 fell 46.5 cents to 36 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Lehman’s $1.5 billion of 6.875 percent subordinated notes due in 2037 plunged 69 cents to 3.5 cents on the dollar.”

Credit-Default Risk Soars After Lehman Files for Bankruptcy

“Lehman has been one of the 10 largest counterparties in the market for credit-default swaps…. The market, which is unregulated and has no central exchange where prices are disclosed, has been the fastest-growing type of so-called over-the-counter derivative, according to the Bank for International Settlements.”

Lot of meat in this article.
Lehman Owes Largest Unsecured Creditors $157 Billion

“Senior unsecured noteholders are owed $138 billion, subordinated unsecured noteholders are owed $12 billion and junior subordinated noteholders are owed $5 billion.”

Pimco, Vanguard Are Biggest Lehman Bond Fund Losers

“While bond investors will recover different amounts based on their ranking in Lehman’s capital structure, models of credit-default swaps assume lenders will recoup 40 percent of their loans overall in a bankruptcy. Investors may receive less than that, based on prices for Lehman’s senior bonds of as little as 35 cents on the dollar from price provider Trace.”

New York Governor Says AIG Can Access $20 Billion

“Goldman Sachs Group Inc. and JPMorgan Chase & Co. are trying to arrange financing for AIG to plug a $70 billion to $75 billion financing gap … The Federal Reserve urged AIG to seek private capital and discouraged the insurer from expecting a loan from the central bank….”

`Tectonic’ Market Shift as Lehman Fails, Merrill Sold

“The two banks most interested in Lehman, London-based Barclays Plc and Charlotte, North Carolina-based Bank of America, balked at a deal unless the government would protect it from any losses on some of the hardest-to-value assets. The government, already shaken by criticism of its actions to support Bear Stearns, Fannie Mae and Freddie Mac, refused to budge and tried to persuade the CEOs of the biggest Wall Street firms to pitch in instead.”

Bank of America to Acquire Merrill as Crisis Deepens

“The Merrill purchase comes less than a year after Lewis, frustrated by proprietary trading losses at his company, said on a conference call, ‘I’ve had all the fun I can stand in investment banking’ and vowed to scale back the unit. Lewis said today his opinion has changed. ‘I like it again,’ Lewis said on the conference call.”

Lehman Workers Clear Desks, Weep After Bankruptcy

“In New York, the day before, hundreds of people wearing Lehman badges were seen entering the building at 745 7th Avenue carrying empty bags. The same employees later left the building with bags now full of files and personal belongings. Some were carrying plants and paintings.”

Build a better life by stealing office supplies?
WaMu Rating Lowered to Junk by S&P on Mortgage Losses

“The bank on Sept. 11 said in a statement that retail balances at the end of August, of $143 billion, were ‘essentially unchanged’ from the end of 2007.”

Thank god for inertia (or oblivious depositors?)
AIG Seeks Funds From JPMorgan, Goldman After Fed Balks at Loan

“Wall Street’s biggest firms are working together to avoid a failure at AIG, which sold the banks and other investors protection on $441 billion of fixed-income assets, including $57.8 billion in securities tied to subprime mortgages.”

New York City `Well-Positioned’ to Withstand Turmoil

“We’re going to go through a period where we’re going to have less revenue from Wall Street’”

Bloomberg, master of understatement. The big question I have is how many Bloomberg terminal subscriptions just got cancelled?
Paulson Says Lehman Bailout `Never Once’ Considered

“‘The American people can remain confident in the soundness and resilience of our financial system. Our banking system is a safe and sound one.’”

Oh Hank, when $62 trillion unravels, you have no idea what’s going to happen (but I understand the need for public officials to say things like this).
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Investing

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September 15, 2008
Turning in Their Maseratis*Lehman Files for Biggest Bankruptcy as Suitors Balk

“The 158-year-old firm filed a Chapter 11 petition with U.S. Bankruptcy Court in Manhattan today. Lehman listed more than $613 billion of debt … and $639 billion of assets …. Rival banks and brokers today held a session for netting derivatives transactions with Lehman to reduce uncertainty in the derivatives market. That move means canceling trades that offset each other….
‘Bankruptcy severs all counterparty contracts, and therein lies the systemic risk. This would be the first time we’ve tested how much damage will be done by a bankruptcy.’”

Keeping an eye on the very short-term interest rates, among a hundred other things.

* The title of the post was inspired by Jimmy Rogers who is fond of saying, “Let those guys on Wall Street turn in their Maseratis….” They are now!
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Investing

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September 14, 2008
Cool ItI haven’t played poker online for awhile, but I just visited Paradise and was thrilled to see that they’ve recently (?) started a sit-and-go no-limit tournament called “Cooler.” If you finish in the top five, you double your buy-in (minus the maximum 10% rake). Since many online players are cliff-divers and action junkies, this is a very good (and quick!) game for a patient player. 1500 starting chips and eight minute blinds is so much better than the dreaded “Speed” (five minute blinds) and absurd “Turbo” (three !!! minute blinds) tournaments, which really lure the nutty gamblers.
As you can see, they have some pretty high stakes games (100-500 euros), but it’s tough to fill a table with those buy-ins. On the other hand, I’ve never had to wait more than a few minutes to get a table at 10 euros or lower. Check it out if you’re a fellow poker player.

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Poker

| Time: 11:51 pm (utc+8) Comments (6)

September 13, 2008
Is the IYR Leading the XLF?The IYR (US Real Estate ETF) bottomed in January 2008 and the XLF (the Financial SPDR) may have bottomed in July 2008. It’s interesting to pair these two relative performance charts up … if the IYR is leading then we’ve probably seen the low in the XLF, despite the recent collapse of LEH and continuing slide in AIG, MER, etc. Wishful thinking? Thoughts from the gallery?

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Investing

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September 12, 2008
TGIF (XXX)

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TGIF

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Lehman, The Bell Tolls for Thee Lehman Wake Hosted by Bobby Van’s as Resumes Flood Headhunters

“[A single Lehman employee willing to talk to reporters], who identified himself as a second-year trainee trader, said that while colleagues were preoccupied with news and rumors, they were continuing to do their jobs.
‘People are still working as normal,’ he said, declining to give his name. ‘We’ve got a bell that rings every time a trade goes through, and it was still ringing today.’”

Thus the title of the post. :) For those who didn’t blow a hundred grand on a useless liberal arts education, here’s Donne:

“Perchance he for whom this bell tolls may be so ill, as that he knows not it tolls for him; and perchance I may think myself so much better than I am, as that they who are about me, and see my state, may have caused it to toll for me, and I know not that.”

This guy has the right idea: Lehman Veteran Goes Sailing as Economic Storm Mounts

“‘Greed trumped everything at Lehman and I left in the nick of time. They were willing to make a loan to an orangutan. My plan now is to begin in California and start acquiring some of these distressed banks.’”

Meanwhile the panic low in the XLF in July is looking fine and may indeed mark a multi-decade low (it’s all up from here? :) ).

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Investing

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September 11, 2008
Bull Market in Lehman’s Credit-Default Swaps Lehman’s Fuld Faces Pressure to Land Deal After Drop

“Lehman has been trying to raise capital and shed devalued real-estate assets that contributed to the firm’s $2.8 billion loss last quarter and saddled the company with $8.2 billion in writedowns and credit losses in the past year.”

Lehman to Sell Neuberger Stake, Spin Off Real Estate

“The company said it plans to shed $25 billion to $30 billion of commercial real estate investments by placing them in a separate publicly traded company, to be called Real Estate Investments Global, in the first quarter in 2009. Lehman also said it will cut its dividend to 5 cents per common share from 68 cents.”

Fed Loans May Give Lehman Breathing Room Bear Lacked

“The Primary Dealer Credit Facility (PDCF) offers the 19 primary dealers that trade Treasuries with the New York Fed access to direct loans at the same rate as commercial banks, now 2.25 percent. Dealers can submit collateral including Treasuries and asset-backed debt, corporate bonds and municipal bonds with investment grades.
Any Fed rescue of Lehman may deepen criticism among some current and former central bankers about the danger of moral hazard — where firms take on more risk in anticipation of government aid if their bets go wrong.”

See Battling Bank Runs, Brokers Borrow from Ben (July 11, 2008).

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September 10, 2008
Holding $65 Billion of Overvalued Mortgage Assets

Lehman Shares Fall After Talks With Korean Bank End

“Analysts are predicting more writedowns because the firm still has about $65 billion in mortgage-related assets that are losing value with the collapse of the real-estate market. Most of the portfolio, about $40 billion, is tied to commercial real estate holdings, which Lehman may spin off into a new company.”

Lehman to Announce `Strategic Initiatives’ Tomorrow

“Lehman said in a statement that it will report the results at 7:30 a.m. in New York. The company said it will host a conference call at 8 a.m. to discuss the firm’s performance, ‘outlook and strategy.’ Lehman previously said it would release the figures on Sept. 18.”

U.S. Stocks Tumble as Lehman Brothers Rattles Banking Shares

“The KBW Bank Index, which rose almost 7 percent yesterday, lost 6 percent today as all of its 24 companies retreated. The S&P 500 Financials Index slumped 6.6 percent, its biggest drop since July 24.”

This article from March 17, 2008 had an $80 billion figure…

“As the biggest underwriter of mortgage-backed bonds last year, Lehman owned $80 billion of the assets at the end of November. Half were tied to commercial mortgages, whose prices declined by 19 percent in the past three months. About $5.3 billion of the holdings were backed by loans to subprime borrowers at greatest risk of default. Lehman limited its writedowns to $1.5 billion last year by using financial hedges.”

… you can see that when the numbers are this large, even small writedowns (in percentage terms) result in huge (crippling if not lethal) losses.
FAS 157 is light and enjoyable reading (if you didn’t take it to the beach with you this summer).
Aside for day traders: In one five minute period on Tuesday, LEH did over 77,000 trades — impressive activity which no doubt strained scanners throughout the land. Remember that Lehman bought RealTick back in 2005, probably in part for their HotTrend scanner (the best publicly available market scanner I’ve ever used).
All posts mentioning Lehman Bros.
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September 8, 2008
Market Stability, Mortgage Availability and Taxpayer Protection - (Pity the Shareholders)Fannie and Freddie news roundup:

Paulson Statement on U.S. Action on Fannie, Freddie
“Let me make clear that these two institutions are unique. They operate solely in the mortgage market and are therefore more exposed than other financial institutions to the housing correction. Their statutory capital requirements are thin and poorly defined as compared to other institutions. Nothing about our actions today in any way reflects a changed view of the housing correction or of the strength of other U.S. financial institutions.”

This is the meat… read this if you want to understand the plan.
Paulson Engineers U.S. Takeover of Fannie, Freddie
“The FHFA will take over Fannie and Freddie under a so- called conservatorship, replacing their chief executives and eliminating their dividends. The Treasury can purchase up to $100 billion of a special class of stock in each company as needed to maintain a positive net worth. It will also provide secured short-term funding to Fannie, Freddie and 12 federal home-loan banks, and purchase mortgage-backed debt in the open market.”
Fannie, Freddie Capital Concerns Prompt Paulson Plan
“Analysts have speculated that the Treasury would wipe out common shareholders, while seeking to shield preferred stockowners from total loss. Fannie and Freddie preferred shares are typically owned by banks and insurance companies. Their $5.2 trillion of debt outstanding is held by investors including Asian central banks, and would probably be guaranteed, analysts said.”
Regulators to Help Banks With Fannie, Freddie Shares
“Paulson urged banks to contact their primary federal regulator if they believe losses on holdings of common or preferred shares in Fannie Mae or Freddie Mac will cause them to fall below the government’s benchmark for ‘well-capitalized’ institutions.”
Treasury Extends Secured Credit Line to Federal Home Loan Banks
“The Federal Home Loan Bank system is the largest U.S. borrower after the federal government. The FHLBs, lend money to more than 8,000 thrifts, credit unions, insurers and commercial banks at below-market rates, mainly to finance their mortgage holdings. The banks also buy and hold mortgage-related assets.”
U.S. Losses on Fannie, Freddie May Be $300 Billion, Poole Says
“‘I would not be surprised if their total losses aggregate about 5 percent of their obligations. Their obligations are in the neighborhood of $6 trillion dollars. And 5 percent of that is about $300 billion. Five percent does not seem to me to be an outrageous guess at this point.’”
Yen Declines After U.S. Government Takes Over Fannie, Freddie
“‘A government bailout will certainly stabilize Freddie and Fannie and improve risk appetite for carry trades.”’
Asian Stocks, U.S. Futures Rally on Fannie, Freddie Takeover
“Asian stocks surged the most in eight months and S&P 500 futures expiring in September climbed 2.6 percent to 1,273.80, the steepest advance since Aug. 5.”
Treasuries Tumble After U.S. Takes Control of Fannie, Freddie
“The bailout gives investors less reason to favor the relative safety of government debt. Treasuries had gained for three straight months as writedowns and credit-market losses surpassed $500 billion.”

Give the last word to the bonds:

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hefeiddd · 发表于 2009-3-21 16:15

September 6, 2008
Sticking with StaplesKeeping an eye on the relative performance of the Consumer Staples sector is a good way to know whether we’re in a bull or bear market. You can see the massive shift into Staples starting in the last quarter of 2007, just as the credit crisis really started to hit the fan. People will always need diapers, bubble gum, cigarettes, beer, and… Bagel-fuls?

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September 5, 2008
TGIF (XXIX)

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Yelling Campfire in a Crowded Trade U.S. Stocks Slump, Posting Longest Losing Streak Since January

“Stock-index futures started falling after the Labor Department said at 8:30 a.m. New York time that the number of Americans collecting unemployment benefits reached a five-year high. The selling accelerated as oil declined an hour and a half later. [ed. Note to Bloomberg robot: this sentence can be used when the market goes up by changing the word ’selling’ to ‘buying.’] The majority of the drop occurred after the S&P 500 slipped below 1,261.16, a one-month intraday low that traders said represented a level of support for the market.”

Billionaire Gross’s widely-read piece was also blamed for contributing to the selling.

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Trading

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Best Places to Begin Life as a DroneEvery year BusinessWeek apparently puts out a list of the Top 50 Best Places To Launch A Career. Here are the top 20 for 2008:

Ernst & Young - Accounting
Deloitte - Accounting
PricewaterhouseCoopers - Accounting
Goldman Sachs - Investment Banking
KPMG - Accounting
Marriott International - Hospitality
Google - Internet
Lockheed Martin - Manufacturing
IBM - Technology
JP Morgan - Investment Banking
Teach for America - Government
US State Department - Government
Microsoft - Technology
Target - Retailing
Abbott Labs - Pharmaceuticals
NASA - Government
Boston Consulting - Consulting
General Electric - Manufacturing
Anheuser-Busch - Consumer Goods
Norfolk Southern - Transportation

Target is an interesting choice. I wonder why they picked it over Wal-Mart?
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Musings

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September 4, 2008
Unnaturally Bad Gas Pains Ospraie May Be Latest Victim of Natural Gas Swings

“Amaranth collapsed in 2006 after $6.6 billion of losses on wrong-way bets on natural gas. MotherRock LP, a $400 million fund also folded that year after bets on the commodity soured.
…
‘If you’ve got too much of the stuff [NG] coming out of the ground, there’s no place to put it, and the price just collapses. It’s almost manic depressive: one minute you’ve made a fortune and the next it’s all gone.’”

But if you skim 2 and 20 off the fortune, it’s yours to keep.
UPDATE: Ospraie Says XTO Investment Led to Hedge Fund Losses:

“Ospraie held $128 million of shares of XTO, which was the fund’s biggest U.S. stockholding as of June 30, according to a Securities and Exchange Commission filing. XTO, based in Fort Worth, Texas, slumped 26 percent in July and August as oil and gas prices fell … Ospraie’s flagship fund declined 27 percent last month, extending its loss for the year to 39 percent … Anderson spoke for about 10 minutes and didn’t take questions.”

Questions such as didn’t you see the massive reversal across the charts in early July?

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Feeling Juiced Coca-Cola to Buy China’s Huiyuan for $2.3 Billion

“Coca-Cola’s purchase of Huiyuan, which is subject to Chinese regulatory approval, would be the biggest foreign takeover of a company in the Asian country … Huiyuan is the biggest fruit and vegetable juice company in China by market share with 10.3 percent … The Beijing-based company had 42.6 percent of the market for 100 percent juices last year.”

Established Chinese brand, new American ownership… I’m thrilled. (I prefer the Great Lakes brand of juices here, but I’m not sure how wide their national distribution is.)
Note that Coke is buying all of Huiyuan. Foreign investors eventually have learned that they must have total control … even 1% ownership by a Chinese party is absolutely guaranteed to cause trouble at some point. The poor French stuck with their 51% stake in Wahaha is one of the few public cases of a nightmare situation I’ve seen literally thousands of times in China.

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September 2, 2008
Wimpy Gustav Gives Rise to Gap Oil Falls as Companies Prepare to Resume Output After Hurricane

“Workers from more than 70 percent of the platforms and rigs in the Gulf were evacuated as Gustav approached…. All of the area’s 1.3 million barrels a day of oil and 7.06 billion cubic feet of gas, 95 percent of the total, was shut.

That’s an ugly chart if you’re an energy bull. Hey, where’d all the $200 a barrel guys go?

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Energies

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The Week That Was (Ending August 29, 2008)Here are the most read stories on the Bloomberg last week with selected excerpts (and my comments, if any, in italics).

Libor Signals Credit Seizing as Banks Balk at Lending
“The premium banks charge for lending short-term cash may approach the record levels set last year … Banks are charging each other a premium of about 78 basis points over what traders predict the Federal Reserve’s daily effective federal funds rate will average over the next three months to lend cash. The spread is up from about 24 basis points in January, and may widen to 85 basis points, or 0.85 percentage point, by mid-December, prices in the forwards market show.”
Merrill, Wachovia Hit With Record Refinancing Bill
“Investors on average demand yields of 4.14 percentage points more than what they can get on Treasuries to purchase bank bonds, up from the low last year of 0.76 percentage point in January … Spreads on investment- grade rated bonds overall average about 3.14 percentage points … Banks sold $960.8 billion of so-called floaters between 2005 and 2007…. About $260 billion, or about 30 percent, of the debt coming due in the remainder of this year is floating-rate notes.”
U.S. Stocks Drop, Led by Financial Shares, AIG, Banks Retreat Blogged.
Fannie, Freddie Mortgage Profit Rises With Debt Costs
“Fannie and Freddie … borrowing costs rose amid concern they don’t have enough capital to weather the biggest housing downturn since the Great Depression. The companies had $14.9 billion of losses in the past four quarters as late payments on mortgages rose to the highest on record.”

Zero shareholders’ equity.
Citigroup Limits Meetings, Pares Color Photocopies Blogged.
Lehman Said to Be Eliminating as Many as 1,000 Jobs
“Lehman has shrunk its payroll by about 6,400, or 22 percent, in the past 12 months … Lehman, the No. 1 underwriter of mortgage-backed securities last year, was saddled with the stakes after investor demand for them dried up.”

Interested to know when the euphemism “headcount reduction” was first used.
Pimco Seeks as Much as $5 Billion for Distressed Debt
“The new Pimco fund, dubbed Disco, will focus on commercial loans as well as residential debt that doesn’t carry explicit government guarantees or the implied backing of securities issued by companies such as Fannie Mae or Freddie Mac.”
Business Jet Crashes Expose Rule-Breaking Brokers 3,500-word magazine? piece. Type of story the WSJ used to do pre-Murdoch, which is now the exclusive preserve of Bloomberg.
Dubai M&A Oasis Lures London Bankers With Bigger Desert Bonuses
“Fees earned by securities firms in the Middle East rose 5 percent to $612 million in the first half of the year, the only part of the world to show growth … While it accounts for less than 2 percent of global investment banking fees, the region accounts for twice as big a share of the pie as it did a year ago.”

I can think of few more awful places to live than Dubai.
Citadel Investment Seeks $1 Billion for Global Macro Hedge Fund
“Macro funds, which attempt to profit from broad economic trends by trading stocks, bonds, currencies and commodities, gained an average of 3.7 percent this year through July … Funds raised $29 billion of new cash in the first half, compared with $118 billion in the same period last year…. The industry manages about $1.9 trillion. ”

Hedge funds are a much more respectable corner of the world’s largest skimming operation.

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Bloomberg

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August 30, 2008
Gratuitous Cute Chick Pic — August 29, 2008

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GCCP

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August 29, 2008
Dubious Youth Trends from Spain Partygoers Alarm Zurich Officials, Who Say Revelry Isn’t Swiss

“Spontaneous revelry and drunkenness are shocking to the Swiss, who value orderliness. Armies of street sweepers clean up cities daily, garbage police inspect household refuse, and 95.9 percent of the trains run on time.”

Zurich is the most uptight place we’ve ever lived — I could tell a hundred stories, but won’t. (I do miss the trails and beautiful trail maps).
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Musings

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hefeiddd · 发表于 2009-3-21 16:25

August 28, 2008
You’re a Bagman, Not an AttorneyI really enjoyed the movie, Michael Clayton, despite its absurd corporate-murder-conspiracy story. Here are some favorite bits of dialogue:
Clayton explains things to an obnoxious, rich client involved in a hit-and-run:

“There’s no play here. There’s no angle. There’s no champagne room. I’m not a miracle worker, I’m a janitor. The math on this is simple. The smaller the mess, the easier it is for me to clean up.”

An intermediary from the mob and Clayton talk about the urgency of repaying a loan:

Loan shark rep: “Are you back at the tables?”
Clayton: “Like I need that kind of action. I don’t have enough going on. I hope you’re kidding.”
Loan shark rep: “If he finds out you’re playing cards with his money, there’s no dialogue after that. Do everyone a favor. Get out the treasure map and start digging. You’ve got a week.”

Marty Bach, head of the law firm, on the (de)merits of the uNorth case (the late Sydney Pollack always played a good Jewish gangster, er lawyer):

“This is news? This case reeked from day one. 15 years in and I gotta tell you how we pay the rent? … Hey, when did you get so in’ delicate?”

I recommend seeing the movie if you haven’t already.
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Movies

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Shortchanging Our Shroff Asia Is About to Give U.S. a Kick in the Fannie

“China holds $376 billion of long-term U.S. agency debt and, according to James McCormack, head of Asian sovereign ratings at Fitch in Hong Kong, most of it is in Fannie and Freddie assets. Fannie and Freddie aren’t just too big to fail — they’re too geopolitical to fail … Asia has few alternatives [for investment]. The magnitude of the region’s trade surpluses leaves few options other than parking money in the most liquid securities and keeping currencies from rising into uncompetitive territory.”

In order to please our foreign creditors (who generously provide $2 billion a day), we need to make the implicit guarantee of agency debt explicit (windfall gains for them!), wipe out the equityholders, and put the American taxpayer on the hook… that should do the trick. We can’t afford to stick our moneylenders; they hold the mortgage, right?

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August 27, 2008
Citi Gets Serious: Ceases Color Copies Citigroup Limits Meetings, Pares Color Photocopies

“Citigroup is clamping down on spending after reporting $55 billion of writedowns and credit losses in the past year, more than any other bank … Color photocopiers will be removed from some locations and their use will be limited to client presentations … Citigroup employs about 363,000 people globally … ‘We will be conducting a review of our Blackberry usage. In the interim, all new Blackberries will require pre-approval.’”

What a riot. How many Vice Presidents does Citigroup have left on the payroll who make six figure salaries and screw around all day on the internet like the late, lamented Large? My conservative guess is at least 10,000.

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Investing

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August 26, 2008
AIG Shareholders AIGhast U.S. Stocks Drop, Led by Financial Shares, AIG, Banks Retreat

“AIG tumbled to a 13-year low after Credit Suisse Group said the insurer may lose $2.41 billion this quarter on mortgage- related writedowns … Columbian Bank & Trust Co. became the ninth U.S. bank to collapse this year … About 865 million shares changed hands on the New York Stock Exchange, the slowest trading day of the year … All 10 industry groups in the S&P 500 dropped … The KBW Bank Index tumbled 3.4 percent as all 24 of its companies decreased … Lehman Brothers Holdings Inc. slipped 6.6 percent to $13.45 on concern that a Korean bank will abandon a potential investment in the fourth-largest U.S. securities firm.”

Here’s a chart of various debt ratios for AIG. I tried to get some long-term numbers (specifically debt-to-common equity) for brokers like Merrill and Lehman, but Bloomberg doesn’t have much data. I need to find one of those old guys who has saved 40 years worth of Value Line’s in his basement.

Related: AIG Shareholders in AIGony
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August 23, 2008
A Few Pictures from the OlympicsWe went to an Athletics event last night at the Olympics and sat in the second row. Here are a few pictures I snapped:

An American long jumper, Grace Upshaw.

The gold medalist in the long jump, Maurren Higa Maggi, from Brazil. (note six-pack abs)

The gold and bronze medal winners in the women’s 5000 meter run, Tirunesh Dibaba and Meseret Defar, both from Ethiopia.

The silver medalist in the men’s pole vault, Evgeny Lukyanenko, from Russia.

The gold medal winner in the decathalon, Bryan Clay, from America.

A star attraction, Usain Bolt, undressing. We sat in the perfect spot to watch the handoff to him in the 4 x 100 relay.

Bolt prepared to bolt.

Moments later, Jamaican gold medalists and new world record holders.

Headed home, the Bird’s Nest and Water Cube at night.
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Personal

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August 22, 2008
Gold and the Golden Ratio Commodities Rally, Head for Biggest Weekly Advance Since 1975
Another article with dumb, lame, or nonsensical reasons given for price movement that’s probably all technically driven.
The last time I posted this chart was at the end of April. Gold is connected to the dollar which is connected to the resolution of the credit crisis… it’s all interwoven, seemingly simple but really complex. As Ed Seykota is fond of saying: trading is the toughest way to make an easy buck.

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Complex, Opaque, Illiquid Profile of Merrill Lynch’s CDO team from May 2005 [emphasis mine]:

“Is there a danger that the market is so opaque that even those who invest in it are taking bigger risks than they should? Nomura’s Whetten says some investors who have entered the market recently might be getting in over their heads. ‘The people who jump into the market last tend to be the ones with the least knowledge,’ she says. ‘People who invested and got hit in 2001 and 2002 said, ‘we just didn’t know what we were buying.’ It’s possible that something on a smaller scale [ed. or a much larger scale] could happen because everyone is buying CDOs with a me-too attitude.’ She adds that many investors with little understanding of structured finance have simply, and dangerously, applied their knowledge of corporate bonds to asset-backed securities … For now, it seems, investors are more interested in returns than transparency or simplicity.”

Investors desperate for yield, blinded by greed, lazy, imprudent, irresponsible… the usual mix. I don’t blame these guys who issued the stuff. Caveat emptor!
Let me remind you what Vanguard’s position was [emphasis mine]:

“Vanguard Group Inc., the second-largest mutual fund company in the U.S., has a policy of never buying CDO commercial paper for its $90 billion in money market funds or $325 billion in fixed-income mutual funds.
‘It really gets down to transparency questions,’ says John Hollyer, risk management director at Valley Forge, Pennsylvania-based Vanguard. ‘Can you understand what you have? And can you measure it appropriately? We haven’t been comfortable that we could.’”

via s_m_i (Twitter)
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Bonds

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August 21, 2008
Fragile Faith in Fannie, Freddie Fannie, Freddie Shares Slump, Bonds Rise on Bailout Speculation:

“Fannie and Freddie have $223 billion of bonds due by the end of the quarter and their success in rolling over that debt may determine whether they can avoid a federal bailout. Fannie has about $120 billion of debt maturing through Sept. 30, while Freddie has $103 billion … Freddie yesterday sold $3 billion of five-year reference notes at its highest yields over benchmarks in at least 10 years as demand fell from Asian investors and central banks. The debt priced to yield 4.172 percent, or 113 basis points more than U.S. Treasuries of similar maturity. The company sold five-year notes in May at a spread of 69 basis points.”

There was a nice spot for Dummies to short Fannie yesterday, assuming you could find shares.

Blast from the past, (November 6, 2003):

“‘These institutions are so large and so important to the housing financial system that we can’t afford to let them melt down,’ Wayne Abernathy said … Investors have already been demanding interest of 55 basis points above U.S. Treasuries to own Fannie Mae’s 10-year notes, up from 37 in June [2003].”

Related: All posts mentioning Fannie
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Investing

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August 20, 2008
Schadenfreude File: New Century Running on FumesThe point I’m trying to make with the schadenfreude files is that it pays to pay attention — sounds obvious, but it isn’t (at least, not for a dummy like me). Or as the great Yogi (Berra) put it: “You can observe a lot just by watching.”
From March 5, 2007: New Century Leads Drop in Shares of Mortgage Lenders

“A surge in defaults on mortgages to the riskiest borrowers has forced more than 20 lenders to close or seek buyers since the start of 2006 … Independent mortgage companies had been thriving until last year as Wall Street snapped up home loans to feed demand from investors for higher-yielding securities … New Century’s fate now rests with the securities firms that once staked it to more than $17 billion and bought its loans by the thousands … The brokerages financed New Century to create a steady flow of mortgages that they packaged into bonds. With delinquent home loans rising nationwide, Wall Street may scale back or cut off credit to mortgage companies … The lenders help subprime mortgage companies by providing ‘warehouse’ lines of credit. They’re called warehouse financing because the banks and brokerages fund individual mortgage loans and then store them until there’s an inventory large enough to sell as a batch.”

I wrote a post in early December 2006 titled Subprime Mortgage Lenders’ Submerging Share Prices, but that was a pretty late-in-the-game observation. Can anyone point me to a series of blog posts/articles written in early 2006 (but not before!) about the coming collapse of the subprime lenders? Thanks.
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Investing

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August 19, 2008
Schadenfreude File: Merrill Loaded for BearAnother now classic article from February 12, 2007: Merrill Loaded for Bear in Mortgage Market That Humiliated HSBC.

“Merrill is determined to capture a dominant share of trading in bonds backed by home loans, the fastest- growing debt market since 1995 and this year’s most troubled. O’Neal’s enthusiasm for mortgages to potentially delinquent borrowers coincides with the highest default rate in more than six years, a record contraction in demand for so-called subprime loans and descending bond prices.
…
Bear Stearns, Deutsche Bank AG, Morgan Stanley and Barclays Plc have bought or agreed to buy subprime lenders in the past six months, betting that a bigger presence in mortgages will produce more revenue from packaging the loans into bonds. Fees from securitizing debts including mortgages, auto loans, aircraft leases and credit-card receivables have almost tripled in the past five years to $5.6 billion.
Merrill is counting on securitization to dispose of risky mortgages and avoid the headaches now plaguing HSBC … HSBC’s troubles stem from its $15.5 billion purchase in 2003 of Household International Inc., then one of the largest U.S. lenders to consumers with poor credit. Beguiled by the high interest rates on subprime loans, HSBC erred by keeping many mortgages on its books instead of selling them to investors. [Ed: erred by not foisting the junk on suckers?]
Lenders provided $640 billion in subprime mortgages last year, an increase of almost fivefold from 2000 … ‘There’s no secret sauce in this business,’ Countrywide’s Mozilo said. ‘It’s a matter of how efficient you are in the securitization process as well as how efficient you are in the origination process.’” [Ed: “efficient,” I love it!]

What a beautiful and timely article that was. (Did the reporters win a prize for it? They should.) Anyone who was paying attention at the time would have profited from it.
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hefeiddd · 发表于 2009-3-21 16:26

August 11, 2008
You Adapt, Evolve, Compete or DieFortunately someone copied and pasted onto a message board this 3,000+ word profile of Paul Tudor Jones written back in May 2004 (it’s long gone from Bloomberg.com):

“Jones said he didn’t always expect to be a trader. After he graduated from high school in Memphis in 1972, he went to the University of Virginia, where his father had earned a law degree. He said he considered being a journalist.
His father ran a financial and legal trade newspaper, and Paul, who was editor of his high school paper, used to write articles under the byline Eagle Jones. He said he was drawn to managing hedge funds because he’s always loved games and odds.
In college, he says, he routinely played poker. These days, he’s more likely to play Monopoly with his four kids, he said.
When he read an article during college about Richard Dennis — who started with $400 and became a millionaire by making bets at the Chicago Board of Trade on moves of commodities such as soybeans, corn and sugar — he said his future was fixed.
‘That’s my dream job,’ Jones said he thought at the time. ‘He was standing in an arena physically and mentally competing with hundreds of other bright and talented people in an ultimate test of wits.’”

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Trading

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August 9, 2008
Gratuitous Cute Chick Pic — August 8, 2008

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GCCP

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August 8, 2008
What Goes 上 Must Come 下In the last year, so many Chinese friends told me, “Chairman, the market can’t go down before the Olympics, the government won’t allow it.” I thought that was a nutty idea. Anyway, here’s a weekly chart of the CSI300 showing the amazing 630% rise beginning in 2005 (enjoyed by very few) and terrible 55% fall since last October (suffered by almost everyone, including my manicurist).
For Fibonacci fans, price is currently bumping around the golden retracement level (61.8%). If it falls through there, I don’t know what’s going to happen. Let’s just say that I’ve mapped the fastest routes to the airport and have my credit card and passport handy at all times.

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AIG Shareholders in AIGony AIG Plummets as Insurer Won’t Rule Out Capital Raise

“AIG slid as much as 17 percent in New York Stock Exchange composite trading, its biggest one-day drop since at least November 1982. The stock declined $4.44 to $24.65 at 10:09 a.m., leaving the shares down 57 percent this year. AIG’s quarterly loss was driven by $5.56 billion in pretax losses tied to credit-default swaps.
Credit-default swap contracts, which are guarantees AIG sold to protect fixed-income investors, drove the company to record losses in the two previous periods, accounting for about $25 billion in writedowns over nine months.”

Argh. AIG was another “deeply undervalued” stock I bought based on its sterling history of dividend growth — a long stretch of glory which is destroyed now. The chart didn’t look awful until $50 failed … once it did, I should have bailed (but didn’t since I had my long-term investor hat on, which I now refer to as my dunce’s cap).

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Investing

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August 7, 2008
Latest Addition — Chinese Zodiac — DogI think Zippo made this line of twelve lighters, each depicting one of the twelve animals in the Chinese zodiac (rat, ox, tiger, rabbit, dragon, snake, horse, sheep, monkey, rooster, dog, and pig), specifically for the Chinese market because I can’t find any information about them online. The manufacture date stamped on the bottom of the case is August 2007 (H 07).
I was born in the year of the dog and also thought that this was one of the best designs among the twelve (I also like the rooster a lot). If you know Chinese, you can see the character for dog, 狗, and not just a reclining black labrador. My collection of Zippos is growing and I must join the Zippo Nutter Club soon.

The characteristics of dogs are: Honest, intelligent, straightforward, loyal, sense of justice and fair play, attractive, amiable, unpretentious, sociable, open-minded, idealistic, moralistic, practical, affectionate, dogged. Can be cynical, lazy, cold, judgmental, pessimistic, worrier, stubborn, quarrelsome.
I am all those good things except attractive and sociable (and, according to the wife, practical) in addition to being lazy, cold (except when amiable and affectionate), and very stubborn.
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Personal

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August 6, 2008
Of Significant Concern to the Committee Fed Keeps Rate at 2% as Economic Growth Stagnates

“The Federal Reserve kept its benchmark interest rate at 2 percent … Fed policy makers have cut the benchmark rate by 3.25 percentage points since the global credit market began unraveling a year ago.”

The market was strong going into the Fed announcement and did its usual ziggy thing (highly technical term) before continuing higher into the close. Three out of four of the Box’s open short positions were stopped out. I’ve learned to hate swing trading (and fall back in love with day trading) by watching the Box ideas these many months.

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Trading

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August 5, 2008
Whipping Into Line All Wandering Fancies, Stray Ideas, and Tangential Thoughts How to Concentrate (from 1930)
By concentrating, I’ve distilled this 2,000+ word article into these four points (89 words):

Learn to let go — to relax completely — before each period of in-tense concentration.
When harassed by the three devils, hurry, worry, and fear, the mind never has a fair chance to center on anything.
Seek a quiet place free from all distractions, a place free from all interruptions which may break your train of thought, a place where you can be alone, free from all outside influences, and a place of pleasing environment, beautiful or otherwise, where the atmosphere is right for you.
Have a written daily schedule.

Does the gallery have any other tips on how to “bring all your mental force and faculties to bear steadily on a given center with-out deviation from that exact point” ?
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Musings

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Commodities Bulls CRYing CRB Commodity Index Caps Biggest One-Day Decline Since March

“The CRB Index (CRY) slid 10 percent in July [after] posting its best first half in 35 years, gaining 29 percent in the first six months of 2008 as investors stocked up on raw materials as an alternative to stocks and bonds and as a hedge against the weakening dollar.”

Is there a major trend change underway here or is this just a “correction” in an on-going bull market? From a trend trader’s perspective, until the weekly flips down you have to play the long side and all short plays must be considered “counter-trend” — best handled by the deft and the daft.

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August 3, 2008
Privatizing Profits, Socializing Losses Interview with Nouriel Roubini:

“[The government is now] bailing out troubled participants and intervening in every market. The Securities and Exchange Commission has accused others of trying to manipulate stocks, but the government itself is now the manipulator. The regulators should investigate themselves for bailing out Fannie Mae (FNM) and Freddie Mac (FRE), the creditors of Bear Stearns and the financial system with new lending facilities. They have swapped U.S. Treasury bonds for toxic securities….
[T]here are ways to manage [the failure of] Bear or Fannie and Freddie in a fairer way. If public money is to be put at stake, first all the shareholders of these companies have to be wiped out. Management has to be wiped out, and the creditors of Bear should have taken a hit. Why did the Fed buy $29 billion of the most toxic securities, and essentially bail out JPMorgan Chase (JPM), which bought Bear Stearns?
The government bailed out everyone. Even the unsecured creditors of Fannie and Freddie should have taken a hit. Sometimes it is necessary to use public money to rescue institutions, but you do it in a way in which you’re not bailing out those who made the mistakes. In each one of these episodes the government bailed out the shareholders, the bondholders and to some degree, management.”

Will Roubini overstay his “being right” about the financial sector? I looked through the charts of hundreds of financial stocks this weekend and thought to myself, maybe the worst is past. He says it’s “the second inning of a severe, protracted recession,” which may be true, but has the market already discounted that? Maybe.
Look at Wells Fargo’s (WFC) chart: it’s trading less than 10% below its August 2007 lows… Old National Bank is another one… I could make a long list.
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Investing

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August 2, 2008
Where’s Robert Prechter When You Need Him?Back on December 24, 2002 there was a big feature article on Prechter which was widely read on the Bloomberg: Market Seer Prechter Called 1987 Crash, Says Dow to Fall to 800 (sorry, no link):

“Forget about the Dow Jones Industrial Average returning to 11,000. Try Depression- era levels below 1,000. And don’t flock to bonds for safety: Municipalities will default and corporate bonds will be wracked by downgrades. Even the U.S. government’s credit status may sink low enough to make Treasury bills shaky.
If you believe in such gloomy prophecies, you probably know about Robert Prechter Jr. [who] is now undergoing a renaissance. His book ‘Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression’, which warns of a looming economic cataclysm, reached the top of Amazon.com’s financial bestseller list in 2002. His two main monthly newsletters have increased their subscriber base by more than 50 percent.”

In order to end the current bear market, it’s very important that Prechter makes an appearance calling for Dow 800. Can you work your magic again, Bobby?

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[ 本帖最后由 hefeiddd 于 2009-3-21 16:31 编辑 ]

hefeiddd · 发表于 2009-3-21 16:30

July 30, 2008
Weak Constitution, Strong GoldIt’s no coincidence that gold began its enormous climb (and the dollar began its terrible fall) shortly after Zhlubya issued this (obviously unconstitutional) Military Order. The invasion of Iraq and everything that followed: warrantless wiretapping, rendition flights (”torture taxis”), secret prisons, etc. ad nauseum … all of these illegal acts have weakened my motherland (and the dollar) and helped gold.
Be interesting to see how gold reacts when Obama is elected President in November.

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July 29, 2008
Beating Mother Merrill into SubmissionI got several emails asking me to explain what I meant by shorting Merrill (MER) on smaller time frames every time the trend flips up and then back down, so I quickly made up this little animation. Ignore the time scale on the x-axis (it’s screwed up because I’m on China time). Let me know if this clears things up, or as usual, further muddies the waters.

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Trading

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Prem Watsa’s Deep Breathing Technique“Once in a while we will talk if we have anything to say,” a short interview with Prem Watsa:
[Emphasis mine]

“… in 2003 we started worrying. We were concerned about asset-backed paper. We saw the moral hazard in all this credit that we saw was being blended and blown out. This was because interest rates were dropped to 1% to bail out the technology companies after the bubble burst in 1999 and we saw that this would lead to the real estate and auto loans and credit card problem. We saw that half of consumer spending was from home equity loans. So we protected ourselves.
… We did swaps but results were not immediate. By 2006 we were down by 75% in that portfolio, but we are long term investors so we took a deep breath and bought more to average down. In July 2007, two of Bear Stearns’s hedge funds failed and in August the crisis occurred. Then our results turned.”

Averaging down is a cardinal sin for traders, but it’s fine if you’re a long-term investor who knows what he’s doing (and has a lot of cash).
- via ControlledGreed.com -
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Investing

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22 Cents on the Dollar Merrill Has $5.7 Billion of Writedowns, Sells Shares

“The firm said it sold $30.6 billion of CDOs to an affiliate of the Dallas-based investment firm Lone Star Funds for $6.7 billion, resulting in a pretax writedown of $4.4 billion. Merrill will provide financing for about 75 percent of the purchase price, according to the statement. The sale values the CDOs at about 22 cents on the dollar.”

Yowza. Good thing the SEC is foiling short sellers of financial stocks — it’s too easy a trade. Every time the trend flips up on the shorter time frames (like the 15-min. chart below), you could hit it hard when it reverses back down. “Coulda” caught nearly ten points these last few days doing just that (assuming you can locate shares).
Have any of you guys tried shorting any of the stocks on the SEC no-no list (PDF) since it came out?

Related: Bloomberg a Buyer as Merrill Sheds Assets
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July 28, 2008
Dilapidated Cultural SoulsTwo different takes on preservation of courtyard homes in Beijing:

“… the growing historical awareness among intellectuals and the wealthy has unleashed a … set of destructive capitalist forces. The courtyard houses’ sudden architectural cachet has made them coveted status symbols for people with seemingly unlimited resources. As affluent foreigners and China’s new rich buy the houses, they are embarking on multimillion-dollar renovations that are robbing the neighborhoods of their souls.
When two or three generations were packed into a single house, family life spilled out into the courtyards and narrow alleyways. Streets were lined with tiny shops and food stands; elderly people sat on folding chairs playing card games as bicycles streamed by.
Today a well-off couple may live with a single well-behaved child in a courtyard home that once housed more than a dozen people. Instead of cooking outdoors or walking to the corner to use a toilet, the nuclear family installs a state-of-the-art kitchen and bathroom with sauna and spa and parks a car in a new underground garage. One Chinese magnate recently added an underground pool. Streets that once teemed with life are as silent as churchyards — and as banal as some American subdivisions.” — Nicolai Ouroussoff

…

“… a growing number of foreigners [and rich Chinese] have invested in the [courtyard] houses in recent years, refurbishing them with the mix of modern sensibility and respect for original detail one expects of a high-end renovation in Brooklyn or East London. At a time when the siheyuans, some of them centuries old, have been disappearing at an alarming rate, these renovators, along with some newly moneyed Chinese ones, are emerging as the city’s best hope for holding on to what’s left of the old hutongs, even as they transform dwellings that once housed dozens of people into private homes for their own small families, and provoke many of the same anxieties that gentrifiers do in the West.” — Dan Levin

I side with Levin more than Ouroussoff (Mr. O. comes across as the worst kind of presumptuous snob with his comment about Nanluoguxiang: “Foreigners walk aimlessly up and down the street, guidebooks in hand, soaking up the phony cultural atmosphere.”) You don’t want to romanticize the old hutong life (and its central toilets) too much. I frequently bike through some old neighborhoods near my (soulless, anonymous, newly-built) apartment building, and they’re generally awful, squalid places.
Michael Meyer is quoted in the Levin article: “In a hutong… people look out for one another.” Maybe, but more importantly, people (mainly old ladies) spy on and gossip about you and your family. The ugliness of communal life can outweigh the good.
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China_Culture

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Teaching Spiritual Growth to Money-Grubbers Yoga Bears: It’s No Stretch to Say Traders Are Taking Deep Breaths

“In recent months, as markets have gone wild, [a yoga instuctor] has noticed increased tension in the neck and back of her clients … Luciano Cortese, a broad-shouldered 48-year-old hedge-fund manager, says he used to bang his desk, throw things or yell at someone when his job became particularly stressful. But since starting yoga in January, he has been taking the stock market’s jolts in stride, he says. ‘I just say to myself tomorrow is another day.’”

I think the benefits of a two-hour full-body massage are even greater than a two-hour yoga session.
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Health

| Time: 10:23 am (utc+8) Comments (2)

July 25, 2008
TGIF (XXVI)

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TGIF

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Buyers Say F-that to F-series Pickups Ford Has $8.7 Billion Loss, Shifts Away From Trucks

“The company’s European auto unit saw its profit more than double to $582 million. Net income at the South American unit increased 52 percent to $388 million. The automaker lost $15.3 billion in the past two years, mostly because of deficits in North America.”

A friend in Beijing just bought a new Ford Mondeo and is very happy with it. The Chinese are generally against buying Japanese cars, and prefer to buy European (Volkswagen, Audi, BMW, etc.) and American (Buick (GM), Ford, Chrysler, etc.) makes.
Here’s a longer-term view of Ford (F). Stock price is back to 1984 levels and is down a wee 93% off the 1999 high.

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Investing

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[ 本帖最后由 hefeiddd 于 2009-3-21 16:31 编辑 ]

hefeiddd · 发表于 2009-3-21 16:32

July 24, 2008
Has Crude Topped? Probably Not.I wouldn’t stick a fork in the Crude bull yet. I don’t know if a major change of trend is underway, but based on the bumper to bumper traffic I face every day in Beijing, I’d say no — this is just a “correction” (I hate that term) in an ongoing bull market. I’d still be looking to get long off reversals on the daily (and lower time frame) charts.

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Energies

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July 23, 2008
14% of Option-ARM Customers Have Zero or Negative Equity Wachovia Has Record $8.9 Billion Loss, Cuts Dividend

“Wachovia lowered the dividend to 5 cents a share from 37.5 cents … The second quarter loss included a $6.1 billion charge tied to declining asset values … Wachovia’s goodwill impairment charge didn’t include its Golden West business ‘due to the value of the retail banking franchise,’ the company said. The impairment included $4.5 billion in reduced value of commercial loans, plus $597 million in investment-banking assets.”

So what did the stock do given this terrible news on Tuesday? It gapped down (expected) and then reversed and ripped higher, moving up over 30% from the open (unexpected). It seems to be a good time to be day trading given the double-digit intraday percentage moves.

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Trading

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July 22, 2008
The Art of Buying Lower LowsMy trumpeting of Ten Favorite Financial Stocks in August 2007 has been widely and rightly (though often cruelly) reviled. I learned my lesson: never post your investment ideas on the Internet. (Just kidding.) The lesson is: never buy stocks that are in a downtrend no matter how much they look like “bargains” on paper.
Earnings collapse, massive writedowns are taken, dividends are slashed or eliminated — what looks like a good solid business with a long and sterling reputation of dividend growth can be crushed in a matter of months. I know this now. Many kind commenters and emailers tried to tell me (most nicely) that I was an idiot to like the financials, but as usual, I went my own way and got my ass handed to me.
My old friend VIX is still excellent at pinpointing extremes in sentiment, but I should have been looking to buy the strongest stuff in a weak market (energies, materials, etc.), not terrible junk like the godforsaken regional banks. Older, wiser, poorer… the same old story. :-)

Related:
A Good Time to Buy Financials? January 27, 2008 [YOU’RE A DOUBLE DUMB SUCKER, KID]
Discover the Chairman’s 10 Favorite Financial Stocks, August 1, 2007 [I’M A POOR SUCKER]
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Investing

| Time: 2:01 pm (utc+8) Comments (21)

July 21, 2008
The Hamburger Helper of Finance Why No Outrage? by Jim Grant

“At the end of 2007, Goldman Sachs had $26 of assets for every dollar of equity. Merrill Lynch had $32, Bear Stearns $34, Morgan Stanley $33 and Lehman Brothers $31. On average, then, about $3 in equity capital per $100 of assets. ‘Leverage,’ as the laying-on of debt is known in the trade, is the Hamburger Helper of finance. It makes a little capital go a long way, often much farther than it safely should. Managing balance sheets as highly leveraged as Wall Street’s requires a keen eye and superb judgment. The rub is that human beings err.”

They don’t just err, they get greedy. Is this new? What were the debt to equity ratios of these various firms in 1997? 1987? 1977? Anyone have a thirty-year old copy of Value Line hanging around?
There’s no outrage in part because financial illiteracy is so widespread.
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Investing

| Time: 11:09 am (utc+8) Comments (0)

Extracting Knowledge from Unstructured Business PlansReading this post, Monitor110: A Post Mortem, I was reminded of the post I made after watching the Wallstrip interview with Collective Intellect’s CTO:

“Sounds fascinating but I’m not sure if it works; I’d need to see it in action.”

From Roger Ehrenberg’s post mortem:

“[W]e started out trying to analyze most of the dynamic web (probably up to 100 million sources by now) in real-time, and using technology (NLP, pattern matching, etc.) to do the filtering, indexing and categorization. This was no mean engineering feat. We had a very, very large and complex back-end. And even with this, the quality of the data coming through to the end-user was just not that good.”

Still sounds fascinating, but now we’re sure that it doesn’t work.
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Internet/Media

| Time: 10:05 am (utc+8) Comments (2)

Hobbled Short Sellers Unable to Cull the Weak Never Have So Many Short Sellers Made So Much Money With Stocks

“More than $1.4 trillion of equities worldwide are now on loan, about a third higher than at the start of 2007 … Short selling on the New York Stock Exchange rose to 4.6 percent of total shares last month, the highest since at least 1931 … The U.S. Securities and Exchange Commission last week limited so-called naked short sales of Fannie Mae, Freddie Mac and brokerages. In such a strategy, speculators sell shares they haven’t secured first. [Not possible in my vast experience, but then again I’m a small fry.]
So-called short covering [probably] helped financial stocks in the S&P 500 surge 12 percent on [Wednesday] July 16, the biggest-ever gain.”

That looks like “panic buying” last week in the bank index — maybe forced covering of short sales? The bottom may be in, but I’d expect prices to go sideways to “build a base” over the coming months. No need to rush in, is there?

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Investing

| Time: 9:55 am (utc+8) Comments (5)

July 18, 2008
TGIF (XXV)

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TGIF

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Bloomberg a Buyer as Merrill Sheds Assets Merrill Lynch Posts Fourth Straight Quarterly Loss

“Merrill’s charges from the credit crisis now exceed $46 billion … Writedowns [this quarter] included $3.5 billion to account for the plummeting value of collateralized debt obligations, or securities backed by other bonds. Another $1.3 billion of charges were taken on residential mortgages. The firm also reduced the value of bond insurance contracts by $2.9 billion, and lowered the value of leveraged loans by $348 million.
Merrill today confirmed the sale of its 20 percent stake in Bloomberg LP, the parent of Bloomberg News. Merrill said it is financing the sale to Bloomberg Inc., the parent of Bloomberg LP.”

Selling a jewel like their stake in Bloomberg shows just how desperate things are. Looking at the monthly chart (Trader Mike is going to kill me for drawing that white trend line :-) ), we can see how important the $30 level is for MER. The stock traded under $20 back during the LTCM crisis, and may do so again here if $30 can’t hold.
(Bloomberg exercised his right of first refusal and now holds a 92% stake. His business is valued at over $20 billion now.)

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Investing

| Time: 3:51 pm (utc+8) Comments (3)

Toddler T’s First BikeWe will be shopping for T’s first bike this weekend. He probably should have gotten one awhile ago but he has busy, neglectful parents (don’t tell his mother I said that). While we will probably end up getting the Jet 16 (it must be a Trek, I buy quality American goods when I can — oops, it’s made in China), I am in love with the model called Drift (pictured below). Why don’t they make this sucker for adults?
At what age did you guys buy your kids their first bike? (Not your age, the kid’s age :-). )

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Baby

| Time: 12:03 pm (utc+8) Comments (8)

July 17, 2008
Brilliant Boy Gets Back to BasicsHere’s a 15-minute chart of Wells Fargo (WFC), Wednesday’s stock du jour, with the Dummies spots clearly marked.
Over the last year, my idiotic investments in various financial sector stocks have cost me so much money (what’s the GDP of Guatemala?) that I am now forced to consider day trading again. I hope to visit Taiwan next month to consult with a spiritual master (yes, he has a long beard and lives in the mountains so you know he’s legit) who will tell me if this is a wise course or not.
I expect to be actively trading again in the fourth quarter of this year at the latest (yogi willing).

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Trading

| Time: 6:14 pm (utc+8) Comments (23)

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hefeiddd · 发表于 2009-3-21 16:33

July 24, 2008
Has Crude Topped? Probably Not.I wouldn’t stick a fork in the Crude bull yet. I don’t know if a major change of trend is underway, but based on the bumper to bumper traffic I face every day in Beijing, I’d say no — this is just a “correction” (I hate that term) in an ongoing bull market. I’d still be looking to get long off reversals on the daily (and lower time frame) charts.

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Energies

| Time: 5:51 pm (utc+8) Comments (14)

July 23, 2008
14% of Option-ARM Customers Have Zero or Negative Equity Wachovia Has Record $8.9 Billion Loss, Cuts Dividend

“Wachovia lowered the dividend to 5 cents a share from 37.5 cents … The second quarter loss included a $6.1 billion charge tied to declining asset values … Wachovia’s goodwill impairment charge didn’t include its Golden West business ‘due to the value of the retail banking franchise,’ the company said. The impairment included $4.5 billion in reduced value of commercial loans, plus $597 million in investment-banking assets.”

So what did the stock do given this terrible news on Tuesday? It gapped down (expected) and then reversed and ripped higher, moving up over 30% from the open (unexpected). It seems to be a good time to be day trading given the double-digit intraday percentage moves.

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Trading

| Time: 4:50 pm (utc+8) Comments (7)

July 22, 2008
The Art of Buying Lower LowsMy trumpeting of Ten Favorite Financial Stocks in August 2007 has been widely and rightly (though often cruelly) reviled. I learned my lesson: never post your investment ideas on the Internet. (Just kidding.) The lesson is: never buy stocks that are in a downtrend no matter how much they look like “bargains” on paper.
Earnings collapse, massive writedowns are taken, dividends are slashed or eliminated — what looks like a good solid business with a long and sterling reputation of dividend growth can be crushed in a matter of months. I know this now. Many kind commenters and emailers tried to tell me (most nicely) that I was an idiot to like the financials, but as usual, I went my own way and got my ass handed to me.
My old friend VIX is still excellent at pinpointing extremes in sentiment, but I should have been looking to buy the strongest stuff in a weak market (energies, materials, etc.), not terrible junk like the godforsaken regional banks. Older, wiser, poorer… the same old story. :-)

Related:
1, 2007 [I’M A POOR SUCKER]
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Investing

| Time: 2:01 pm (utc+8) Comments (21)

July 21, 2008
The Hamburger Helper of Finance Why No Outrage? by Jim Grant

“At the end of 2007, Goldman Sachs had $26 of assets for every dollar of equity. Merrill Lynch had $32, Bear Stearns $34, Morgan Stanley $33 and Lehman Brothers $31. On average, then, about $3 in equity capital per $100 of assets. ‘Leverage,’ as the laying-on of debt is known in the trade, is the Hamburger Helper of finance. It makes a little capital go a long way, often much farther than it safely should. Managing balance sheets as highly leveraged as Wall Street’s requires a keen eye and superb judgment. The rub is that human beings err.”

They don’t just err, they get greedy. Is this new? What were the debt to equity ratios of these various firms in 1997? 1987? 1977? Anyone have a thirty-year old copy of Value Line hanging around?
There’s no outrage in part because financial illiteracy is so widespread.
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Investing

| Time: 11:09 am (utc+8) Comments (0)

Extracting Knowledge from Unstructured Business PlansReading this post, Monitor110: A Post Mortem, I was reminded of the post I made after watching the Wallstrip interview with Collective Intellect’s CTO:

“Sounds fascinating but I’m not sure if it works; I’d need to see it in action.”

From Roger Ehrenberg’s post mortem:

“[W]e started out trying to analyze most of the dynamic web (probably up to 100 million sources by now) in real-time, and using technology (NLP, pattern matching, etc.) to do the filtering, indexing and categorization. This was no mean engineering feat. We had a very, very large and complex back-end. And even with this, the quality of the data coming through to the end-user was just not that good.”

Still sounds fascinating, but now we’re sure that it doesn’t work.
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Internet/Media

| Time: 10:05 am (utc+8) Comments (2)

Hobbled Short Sellers Unable to Cull the Weak Never Have So Many Short Sellers Made So Much Money With Stocks

“More than $1.4 trillion of equities worldwide are now on loan, about a third higher than at the start of 2007 … Short selling on the New York Stock Exchange rose to 4.6 percent of total shares last month, the highest since at least 1931 … The U.S. Securities and Exchange Commission last week limited so-called naked short sales of Fannie Mae, Freddie Mac and brokerages. In such a strategy, speculators sell shares they haven’t secured first. [Not possible in my vast experience, but then again I’m a small fry.]
So-called short covering [probably] helped financial stocks in the S&P 500 surge 12 percent on [Wednesday] July 16, the biggest-ever gain.”

That looks like “panic buying” last week in the bank index — maybe forced covering of short sales? The bottom may be in, but I’d expect prices to go sideways to “build a base” over the coming months. No need to rush in, is there?

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Investing

| Time: 9:55 am (utc+8) Comments (5)

July 18, 2008
TGIF (XXV)

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TGIF

| Time: 8:57 pm (utc+8) Comments (2)

Bloomberg a Buyer as Merrill Sheds Assets Merrill Lynch Posts Fourth Straight Quarterly Loss

“Merrill’s charges from the credit crisis now exceed $46 billion … Writedowns [this quarter] included $3.5 billion to account for the plummeting value of collateralized debt obligations, or securities backed by other bonds. Another $1.3 billion of charges were taken on residential mortgages. The firm also reduced the value of bond insurance contracts by $2.9 billion, and lowered the value of leveraged loans by $348 million.
Merrill today confirmed the sale of its 20 percent stake in Bloomberg LP, the parent of Bloomberg News. Merrill said it is financing the sale to Bloomberg Inc., the parent of Bloomberg LP.”

Selling a jewel like their stake in Bloomberg shows just how desperate things are. Looking at the monthly to kill me for drawing that white trend line :-) ), we can see how important the $30 level is for MER. The stock traded under $20 back during the LTCM crisis, and may do so again here if $30 can’t hold.
(Bloomberg exercised his right of first refusal and now holds a 92% stake. His business is valued at over $20 billion now.)

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Investing

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Baby

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July 17, 2008
Brilliant Boy Gets Back to BasicsHere’s a 15-minute chart of Wells Fargo (WFC), Wednesday’s stock du jour, clearly marked.
Over the last year, my idiotic investments in various financial sector stocks have cost me so much money (what’s the GDP of Guatemala?) that I am now forced to consider day trading again. I hope to visit Taiwan next month to consult with a spiritual master (yes, he has a long beard and lives in the mountains so you know he’s legit) who will tell me if this is a wise course or not.
I expect to be actively trading again in the fourth quarter of this year at the latest (yogi willing).

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Trading

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hefeiddd · 发表于 2009-3-21 16:34

July 17, 2008
A Slave to the TapeI haven’t worked my way through all these interviews with various hedge fund managers, but here are the bits I liked from the one with Paul Tudor Jones:

“It’s a hell of a lot easier to get an information edge on one stock than it is on the S&P 500. When it comes to trading macro, you cannot rely solely on fundamentals; you have to be a tape reader, which is something of a lost art form. The inability to read a tape and spot trends is also why so many in the relative-value space who rely solely on fundamentals have been annihilated in the past decade. Markets have consistently experienced ‘100-year events’ every five years. While I spend a significant amount of my time on analytics and collecting fundamental information, at the end of the day, I am a slave to the tape and proud of it.
[I come] from that period of crazy volatility [in] the late ’70s and early ’80s, when the amount of fundamental information available on assets was so limited and the volatility so extreme that one had to be a technician … When I got into the business, there was so little information on fundamentals, and what little information one could get was largely imperfect. We learned just to go with the chart.
There is no training — classroom or otherwise — that can prepare for trading the last third of a move, whether it’s the end of a bull market or the end of a bear market. There’s typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. The only way to learn how to trade during that last, exquisite third of a move is to do it, or, more precisely, live it — a sort of baptism by fire. One has to experience both the elation and fear as markets move five and six standard deviations from conventional definitions of value.
Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, where the mania runs wild and prices go parabolic.”

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Trading

| Time: 11:37 am (utc+8) Comments (8)

Maliciously Manufactured Short Covering Wells Fargo Leads Financials to Record Rally

“Financial shares rebounded from their steepest five-day loss ever, pushed higher by an increased dividend at Wells Fargo and a Securities and Exchange Commission plan to limit traders’ ability to bet that shares of Fannie Mae, Freddie Mac and some of the nation’s largest banks and securities firms will decline.”

A variation on Marty Zweig’s old saying: You Can’t Fight the Fed(s).

(Source: finviz)
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Investing

| Time: 10:49 am (utc+8) Comments (9)

July 16, 2008
SEC Encourages Short Sales of Crude OilOf course I’m making a joke about this bit of absurdity: SEC to Limit Short Sales of Fannie, Freddie, Brokers
Meanwhile, back in the real world:

“U.S. gasoline demand fell 5.2 percent last week, the 12th consecutive weekly decline, a sign record pump prices are changing driving habits.”

Some guy wearing pajamas recently pointed out that monthly crude was mighty stretched … thank god no one pays attention to those blasted bloggers.

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Energies

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July 15, 2008
Explicitly Guaranteeing a Dollar Decline Fannie Plan a `Disaster’ to Rogers; Goldman Says Sell

“‘I don’t know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,’ Rogers, 65, said in an interview from Singapore. ‘So we’re going to bail out everybody else in the world. And it ruins the Federal Reserve’s balance sheet and it makes the dollar more vulnerable and it increases inflation.’”

The airheads interviewing Rogers (”don’t you like anything here, Jimmy? can’t you be bullish about one thing, Jimmy?”) only ask the kind of questions someone who isn’t paying attention would ask. Bloomberg should be better than that. If I wanted mindless cheerleading or puerile positivity, I’d turn on CNBC or open the Wall Street Journal (editorial page).
Here’s a weekly view of the US Dollar Index. It’s a dead cinch to fall to a new low. (Yes, famous last words, but c’mon, this is too easy.)

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Currencies

| Time: 9:54 am (utc+8) Comments (15)

July 14, 2008
Isolated Splendors In changing face of Beijing, a look at the new China, by Nicolai Ouroussoff

“In his design for the CCTV headquarters, Koolhaas has set out to express the elasticity of the new global culture, and in the process explore ways architecture can bridge the gap between the intimate scale of the individual life and the whirling tide of mass society. The image of authority he conveys is pointedly ambiguous. Imposing at one moment, shy and retiring the next, the building’s unstable forms say as much about collective anxieties as they do about centralized power.”

I love the new CCTV Tower, but it will be ridiculous if they “restrict access to its enormous plaza only to the company’s employees.”
We visited the Egg (the National Theater by Paul Andreu) recently and I decided that I like it, even though I have yet to find a single Chinese person who doesn’t hate it. We parked underneath and were distressed to see various piles of junk scattered throughout and badly painted walls and other signs of carelessness down there. My wife said, “this is a disgrace.” The elevator up from the parking lot was cramped and ill-lit.
The Chinese are really, really bad about getting the little things right. It may not be an awful idea to outsource the management of these various new “national treasures” to people who know what they’re doing when it comes to details, like the Japanese, for example. (Yes, I’m being intentionally outrageous.)
Related: Kurt Andersen doesn’t write about the Egg in his recent 6,000-word piece, From Mao to Wow!, but there’s a picture of it there (and the Bird’s Nest and the CCTV Tower) if you’re interested.
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China

| Time: 5:29 pm (utc+8) Comments (9)

No Doc Loan Specialist Goes No Bid IndyMac Seized by U.S. Regulators; Schumer Blamed for Failure

“The failure will cost the federal deposit insurance program about $4 billion to $8 billion, the FDIC said. Some $1 billion of uninsured deposits are held by about 10,000 customers, the FDIC said. Those depositors will get an ‘advance dividend’ equal to half the uninsured amount, according to the statement.”

Fifty cents for every uninsured dollar… let’s call that an “advance dividend.” I love it. Here’s the monthly chart of IndyMac (IMB) going back to 1985. The stock hit an all-time high in May 2006 (not that long ago).

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Investing

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July 11, 2008
TGIF (XXIV)

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TGIF

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Battling Bank Runs, Brokers Borrow from Ben Lehman Shares Sink as Fannie, Freddie Plunge Further

“Lehman was hit by speculation that some of its biggest customers had ceased doing business with the firm, which the clients denied … Pacific Investment Management Co., manager of the world’s biggest bond fund, and hedge fund SAC Capital Advisors LLC both said speculation they had backed away from Lehman was unfounded.”

Here’s a monthly chart of Lehman (LEH) going all the way back to 1994 when they went public. Imagine one more big down bar and you can see Buried Stearns.

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Investing

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July 10, 2008
Seeing No Reason Bank of America to Keep Dividend, Won’t Raise Cash

“We see no reason to cut the dividend and no reason to raise any more capital.” — Ken Lewis

They saw at least 20.7 billion reasons to raise capital earlier this year, but now things are peachy I guess. Looking at Bank of America’s (BAC) monthly chart over the past decade, I see that practically every shareholder is a bagholder, including the hapless Chinese (didn’t CIC buy some BAC, or am I confused?).

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Investing

| Time: 10:10 am (utc+8) Comments (1)

July 9, 2008
Corn Cracks But Does Jimmy (Rogers) Care?Commodities Tumble on Signs Slumping Economy to Erode Demand

“Corn futures for December delivery declined 24.5 cents, or 3.3 percent, to $7.225 a bushel on the Chicago Board of Trade. Corn has declined almost 7 percent from its all- time high. Price has more than doubled in the past 12 months, reaching a record $7.9925 on June 27.”

This chart gazer sees corn going below 650, but it’s just the guess of a simpleminded trend follower. (I’ll be sure to crow about it if proven “right.”) Fans of Victor Sperandeo should print out this chart and tack it up with the others on your 2B or Not 2B shrine.

Related: Will Corn Crack or Send More Shorts to Slaughter? May 27, 2008
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Agriculture

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hefeiddd · 发表于 2009-3-21 16:35

July 8, 2008
On a Mission to Enter Single Digits Freddie Mac, Fannie Mae Plunge on Capital Concerns

“Fannie Mae would need to add $46 billion of capital and Freddie Mac would need about $29 billion, the Lehman analysts wrote. The companies will probably get an exemption from the rule because it would be ‘very difficult’ for them to raise that amount of capital, the analysts said.
‘The provision discussed by Lehman could have an effect on our ability to serve the housing mission,’ Freddie Mac spokeswoman Sharon McHale said. ‘We would hope FASB would take into account our mission’ when it writes the final rule, McHale said.”

Ah yes, drag out the sacred “mission” when looking for a loophole.
The head and shoulders top in Fannie (FNM) that the dirty-collared “technical analysts” have been pointing out for ages has a measured move into the single digits. When it gets there you can score one for the frayed shirtcuff crowd. Here’s the quarterly chart of FNM going back to 1980 for some perspective.

Related: Monthly View of Freddie and Fannie, November 21, 2007
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Investing

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July 7, 2008
A New Cycle of Currency Debasement Walter Bagehot Was Wrong, by James Grant

“It was Bagehot who laid down the law that, in a credit crisis, a central bank should lend freely against good collateral at a high rate of interest … Anyone with good collateral should expect to find accommodation at the Bank’s discount window at a suitably high penalty rate, Bagehot said. What passed for good banking collateral in the mid-19th century were bills of exchange, i.e., short-dated, self-liquidating IOUs. Mortgages, inherently illiquid, were inadmissible.
Hankey, in a losing cause, marshaled two principal arguments against the Bagehot doctrine. No. 1, moral hazard: Let profit-maximizing people come to believe that the Bank of England will bail them out, and they themselves will take the risks, and pile on the leverage, that will require them to be bailed out. No. 2, simple fairness: If Britain’s banking interest can claim a right to the accommodation of the Bank of England, why shouldn’t the shipping interest, the construction interest, the railroads, ‘and, last of all, the much-maligned agricultural interest,’ do the same?”

I’d subscribe to Grant’s Interest Rate Observer if it were $85 a year; unfortunately it’s $850.
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Investing

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Persistent Large InflowsEveryone on planet Earth has been trying to get in on the appreciating Renminbi. This is worrisome to those of us who were early. I’d hate to be a Chinese central banker about now.
[Note to the good folks at UBS: Log scale your charts next time, dummies.]

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Currencies

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For Entrepreneurs, Deviation is a Virtue Board battles won on playing fields of youth, by Lucy Kellaway

“About half of CEOs admit that they are strangers to self-doubt. Such confidence is interesting because it flies in the face of one of the most popular theories of modern leadership: that successful leaders are emotionally intelligent. Total self-belief is not only emotionally unintelligent, it is unintelligent in every way, as deep down, every one of us is a duffer. Well-rounded people know this, which makes it harder for them to excel in the boardroom or on the pitch.
In large companies, for all the talk of diversity, most people think and believe the same things. All the stuff about ‘thinking outside the box’ is fanciful: to do well you need to be just like the next person, only even more ambitious.”

I believe good traders are almost always deviants. :-)
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Trading

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July 4, 2008
TGIF (XXIII)

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TGIF

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Monthly Crude Mighty StretchedHere’s the monthly chart of crude oil going back about a dozen years. Yes, it’s up over 13 times off its 1998 low (that’s 32% annually for the last decade, the power of compounding, yow!) and recently started poking out of the regression channel (>2 SD). I expect it to go sideways for awhile at least after hitting the “magic” $150/barrel mark.

When crude broke out of the long sideways consolidation I didn’t think it would be an “easy” breakout and would dip back into the range to mess with the short-term traders, but I was wrong.

I know that posting to the blog has been a little doggy recently (neglect is on my mind), so in my defense (continuing the Janet Jackson What-Have-You-Done-For-Me-Lately theme) readers should kindly recall that I guessed that Earl would break out of the range to the upside and warned y’all to resist the temptation to countertrend trade black gold.
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Energies

| Time: 10:36 am (utc+8) Comments (0)

Experiment with Obtrusive AdIf you visit the website (I never do, I read maoxian as a feed), you’ll notice a new large colorful ad in the upper right hand corner. I’m doing a little experiment to see how much revenue this thing can generate in a month. With the old text ads I used to make about 20 cents a day, but these more obnoxious ones pay better (40 cents a day?).
I will report faithfully on how much beer I can buy with my monthly AdCents revenue!
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Internet/Media

| Time: 9:45 am (utc+8) Comments (8)

July 3, 2008
General Demoted GM Bankruptcy `Not Impossible,’ Merrill Analyst Says

Merrill cut its share-price estimate by 75 percent to $7.

That’s helpful. And 75% only rates a “cut?” Surely 75% deserves at least a “slash.”

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Investing

| Time: 11:30 am (utc+8) Comments (12)

June 30, 2008
Adjusting to $3.37 per Gallon Gas in China Adjusting to $7 per Gallon Gas in America (PDF)

“Compare driving behavior in the United Kingdom with driving behavior in the United States. Over 90% of American households use a car to get to work, while over 60% of US households own two cars or more. By comparison, just 60% of British households use a car to get to work, while less than 25% own two or more cars. Moreover, Americans drive their cars more. They make four trips a day while Brits make two. And last, some 30% of Brits don’t even own a car. In the US less than 10% of households don’t own a car.”

All these guys jumping on the $200 a barrel bandwagon brings out the skeptic in me, but the trend is their friend and I won’t call a top in crude earl until I see a turn (the same turn everyone else will see).

I can report that the recent 17% gas price hike (to $3.37 a gallon) here in Beijing has done absolutely zilch to curb demand, and I remain stalled in bumper to bumper traffic every day.
On a purchasing power parity basis, $3.37 a gallon is a fortune to the average Chinese, but as I’ve noted again and again never think of the “average” Chinese. There are now at least 100 50 million Chinese who live like Americans: they have big houses/apartments, big cars, plasma TVs, big fridges, washer-dryers and they certainly don’t bat an eye when paying $3.37 at the pump.
Only one in five urban households in China owns a car — stay long Energies.
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Energies

| Time: 4:40 pm (utc+8) Comments (9)

June 28, 2008
Animated Trading Lesson from the Box: Short SRP Drop me an email if you’d like to join the club.
Chart last updated through July 1, 2008

Related: Animated Trading Lesson from the Box: Short UAUA
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The_Box

| Time: 10:22 am (utc+8) Comments (34)

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hefeiddd · 发表于 2009-3-21 16:36

That Terrible Sucking SoundI like to post intraday charts following massive bloodbaths, so here is crude followed by the dollar, bonds, stocks, and gold. (Fellow chart fiends love reviewing these, I think.) This plunge wasn’t completely unexpected if you were paying attention to other markets around the world and Lowry’s (abysmal) numbers.
Gratuitous horn tooting: I mentioned on Tuesday that crude would probably break out to the upside given recent failed trade set-ups from the Box.

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| Time: 3:42 pm (utc+8) Comments (0)

June 25, 2008
The Big Picture — 13-week Treasury Bill (Yield), Last DecadeHere’s a monthly chart of the 13-week T-bill Index going back ten years. Looks like boom, bust, boom, bust to me. Can someone explain if this is the result of central bank meddling or what? Tinfoil hatters, please control yourselves in the comments. :-)

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Bonds

| Time: 4:55 pm (utc+8) Comments (8)

June 24, 2008
Keepin’ It RealHere’s a ten-year view of the Brazilian Real. A case of Zero to Hero. See the devaluation back in January 1999 and the long terrible slide to four in October 2002. Reviewing monthly charts is a good way to grasp big trends; it’s something I recommend you do to form and maintain your perspective, and currency charts are especially telling.

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Currencies

| Time: 6:04 pm (utc+8) Comments (8)

The Value of Failed Trade Set-upsThe Box has had a quiet June finding only ten with-the-trend set-ups so far this month. It also has found 17 countertrend ideas, which I encourage subscribers to ignore. Nevetheless, I think it’s always good to pay attention to all the ideas, especially when they fail.
Last Friday the Box suggested getting short two Energy sector stocks (PDE and FTI). Both ideas were deeply countertrend and were ignored by subscribers, but the fact that both trades triggered and failed is useful information, I think.
It leads me to expect that Crude will break out of this range on the high side. (Coin toss?)

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Energies

| Time: 10:02 am (utc+8) Comments (0)

June 23, 2008
Think Off-centerTen selected Carlinisms to celebrate the recently departed man:

“One tequila, two tequila, three tequila, floor.”
“Fighting for peace is like screwing for virginity.”
“The only good thing ever to come out of religion was the music.”
“If God had intended us not to masturbate he would’ve made our arms shorter.”
“…the baby boomers: whiny, narcissistic, self-indulgent people who have a simple philosophy: ‘GIMME THAT! IT’S MINE!’…these people were given everything, everything was handed to them, and they took it all, sold it all.”
“Ever wonder about those people who spend $2 apiece on those little bottles of Evian water? Try spelling Evian backward.”
“If a man stands in the middle of the forest speaking and there is no woman around to hear him . . . is he still wrong?”
“Why do they lock gas station bathrooms? Are they afraid someone will clean them?”
“Do infants enjoy infancy as much as adults enjoy adultery?”
“If you try to fail, and succeed, which have you done?”

Share your favorite quotes from George Carlin in the comments, if you’d like.
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Musings

| Time: 5:28 pm (utc+8) Comments (12)

Asia’s Worst-Performing Currency Rupee Steepest Slide Since ‘93 Repels Funds on Prices

“The difference between India and other BRICs is that Russia is a net exporter of oil, while Brazil is the world’s biggest exporter of beef, coffee, orange juice and sugar. China posted a record $262 billion trade surplus in 2007 and has $1.68 trillion of currency reserves.
India imports about 75 percent of its oil, which has almost doubled in price in the past year. The rising cost added to the shortfall in the country’s current account, a broad measure of trade and investment flows. The deficit widened to a record $13.4 billion in 2007.”

Barclays, Deutsche Bank, and Goldman are all looking for 43 or 44 in the rupee. I’m willing to go a little farther out on the Fibonacci projection limb and say 46+ is in the cards.
(Note that the weekly Sequential nailed the low at the beginning of the year.)

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Currencies

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June 21, 2008

June 20, 2008
Rapid Price Adjustment in the Crude Oil MarketReuters got the scoop that China would raise fuel prices. I don’t have a Reuters terminal, but it would be interesting to know what time (precisely) they published the news. Bloomberg was very late to the game, I believe, with their first headline (referring to Reuters) at around 9:53 AM, long after the market had digested the information. Can anyone tell me exactly when the Reuters headline hit?
I love comparing the intraday charts with time-stamped “news.”

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Energies

| Time: 5:58 pm (utc+8) Comments (3)

Housing the Poor in McMansions America’s Suburban Nightmare

“Once rundown downtowns are being revitalized by well-educated, young professionals who have no desire to live in a detached single family home typical of a suburbia where life is often centered around long commutes and cars.
They are looking for ‘walkable urbanism’ — both small communities and big cities characterized by efficient mass transit systems and high density developments enabling residents to walk virtually everywhere for everything — from home to work to restaurants to movie theaters.
In 2025 there will be a surplus of 22 million large-lot homes that will not be left vacant in a suburban wasteland but instead occupied by lower classes who have been driven out of their once affordable inner-city apartments and houses.
The so-called McMansion will become the new multi-family home for the poor.”

Quite a vision! I think the ideal is to have both a city apartment and a rural second home (for weekends, summers, etc).
– via 53 Cent a Day Guru –
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Real_Estate

| Time: 11:56 am (utc+8) Comments (7)

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hefeiddd · 发表于 2009-3-21 16:37

June 20, 2008
Surviving on $900,000 a YearFrom Richard Russell, who will turn 84 next month.

“I feel that I’m entitled to write whatever I want, as long as I don’t bore my subscribers silly (to the point where they cancel their subscriptions). And even if you do cancel –
I’ve now got 10,300 subscribers, which is about the most I’ve ever had in 50 years of writing Dow Theory Letters — so even if 10% or 20% of my subscribers cancel because they’ve had enough of me, that’s OK. I can support the folks I need to with 3,000 subscribers.”

I’m a big fan of Russell and hope that within five years I can have at least 1% of his current number of subscribers. :-)
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Internet/Media

| Time: 11:16 am (utc+8) Comments (3)

June 19, 2008
Frayed Shirtcuff Technician Saves the DayI meant to post this spreadsheet of CAF’s holdings yesterday, but had technical difficulties. You might find some of the columns interesting, such as date of 52 week high and number of days since 52 week high, etc.
CAF Holdings
One of the fund’s top ten holdings is China Merchants Property Development (listed in Shenzhen), which is down around 63% year-to-date and is 80% off its high. No idea what their cost basis is in this dog. The trend reversal last year was pretty clear so it would have helped to have a dirty-collared “technical analyst” on the staff to point it out at the time.

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China_Investing

| Time: 5:27 pm (utc+8) Comments (4)

June 18, 2008
China A Share FundReaders suggested shorting the Morgan Stanley China A Share Fund (CAF) as a way to take advantage of the stock slide in China. I looked at the holdings of the fund (as of 3/31/08) and they only held 33 positions, including six stocks listed in Hong Kong with the remainder being Shenzhen- and Shanghai-listed A shares. This actively managed fund is not the best mirror of the Index as the managers try to earn their 1.73% fee through superior stock picking. Anyway, here is the performance chart of the CSI 300 Index and CAF, along with CAF’s short interest chart.

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China_Investing

| Time: 8:01 pm (utc+8) Comments (3)

Seeing the Ball and Hitting It Hard A Profile of David Einhorn:

“An accomplished bridge player who has played against Jimmy Cayne of Bear Stearns fame, he took up poker on a lark and finished 18th at the 2006 World Series of Poker. He donated the $660,000 in prize money to charity.
‘Texas hold ’em is all about folding and waiting for that time that comes up every hour or two where you actually have an advantage and you can press it,’ he says. ‘I had a couple of advantages over the group. Number one, I probably cared less. This was the event of the year for them. We make bigger bets every day. There’s more at risk in what happens in Microsoft than I could ever bet on a poker table. Two, I keep a reasonably decent poker face.’”

– via kedrosky.com –
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| Time: 11:14 am (utc+8) Comments (10)

June 17, 2008
The Unshortable CascadeThere are no stock index futures in China so it’s impossible to take advantage of the dramatic decline underway here. This is the 15-minute chart — the weekly and daily trends are all down so it’s just a matter of hitting it every time it reverses on the smaller time frames. Sadly there is no way to short.

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China_Investing

| Time: 5:55 pm (utc+8) Comments (13)

Like a Lead BalloonAll this talk of bubbles in commodities prices (corn, crude, rice, etc.) makes it necessary to look at a bubble that already burst. The price of lead has already dropped over 50% from the high made late last year. Any “true believer” has given everything back and those late to the game are surely sunk.
(It’s worth noting that the weekly Sequential nailed the high in lead to the very week.)

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Metals

| Time: 10:33 am (utc+8) Comments (11)

June 15, 2008
Quoting Jesse Livermore as Holding Bullish ViewsEvery issue of The Times published between 1785 and 1985 has been scanned and made fully searchable. Here’s an excerpt from a column by their financial correspondent in New York from June 30, 1920:

“The Stock Exchange will be closed next Saturday and Monday for the ‘Independence Day’ celebrations.
Trading to-day was a trifle more active, but the market showed an absence of feature, although the undertone was hopeful. Sales were returned at 330,000 shares.
The opening was fairly firm, with generally light offerings and some demand to cover. Delawares, in the railroad group, recovering smartly from yesterday’s depression on the understanding that there was no intention to ‘cut’ the dividend at to-day’s meeting of directors. Oil stocks developed marked firmness later in the session owing to the prospects of increased earnings. Shorts were impressed by a newspaper interview, quoting Jesse Livermore as holding bullish views. The Waldorf-Astoria crowd were particularly noticeable in the covering movement. Reports that the British Government was encouraging private gold exports to America also had a favourable influence. Tobacco stocks were firm owing to a renewal of the merger rumours, and accumulation of Steel Common was accompanied by a statement that the earnings of the past quarter were satisfactory, despite the inadequate shipping situation.
Towards midday realizations caused a moderate setback, but the market soon rallied, owing to the ready absorption of the offerings, sentiment generally being better. Oil stocks marked a further improvement in the early afternoon, but the rise in call money to 15 per cent. checked the upward movement in stocks, though the general opinion was that dear money would not continue for more than three or four days. The close was irregular.”

Don’t you love the language? The next time someone asks me about the market, I plan to say: It showed an absence of feature, the undertone was a trifle hopeless, and the close was moderately irregular.
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Language

| Time: 8:18 am (utc+8) Comments (3)

June 13, 2008
TGIF (XXI)

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TGIF

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Animated Trading Lesson from the Box: Short UAUA

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The_Box

| Time: 10:04 am (utc+8) Comments (21)

June 11, 2008
Lesson in Trend Trading: Crude OilThe monthly trend in crude has been continuously up since April 2002. The weekly trend has been continuously up since April 2007. What this means for traders working off the daily chart is that there has been only one side of the market to consider: the long side. Here’s an animated lesson that I hope makes this clear. I’m looking forward to comments!

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| Time: 9:19 am (utc+8) Comments (28)

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hefeiddd · 发表于 2009-3-21 16:38

June 10, 2008
Bad Day for Stocks in ChinaHere’s a screenshot from my monitor following today’s trading in China. That’s a daily chart of the CSI 300 Index on the bottom and the quote sheets above list the 70 or so most actively traded stocks — if you don’t know which ticker symbols represent which companies, you’re out of luck, sorry.
Note that “limit down” is 10% and that there’s no way to “sell short.” The sheets also have columns which list the 52 week high date and price for each issue, which you may want to study. A lot of folks who came late to this party are deeply underwater.
We have our answer about whether the late April, early May jump was a “sucker’s rally.” Moving to the US markets, with one eye on Lowry’s (abysmal) Buying Power numbers, we can anticipate a similar breakdown in the major averages, yes?

Related:
China’s Stock Markets Have Topped, November 8, 2007
What It Will Look Like When the Chinese Stock Bubble Bursts (Try Try Again), March 30, 2008
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China_Investing

| Time: 5:20 pm (utc+8) Comments (7)

A Kind of Poison Victim or Victor? China’s Olympic Odyssey, by Ian Buruma

“When Communist ideology began to lose its potency in China, after the death of Mao and his successors’ turn towards capitalism, something had to be found to replace it. The Deng era slogan, ‘to get rich is glorious,’ was not quite enough. Chinese rulers have always needed the legitimacy of an official orthodoxy, whether Confucian or Communist, to justify their grip on power. The official post-Maoist answer has been nationalism.
To many Chinese staging the Olympic games has a special significance, because it is part of that promised restoration of Chinese greatness. National pride has to be bolstered by international recognition. So Westerners who use this occasion to criticize Chinese abuses of human rights are not just wrongheaded, but enemies who wish to stop the rise of Great China. And Chinese who support foreign criticisms of China’s human rights record are regarded as traitors.
Aggressive nationalism usually goes together with authoritarian politics. When people have no legitimate means to show dissent, vent their frustrations, express critical opinions in public, and generally take part in politics, nationalism fills the void. As long as they can control it, this suits authoritarian rulers.”

(Buruma has written several good books on Asia, notably “God’s Dust.”)
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China_Culture

| Time: 3:41 pm (utc+8) Comments (3)

It’s Like a Locomotive Running Through Your StomachI watched Rounders again last night. The movie is ten years old and holds up pretty well, but if you don’t play poker, you probably never thought it was any good in the first place. It came out way before no-limit Texas Hold’em hit the mainstream. Here are excerpts from a few of the reviewers I read [and my comments in brackets]:

“Though the stakes are always high at the gambling table, they’re pretty low when the film is away from it … John Malkovich shows up, as a Russian mobster. Imagine the danger to the scenery with Malkovich turned loose with a Russian accent.” — Mick LaSalle [the scenes with Malkovich make me laugh out loud, I love Malkovich.]

“John Malkovich has a field day with this role, with a vowel-bending accent that turns ‘O.K.’ into a drawling ‘Ak-yay’ … these gamblers live in a realm where a pair of aces beats a seductive babe every time. Famke Janssen slinks through the film as what would be an attractive alternative to card-playing in any other story.” — Janet Maslin

“Rounders—a vehicle for Matt Damon as a poker-hustling whiz kid—is an unappealing, conventional, and somnolent piece of work. Damon’s latest working-class genius may only feel fully alive when he’s playing cards, but that’s not something one could say for the movie.” — J. Hoberman

“Most gambling movies are dire warnings; this one is a recruiting poster … The movie buys into the seedy glamor of poker, romanticizing a game that essentially consists of exhausted technicians living off brief bursts of adrenaline generated by risking everything they own or can borrow … I am not sure I follow the Professor’s reasoning when he lends his student $10,000 and calls it a mitzvah [LOL] … Rounders sometimes has a noir look but it never has a noir feel, because it’s not about losers (or at least it doesn’t admit it is). It’s essentially a sports picture, in which the talented hero wins, loses, faces disaster, and then is paired off one last time against the champ. For a grimmer and more realistic look at this world, no modern movie has surpassed Karel Reisz’s ‘The Gambler’ (1974).” — Roger Ebert

“It makes one excellent point – you should be what you’re meant to be, and if you know what that is, you’re a lucky man. And if you’ve got the talent, you’re even luckier … (what is that accent Malkovich is doing? Urdu? Uzbeki? Uzi?) [no one knows but it makes everyone laugh] … It’s a movie of character and milieu, both of which it evokes brilliantly. Though it fizzles at the end, you won’t leave it thinking, I need to go somewhere new. You’ve just been somewhere new.” — Stephen Hunter [Hunter is my favorite movie critic by a mile — I almost never disagree with him.]

“John Malkovich chews the scenery as if he hadn’t eaten for a week … the mysteries of the Pyramids will probably have been revealed by the time anyone figures out exactly where Malkovich got his inscrutable Russian accent. ‘Count-eet!’ he barks as he passes a tray of poker chips to Damon early in the movie, and I couldn’t wait for him to show up and open his mouth again. When I heard lines like ‘You haefhv my muneey?’ and ‘Meestair son-of-a-beetch!’ I wasn’t disappointed. Malkovich is occasionally a fine actor but he’s played the beady-eyed bad dude too many times. What he does here isn’t a performance, but a stunt. It’s got to be a tough life, smearing bad accents all over your dialogue like margarine on a soda cracker.” — Stephanie Zacharek [Zacharek is smart and writes well but she’s a girl who doesn’t understand cards (pun intended).]

Here’s the speech given by Joey Knish (brilliantly played by John Turturro) when Mike, broke and desperate, asks him for money:

“‘Stones?’ You little punk. I’m not just playing for the thrill of f*cking victory here. I owe rent, alimony, child support. I play for money. My kids eat. I got stones enough not to chase cards, action, or f*cking pipe dreams of winning the World Series on ESPN. You want me to call some people, try and buy you some time, I will. Place to stay, or the truck. No problem. But about the money, I gotta do this. I gotta say no.”

I recommend the movie, but only to guys who play poker.
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Movies

| Time: 12:18 pm (utc+8) Comments (8)

June 7, 2008
Gratuitous Cute Chick Pic — June 6, 2008

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GCCP

| Time: 9:03 am (utc+8) Comments (14)

June 6, 2008
A Few Notes on the Chinese ConsumerA few selected excerpts (with my notes in []) from the latest China Consumer Survey (192 pages of pure gold) from CSFB:

Average monthly household after-tax income tier-1 cities (RMB) 5,374 (2004) 6,046 (2005) 5,703 (2006) 7,203 (2007)
Average monthly household after-tax income (RMB) 4,486 (2004 etc) 5,081 5,043 6,180
Median monthly household after-tax income (RMB) 3,770 (2004 etc) 3,940 4,200 4,790
Average monthly after-tax personal income (RMB) 2,013 (2004 etc) 2,121 2,129 2,500
“Experiences in the US and Japan indicate that when per-capita GDP reaches around US$2,000 (in 1951 for the US and 1970 for Japan), private consumption starts to become the key driver of the national economy, reflected in rising private consumption as a percentage of GDP.” [As I’ve said again and again, “per-capita” is the wrong way to try to understand anything in China.]
“only about 20% of urban households own a car” [$200 a barrel crude is a gimme]
Planned budget for new auto purchase (RMB ’000) 131.3 (2004) 146.0 (2005) 128.4 (2006) 166.8 (2007)
Average spending per restaurant meal (RMB) 49.9 (2004 etc) 51.1 51.1 56.5
Planned budget for handsets current owners (RMB) 2,138 (2004 etc) 2,202 2,162 2,138 [that’s a lot of money, even if there’s no growth (normal tech price deflation)]
Total monthly spending on online games (RMB) - 68.7 (2005 etc) 59.2 65.2 [not a category in 2004]
Budget for overseas travel in next year (RMB) 14,760 (2004 etc) 16,438 13,532 15,852 [this is why you *must* own CTRP]
“respondents with college or above educations expect 26% income growth” [great expectations]
“We think that the official data is underestimating the income of Chinese residents, mainly due to under-reporting of income by the high-income group to official statistical agencies.” [massive tax evasion in China, no collection system outside of multinationals (where the tax collection is *extremely* efficient :) )]
“Which mobile carriers are you using?” 76% Total domination by China Mobile (0941.HK) [yes, I use China Mobile]
“Which Chinese brands of sports clothing or sports shoes have you bought?” 50% Li Ning dominates among domestic brands (2331.HK) [I remember well the incredulity when I first asked ‘who in god’s name is Li Ning?’]
“Which is your favourite online game?” 20% QQ game zone (0700.HK)
“Which instant messaging software do you use most frequently?” QQ (again) 47% [though in my experience here in Beijing, MSN has huge share]
“Which blog site do you use most frequently?” 23% Sina (SINA (Nasdaq))
“Which search engine do you use most frequently?” 61% Baidu (BIDU (Nasdaq)) [I’m a Google man myself but they have a tough row to hoe here.]
“Which portal do you use most frequently?” Sina and Sohu dominate [I can’t bear to visit these because of the blinky flashies and incredibly dense text, but the locals are unphased by the horrific design.]

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China_Investing

| Time: 11:14 am (utc+8) Comments (6)

June 5, 2008
Yield Curve for Chinese Sovereign DebtHere’s the yield curve for Chinese government bonds. I don’t get it because I think the last time I was in my local bank, the one-year deposit rate they were offering was around 4.14%, which is just below what the ten-year Treasury is yielding? I don’t un-ner-stan (as usual). I guess the Treasury is sale-able whereas you’re locked-in at the bank (must be a penalty for early withdrawal)? Typically ignorant, rambling blog post — my specialty!

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Bonds

| Time: 2:54 pm (utc+8) Comments (6)

June 4, 2008
Lousy Lehman’s Delicious Lunchtime LullHere’s the 15-minute chart for Lehman (LEH) over the last several days. I was fast asleep during all this trading, but that doesn’t mean I can’t engage in a little after-the-fact analysis like the best 53-cent-a-day gurus (this is an inside joke).
LEH gave dummies a nice spot to get short during the lunchtime lull yesterday. Like Fibonacci, the Sequential can be useful for price projection (top secret method though, don’t ask me for details), and in this case was pointing to a sub-$30 price off the 15-minute chart.
Interesting to learn that Lehman themselves were in the market on Tuesday buying back their stock. Hey, if you’re going to dilute the common shareholders’ equity to the tune of several billion more dollars, what’s the matter with a little intervention to keep up appearances?

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Trading

| Time: 4:15 pm (utc+8) Comments (13)

Lehman Short — Swing and a MissThe Box was looking at Lehman (LEH) from the short side back in April and subscribers received this idea for April 28:

The trade didn’t trigger or fill so it was discarded. The May 2 bar would have taken us out for a loss anyway (though getting short beneath that reversal bar at $46.51 would have been perfect). In any event, I just wanted to show that the Box’s thinking is often good… but timing is everything and being “close” doesn’t mean a damn.
<DIV class=cent .

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The_Box

| Time: 8:45 am (utc+8) Comments (6)

June 3, 2008
Herbie Sandler, Very Keen Observer of the MarketA little blast from the past, from May 2006 … fun reading in light of the purging of G. Kennedy Thompson [emphasis mine]:

“‘We believe this combination of our two companies, both known for exceptional customer service and pristine credit quality, will generate superior long-term growth in earnings per share,’ said Ken Thompson, Wachovia chairman and chief executive officer, who noted that Golden West’s World Savings Bank is the nation’s only standalone savings and loan with a ‘AA’ debt rating. ‘For four decades, Golden West has taken industry-wide challenges in stride and maintained a singular focus as a risk-averse residential mortgage portfolio lender. [I believe their loan portfolio was 99% option ARMs with a huge concentration in California.] The result is an astonishing 25-year track record of 17 percent compound annual growth in earnings per share and virtually no credit losses realized even in the toughest year in its history.’
Herbert M. Sandler, Golden West chairman and chief executive officer, commented, ‘I’ve been a keen observer of the market and the mortgage and banking industries for nearly 40 years. Wachovia is the company we selected to entrust with our legacy as one of the nation’s most admired and trusted financial institutions. We share the same values of operating with integrity, putting customers first and encouraging teamwork.’”

I recall that at the time many people believed that a shrewd old operator like Herbie Sandler was selling out at the top, making a perfectly-timed exit — his Pick-a-Payout was a thing of beauty. (The Golden West sale could be studied together with Sammy Zell’s similarly brilliant sale of EOP to those dummies at Blackstone.) In matters of money, are you going to place your bets on someone named G. Kennedy or someone named Herbie? (That’s right, always the latter.)
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Investing

| Time: 11:36 am (utc+8) Comments (1)

Regional Bank (KRE) Short Idea– Animated EditionThought I’d try an experiment with these animated charts … here’s a recent short idea from the Box — the lead up to the set-up and the aftermath. Let me know if you like this kind of thing, how I can improve it, make it more instructive, etc. I’ll make more of them if people like them.

Related: Will the Regional Banks Break to New Lows? (May 8, 2008)
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The_Box

| Time: 9:11 am (utc+8) Comments (22)

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hefeiddd · 发表于 2009-3-21 16:39

June 10, 2008
Bad Day for Stocks in ChinaHere’s a screenshot from my monitor following China. That’s a daily chart of the CSI 300 Index on the bottom and the quote sheets above list the 70 or so most actively traded stocks — if you don’t know which ticker symbols represent which companies, you’re out of luck, sorry.
Note that “limit down” is 10% and that there’s no way to “sell short.” The sheets also have columns which list the 52 week high date and price for each issue, which you may want to study. A lot of folks who came late to this party are deeply underwater.
We have our answer about whether the late April, early May jump was a “sucker’s rally.” Moving to the US markets, with one eye on Lowry’s (abysmal) Buying Power numbers, we can anticipate a similar breakdown in the major averages, yes?

Related:
March 30, 2008
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China_Investing

| Time: 5:20 pm (utc+8) Comments (7)

A Kind of Poison Victim or Victor? China’s Olympic Odyssey, by Ian Buruma

“When Communist ideology began to lose its potency in China, after the death of Mao and his successors’ turn towards capitalism, something had to be found to replace it. The Deng era slogan, ‘to get rich is glorious,’ was not quite enough. Chinese rulers have always needed the legitimacy of an official orthodoxy, whether Confucian or Communist, to justify their grip on power. The official post-Maoist answer has been nationalism.
To many Chinese staging the Olympic games has a special significance, because it is part of that promised restoration of Chinese greatness. National pride has to be bolstered by international recognition. So Westerners who use this occasion to criticize Chinese abuses of human rights are not just wrongheaded, but enemies who wish to stop the rise of Great China. And Chinese who support foreign criticisms of China’s human rights record are regarded as traitors.
Aggressive nationalism usually goes together with authoritarian politics. When people have no legitimate means to show dissent, vent their frustrations, express critical opinions in public, and generally take part in politics, nationalism fills the void. As long as they can control it, this suits authoritarian rulers.”

(Buruma has written several good books on Asia, notably “God’s Dust.”)
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China_Culture

| Time: 3:41 pm (utc+8) Comments (3)

It’s Like a Locomotive Running Through Your StomachI watched Rounders again last night. The movie is ten years old and holds up pretty well, but if you don’t play poker, you probably never thought it was any good in the first place. It came out way before no-limit Texas Hold’em hit the mainstream. Here are excerpts from a few of the reviewers I read [and my comments in brackets]:

“Though the stakes are always high at the gambling table, they’re pretty low when the film is away from it … John Malkovich shows up, as a Russian mobster. Imagine the danger to the scenery with Malkovich turned loose with a Russian accentscenes with Malkovich make me laugh out loud, I love Malkovich.]

“John Malkovich has a field day with this role, with a vowel-bending accent that turns ‘O.K.’ into a drawling ‘Ak-yay’ … these gamblers live in a realm where a pair of aces beats a seductive babe every time. Famke Janssen slinks through the film as what would be an attractive alternative to card-playing in any other story.” —

“Rounders—a vehicle for Matt Damon as a poker-hustling whiz kid—is an unappealing, conventional, and somnolent piece of work. Damon’s latest working-class genius may only feel fully alive when he’s playing cards, but that’s not something one could say for the movie.”

“Most gambling movies are dire warnings; this one is a recruiting poster … The movie buys into the seedy glamor of poker, romanticizing a game that essentially consists of exhausted technicians living off brief bursts of adrenaline generated by risking everything they own or can borrow … I am not sure I follow the Professor’s reasoning when he lends his student $10,000 and calls it a mitzvah [LOL] … Rounders sometimes has a noir look but it never has a noir feel, because it’s not about losers (or at least it doesn’t admit it is). It’s essentially a sports picture, in which the talented hero wins, loses, faces disaster, and then is paired off one last time against the champ. For a grimmer and more realistic look at this world, no modern movie has surpassed Karel Reisz’s ‘The Gambler’ (1974).”

“It makes one excellent point – you should be what you’re meant to be, and if you know what that is, you’re a lucky man. And if you’ve got the talent, you’re even luckier … (what is that accent Malkovich is doing? Urdu? Uzbeki? Uzi?) [no one knows but it makes everyone laugh] … It’s a movie of character and milieu, both of which it evokes brilliantly. Though it fizzles at the end, you won’t leave it thinking, I need to go somewhere new. You’ve just been somewhere new.” — [Hunter is my favorite movie critic by a mile — I almost never disagree with him.]

“John Malkovich chews the scenery as if he hadn’t eaten for a week … the mysteries of the Pyramids will probably have been revealed by the time anyone figures out exactly where Malkovich got his inscrutable Russian accent. ‘Count-eet!’ he barks as he passes a tray of poker chips to Damon early in the movie, and I couldn’t wait for him to show up and open his mouth again. When I heard lines like ‘You haefhv my muneey?’ and ‘Meestair son-of-a-beetch!’ I wasn’t disappointed. Malkovich is occasionally a fine actor but he’s played the beady-eyed bad dude too many times. What he does here isn’t a performance, but a stunt. It’s got to be a tough life, smearing bad accents all over your dialogue like margarine on a soda cracker.” Zacharek is smart and writes well but she’s a girl who doesn’t understand cards (pun intended).]

Here’s the speech given by Joey Knish (brilliantly played by John Turturro) when Mike, broke and desperate, asks him for money:

“‘Stones?’ You little punk. I’m not just playing for the thrill of f*cking victory here. I owe rent, alimony, child support. I play for money. My kids eat. I got stones enough not to chase cards, action, or f*cking pipe dreams of winning the World Series on ESPN. You want me to call some people, try and buy you some time, I will. Place to stay, or the truck. No problem. But about the money, I gotta do this. I gotta say no.”

I recommend the movie, but only to guys who play poker.
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Movies

| Time: 12:18 pm (utc+8) Comments (8)

June 7, 2008
Gratuitous Cute Chick Pic — June 6, 2008

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GCCP

| Time: 9:03 am (utc+8) Comments (14)

June 6, 2008
A Few Notes on the Chinese ConsumerA few selected excerpts (with my notes in []) from the latest China Consumer Survey (192 pages of pure gold) from CSFB:

Average monthly household after-tax income tier-1 cities (RMB) 5,374 (2004) 6,046 (2005) 5,703 (2006) 7,203 (2007)
Average monthly household after-tax income (RMB) 4,486 (2004 etc) 5,081 5,043 6,180
Median monthly household after-tax income (RMB) 3,770 (2004 etc) 3,940 4,200 4,790
Average monthly after-tax personal income (RMB) 2,013 (2004 etc) 2,121 2,129 2,500
“Experiences in the US and Japan indicate that when per-capita GDP reaches around US$2,000 (in 1951 for the US and 1970 for Japan), private consumption starts to become the key driver of the national economy, reflected in rising private consumption as a percentage of GDP.” [As I’ve said again and again, “per-capita” is the wrong way to try to understand anything in China.]
“only about 20% of urban households own a car” [$200 a barrel crude is a gimme]
Planned budget for new auto purchase (RMB ’000) 131.3 (2004) 146.0 (2005) 128.4 (2006) 166.8 (2007)
Average spending per restaurant meal (RMB) 49.9 (2004 etc) 51.1 51.1 56.5
Planned budget for handsets current owners (RMB) 2,138 (2004 etc) 2,202 2,162 2,138 [that’s a lot of money, even if there’s no growth (normal tech price deflation)]
Total monthly spending on online games (RMB) - 68.7 (2005 etc) 59.2 65.2 [not a category in 2004]
Budget for overseas travel in next year (RMB) 14,760 (2004 etc) 16,438 13,532 15,852 [this is why you *must* own CTRP]
“respondents with college or above educations expect 26% income growth” [great expectations]
“We think that the official data is underestimating the income of Chinese residents, mainly due to under-reporting of income by the high-income group to official statistical agencies.” [massive tax evasion in China, no collection system outside of multinationals (where the tax collection is *extremely* efficient :) )]
“Which mobile carriers are you using?” 76% Total domination by China Mobile (0941.HK) [yes, I use China Mobile]
“Which Chinese brands of sports clothing or sports shoes have you bought?” 50% Li Ning dominates among domestic brands (2331.HK) [I remember well the incredulity when I first asked ‘who in god’s name is Li Ning?’]
“Which is your favourite online game?” 20% QQ game zone (0700.HK)
“Which instant messaging software do you use most frequently?” QQ (again) 47% [though in my experience here in Beijing, MSN has huge share]
“Which blog site do you use most frequently?” 23% Sina (SINA (Nasdaq))
“Which search engine do you use most frequently?” 61% Baidu (BIDU (Nasdaq)) [I’m a Google man myself but they have a tough row to hoe here.]
“Which portal do you use most frequently?” Sina and Sohu dominate [I can’t bear to visit these because of the blinky flashies and incredibly dense text, but the locals are unphased by the horrific design.]

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China_Investing

| Time: 11:14 am (utc+8) Comments (6)

June 5, 2008
Yield Curve for Chinese Sovereign DebtHere’s the yield curve for Chinese government bonds. I don’t get it because I think the last time I was in my local bank, the one-year deposit rate they were offering was around 4.14%, which is just below what the ten-year Treasury is yielding? I don’t un-ner-stan (as usual). I guess the Treasury is sale-able whereas you’re locked-in at the bank (must be a penalty for early withdrawal)? Typically ignorant, rambling blog post — my specialty!

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Bonds

| Time: 2:54 pm (utc+8) Comments (6)

June 4, 2008
Lousy Lehman’s Delicious Lunchtime LullHere’s the 15-minute chart for Lehman (LEH) over the last several days. I was fast asleep during all this trading, but that doesn’t mean I can’t engage in a little after-the-fact analysis like the best 53-cent-a-day gurus (this is an inside joke).
LEH gave nice spot to get short during the lunchtime lull yesterday. Like Fibonacci, the Sequential can be useful for price projection (top secret method though, don’t ask me for details), and in this case was pointing to a sub-$30 price off the 15-minute chart.
Interesting to learn that Lehman themselves were buying back their stock. Hey, if you’re going to dilute the common shareholders’ equity to the tune of several billion more dollars, what’s the matter with a little intervention to keep up appearances?

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Trading

| Time: 4:15 pm (utc+8) Comments (13)

Lehman Short — Swing and a MissThe Box was looking at Lehman (LEH) from the short side back in April and subscribers received this idea for April 28:

The trade didn’t trigger or fill so it was discarded. The May 2 bar would have taken us out for a loss anyway (though getting short beneath that reversal bar at $46.51 would have been perfect). In any event, I just wanted to show that the Box’s thinking is often good… but timing is everything and being “close” doesn’t mean a damn.
<DIV class=cent .

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The_Box

| Time: 8:45 am (utc+8) Comments (6)

June 3, 2008
Herbie Sandler, Very Keen Observer of the MarketA little blast from the past, from May 2006 … fun reading in light of [emphasis mine]:

“‘We believe this combination of our two companies, both known for exceptional customer service and pristine credit quality, will generate superior long-term growth in earnings per share,’ said Ken Thompson, Wachovia chairman and chief executive officer, who noted that Golden West’s World Savings Bank is the nation’s only standalone savings and loan with a ‘AA’ debt rating. ‘For four decades, Golden West has taken industry-wide challenges in stride and maintained a singular focus as a risk-averse residential mortgage portfolio lender. [I believe their loan portfolio was 99% option ARMs with a huge concentration in California.] The result is an astonishing 25-year track record of 17 percent compound annual growth in earnings per share and virtually no credit losses realized even in the toughest year in its history.’
Herbert M. Sandler, Golden West chairman and chief executive officer, commented, ‘I’ve been a keen observer of the market and the mortgage and banking industries for nearly 40 years. Wachovia is the company we selected to entrust with our legacy as one of the nation’s most admired and trusted financial institutions. We share the same values of operating with integrity, putting customers first and encouraging teamwork.’”

I recall that at the time many people believed that a shrewd old operator like Herbie Sandler was selling out at the top, making a perfectly-timed exit — his Pick-a-Payout was a thing of beauty. (The Golden West sale could be studied together with Sammy Zell’s similarly brilliant sale of EOP to those dummies at Blackstone.) In matters of money, are you going to place your bets on someone named G. Kennedy or someone named Herbie? (That’s right, always the latter.)
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Cat:

Investing

| Time: 11:36 am (utc+8) Comments (1)

Regional Bank (KRE) Short Idea– Animated EditionThought I’d try an experiment with these animated charts … here’s a recent short idea from the Box — the lead up to the set-up and the aftermath. Let me know if you like this kind of thing, how I can improve it, make it more instructive, etc. I’ll make more of them if people like them.

Related: (May 8, 2008)
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The_Box

| Time: 9:11 am (utc+8) Comments (22)

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