A Tale of two Companies: Netflix ($NFLX) and Blockbuster (BLOAQ)
If you are reading this blog that means you are part of the online revolution which has sped up the way we conduct business and also the way we spend our leisure time.
The recent years have brought user generated videos, tv episodes and even full movies to the web. Gone are the VHS and DVD days where it cost $6-7 to rent a movie and in are the $10-15/month to watch unlimited movies. The company that revolutionized this was Netflix a few years back and that caused dear ol' brick and mortar Blockbuster to go belly-up.
Well Gentlemen and Ladies the beast is awakening from its two year sleep. In what might turn out to be a lengthy blog post I will be evaluating both Netflix and Blockbuster because in another week (December 15th) Blockbuster is expected to file its reorganization plan.
Lets start with Netflix $NFLX king which Since January 2010 alone is up a whopping 245% from $55 to $190 a share. Being a technical analysis freak I always look at the chart to see how the stock has done in the past and whether its shot up too far from the ground (my moving averages trio) and as you can see below the real ground is the 110 ema which right now stands at 151.37. I also use two shorter term averages in case I don't want to wait for a stock to go that low but with Netflix being $40+ above ground I am willing to wait. (Click Image to Enlarge)
Sure sure technicals are one thing but I also like to look under the hood at fundamentals. I plug balance sheet, income statement and other data into my system and what I get is an all in one visual of different ratios. The profit margins have increased over the years and that is a positive thing but Netflix's equity multiplier has increased from 1.78 to 3.41 which is basically doubled within the year and that signals to leveraging, all the profitability ratios are also good, but when we get to Liquidity ratios such as current and quick ratios we see a different story, Netflix has become more illiquid for better or worse. Lastly Long term debt to total assets has gone up significantly from 6% to 35% within a year so that might be a warning shot. And Finally the past few day Netflix has been under the influence of mostly negative news and especially tonight's after-hours news of its CFO "retiring".
Netflix receives a score of 57% (out of 100 of course) based on my hybrid system of technical analysis, fundamental and news and on we move into Blockbuster.
When was the last time you heard about Blockbuster? My educated guess would be around 2007 when they stopped advertising (started going belly-up). Well I do have some news for you and the news is that the Yellow and Blue logo is making a comeback but first lets keep the layout somewhat organized (neat freak) and start off with a chart.
Below is a chart using the exact averages as above but this one isn't as pretty and Blockbuster (BLOAQ) former $BBI has been "under ground" for quite some time. Even with the recent doubling of its price from 5 cents to 10 cents the ground hog hasn't been able to stick its head above the 12 cent ground for long. Back in May the ground hog (Blockbuster) poked its head, didn't see a shadow and that resulted in 6 more months of winter. So technically speaking, 12 cents has to be broken before the stock goes anywhere gooood. (Click Below to Enlarge)
Just because Blockbuster stock is yet to break out, that doesn't mean that the company isn't making steps into a re-emergence from bankruptcy. As mentioned in the beginning of this article Blockbuster should be submitting its plan on December 15th, meanwhile they have just closed 18 more physical stores in a move from offline to online media. For those of you that like purchasing dvds at a physical location, NCR Corp operates RedBox-like kiosks with Blockbuster logo and movies. Tests on about 900 kiosks are being run now in San Francisco, Miami etc to see if people would pay $3.99 for the first night to rent a new movie 28 days before it comes out to Netflix. Going into bankruptcy it had $1 billion in debt and coming out it is expected to have $100 million or less.
Just a few weeks ago Blockbuster received court approval for $20 million in advertising, it had not advertised since 2007 and they have already begun with a few ads showing their competitive edge of providing movies 28 days earlier than Netflix the ad campaign is called "Less Waiting. More Watching."
Another thing i noticed while looking website statistics and info is that when you search "new releases" on Google Blockbuster.com is #3 ranked and Netflix is #10.
Ok so why would I (or You) as a consumer want to pay $11.99/month for the 1 Dvd plan when Netflix is $9.99/month right now?
Well there is a big reason why I highlighted "right now" because it is the main reason Blockbuster is the only one to offer movies 28 days earlier since it costs $3.99/movie.
With Netflix's recent fame in the stock market more companies such as the movie studios will want to suck more money out of them and they (Netflix) will pay higher prices for the movies. At this moment either Net profit margins will begin declining if the $9.99 price is still valid or Netflix will be forced to charge $10.99, 11.99 12.99 etc and that will drive users to other competitors since the price advantage is no longer valid.
With the new campaign, Blockbuster's ad spending next month is to be three times as high as it was last December. The final month of the year is traditionally one of the most lucrative for the company, as summer event movies come out on DVD and families watch movies together over the holidays.
I will leave you with Blockbuster's new ad campaign that came out less than a week ago.
What a crook I would be if I didn't disclose my holdings. Short NFLX via option puts and long Blockbuster.
When ETF’s don’t work ($VXX, $VIX)
We are all caught up in the new bubble that I would like to call the Great "Enron Task Force" (ETF).
Basically ETF's are usually set up to mimic indices that we cannot directly buy. That is a great way to stay invested and diversified if you believe the stock market in general will do good or bad. The number of Enron Task Forces is now reaching the gazillions and "investors" are so drawn into them that they are getting bigger and bigger and bigger (can you guess already?).
Here is SPY ETF compared to the index that it tries to replicate. (Click To Enlarge)
As you can see the mirroring effect is almost so perfect that by owning SPY shares you will make nearly the same percentage as how the S&P 500 has performed. Thats GREAT! It takes pain away from doing individual stock research. Of course if you still want to invest in specific stocks with minimal effort and AMAZING returns I would recommend Bear Sterns. After you have made millions in Bear Sterns get your attention back to this useless post.
Hey I have an Idea! I believe Volatility will increase and VIX index will keep going higher again. Hmm "Google Google on the wall whats the best ETF of them All?" Google: VXX for the win! So there you have it, if you want volatility there is an ETF for that. Alright time to cut to the chase because its nearing midnight. Click Below to Enlarge the Comparison between VIX and VXX.
Notice a Difference between the SPY comparison and the the VXX comparison? Gosh I hope so or get the FREAK out of here! They don't mirror each other AT ALL. They Barely did before last august and from then on its a whole different story. Speaking of stories... Thanks Dan for the heads up in the comments about the "VXX Reverse Split 1:4" story.
For those that are new to stock splits a quick search can yield a lot of information but I will spare that for you by explaining in my own words what will happen here.
When VXX reverse splits in the first week of November (lets assume its at $13 on that day) it will start showing up as a $52 instead. How can they just change the price? Well If you owned 4 shares of VXX now you will own just 1 later thats how.
Ok finally getting to the finish. A reverse split is bad because instead of increasing the amount of shares outstanding, the company is making this move to make the stock look like it has more value when in fact is the same crappy thing. I will not be playing VXX but seeing the "oh so perfect" mirroring effect it has done so far I congratulate those who will keep shorting it via whatever method works for them and reaping profits until VXX slashes in half once again.
Thats it for now and I hope that helped clear your question Dan. Volatility will not get a spark just because Barclays "Enron Task Force" will have a "higher price". If you're still confused or stumble upon other interesting things that you would like to share, the boxes are right below the post most of the time.
Happy Trading all and to all a good night!
-K
SPY’der Pig Spy’der Pig!
Well it surely has been a lifetime (one month) since I last posted but don't blame me much because life has become much busier and time consuming. Don't worry though I won't leave fellow freaks without some delicious charts before I return to the freakishly busy life of mine .
First off for some humor Here's my Inspiration to the awesome title. 
Ok so without even mentioning any recent news because I really don't care if the Economy officially came out of recession last summer or if Larry Summers will finally leave his post at the end of the year because I am a technical trader and I like to trade what I see rather than what I hear. If I traded what I heard then I would be a BOOOYAH Cramerica Fan which would have made me millionaire by now if I had invested billions.
Lets start off with an hourly chart for the past 20 days of the SPY so we can see what happened while the blog was inactive.
I will not reveal the indicators of lines used in the chart but with some trial and error you might be able to figure it out . As you can see starting September 1st the market broke above the blue line while at the same time volume picked up and a special indicator went from red to green. SPY at the time was around 107 and today it reached a high of nearly 115.
Thats great and all as we see what happened in the past but what about the "Freak"ing future? I am not calling a market top yet but I must make my intentions known that if either 115 or 113 are broken on the hourly while the volume is there then that will determine the future. If I were to call it? I would say the volume increased the last two hours of today's trading thanks to Ben Balloonhead and the special indicator below is heading downhill (but still green). My ideal trade would be when SPY cuts below 113 and the indicator turns red. Remember that even if what I am preaching does not happen at least it is a more informed decision than pressing a "Buy Buy Buy, Sell Sell Sell" button. (Click Image below to Enlarge)
Next up we will visit something I like to call the Bollinger Bands and again I will not reveal the inputs but I hope you are understanding (you can always figure it out with some hard work), as you can see I have also shown the signals my system has given to me. I am awaiting for that Sell signal which might send SPY to 110's at the very least if it displays me that lovely red "S". of course there have been times where the market just consolidates along the blue lines and then moves up in which case I wouldn't enter until I see my system print the signals while I also evaluate the chart already posted above.
Are you falling asleep yet? If so you aren't a real Investing Freak because only the elite know that without doing your homework you will go into the market like a headless chicken and come out a loser. Now Time to introduce the updated Investing Freak special chart which I last displayed back in June. If you click on the link and go to that post you will see a "price line" drawn near 1152 (it's really just a bit over 1150 if you get microscopical), I mention that because today the market reached up to 1048.59 and retreated a full 10 points! 10 points is a sweet intra-day move which you can make a killing on if you play it right. Anyways here is the updated chart since I can see you falling asleep. (Click below to Enlarge)
Recap: I've been busy, market has been behaving according to plan and is not showing more negative signs than positive but no definite reversal has been noticed so just use the charts above for reference. If they are helpful, you are welcome to post comments so we can liven up the blog again.
Until next post.... Enjoy Making money!!
-K
Tropical Storm Alex to BP’s Rescue
I Want my life back! I am not the only one as plenty of fishes, birds, and people also want their life back that BP plc (ADR) has taken away. Not to Worry because BP feels sorry, so sorry that it is donating oil spill revenue to charity (the National Fish and Wildlife Foundation). BP said it would provide $5 million to the group immediately, Based on a current futures price of $77.83 a barrel, the collected oil is worth about $1.2 million. BP hopes to cap the well by August.
With the CEO now out of the picture time to get back to work and stop this drilling insanity. Hmm maybe not thanks to a federal judge who has overturned the Obama administration’s 6-month moratorium on new deepwater offshore drilling projects. What's the reason for overturning the decision?
The Interior Department said it needed time to study the risks of deepwater drilling but U.S. District Judge Martin Feldman said in his ruling the Interior Department assumed that because one rig failed, all companies and rigs doing deepwater drilling pose an imminent danger.
Come on there has to be more to this story and thankfully there is. Like many judges presiding in the Gulf region, Feldman owns lots of energy stocks, including Transocean, Halliburton, and two of BP’s largest U.S. private shareholders — BlackRock (7.1%) and JP Morgan Chase (28.3%). Here’s a list of Feldman’s income in 2008. How can he stop drilling when his heart is fully soaked in oil? He can't because Industry ties among federal judges are so widespread that they are beginning to endanger the courts’ ability to conduct routine business.
More great news! We don't need to head to Italy to see the amazing Leaning Tower of Pisa because BP pipe is tilting more.
The Deepwater Horizon riser package that sits on the seabed a mile below the ocean surface weighs over 450 tons, including the 48-foot-tall failed blowout preventer. National Incident Commander Thad Allen announced that the riser package is tilting “10 or 12 degrees off perpendicular (On June 10 it was only tilting by about 2 or 3 degrees). Engineers and geologists fear the stack atop the well could tip over if the well integrity further degrades, leading to the “unlikely, but not implausible” scenario of “oil gushing through the sea floor.”
Hey you say, its unlikely and worst case scenario and BP will get things rolling before something worse happens. What else coulg go wrong? everything is already factored for the worse.
Oh wait! More Great news just arrived! Tropical Storm Alex comes to the rescue (or not) of BP. The ECMWF model is the most aggressive in developing this system, taking it into the Gulf of Mexico as a hurricane next week. The NOGAPS model keeps the storm weak and farther south, predicting that 93L will bring heavy rains to northern Honduras as a tropical disturbance or tropical depression on Friday and Saturday. But either way this will be fun to watch.
Here is the graph of Invest93 (Tropical Storm Alex)
Check out some previous BP Posts:
BP Cares about the small people June 17
BP now stands for Bad Publicity June 14
Thats all Folks,
-K
BP now stands for Bad Publicity
After creating one of the biggest disasters in US history with the Gulf Oil Spill, British Petroleum (BP) has tried to buy ads on Google to get their message through, however, they have not just stopped at buying ads for Google search and have been promoting their message on YouTube too.
BP plc (ADR) has concluded that its “top-kill” attempt to seal its broken well in the Gulf of Mexico may have failed due to a malfunctioning disk inside the well about 1,000 feet below the ocean floor. If the casing is compromised the well is that much more difficult to shut down, including the risk that the relief wells may not be enough. If the relief wells do not result in stopping the flow, the next and drastic step is to implode the well on top of itself, which carries other risks as well. The real doomsday scenario here… is if that casing gives up, and it does come through the other strings of pipe. Remember, it is concentric pipe that holds this well together. If it comes into the formation, basically, you‘ve got uncontrolled [oil] flow to the sea floor. And that is the doomsday scenario. -Naked Capitalism
The U.S. Coast Guard gave BP Plc 48 hours to find more capacity to contain its leaking oil well in the Gulf of Mexico after scientists and researchers doubled their estimates of the spill’s size.Based on government estimates, the drillship isn’t capturing as much of the spill as BP predicted earlier this month. In a June 4 interview with CBS, Suttles said the system would be capable of capturing as much as 90 percent of the flow.
If BP does not comply with this order, and cannot give a satisfactory reason why, this will put them further on the back foot in their meeting with Obama next week. Readers are correctly cynical as to whether the Administration will live up to its tough words, but the groundwork is being laid, which would make failure to follow through even harder to defend.
Separately, BP said its board will meet June 14 to discuss whether to cut or defer its second-quarter dividend payment following the spill. This is causing BP's Major British Shareholders to Ditch The Company While American Ones Are Staying. Major UK institutions including Legal & General, M&G, Scottish Widows, Threadneedle and Axa have all trimmed their holdings since the Deepwater Horizon rig sank. US pension funds – including Calpers, the Teacher Retirement System of Texas and Ohio Public Employees Retirement System – have held their stakes in the company despite the dramatic fall in the share price.
If you think BP is a good buy right now check out this article: The Ultimate Contrarian Bet: BP
Lets see what today has in store for BP and the rest of the market.
Happy Trading
Update 1pm : - Senate Majority Leader Harry Reid (D, Nev.) and members of the Democratic caucus on Monday asked BP Plc (BP) to set aside $20 billion in a special account to be used to pay for economic damages and clean-up costs of an ongoing oil spill in the Gulf Coast.
Update 3:30pm: To demonstrate that it’s responsibly taking care of the oil spill and listening to public complaints, BP has touted the fact that it has set up call centers to handle the response. However, one of the operators at the BP Call Center in West Houston has revealed that she and the other 100 employees are just PR props; BP isn’t actually doing anything with the thousands of calls it receives: "“We’re a diversion to stop them from really getting to the corporate office, to the big people,” said Janice. … Because the operators believe the calls never get past them, some don’t even bother taking notes."
Debt Reducing Tuesday
Bennie Balloon Bernankie has something to say about the koolaid.
“My best guess is that we’ll have a continued recovery, but it won’t feel terrific. Even though technically we’ll be in recovery and the economy will be growing, unemployment will still be high for a while and that means that a lot of people will be under financial stress,” he said. Via CalculatedRisk
But there is GREAT NEWS...You can use your credit card to Help Reduce National Debt. Via The Mess That Greenspan Made
Its ok that everyone is financially strained you are still welcomed to help especially if you have a credit card with 13 trillion dollar limit. 
There are two ways for you to make a contribution to reduce the debt:
- You can make a contribution online either by credit card, checking or savings account atPay.gov
- You can write a check payable to the Bureau of the Public Debt, and in the memo section, notate that it's a Gift to reduce the Debt Held by the Public.
And as mentioned yesterday the G20 Meeting relied more on taking the koolaid away and tightening the belts of the countries.
Here's what Germany decided to do:
Germany will cut child payments, pare government payrolls and boost taxes on energy firms with nuclear power plants in an effort to save 81.6 billion euros ($97.6 billion) between 2011 and 2014 in a package approved by Chancellor Angela Merkel's Cabinet on Monday. -Marketwatch
and how it would look if the United States did something very similar. (Click the option to View as One Page for easy reading)
Of course all these news were already priced in today and greenshoots galore tomorrow.
Make money!!
Germany Tries to save the day AGAIN -2008 Part 2 Begins-
So today Germany's Merkel decided to pull a good trick over the nekkid shorts.
There is much surprise that the German government has declared a ban on naked short selling, including CDS, as of midnight tonight, with no prior notice or the niceties demanded by the banks when government chooses to act. This action seems to have perturbed some and confused many.
Germany is claiming that this move will stop the Speculators
The ban will also apply to naked short selling in shares of 10 banks and insurers that will last until March 31, 2011, German financial regulator BaFin said today in an e-mailed statement. The step was needed because of “exceptional volatility” in euro-area bonds, the regulator said.
HMMM Where oh Where Have I heard this story before... Oh Yeahh.. September 20, 2008 German regulator bans short-selling in financial stocks
Germany on Saturday halted short-selling in financial shares, when investors borrow company stock to sell it, following the example of Britain and the United States. The ban affects 11 shares including those of AAreal Bank, Allianz, AMB Generali, Commerzbank, Deutsche Bank, Deutsche Boerse, Deutsche Postbank, Hannover Re, Hypo Real Estate, MLP and Munich Re. BaFin, said short sales were banned with immediate effect until the end of the year, underscoring that they could lead to huge losses in the current global financial turmoil.
Roll Back to May 18, 2010....
Allianz SE, Deutsche Bank AG, Commerzbank AG, Deutsche Boerse AG, Deutsche Postbank AG, Muenchener Rueckversicherungs AG, Hannover Rueckversicherungs AG, Generali Deutschland Holding AG, MLP AG and Aareal Bank AG are covered by the short-selling ban. “Massive” short-selling was leading to excessive price movements which “could endanger the stability of the entire financial system,” BaFin said in the statement.
I wonder what happened last time they tried protecting the banks? Well I will examine it below but what's that I hear you say? This Time is Different? It sure is!!
During the last Crisis we had Lehman go bankrupt and Bear Stearns collapse. Two years later we don't have any financial institutions going down. We Have Countries that are crumbling and their "shareholders" (taxpayers and citizens) revolting. Greece is Bear Stearns because of the trillion dollar bailout and Portugal might as well become Lehman because unless Europe is willing to print a trillion for every country they bail (which I know they can if they want) and euro dropping to parity and beyond with the dollar.... someone will have to hold the bankruptcy stick.
Anyways Lets look at how the last short selling ban affected the financial institutions they tried to protect.
I'm using Dow Jones Germany Index for a Benchmark as to compare returns.
| Company | Sept to Dec 2008 | May 2010 – March 2011 |
| Dow Jones Germany Index (USD) DEDOWD | -23% | TO |
| Allianz SE AVL | -30% | BE |
| Aareal Bank AG ARL | -64% | FILLED |
| Commerzbank AG CBK | -61% | OUT |
| Deutsche Bank AG DBK | -50% | ON |
| Deutsche Boerse AG DB1 | -15% | APRIL |
| Deutsche Postbank AG DPB | -65% | 2011 |
| Hannover Rueckversicherung AG HNR1 | -18% | WHEN |
| MLP AG MLP | -26% | BAN |
| Muenchener Rueckversicherungs-Ges. AG MUV2 | +7% | ENDS |
Oh myyyyyy Germany Saved the day as speculators were on the sidelines watching and missing out on 18 to 65% gains (its what you do when you short and if you're not familiar just Google "selling stocks short")
The Previous ban was 3 months and the protected stocks crashed an average of 46%. The New Ban will be around 11 months and will crash how much? It will crash aplenty so I will not make an exact percentage call on this one. But I will be doing one thing this time around though. I'm putting German Financials on a Bank Watch List that I will check back on April 1st 2011.
Make plenty of money these next few weeks even if my blogging is sporiadic at best. (Offline life always comes first)
-K
Special: Best Lesson Ever On How To Find Shares To Borrow of Stocks at Different Brokers
Let me just warn you that short selling is even more dangerous than buying (aka going long) stocks.
Why?
If you buy a 1000 shares of MCGI at 2.3, you will pay $2300 + commission. Thus, most you can lose is $2300 and there is no limit on your reward-- it could go as high as $4, or $100 per share.
If you short sell a 1000 shares of MCGI at 2.3, you will pay $2300 + commission. Here is the catch: you bet that the price will go down, so THEORETICALLY you can only make 100% of your investment if the price will go down to $0 (zero, null, nada, nic, vlere). THE PROBLEM: the price of the stock can go up infinitely, so you can lose the value of your whole account if you are not being careful. I recommend to never, ever, under no circumstance, leave the short position open without you looking at the price action and being ready to pull the trigger within seconds. If you still do not understand what short selling is or are confused about something, please leave a comment with your question and I will do my best to answer it.
If you understand the risk of short selling, you are half way there. In order to short a stock, you need to borrow shares from your broker. Below is the list of some brokers and how I go about borrowing shares from them.
Thinkorswim: their platform will tell you whether given stock is easy to borrow or hard to borrow by showing you ETB or HTB in the top right corner of the quote window. If it is ETB, you can just execute sell order which is equivalent of shorting. If it is HTB, you have two options: call them or chat with them live on the website. I generally prefer to chat with them as it is the easiest and most convenient for me. I connect with Trade desk, and say "Hi, do you have a 1000 shares of MCGI to borrow?." If they do not have shares, the person will say "none" or "none available." If they are available, the person you are speaking with will ask you for your account # and the price you want your order to be placed. I usually would reply with "Set sell lmt order at $x.xx"" -- I recommend to ALWAYS set your order higher than it is now at as sometimes it could take them 10 seconds and sometimes 2 minutes for your order to start working.
TD Ameritrade: there is no way to know whether the stock is short-able or not. You can try executing the sell order and it will either get executed or not. If not, you will be simply given an error message saying: rejected. Note that TD has implemented Thinkorswim's software recently so it might be possible to know whether it is short-able or not. I personally have not used TD for a while; I never liked TD and their high commissions.
E-trade: tired them in the past. My experience has been negative (but maybe they changed since then?). Just like with TD, you can't know whether it is short-able. You can try executing sell order and it will either be successful or rejected.
Sogotrade: You can know whether given stock is available to borrow by using this URL: http://www.gndt.com/support/shortlist.htm or simply calling them. The list is updated only once during a day so it is possible that shares of desired stock might be already borrowed and not available anymore. Generally speaking, in my experience, Sogotrade usually has shares to borrow of stocks you can't find with other brokers. Don't ask me why, I don't know...
I will add more brokers if anyone is interested.
- Kamil
Mother Nature Shorts the Market: Volcano errupts, Cramer Says the Recovery is Real
Mother nature is fed up with the mountainous stock market climb and the Icelandic Volcano has finally put a top to it.
There have been many canceled flights across Europe and airliners will be feeling the effects of the volcano for at least a quarter if not more. This is one of those news items that is still not priced into the market (at least wasn't as of 4pm closing bell) so shorting an international Airliner should yield results (British Airways or AirFrance perhaps).
This is not just a minor news article as many airports have yet to close but will have to as the ash travels farther from its origin. According to BBC "Such a large eruption... would have the potential to severely affect air travel at high northern latitudes for six months or more. "In relation to the current eruption, it is worth noting that the last eruption of Eyjafjallajoekull lasted more than 12 months."
This could be a major win for global warming activists because it might cool us down according to an article in the Guardian that states "The dust can also help reduce global warming. The effect of the Iceland ash cloud will be small but larger eruptions help to cool the planet as they reflect sunlight back into space. The 1815 eruption of Mt Tambora in Indonesia produced so much volcanic ash that it triggered the "year without a summer" that brought widespread failure of harvests across Europe, famine and economic collapse."
Now that we established Mother nature's attempt to stagnate or destroy the economy lets turn our heads to the lovely Jim Cramer who tells us that the Recovery Is Real!
"Maybe this time, the recovery is better, Maybe it's healthier and more sustaining. Maybe this time we've got it right, not wrong, and Maybe the recovery will be responsible and Maybe fueled by a longer-term health in the consumer, and Maybe it will not be turbocharged bad lending." Now I added a few more maybes on my own to emphasize that Maybe the recovery is real and Maybe Cramer is a genius.
We know mother nature is short and Cramer is long. Lets take a look at some economic data domestically and around the world.
US Economy:
March Foreclosure Activity Highest on Record (Calculated Risk)
7 million households are behind on their mortgages. Now that the worst of the financial crisis appears to be over, banks are finally stepping up the foreclosure process again. Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.
Weekly Initial Unemployment Claims Increase to 484,000 (The Big Picture)
Today’s Unemployment Insurance claims “unexpectedly” spiked to 484k vs. a 440k consensus, and were 24k higher than last week. Lets get to the excuses as to why the weekly claims for unemployment insurance are not dropping as quickly as everyone would like. "A Labor Department economist said this latest rise can be pegged to lag effects from the spring holidays, including Easter and Cesar Chavez Day, which is celebrated in worker-heavy California." If that puts a dent in employment then here are the Holidays: Thanksgiving, Christmas, MLK Jr. Day, snow storms, Easter, Cesar Chavez. Upcoming next week are Administrative Professionals Day and Take Your Children to Work Day, so fear not when UI claims breach 500k again.
Empire Manufacturing Index Soars (Econompic)
A gauge of manufacturing in New York State rose to a six-month high in April as new orders advanced and employment continued to improve, the New York Federal Reserve said in a report on Thursday. The New York Fed's "Empire State" general business conditions index rose to 31.86 in April, the highest since October and up from 22.86 in March. Economists polled by Reuters had expected a figure of 24.
World Economy:
Greece On Verge Of Activating Rescue Package (Zero Hedge)
A senior Greek Finance Ministry official told Market News that With the call for a meeting today, Greece is seeking to iron out “immediately” exactly what the details of the joint EMU-IMF plan will be, and what fiscal, macroeconomic and other conditions will be imposed on Greece in exchange for the aid. Last weekend Greece issued $2.1 billion in Bills, which auction by the way bankingnews.gr recently reported was a scam, with half the bids being fake!
Israel accuses Syria of arming Hezbollah(AFP)
Israeli President Shimon Peres on Tuesday accused Syria of supplying Scud missiles to the Lebanese militant group Hezbollah while publicly talking peace.
"Syria claims it wants peace while at the same time it delivers Scuds to Hezbollah whose only goal is to threaten the state of Israel," Peres told public radio.
Have a good night.
-K
Nightly Recap 4-9-2010
Market Summary:
DOW +70.28 (10,997.35) Briefly Touched 11,000
S&P +7.94 (1,194.37)
Nasdaq +17.24 (2,454.05)
____________
Disclaimer:
Open Positions: SRS at 5.97
___________
Nightly News Links
US Economy:
Bank Failures and Puerto Rico (Calculated Risk)
It appears the FDIC is getting closer to taking action in Puerto Rico. Three banks on the island holding more than $20 billion of assets are in trouble ... It appears the remaining healthy banks in Puerto Rico don't have the capacity to acquire these troubled banks - and most banks not in Puerto Rico just aren't interested.
Crazy Expensive Stuff That's Helping Push Sotheby's Back Towards Nosebleed Heights (BID) (Business Insider)
Sotheby's (BID) is back and the sales are as hot as ever. The auction house, a viable predictor of major market turns, is officially telling us its back to pre-Lehman levels.
Many million dollar pieces are even fetching bids twice the amount predicted, as wealthy buyers appear more than ready to spend again.
Back on March 14th I wrote an article about (BID) as a Market Leading Indicator. Click here to check it out.
World Economy:
U.K. Produce Prices Soar in March (Econompic)
Oil prices rose above $86 a barrel Friday on a weaker dollar and after robust U.S. retail sales in March pointed to growing consumer demand in the world's biggest energy market. As can be seen, this jump is almost entirely due to the cost of energy (it has not yet fed into other goods / services) and elevated producer prices will be difficult for businesses to pass through to end consumers.
More Links on the Greece Fiasco:
1.Greek Short term debt spikes to 21%
2.Fitch Downgrades Greece To BBB-
Interesting Links:
10 Psychological, Valuation, Adapative Investing Rules (The Big Picture)
Everything cycles: Recessions turn into recoveries; bull markets give rise to bear markets. Every rally that there ever was or there ever will be eventually ends. Adapt to this truism or lose your money. - After a collapse (i.e., a 55% market sell off), most of the terrible structural news that existed before the collapse is reflected in prices. Let it go. (Plenty more good ones at the link above)
Southpark: Cartman as Jim Cramer of Facebook
Kudos to Matt Trivisonno for finding this video and finally some straight talk about China.
China is dependent on us, we're working in order to keep Chinese people working. The Chinese think that we are suckers and are laughing at us.
Check the video below for 4 well spent minutes.
Have a Good Night
-K