Marc Faber was on Fast Money tonight and was saying what you have been telling us all along
(from memory) :
-the fed is not measuring true inflation,should be much higher
-if it was accounted for properly the real GDP growth would be close to zero and rates much higher
-the market is strong because the Fed is printing money and is keeping rates artificially low
-this is making the dollar weak
-real inflation will eventually show itself
-excess liquidity will result in unfortunate mistakes, such the sub prime issue
-these mistakes will set off a major correction
-China is in a bubble
-better to shift into real investments, farmland and real estate that isn’t overvalued than stocks etc

is Marc a member? wish I saw the entire segment….

They used 100% of their cash flow last year (-$500M), $28 of the $39Bn the company made was used to buy XOM stock and, of course, they would have made much less per share if they hadn’t bought $17Bn back the year before but this buyback is masking a host of issues that are eroding the core of the business. In order to keep up their buying pace this year, they had to up the ante to $8Bn of buybacks per quarter, since they needed some money for other things in Q4, they actually went negative to the tune of -$4.5Bn while they relentlessly bought back their own stock. They also pay out $2Bn a quarter in dividends so, effectively, they spend every single penny of the $10Bn they make on enriching themselves and this is THE BEST they can do?!?

What happens if they can’t bump gas prices up an average of 50% per year ($1, $1.50, $2.25, $3.20 this year)? For XOM to continue buying their much more expensive stock at this pace they need 40% more money than they needed last year, when the stock averaged $60 a share in the first half. That means the same $6.7Bn they spent to buy 111.6M shares last Q2 will only net them 85M shares this Quarter. That’s why you’ll notice, if you look at XOM’s recen price movement, that almost all volume spikes are negative volume spikes - XOM simply can’t buy at these levels anymore - they don’t make enough money to support the stock when sentiment changes.

There is some masterful manipulation going on here - they strike at the most opportune times, like today coming into a holiday when they can have a lot of buying effect. Yesterday the stock was saved at $83 by massive buying into the close that took it up $1, a $477Bn corporation gaining $5Bn in value in 30 minutes is a spectacular site but where is that next $100Bn going to come from to take them up to $100 per share?

This afternoon XOM said that losing their Venezuela operation would have “no material effect on it’s operations as it’s “just” .7% of it’s worldwide property. plant and equipment. Isn’t that .7% of $477Bn or $3.3Bn??? How safe do you feel with a company that downplays a $3.3Bn loss of value? They sound a lot like builders and subprime lenders who have been saying for a year that there isn’t a problem. XOM’s costs are absolutely out of control, up from $163Bn in ‘04 to $213Bn last year for selling the SAME amount of oil. SG&A have held flat but an extra $79Bn in revenue netted “just” $27Bn in additional operating income and just $14Bn in additional net profits.

We know why their costs are up, the entire oil food chain is “en fuego” but what does happen when the music stops. Already they made $1Bn less in Q1 than they did in any of the prior 3 quarters. Q2 oil prices, despite the late spike is still more than $5 per barrel less than last year. Perhaps the crack spread will save them but it won’t save the pure plays, especailly the ones that rely on companies like RIG, whose profits are up 50% from last year.

I see these guys messing with their numbers, shuffling costs around and hoping for a hurricane or a jihad they can blame a really bad quarter on but, if nothing earth shaking happens, by the end of the year the balance sheet will have to be addressed and I sure wouldn’t want to be standing under this thing when it falls.

My personal valuation for Baidu in 2010 isn’t anywhere near $290 per share. I see at most, a more realistic 30% growth rate which would put 2011 owner earnings at 185 million. 30 x 185 million is 5.5 billion plus the 400 to 500 million cash on hand. This would support a market cap of 6 billion. This gives me 2010 share prices of $167.

By Jim Cramer
RealMoney.com Columnist
7/2/2007 3:56 PM EDT

Oh boy, this is a defining day — one of those days where if your stock went down, you simply may be in the wrong stock. That’s how powerful this rally is.

We can see that there is a concentration into the cyclicals, but that doesn’t mean your non-cyclical is in trouble. It just means it’s gotten quite out of fashion. Homebuilders, NVR (NVR - commentary - Cramer’s Take - Rating), casinos, everyone including Wynn (WYNN - commentary - Cramer’s Take - Rating) off the Trump (TRMP - commentary - Cramer’s Take - Rating) fiasco, which says that Jersey just isn’t as good we thought.

And what’s with that management turmoil? Some of the worst non-options-related turnover I have seen. The drug stocks are awful, too. That’s telling. Most retail is awful, too, especially the so-called turnarounds like Ann Taylor (ANN - commentary - Cramer’s Take - Rating), Chico’s (CHS - commentary - Cramer’s Take - Rating), and the like.

Natural gas still can’t keep pace with oil. And health-care cost containment of the Medco/Cardinal (CAH - commentary - Cramer’s Take - Rating) variety seem to have been lurched in the wrong direction.

Financials are struggling. They are sales here to buy back on the next rumor. Of course, NYSE Euronext (NYX - commentary - Cramer’s Take - Rating) is weak and will be until it gets to the $60s, where at last it will sell at 1 times growth. I will not counsel anyone buying this stock again until the sellers are exhausted, and they are not. It was wrong to buy it high; it still not right because the sellers are persistent, motivated and, well, crazy. I don’t want to take them out higher than they want to sell it.

Yahoo!’s (YHOO - commentary - Cramer’s Take - Rating) pathetic. What else is new? Google (GOOG - commentary - Cramer’s Take - Rating), its beneficiary, will go to $550 on this rally, I believe.

It is such a have/have-not market that you can’t outthink it. You need exposure to the wild bull markets. That means Monsanto (MON - commentary - Cramer’s Take), Bunge (BG - commentary - Cramer’s Take - Rating) or Deere (DE - commentary - Cramer’s Take - Rating) in ag; Caterpillar (CAT - commentary - Cramer’s Take - Rating) or Ingersoll-Rand (IR - commentary - Cramer’s Take - Rating) in machinery, Transocean (RIG - commentary - Cramer’s Take - Rating) or Schlumberger (SLB - commentary - Cramer’s Take - Rating) (which, of course, turned) in oil service, ExxonMobil (XOM - commentary - Cramer’s Take - Rating) — never outthink it in oil, although I like XTO Energy (XTO - commentary - Cramer’s Take - Rating), and United Technologies (UTX - commentary - Cramer’s Take - Rating) now supplanting Boeing (BA - commentary - Cramer’s Take - Rating) in aerospace.

It’s a great tape. We have had one good day, then one OK day, then a couple of bad days during this period. I don’t think anything’s different now, except we are a little oversold and the bonds are no longer our enemy.

I am reluctant, as always, to call any bottom, but the bearishness last week was out of control. Make sure that you have covered your shorts.

Don’t forget what this rally has going for it, though:
It’s a seasonally nice period where the summer rally gets talked about a lot.

The bond scare is over.

Deals never disappeared.

Most important, the bears overplayed their hand again and bought too many puts. It would not surprise me to see an explosive options period with this much ammo on the books.

Completely crooked reaction to earnings.

RIMMs results were good, but:
- Revenues in line
- Subscriber growth in line.
- Earnings were manufactured by the use of a 54 million tax deferral. I am amazed that no analysts questioned RIMM management or commented about this. All these brokers are in cahoots with crooked canadian accounting. Without RIMM painting their earnings with the tax credit, true earnings would seem to be about 2/3 of reported earnings.
- Margins are dropping.

Notably, RIMM advanced their earnings call to be 1 day prior to I-phone rollout so they could report their “blowout” quarter (juiced by use of tax credit) and claim no I-phone impact. Oh yeah, and the 3-1 stock split, which I think is what the perverse stock reaction is really all about.

In my view, it is patently absurd for RIMM to guide that the I-phone would have no effect on RIMM and defiantly raise guidance (maybe they can manufacture earnings again). 500,000 or more I-phone purchases in a weekend !, including many folks switching from RIMM, tells another story.

Yes RIMM is a good company and good product ? But 50 points and $6 Billion in Market Cap on the facts at hand ? I’m just not buying what they be selling. If anyone should be flying, it should be AAPL.

Management’s reward will be insider selling to commence in a couple of days as the analysts have already prepared their thank you’s here … 1 hand washing the other.

Having said all that, wish I had speculated on $180 calls last week. That would make anyone’s year.

Congrats Optiondragon .. you called it…. but don’t drink all the Kool Aid.

I suspect once the split occurs and the float increases 3-fold, this will be far more difficult for even the best crooks to manipulate. Be careful folks.