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Archive for April, 2009
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Scientists see this flu strain as relatively mild

by ilene - April 30th, 2009 4:28 pm

Flu Watch Update – current genetic and other indications are suggesting the swine flu virus is typically contagious, but on the mild side in virulence.  - Ilene

Scientists see this flu strain as relatively mild

By Karen Kaplan and Alan Zarembo, LA Times 

As the World Health Organization raised its infectious disease alert level Wednesday and health officials confirmed the first death linked to swine flu inside U.S. borders, scientists studying the virus are coming to the consensus that this hybrid strain of influenza — at least in its current form — isn’t shaping up to be as fatal as the strains that caused some previous pandemics….

Flu viruses are known to be notoriously unpredictable, and this strain could mutate at any point — becoming either more benign or dangerously severe. But mounting preliminary evidence from genetics labs, epidemiology models and simple mathematics suggests that the worst-case scenarios are likely to be avoided in the current outbreak.

"This virus doesn’t have anywhere near the capacity to kill like the 1918 virus," which claimed an estimated 50 million victims worldwide, said Richard Webby, a leading influenza virologist at St. Jude Children’s Research Hospital in Memphis, Tenn….

The Centers for Disease Control and Prevention and the National Institutes of Health published genetic sequence data Monday morning of flu samples isolated from patients in California and Texas, and thousands of scientists immediately began downloading the information. Comparisons to known killers — such as the 1918 strain and the highly lethal H5N1 avian virus — have since provided welcome news.

"There are certain characteristics, molecular signatures, which this virus lacks," said Peter Palese, a microbiologist and influenza expert at Mt. Sinai Medical Center in New York. In particular, the swine flu lacks an amino acid that appears to increase the number of virus particles in the lungs and make the disease more deadly….

The swine virus does appear able to spread easily among humans, which persuaded the WHO to boost its influenza pandemic alert level to phase 5, indicating that a worldwide outbreak of infection is very likely. And the CDC reported on its website that "a pattern of more severe illness associated with the virus may be emerging in the United States."…

But certainly nothing that would dwarf a typical flu

…
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DOW 10,000!

by ilene - April 30th, 2009 4:01 pm

Courtesy of Henry Blodget at ClusterStock

DOW 10,000!

cramer-bullhorns-tbi.jpgCelebrating the DOW’s best monthly percentage gain since 2002, CNBC has begun banging the DOW 10,000 drum.  Specifically, the network is asking guests whether they think we’ll be there by the end of summer.

In classic fashion, the prototypical CNBC guest these days is no longer talking about a "bottoming process." (That was three weeks ago.)  Now, seven weeks into a rip-roaring bull market, the guests are talking about… the new bull market.

We’re still skeptical.  We’re certainly grooving on those "green shoots," and we hope that the worst recession since the Great Depression is on its last legs.  We’re also glad we didn’t panic and throw in the towel at DOW 6500 when the Wall Street Journal ran that DOW 5000 cover story (which put in the bottom, by the way.) 

But we’re still not persuaded that stocks won’t suddenly head for the cellar again, especially as people realize that we still have a humongous bad debt problem on their hands.  Also, stocks are now almost back to fair value (see Robert Shiller’s chart below).

shillerpe430.jpg

So if you’re banging the drum about stocks soaring from here, you’re arguing that they’re going to charge right back to being significantly overvalued again.

At today’s levels, stocks are priced to return about 9%-10% a year over the next decade.  That’s a much better return than they’ve been priced to return at any time in the past 15 years (other than 7 weeks ago).  But we’d feel more comfortable about betting the farm if/when they’re priced to return, say, 17% a year, as they have been at the bottom of other major bear markets.  That would be a single digit P/E…

See Also:

Economy: Don’t Look Now, But Worst Is Over

DOW 5000, Revisited

How Low Can The Market Go?

Stocks Now Distinctly Cheap

 



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Chrysler Chapter 11 Case Assigned To Judge Arthur Gonzalez

by Zero Hedge - April 30th, 2009 3:23 pm

More on Chrysler’s impending bankruptcty, courtesy of Tyler Durden. – Ilene

Chrysler Chapter 11 Case Assigned To Judge Arthur Gonzalez

Update 2: Top unsecured creditors include:
  • Ohio Module Manufacturing – $70.3 million
  • BBDO Detroit -$58.1 million
  • Johnson Controls – $50.3 million
  • Continental Automotive – $47 million
  • Cummins Engine – $43.9 million
  • Germersheim Spare Parts – $36.2 million

Update 1: Chrysler says will produce Plan of Reorganization by August 28. Uhm, my math is rusty but that is a little longer than 60 days.

Developing Story. Gonzalez previously worked on Enron and WorldCom (here is a list of the judge’s opinions)

Corinne Ball of Jones Day will legally represent the company in bankruptcy.

Some more updates as I try to track down Chrysler’s bankruptcy case # in SNY (reader input welcome).

- Treasury to get 8% of equity in new Chrysler
- VEBA to get 55% of equity
- Daimler agrees to give up 19% equity in Chrysler
- Cerberus forfeits equity in the company and will waive its share of Chrysler’s 2nd lien
- In February Chrysler told U.S. it had $51.4 billion in assets

Here is the administration’s just issued statement on Chrysler:

Also conference call to be held to discuss the filing:

On Thursday, April 30 at 2 p.m. (EDT), Bob Nardelli, Chairman and Chief Executive Officer, Chrysler LLC and Chrysler Office of the Chairman Members will hold a media conference call to address the state of the company in response to President Barack Obama’s news conference.

DIAL-IN NUMBERS:

USA Toll Free Number: 888-677-1046

International Toll Number: +1-773-756-0415

PASSCODE: CHRYSLERCOMMUNICATIONS

See also Senior Chrysler Creditors Revolt by John Carney in the favorites section – Ilene

 



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Senior Chrysler Creditors Revolt

by ilene - April 30th, 2009 3:11 pm

John Carney at ClusterStock reprints a statement by a group of Chrylser’s senior creditors complaining they have no voice in negotiations due to being shut out: "in its earnest effort to ensure the survival of Chrysler and the well being of the company’s employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades."  Anyone surprised? For more on the Chrysler bankruptcy, see the Zero Hedge section. – Ilene

Senior Chrysler Creditors Revolt

Courtesy of John Carney at ClusterStock

As Maria Bartiromo just reported on CNBC, a group of senior Chrylser’s lenders made up of firms that didn’t take TARP funds have issued a statement saying that they have been shut out of direct contact with the government during the negotiations.

Instead, they have been forced to negotiate through JP Morgan, which they view as having a conflict of interest.

Here’s the statement:

As of last night’s deadline, we were part of a group of approximately 20 relatively small organizations; we represent many of the country’s teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler. Combined, these loans total about $1 billion. None of us have taken a dime in TARP money.

As much as anyone, we want to see Chrysler emerge from its current situation as a viable American company, and we are committed to doing what we can to help. Indeed, we have made significant concessions toward this end – although we have been systematically precluded from engaging in direct discussions or negotiations with the government; instead, we have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds.

What created this much-publicized impasse? Under long recognized legal and business principles, junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full. Nevertheless, to facilitate Chrysler’s rehabilitation, we offered to take a 40% haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to 50% or more and being allowed to take out billions of dollars. In contrast, over at General Motors, senior secured lenders are being left unimpaired with

…
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Debt and income inequality (with additions 4/30)

by ilene - April 30th, 2009 2:27 pm

Here’s an interesting discussion by Benign Brodwicz with charts on income inequality and the implications to society. - Ilene 

Debt and income inequality (with additions 4/30)

Courtesy of Benign Brodwicz at The Animal Spirits Page

Observations:

  • Note the similarity between the graphs of income inequality and debt/GDP.
  • It took a war, not just a depression asset price collapse reducing wealth inequality, to reduce income inequality last time, supporting the hypothesis that a new social contract is required to cure this ill.  The war brought people more income equality, the New Deal didn’t.  Without the motivation to band together to fight a common enemy like the Nazis, will Americans tolerate deficits of 13 percent of GDP and inevitable tax increases, when there is no equalization of the income distribution and the highly compensated continue to receive outsized rewards?  This is the great risk to the social fabric, and why I think the social contract is [widely perceived to be, which is the same thing as being] broken.
  • All households took on more debt in the national run-up since 1980, but lower income households took on much more in a attempt to “keep up” with higher income groups.  Median household income stagnated relative to mean income during this period (U.S. Census Bureau).  The bottom half is deleveraging, implying that their standards of living will fall further behind the top income classes, implying further rending of the social fabric.
  • Fixing the banks won’t fix this; in fact, it will exacerbate the current quasi-feudal situation.

image

Source:  Emmanual Saez’ home page.  The income measure is personal tax return based, so is roughly based on household income.

image

Source:  Credit Suisse

 

 

image

Source:  Boston Fed



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Honey I Shrunk The Treasuries

by Zero Hedge - April 30th, 2009 1:38 pm

Courtesy of Tyler

Honey I Shrunk The Treasuries

10Y UST just got the Friend-O treatment. The yield now is a Fed vomit-inducing 3.15%.

 

 


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Perspectives From The Great Depression

by Zero Hedge - April 30th, 2009 12:53 pm

Courtesy of Tyler at Zero Hedge

Perspectives From The Great Depression

No less an authority than FDR’s Treasury secretary and close friend, Henry Morganthau, said in 1939: "We have tried spending money. We are spending more than we have ever spent before and it does not work…..I say after eight years of this Administration we have just as much unemployment as when we started, and an enormous debt to boot!" Similarly policy makers’ current aggressive actions remind me of the quote “Never in the history of the world has there been a situation so bad that the government can’t make it worse”.

And some comedy, compliments of the 1934 (now bankrupt) Chicago Tribune

hat tip Greg



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Comparing Today’s Vegas Back Lot To A Real Bull Market

by Zero Hedge - April 30th, 2009 12:49 pm

Tyler at Zero Hedge posts an analysis by contrary investor which compares our current market and economic situation to the ingredients that would support the birth of a real bull (not bs) market. - Ilene  

Comparing Today’s Vegas Back Lot To A Real Bull Market

Courtesy of Tyler at Zero Hedge

Zero Hedge has often been critical of the administration’s current policies, which are not unique or novel, or even sufficient, as many claim, to prevent a relapse based on a confluence of economic events that pushed the country into the Great Depression, and can be simply qualified as inflationary spending and credit bubble reflation. By peddling debt at even cheaper rates than the much maligned Greenspan did during the great initial credit bubble inflation, what is happening right now does not differ one bit from the scenario that brought us here. Attempting to set the basis for a true bull market by Obama would look totally different, most notably the elimination of massive amounts of debt to the pain of existing equity holders. Of course, that would never happen as those very equity holders are the bulk of his voting constituency and what politician cares about doing the right thing instead of getting reelected? But that is not news to anyone.

What would, however be newsworthy, is a comparison of the current market which has at this point become a speculative day trading casino, with the one, which in the early 1980s lead to a multi generational bull market, however ultimately fed by the same credit binge that has led us to our current predicament. For that purpose I present a great analysis done by highly insightful and contrarian folks over at contrary investor. The observations are stunning.

***

You already know that since “the bottom” in the equity market back in early March, the cries have grown ever louder with each passing point higher on the major equity averages that a major stock market bottom has been reached and a key turn in the economy is at hand as many an economic stat of the moment shows stabilization in rate of change deterioration for now. Moreover, we’ve seen a number of stock market extremes in recent months that we have to admit are generational in nature.

Has a major inflection point on the downside been achieved? It’s been a very long time since we’ve…
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Obama Official: Chrysler To Be “Surgical” Bankruptcy

by Zero Hedge - April 30th, 2009 12:40 pm

Courtesy of Tyler Durden

Obama Official: Chrysler To Be "Surgical" Bankruptcy

According to an Obama official, the company will receive a $3.5 billion DIP from the U.S. government and up to $8 billion in total government financing, will file in NY bankruptcy court, and GMAC will take over financing duties.

The bankruptcy is expected to last 30-60 days (this is the biggest load of misguided garbage I have ever heard).

Other facts: Chryler will name a new board of directors and the Chrysler-FIAT alliance is expected to go through.

According to BO "Bankruptcy is not a sign of weakness." OK: are we talking about the same process where equity holders are wiped out and bondholders get pennies on the dollar?

Nothing like blaming Xerion Capital (a subsidiary of administration darling Perella Weinberg) once the UAW finds another 100,000 unemployed in its ranks in 3 months.

Anyone willing to take the under on the 30-60 days?

At least Bob Nardelli who single-handedly destroyed Home Depot and is now the proud supervisor of two massive corporate failures, is out . Great work Bob.

PS – Is it a sign of the apocalypse if one agrees with Dennis Kneale?

 
This article updates a previous post by Tyler on Zero Hedge:

Chrysler To File Any Minute, Hedge Funds Blamed

Of course, as expected, the White House is placing the full blame for the impending bankruptcy on the hold out hedge funds. Here is the stupendously hypocritical statement releaseed from the White House:

"[The hedge funds'] failure to act in either their own economic interest or the national interest does not diminish the accomplishments made by Chrysler, Fiat and its stakeholders nor will it impede the new opporunity Chrysler now has to restructure and emerge stronger going forward."

How dare these hedge funds believe that debt covenants have any value under the current administration? After all, Obama himself is telling you that your economic interests have to align with the national ones. As long as they diverge, you can expect to pay 99% of all income as taxes in perpetuity compliments of soon to be implemented legislation out of Barney Frank.

By the way, isn’t it ironic that one of the biggest culprits

…
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Frontrunning: April 30

by Zero Hedge - April 30th, 2009 12:26 pm

Tyler Durden’s Frontrunning: April 30

  • The quants are brewing real trouble at Morgan Stanley (WSJ)
  • Europe erases 2009 losses (Bloomberg)
  • Chrysler bankruptcy looms as deal on debt falters (NYT)
  • Howard Kagan sues Harbinger for $63 million of back pay (Dealbook)
  • Mexico plans partial shutdown to slow spread of flu (Bloomberg)
  • Japan’s industrial production up as Americans wait in lines to buy Toyota and Nissan cars (NYT)
  • Nasdaq follows SEC’ workaholic example and will take no action in Dendreon (Bloomberg)
  • Navigating toward Bretton Woods 3? (RGE)
  • Economy down, stocks up (Fundmastery)
  • What would Milton Friedman say? (Bloomberg)
  • US Protectionism takes its first bite (National Post)


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Phil's Favorites

Crude Oil vs. Iran: Who Blinks First?

February 23rd, 2012 12:07 am

Courtesy of www.econmatters.com.

By EconMatters

Oil futures spiked more than 2% in one day to their highest level in nine months on Tuesday Feb. 21.  WTI front month contract closed at $105.84, while Brent ended at $121.66 on ICE, primarily on investors fear of potential conflict over the escalating tensions between the US, Europe, Israel, and Iran.  A second Greek bailout deal of €130bn (£110bn; $170bn) also helped to inject some optimism into the market (which would seem totally mis-placed as we may need to relive this Greek drama in two years).  Nevertheless, the fact remains crude oil market supply and demand has not changed a bit to warrant a 2%+ price jump in one day.

...

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Zero Hedge

Scandal: Greece To Receive "Negative" Cash From "Second Bailout" As It Funds Insolvent European Banks

February 22nd, 2012 12:15 pm

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Earlier today, we learned the first stunner of the Greek bailout package, which courtesy of some convoluted transmission mechanisms would result in some, potentially quite many, Greek workers actually paying to retain their jobs: i.e., negative salaries. Now, having looked at the Eurogroup's statement on the Greek bailout, we find another ...



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Insider Scoop

Morning Social Media Outlook for Wednesday Feb 22

February 22nd, 2012 11:05 am

Courtesy of Benzinga.

In recent years, traders and investors have increasingly turned to social media to discuss their investments. Now, interested parties can get a scientific look at what is being discussed on a weekly, monthly, and even hourly basis.

Provided by Social Market Analytics, here is the morning social media outlook for Wednesday, February 22.

Most Bullish

Sentiment has been most bullish this morning on two tech companies.

Sourcefire (NASDAQ: FIRE) reported stellar earnings yesterday afternoon, which prompted several analysts to upgrade their price targets on the stock. The company hit a fresh 52-week high earlier this morning, as shares surged over 23%.

Procera Networks (NASDAQ: ...



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Chart School

The Mindset For Successful Trading In Today’s Market

February 22nd, 2012 11:03 am

Courtesy of David Grandey.

In today’s market, it’s more important that ever to have a mindset to maintain a sane mental state and stay peaceful calm and centered.
  Keep in mind with the markets as stretched as they are, we are in a high risk zone for pulling back as we have been in an accelerated uptrend with barely any pullback to speak of which as we all know can not continue forever — it never does. That said the music can stop at a moment’s notice and odds favor when it does it will be a gap down. So using that as a backdrop let’s look at SXCI. SXCI — SXC Health   Let’s say that issue breaks above the pink line and triggers a long side trade. That’s all fine and dandy HOWEVER it’s what happens next that we have no control over. At that point it either follows through or it doesn’t. WE NOR YOU HAVE ANY CONTROL ...

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Sabrient

Sabrient Risers - 2/22/2012

February 22nd, 2012 12:00 am

Top 5 RisersStockRatingAnalysisAGBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valuation from just a few weeks ago make AGCO a company to watch.PCUBUYThe recent earnings history for Southern Copper shows significant improvement while projected valuation continues to rise.PAGBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valuation from just a few weeks ago make Penske a company to watch.FEICBUYAn increasingly attractive expected long term growth rate and a significantly higher projected va...

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Market Montage

Breadth is Narrowing

February 21st, 2012 2:23 pm

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Other than that rally last Thursday that caught a lot of technicians flat footed (i.e. post the Apple reversal) the breadth in this market has been relatively poor the past 5 sessions or so.  The Russell 2000 has been lagging the major indexes dominated by large caps, and my watch lists have contained far more red than green.   Some people have been calling it the NBA market ("Nothing but Apple") but it's been a bit broader than that – i.e. Microsoft has acted well, and some groups are still working.

A bearish take on this is of course what I cited above – breadth is narrowing which usually happens near tops.  Fewer and ...



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All About Trends

Mid-Day Update

February 21st, 2012 1:40 pm

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Option Review

Bullish Bets Build In Wynn Resorts Weekly Options

February 21st, 2012 1:39 pm

 

Today’s tickers: WYNN, CTRP, DTV & WMT

...



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OpTrader

Swing trading portfolio - week of February 20th, 2012

February 21st, 2012 8:58 am

Reminder: OpTrader is available to chat with Members, comments are found below each post.

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here

Optrader 

...

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ETF Selector

Global Markets, Euro, Jump On Greece (FXE, SPY, EWG, UUP)

February 20th, 2012 10:36 pm

Courtesy of John Nyaradi.

Monday comes and goes with no agreement on Greece until late night settlement on Greece.

European finance ministers met in Brussels Monday and deep into the night and finally, in the wee hours, apparently have struck an agreement for the next round of bailout money for Greece.

In overnight trading, the European indexes were up with the DAX gaining 1.46%, the STOXX 50 adding 1.2% and the FTSE climbing 0.7%

In Asia, major indexes were down slightly as the world waited for an answer on Greece.

The U.S. Dollar (NYSEARCA:UUP) declined after announcement of the agreement while the Euro Dollar (NYSEARCA:FXE) jumped.

The issue remains the same as it always ha...



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Stock World Weekly

Stock World Weekly: Balancing Act

February 19th, 2012 3:12 am

NEW: Elliott and Ilene are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the most recent Stock World Weekly, Balancing Act. Click on this link to sign in or sign up to read.  

...

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IRA Strategy/Income Trader

Weekend Virtual Portfolio Update 1/30/2012

January 30th, 2012 7:22 am

Here is a quick update of past trades and our current position. AA Money No trade this week as we wait for AA to settle. Phil remarked last week that AA seemed overvalued. In the meantime, it looks like we might have to roll our Feb 9 calls. Good thing we sold only 5 of them against our position. Last week P&L - 310.00 We lost ground last week, but we still have 11 months to sell premium! FAS Money Very good week for FAS Money as we benefited from the large amount of premium sold the previous week. We covered most of the shorts in advance of the Fed speech, but sold another set of options on Wednesday after the speech - 2 FAS calls that expired worthless on Friday, 2 FAS put that we are still holding and 2 FAZ put that we bought back for a profit on Friday. A late stick comparable to last week's almost gave us problems at the end of the day though! Last week P&L - $4277.00 IWM Money A decent week in this virtual portfo...

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Pharmboy

Biotech Investing for 2012

January 18th, 2012 1:09 am

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Finding new and exciting Biotech companies that target novel mechanisms is like trying to find a needle in a haystack.  Sure there are many companies working on cutting edge science, but investing in those companies to reap the rewards of their work is a very dangerous game.  More often than not, companies fail because the mechanism does not pan out, the compound(s) do not have pharmacokinetics (get into the body or last very long in the body), or an adverse event happens that knocks years off a development timeline.  In addition, the stock can be manipulated by market makers so investors don't know which way is up.  I approach investing in biotechs as a long term prospect.  I continue to like our current portfolio of biotech companies (join in chat for many of those plays), and we continually add/subtract shares and sell/buy options on ...



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