Guest View
User: Pass: | become a member
Archive for June 5th, 2009

The (Futile) Task Of Projecting Unemployment

The (Futile) Task Of Projecting Unemployment

Some realistic downside projections: U3: 17-21%; U6: 30-37%.

Best case scenario: U3: 14-17%; U6: 26-31%

And here is what Bernanke, and everyone else who wonders where we are headed, should be looking at:

“If the job market does not turn around by late summer or early fall of 2009, the projections easily exceed the Great Depression. At that point the only way to prevent catastrophic economic conditions would be through massive inflation of the US dollar achieved by either congress allowing the Federal Reserve to issue its own debt, or by accelerating the rate at which the Federal Reserve monetizes US debt while funneling the newly printed dollars into wages so that the money can circulate within the economy.”

Yes, wage inflation is wonderful, however recent data indicate that just the opposite is happening, and the only people who have seen their base pay increase are, ironically, Wall Street bankers, however, at the expense of losing their bonuses. Which is why bank excess reserves are likely to continue skyrocketing as literally boxes full of cash continue gathering dust, while a deleveraging consumer spends his money on guns and ammo.

And here, for some more data on why the unemployment number, is for the most part, rubbish.

Hat tip Distressed Lookout





TGI Failure Friday: #37

TGI Failure Friday: #37

Bank failure # 37 for the year was Bank of Lincolnwood, Lincolnwood, Illinois. Republic Bank of Chicago, Oak Brook, Illinois will assume all the deposits.

As of May 26, 2009, Bank of Lincolnwood had total assets of approximately $214 million and total deposits of $202 million. Republic Bank of Chicago agreed to purchase approximately $162 million in assets. The FDIC will retain the remaining assets for later disposition.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $83 million. Republic Bank of Chicago’s acquisition of all the deposits was the “least costly” resolution for the DIF compared to alternatives. Bank of Lincolnwood is the 37th FDIC-insured institution to fail in the nation this year and the sixth in Illinois. The last bank to fail in the state was Citizens National Bank, Macomb, on May 22, 2009.

Does anyone even care about this data anymore? There obviously isnt one bank in the US which, on a long enough timeline, won’t fail.





FDIC Sold $295 Million Commercial Loans In April At 60 Cents On The Dollar

FDIC Sold $295 Million Commercial Loans In April At 60 Cents On The Dollar

Looks like even the FDIC is flexing its perfectly inelastic supply curve in Commercial Real Estate Loans. After selling a whopping 1,328 performing and non-performing loans in March for $218 million (a 54% discount), the FDIC sold just 315 loans in April for $177 million, a 40% discount. Presumably the investors who have purchased these loans are ineligible for PPIP or else they would know they could have purchased everything at par and paid less than half in equity, resulting in much better IRRs (to themselves, not taxpayers). A novel development for this month, is that in addition to long-time fan of the FDIC loan auction process Beal Bank (LNV), now Colony Capital has also joined in the bidding fray (under Matrix Advisors LLC in the list below). It is notable that all of Colony’s loan auctions were won at exactly the same bid: 67.1% of par. Something is definitely quite odd about this result. Reader feedback is welcome.





Lifting the Axle

Today’s tickers: AXL, PALM, POT, XLF, EMR, AA, & BIIB

AXL – Shares of the Tier 1 supplier of parts and components to the automotive industry have rallied more than 8.5% to a whopping $2.78 today. The improvement in the stock, since touching down to just 26 cents on March 9, 2009, prompted one uber-bullish investor to enact a call spread in the October contract. The trader seems to have determined that the $300 million cut in AXL’s second- and third-quarter revenue streams, felt in the wake of its bankruptcy-brethren GM and Chrysler, will have been replenished by the fall. The summer shutdowns by the automakers are certainly painful for the time being as the two behemoths account for 90% of AXL’s annual revenue. Hoping for a ridiculous turnaround in circumstances, the investor initiated the purchase of 10,000 calls at the October 5.0 strike price for a premium of 40 cents apiece which were spread against the sale of 10,000 calls at the higher October 7.5 strike for about 15 cents each. The net cost of the transaction amounts to 25 cents and yields maximum potential profits of 2.25. Shares will need to grow with the tenacity of the Hulk in order to rally more than 169% over the next five months. – American Axle & Manufacturing Holdings, Inc.

PALM – Put options on the mobile devices company were favored by option investors on the scene today amid a share price decline of 3% to $13.22. One trader targeted the July contract in order to initiate a bearish ratio put spread. The transaction involved the purchase of 2,800 puts at the in-the-money July 14 strike puts for a premium of 2.82 per contract spread against the sale of 5,600 puts at the lower July 10 strike for about 70 cents apiece. The net cost of the pessimistic play on PALM amounts to 1.42 and yields maximum potential profits of 2.58 to the trader if shares decline down to $10.00 by expiration. Profits begin to amass if shares fall another 5% to the breakeven point at $12.58 by expiration next month. Option implied volatility has ramped up significantly over the past couple of days from 93% at the start of Thursday to the current reading of 112% ahead of the release of The Pre tomorrow. – Palm, Inc.

POT– We observed an interesting use of out-of-the-money puts by one investor on POT this afternoon. The potash producer’s shares…
continue reading


Tags: , , , , , ,



Indiana Pension Funds Lose Appeal

Indiana Pension Funds Lose Appeal

Developing story: Indiana Pension Funds lose second circuit appeal challenge (from Bberg).

Supreme Court appeal pending: SCOTUS has until Monday to decide if it wants to deal with this ungodly mess.





Payroll Data In Perspective

Payroll Data In Perspective

Compliments of a much happier and much less Merrill “Is that the most bullish piece you can come up with” Lynch-supervised David Rosenberg.

We have to put the data into perspective. Before the Lehman collapse, when equities were in a moderate bear market and bonds in a moderate bull market, the worst nonfarm payroll result we saw was -175,000. We don’t seem to recall too many pundits rejoicing over employment declines at that time, which were basically half of what was just posted in May. Moreover, the worst nonfarm payroll number in the 2001 recession — right after 9-11 — was -325,000; and before that, at the depths of the 1990-91 recession, the worst report showed a -306,000 print. So basically, what we saw today was a number consistent with a deep recession — just not quite as deep as the near-6% at an annual rate contraction we saw in the first quarter. It is difficult to rejoice over an employment data that is consistent with real GDP still declining anywhere from a 2% to 4% at an annual rate. Now here we are, close to nine months after the Lehman collapse, and we are still printing employment numbers that are double what they were before pre-Lehman. That is the bigger picture.

Moreover, the internals of today’s report, in a word, were awful. Not only are businesses still cutting jobs but they are also reducing the hours that their employees are working; the private workweek hit a new record low of 33.1 hours (from 33.2 hours in April). So, total labour input was much weaker than the headline payroll suggests and this is vividly illustrated in the aggregate-hours worked index, which fell 0.7% MoM and something ‘green shoot’ advocates will not like discuss since this was actually worse than the 0.3% MoM drop in April; this takes the three-month trend to a -8.6% annual rate. Think about that for a moment because what goes into GDP is total hours worked and productivity — so the latter better continue to hang in there or else we are going to be seeing some nasty output data going forward that may well take Mr. Market by surprise. Put another way, if companies had held hours worked constant in May instead of cutting them, to achieve the total labour input they achieved last month would have required — get…
continue reading




Proudly Gunning Every Market Upswing Since TARP

Proudly Gunning Every Market Upswing Since TARP

Update: Just as the SPY is about to drop, guess who start gobbling up 5-10k blocks of SPY. $10 in TARP money to the first who guesses.

JPM making sure that no Dow dip goes unpunished.

Update 2: And just in case there is ANY CONFUSION AT ALL LEFT, here is who gunned the last ramp up.





Consumer Credit Plunges v2

Consumer Credit Plunges v2

And I thought last month was bad. Total consumer credit in April dropped by almost $15 billion to just above $2.5 trillion, on expectations of -$6 billion, a 7.4% annual rate reduction. As for the March revision, it just does not compute how manipulated higher that number initially was.

Someone tell that house of dimon SPY permabid that consumer credit down -> savings up -> economy bad.





Liesman Tries To Be Convincing, Another Epic Fail Ensues

Liesman Tries To Be Convincing, Another Epic Fail Ensues

Also, when it seems like Steve is about to crack in “explaining how we live and how the system is set up”, Melissa storms to the front, providing that critical second wind of intellectual superstardom. Michael Pento must still be shell-shocked from that episode.





Inside Wall Street

Courtesy of Shah Gilani, Contributing Editor Money Morning

Inside Wall Street: Does a Potential New Wall Street Pandemic Fester Underneath Apparent BlackRock Conflicts?

The U.S. Treasury Department recently announced it has preliminarily granted BlackRock Inc. (NYSE: BLK), a mega-money-management and risk-advisory firm, a second-round interview to potentially buy toxic assets from beleaguered U.S. banks. The Treasury’s plan was to let a chosen few investment firms borrow cheaply from the Fed in order to massively leverage up their capital pools to purchase toxic assets, and then to backstop almost all potential losses with taxpayer money. This plan was itself crafted in large measure with help from BlackRock. It’s as if the moral hazards of cronyism, leverage, laissez-faire government and the doctrine of too-big-to-fail never happened.

The Background on BlackRock

In 1988, The Blackstone Group LP (NYSE: BX) - then a young-and-aggressive leveraged buyout shop that would eventually go public and is now the largest private equity company in the world - bankrolled a small asset-management startup called Financial Management Group. Heralding its roots out of Blackstone, Financial Management Group later changed its name to BlackRock. BlackRock was originally run by Ralph L. Schlosstein, a former Lehman Brothers Holdings Inc. (OTC: LEHMQ) managing director of the mortgage-backed bond group, who stepped down as BlackRock’s president last year, and Laurence D. Fink, a former First Boston Group [now part of giant Credit Suisse Group AG (NYSE ADR: CS)] and a master-of-the-universe, fixed-income mortgage trader. That the expertise of the firm’s founders was in mortgage-backed securities is hardly ironic in this story. As it happens, the story goes that Fink was one of the early pioneers at First Boston who helped create collateralized mortgage obligations (CMOs) out of fairly transparent mortgage-backed securities. Collateralized mortgage obligations, not unlike a virus, eventually yielded a whole host of spin-off products, now collectively lumped under the banner of collateralized debt obligations, or CDOs.

For the most part, CDOs are like IEDs (improvised explosive devices) strewn along the road of once-straightforward securitized products. Sometime, in the not-too-distant future, when you look up the term "toxic assets" in your Barron’s "Dictionary of Finance and Investment Terms," the definition will include a picture of the collateralized debt obligation family of products. In 1994, Blackstone sold BlackRock to PNC Bank Corp. (NYSE: PNC), and in 1999 BlackRock went public (PNC still holds a 34% stake in BlackRock). Also in 1999, under Fink’s watchful eye, BlackRock Solutions was formed to provide…
continue reading




 

Phil's Favorites

Hatch Says It's "Nuts" To Think Health Care Issue Resolved On Monday; House Majority Leader Says Bill Is Constitutional

Hatch Says It's "Nuts" To Think Health Care Issue Resolved On Monday; House Majority Leader Says Bill Is Constitutional

Courtesy of Mish

A flurry of news reports abound as President Obama puts on a full court press to pass legislation no one really wants except the President and those who have been bribed. Let's take a look at a handful of articles.

Democrats About Six Votes Short on Health Care, Officials Say

March 19 (Bloomberg) -- Democrats need about six more votes from House members to pass a U.S. health-care over...

more from Ilene

Zero Hedge

One Very Tragic Death

Courtesy of Tyler Durden

Even as the Lehman scapegoating campaign is on in full force, there is little doubt that the man who somehow was in the middle of virtually everything, was not Dick Fuld, or any of the bevy of rotating Lehman CFOs, but Lehman's very much under the radar Global Product Controller, Gerard Reilly. Reilly was the point man on Repo 105, the point person for E&Y's "investigation" into the Matthew Lee whistleblower campaign, Lehman's Level 2 and Level 3 asset valuation, the brain behind the idea to spin off Lehman's commercial real estate business, Lehman's Archstone investment, and likely so much more. Reilly stayed on at Lehman, solid as a rock, even as the CFO's above him rotated one after another. Tragically, on December 29, 2008, a 44-year old Gerald [sic] Reilly died while skiing alone on New York's Whiteface mountain, while on a trip with his wife, 4 small chi...



more from Tyler

Chart School

Bears Emboldened By Low CBOE Equity Put to Call Ratio

Bears Emboldened By Low CBOE Equity Put to Call Ratio

Courtesy of Bill Luby at Vix and More 

Truthfully, I have not surveyed our ursine friends this morning, so I really have no idea if they are emboldened by the low CBOE equity put to call ratio (CPCE), but they should be.

My preferred way of looking at the equity put to call ratio involves using an exponential 10 day moving average (EMA) as a smoothing factor. The 10 day EMA generates the dotted blue li...

more from Chart School

Trading Goddess

Options and My Patience Expire Today

Well now we're officially cashed out!


As I always do before options expiration I reviewed our Buy List, which, this quarter, is a list of 37 stocks we've been playing since late December and, sadly, after reviewing 37 of our favorite investments very carefully this week - I could only conclude that cashing them out was the only decision I could be comfortable with this week. Of 66 trades we had on our 37 stocks, 64 are winners with an average return since 2/8 of 28% - since most of the trades were designed to make 40% for the year - it just seems silly not to take the money and run now, on March 19th.


You are not supposed to have 64 out of 66 winners in 6 weeks, you are not supposed to make 3/4 of what you anticipate for the year in 6 weeks - that is NOT how the markets are supposed to work! When the ma...



more from Goddess

Oxen Group Trades

The Oxen Report: Five Keys to Fundamental Day Trading

Identifying the Fundamentals

Stocks move under the influence various factors that we can use to identify stocks that are likely to move 3-5% in a single day. Even t...



more from David

The Options Report

By Andrew Wilkinson


Best Buy Option Investors Condone Broker Upgrade in Bullish Action

Today’s tickers: BBY, DNDN, GLD, BAC, AET, BA & NBR

BBY - Best Buy Co., Inc. – Shares of the world’s largest electronics retailer rallied 2% to $41.25 during the trading session after receiving an upgrade to ‘buy’ from ‘neutral’ at Goldman Sachs Group where analysts increased BBY’s target share price to $47.00 from $44.00. Options traders employed a few different bullish tactics to position for continued upward movement in the price of the underlying stock through expiration in April. Plain-vanilla call buyers targeted the April $44 strike to purchase 5,100 calls for an average premium of $0.55 apiece. These investors stand ready to accrue profits if Best Buy’s share price increases 8% from the current value to exceed the effective breakeven point on the calls at $44.55 by expirati...



more from Andrew

Insider Zone


Insiders: March to Exit

By Ilene

Let's take a look at Insider Buying and Selling over the last week or so. These are screen shots from Finviz - the significant buys against a green background first and significant sells against the pink background second.  All the buys fit into my screen shot but the sells did not.  Click here to see all the sells.  

Note that the largest buy in the group, for KITD was at a price of 9.73 (KITD is currently at 11.54). The buy was part of an Equity Offering rather than an open market purchase. Tuzman Kaleil Isaza's (KITD's Chairman and Chief Exec. Officer) history of buys is http://www.insidercow.com/ more from Insider

OpTrader


Swing trading portfolio - week of March 15th 2010

This post is for live trades and daily comments. 

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

- Optrader

...

more from OpTrader


March 2010
M T W T F S S
« Feb «-»  
1234567
891011121314
15161718192021
22232425262728
293031  

Locations of visitors to this page

FeedTheBull - Top Stock market and Finance Sites

As Seen On:




About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>

About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the Favorites backup site (blogroll, archives, more). Contact Ilene to learn about our affiliate and content sharing programs.

Favorites Site >>