As I Have Anticipated, There is Absolutely No Fire in the Torch, Except for the One That’s Frying RIMM’s Share Price
by ilene - August 31st, 2010 8:37 am
As I Have Anticipated, There is Absolutely No Fire in the Torch, Except for the One That’s Frying RIMM’s Share Price
Courtesy of Reggie Middleton
So it has been a month and a week since turning bearish on Research in Motion, and after more than 100% gains in ATM options, a launch of the companies most pivotal product and the figurative obliteration of market share by competitors Apple and Android, Rethink Wireless reports:
After a burst of enthusiasm around RIM’s launch of its latest BlackBerry, the Torch, the firm’s shares have slid again, amid reports of disappointing initial performance. The Torch 9700, the first smartphone to run the company’s upgraded operating system, BlackBerry OS 6, is seen as RIM’s crucial device to fend off the rising attack on its market from Apple and Android.
But online retailer Amazon has already slashed the price of the device to $99, less than a week after the phone shipped in the US on August 12, with an AT&T exclusive. It will soon appear in some European markets with Vodafone. According to estimates from analysts at Stifel Nicolaus and RBC, as reported by The Wall Street Journal, the Torch has sold just 150,000 units since launch, compared to 1.7m iPhone 4s in the first three days of that handset’s availability (and despite ‘Antennagate’).…
But at launch, many analysts questioned whether it was enough to move ahead of Apple, HTC and other companies currently leading the field – or merely a catch-up device for a range that had fallen well behind the cutting edge.
In a new research note, analyst firm Gartner says it believes the Torch will appeal mainly to traditional BlackBerry users in the business world, and stop them defecting to other smartphones, but is unlikely to attract new users. It may fare better in Europe, where the BlackBerry has been making significant progress in the youth market, depending on carrier pricing and marketing.
Shares in RIM have fallen steadily since the launch of the Torch, dropping almost $5 per share since August 12. One analyst downgrading the firm was Scott Sutherland of Wedbush, who moved shares from outperform to neutral and wrote in a client note: “We continue to believe that RIM’s strategic positioning in the enterprise, alignment with carriers, new products, and international expansion will allow the company to participate in the solid…
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DiggToday’s Economic Data Highlights
by Zero Hedge - August 31st, 2010 8:12 am
Courtesy of Tyler Durden
Here are the highlights of today’s economic data release schedule: Case-Shiller, Chicago purchasing managers, Conference Board confidence, FOMC minutes, ABC consumer poll.
9:00: S&P/Case-Shiller Home price index for June…did it rise further in response to the tax credit? This index rose slightly more than 1% in April and May combined as the homebuyer tax credit had its peak effect on sales of existing homes. The FHFA index had risen a bit more in the March-May period (1.4%, cumulatively) but edged down 0.26% in June. However, because the Case-Shiller index is calculated on the basis of a 3-month average, most economists expect another small increase for June.
Median forecast (of 17): +0.2%, ranging from -0.6% to +0.5%; last +0.47%.
9:45: Chicago purchasing managers’ index for Aug…slowing? Most indicators of industrial activity point to slowing. The main issue with the Chicago survey is how much of that slowing will be offset by relatively buoyant conditions in the auto sector.
Median forecast (of 55): 57, ranging from 53 to 60; last 62.3.
10:00: Conference Board confidence index for Aug…will it edge up? The Reuters/Michigan index moved up about 1 index point between July and August, and we expect something similar for the Conference Board index. As usual, we will look also at the gap between those saying jobs are plentiful and those saying they are hard to get. In July it widened to -41.5 from -39.2 in June.
Median forecast (of 68): 50.7, ranging from 47.5 to 55; last 50.4.
14:00: Minutes to the June 22-23 FOMC meeting…anything new under the sun? Last week’s Wall Street Journal article provided quite a lot of detail on the positions taken by various members of the FOMC. With that already in the public domain, it’s hard to imagine much news coming out of these minutes, but it’s never a good assumption that there will be nothing.
17:00: ABC consumer comfort index…aimless movement. This index edged up another point to -44 in its endless wandering in the depths.
From Goldman’s Ed McKelvey
Is Goldman Preparing To Reevaluate Its EURUSD Target… Again?
by Zero Hedge - August 31st, 2010 8:03 am
Courtesy of Tyler Durden
The firm, whose calls so far in 2010 on the EURUSD have been a reactionary disaster and cost clients millions, once again contemplates its navel, after the EURUSD has been trending increasingly away from its latest mid-term 1.35 target (but directly toward its 3 month target of 1.22). That said, it appears the Goldman FX guys are about to drop their 6 and 12 month forecasts on the pair once again, now that the EURUSD has tumbled almost 700 pips from recent 1.33+ highs, at the peak of Europe’s artificial and so very temporary, export-driven economic golden age. Goldman’s Mark Tan explains why.
EUR/$ has been Trading Strong, Especially Given the Peripheral CDS Widening
We have been keeping close watch on the EUR/$ price action and have been using a simple EUR/$ benchmarking exercise to give us a sense where EUR/$ should be trading given basic fundamentals. As Robin Brooks described previously (see Global Markets Daily July 6, 2010), this involves a regression incorporating 5y CDS spreads, 2y EUR and US swap rates, oil prices and the VIX.
EUR/$ seems to be trading strong currently, considering the widening in peripheral CDS spreads over recent weeks. A simple average of 5y CDS in Greece, Italy, Portugal and Spain shows an increase of around 140bps over the past month, now above pre-stress tests levels and not that far off from recent peaks. Our aforementioned benchmarking exercise gives a current EUR/$ value of around 1.22, which coincidentally also happens to be our 3-month forecast (which we had set when we last revised in mid July).
Correlations between CDS spreads and EUR/$ are still at extremely high levels, and as a result this simple benchmarking exercise suggests that EUR/$ should be trading lower. So what is causing this apparent disconnect?
Eurozone vs US Relative Data Surprises Have Been Supportive of EUR/$
One explanation could be that the recent widening in the peripheral CDS spreads is very different in nature to the widening observed in May/June. the funding conditions for the likes of Italy Spain and France are actually pretty much better. The widening is mainly driven by broader growth concerns. And as we expect growth to be broadly robust in Eurozone with significant differentiation across members, it is also likely that the response across different assets also varies and is much
…
Daily Highlights: 8.31.2010
by Zero Hedge - August 31st, 2010 7:47 am
Courtesy of Tyler Durden
- Asian stocks fall as US data fuels economic growth concern; Sony drops.
- Australia’s current-account deficit totalled $5.05B in Q2, down 66% from Q1 levels.
- BOJ is ‘too little, too late’ in tackling Yen, Nakahara says. Nikkei finishes down 3.6%.
- Eurozone Confidence rose for the third straight month, to 101.8.
- Eurozone inflation rate eases in August to 1.6%.
- Fed purchased $360M in inflation-indexed Treasury debt
- US Treasury to sell $25B cash management bills.
- India’s GDP grew 8.8% in April-June qtr, driven by the manufacturing sector.
- Japanese industrial output rose a seasonally adjusted 0.3% in July.
- Oil drops a second day on concern slower income growth will hurt demand.
- US Consumer spending rose 0.4% in July while personal income increased 0.2%.
- US Small-business hiring shows net gain in Aug, but pace slows.
- 3M to buy Cogent, a maker of fingerprint-recognition technology, for $943M.
- Aegon pays Dutch state back $635M.
- Taiwan regulators rejected AIG’s planned $2.2B sale of its Taiwan unit.
- CA Inc to acquire Arcot Systems for $200M in cash.
- Carrefour swings to H1 profit of €82M helped by higher sales in emerging markets.
- Charles Schwab to buy Windward Invt Mgmt for $150m to push into ETF segment.
- Donaldson Co.’s Q34 net almost doubles to $51.2M on 22.2% rise in revs.
- First Financial Bancorp announces the co will prepay $232M of FHLB advances.
- Genzyme’s board again rejected an $18.5B takeover proposal from Sanofi-Aventis.
- Google buys social games start-up SocialDeck Inc., to compete with Facebook Inc.
- HP selected by US Air Force for a 5-yr purchase contract valued at up to $800M.
- HSBC completes sale of U.S. auto loans for $3.56B to Santander.
- Lukoil’s Q2 profit down 16% to $1.9B on higher export duties.
- Rusal swings to a better-than-expected H1 profit of $1.27B aided by higher prices.
- Toyota Prius may lead Japan car sale collapse as subsidies end.
- Winn-Dixie’s Q4 net rises 48.9% to $14M as revs edged up 1.8% to $1.75B.
Economic Calendar: Data on Chicago PMI, Consumer Confidence & Minutes of FOMC Meeting to be released.
Earnings Calendar: ABM, BLD, BNS, CFI, CPY, DG, DSW, ISLE, SGN, TSTR, UNFY.
RECENT RATING ACTIONS
CORN PRODUCTS INTERNATIONAL (CPO)
TEMPLE-INLAND INC (TIN)
BRISTOL-MYERS SQUIBB CO (BMY)
NOBLE ENERGY INC (NBL)
RAYTHEON CO (RTN)
CHEVRON CORP (CVX)
DOW CHEMICAL CO/THE (DOW)
MEADWESTVACO CORP (MWV)
LOCKHEED MARTIN CORP (LMT)
BEMIS CO INC (BMS)
LOCKHEED MARTIN CORP (LMT)
CHARLES RIVER LABORATORIES (CRL)
Data provided by Egan-Jones
Troubling Tuesday – Bears and Bears and Bears, Oh My!
by Phil - August 31st, 2010 7:32 am
Fear is the mind killer,
Fear is the little death
That brings total Oblivion
I will permit my fear to pass
Over me and through me
And where it has gone
I will turn the inner eye
Nothing will be there
Only I will remain."
That is the Bene Gesserit incantation for bravery from Frank Herbert’s "Dune," one of my favorite books. When the markets turn nasty on us it is time to get analytical, not emotional and we need to let our fear pass over us as we step back and evaluate the situation with fresh eyes, and a calm mind.
Above is a chart of our major indexes and their year-to-date performance. As we tested our -5% lines last week, we added a fresh round of Disaster Hedges, a series of trade ideas that can make 500% or more if the market falls further and in an afternoon Alert to Members yesterday, we added another SDS hedge with a 400% upside. Having some high-reward hedges in your virtual portfolio allows you to set aside just 2% to protect your entire virtual portfolio against a 10% drop in the markets. 10% is A LOT for the markets to fall and, of course, now that they have brakes on the market, we can always add more hedges along the way down. Should the market fall "just" 5%, we STILL make 10% on our hedges and that nets our virtual portfolio (in this example) UP 5% on a 5% drop in the market. If our bullish plays were also hedged with covers – then so much the better!
Most importantly, having a balanced virtual portfolio with hedges allows you to play the market WITHOUT FEAR. Warren Buffett famously advises investors to "Be greedy when others are fearful" and our own PSW Rule #1 is "Always sell into the initial excitement," which doesn’t mean always buy but we look for opportunities to sell fear (naked puts) on a dip, the same way we sell our own positions into spikes up that we consider overdone.
In last week’s "Disaster" article, I wondered if we were in the panic/capitulation part of the above chart and,…
RANsquawk European Morning Briefing – Stocks, Bonds, FX etc. – 31/08/10
by Zero Hedge - August 31st, 2010 6:33 am
Courtesy of RANSquawk Video
THE DETERIORATING MACRO PICTURE
by ilene - August 31st, 2010 3:59 am
THE DETERIORATING MACRO PICTURE
Courtesy of The Pragmatic Capitalist
Over the course of the last 18 months I’ve been adhering to a macro view that can best be summed up as follows:
1) The explosion in private
sector debt (excessive housing borrowing, excessive corporate debt, etc) levels would reveal the private sector as unable to sustain positive economic growth, de-leveraging and deflation would ensue.2) Government intervention would help moderately boost aggregate demand, improve bank balance sheets, improve sentiment, boost asset prices but fail to result in sustained economic recovery as private sector balance
sheet recession persists.3) Extremely depressed estimates and corporate cost cutting would improve margins and generate a moderate earnings rebound, but would come under pressure in 2010 as margin expansion failed to continue at the 2009 rate.
4) The end of government intervention in H2 2010 will reveal severe strains in housing and will reveal the private sector as still very weak and unable to sustain economic growth on its own.
The rebound in assets was surprisingly strong and the ability of corporations to sustain bottom line growth has been truly impressive – far better than I expected. However, I am growing increasingly concerned that the market has priced in overly optimistic earnings sustainability – in other words, estimates and expectations have overshot to the upside.
What we’ve seen over the last few years is not terribly complex in my opinion. The housing boom created what was in essence a massively leveraged household sector. The problems were compounded by the leveraging in the financial sector, however, this was merely a symptom of the real underlying problem and not the cause of the financial crisis (despite what Mr. Bernanke continues to say and do to fix the economy).
As the consumer balance sheet imploded the economy imploded with it. This shocked aggregate demand like we haven’t seen in nearly a century. This resulted in collapsing corporate revenues. The decrease in corporate revenues, due to this decline in aggregate demand, resulted in massive cost cutting and defensive posturing by corporations. This exacerbated the problems as job losses further weakened the consumer balance sheet position. Consumers, like, corporations, got defensive and began cutting expenses and paying down liabilities. Sentiment collapsed and we all know what unfolded in 2008.
The government responded by largely targeting the banking sector based on the belief that fixing the banks would fix Main…
30 Statistics That Prove The Elite Are Getting Richer, The Poor Are Getting Poorer And The Middle Class Is Being Destroyed
by ilene - August 31st, 2010 3:49 am
30 Statistics That Prove The Elite Are Getting Richer, The Poor Are Getting Poorer And The Middle Class Is Being Destroyed
Courtesy of Michael Snyder at Economic Collapse
Not everyone has been doing badly during the economic turmoil of the last few years. In fact, there are some Americans that are doing really, really well. While the vast majority of us struggle, there is one small segment of society that is seemingly doing better than ever. This was reflected in a recent article on CNBC in which it was noted that companies that cater to average Americans are doing rather poorly right now while companies that market luxury goods and services are generally performing exceptionally well. So why aren’t all American consumers jumping on the spending bandwagon?
Well, it seems that there are a large number of Americans who either can’t spend a lot of money right now or who are very hesitant to. A stunningly high number of Americans are still unemployed, and for many other Americans, there is a very real fear that hard economic times will return soon. On the other hand, there is a significant percentage of Americans who are blowing money on luxury goods and services as if the economy has fully turned around and it is time to let the good times roll. So exactly what in the world is going on here?
Well, in 2010 life is very, very different depending on whether you are a "have" or a "have not". The recent article on CNBC referenced above described it this way….
Consumer spending in the U.S. has turned into a tale of two cities in 2010, with an entire segment of consumers splurging confidently on the finer things in life, while another segment, concerned about unemployment and with little or no discretionary income, spends only on bare necessities.…
TLP: WTF, FCC?
by ilene - August 31st, 2010 3:20 am
TLP: WTF, FCC?
Courtesy of Jr. Deputy Accountant
Are they just trying to stay busy at the FCC? Because I can’t think of another logical explanation for this.
Federal regulators are appealing a recent court decision that struck down a 2004 government policy that says broadcasters can be fined for allowing even a single curse word to be uttered on live television.
A three-judge panel of the United States Court of Appeals for the Second Circuit in New York threw out the Federal Communications Commission policy last month, saying it was unconstitutionally vague.
In a filing on Thursday, the F.C.C. and the Justice Department asked the court to reconsider the decision, warning that the ruling appears to undermine the F.C.C.’s entire approach to regulating indecency on the airwaves.
In a statement, the F.C.C. general counsel, Austin Schlick, said the ruling raised “serious concerns about the commission’s ability to protect children and families from indecent broadcast programming.”
The agencies want the three-judge panel or the full court to reconsider the decision.
The commission has stepped up broadcast indecency enforcement — issuing record fines for violations — spurred in part by public outrage after Janet Jackson’s breast-baring performance during the 2004 Super Bowl halftime show.
The agency put its “fleeting expletive” policy in place in 2004 after repeated instances of profanity by celebrities, including Cher, Nicole Richie and Bono, during the live broadcasts of awards programs.
Here’s a better idea: tell children how idiotic awards shows are and maybe they won’t watch them. Their little brains won’t be polluted with the drivel that comes out of celebrity mouths and they’ll miss the odd curse word. It’s a win-win. A f*&king brilliant win-win.
One Lump Or Two?
by ilene - August 31st, 2010 2:50 am
One Lump Or Two?
Courtesy of James Howard Kunstler
Here come the Corn Pone Nazis!
Eighty-seven thousand disoriented citizens lined the DC Mall reflecting pool and adjoining lawns to witness Beck overstep his role as a television clown and don the mantle of an evangelist-savior battling the dark forces working insidiously to put the America of WalMart, Walt Disney World, Nascar, and Burger King into the Collapsed Society Hall of Fame — where it’s heading anyway, due to the bad choices these self-same citizens made during an extraordinary bonanza era of cheap oil that is now drawing to a close whether anyone likes it or not. Naturally, Beck invoked prayer against this prospect, which is what people resort to when they don’t understand what is happening to them.
Beck himself just seems to be following a career arc more than really answering "a call." The emptiness of his platitudes and the confusion of his ideas shows that he is just flexing his demagogic muscles in a moment when weepy bluster passes for heroism. Ten years ago he was a cringing drunk contemplating suicide. Then he went shopping in America’s Mall of Utopias for something to believe in and found Mormonism, a "religion" dreamed up by an imaginative young man on the agricultural frontier of western New York during an earlier age of ferment which — guess what — coincided with a decade of economic turbulence. (Anyone interested in the bizarre subject is advised to read Fawn Brodie’s excellent biography of Smith, No Man Knows My History [Knoph,1945].)
Of course, what has allowed Beck to occupy center stage is the failure of rational political figures to articulate the terms of the convulsion that American society faces, brought about not by communists and other John Bircher hobgoblins but by the forces of history. The failure at the political center is a conscious one of nerve and will, of elected officials in both major parties playing…
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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