Comment by phil

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phil
March 10th, 2014 at 4:16 am

Ryan/StJ – That guy really sickens me.  Unfortunately, he's the likely GOP front-runner. 

Great article, Rookie, nice charts in it:













Wow, that last chart says it all.  This insanity can't go on forever – something will break at some point, yet all of our "bullish" market premises are based on QE Forever with no consequences.  Just seems like madness to me.  

Thanks Sibe. 

CELG/Maya – $164 to $152 is $12 so you expect bounces of 20% (weak – $2.40) and 40% (strong – $4.80) of that drop in the same time-frame as the drop occurred (one day).  And where did CELG finish?  $156.56 – almost exactly where a strong bounce should take it.  So still not bullish until/unless it moves over $156.80 and holds it today.  Understand that the urge to dip buy that you experience is exactly the behavior predicted by the 5% Rule.  That's why the initial pullback of 40% (of the rally, to about $150) was expected in the first place.  A failure to get over the strong bounce begins drawing a right shoulder to a "head and shoulder" pattern and that then sets off more technical selling.   So, for a long-term INVESTOR, the real key is how it behaves for the next few days.

Very little Fed speak for a week with a lot of note auctions.  

FB, Etc/Lflan – It's just the normal morning pump job.  Very tradeable until it isn't.  As you can see today, over the weekend is not the best time.

Short Japan/ZZ – Good call over the weekend!

TSLA/Cturb – What should my take be?  The article doesn't say anything other than hedge funds are hedging – that's their job.  With $2Bn worth of money place on bonds, there becomes a demand to hedge about 10% of the stock short to cover a melt-down.  That's why short betting on TLSA is still so expensive – even though it never goes down.  

CELG/Lflan – You can drive a truck through the bid/ask spread – $142/162 at the moment. 

China/Den – Good note.  Having an effect already this morning but who trusts Chinese data, good or bad?  

Rent-a-Rebel/Chuck – Not helping much this morning ($101.39).  

Wikileaks/ZZ – Yes, well-timed distraction by Putin.  

TSLA/Jabob – Interesting.  So is this:   How I Shorted Tesla and Survived

For all of 2013 Tesla reduced it's warranty reserve nearly $2.1 million, a sharp reversal from the nearly $8.1 million increase through the first three quarters of the year. In other words, in the fourth quarter alone, Tesla reduced its warranty reserve by a hefty $10.2 million, a gain that flowed directly into its income statement and boosted reported margins from 23.5% to 25% (exactly what Tesla had guided to) and earnings by an extra $0.07-$0.08 a share.

Given the early state of Tesla's automobile production cycle, it is highly unconventional and unclear to me why the company went from $8 million under accrual for prior year warranties for the nine-month period and then in the next quarter decide that it has actually over-accrued for the year by $2 million, serving to unwind the reserves (and then some, $2 million) from the first three quarters of the year.

In essence the question comes down to whether Tesla's warranty reserve release was used as a cookie jar to boost profits in the latest quarter, or did the company simply miscalculate its warranty calculations?

There's so much shady crap going on in their income statement, it's ridiculous but, for whatever reason, it doesn't deter investors and most analysts just give them a pass. 

Good note, Sibe:



Putting the rate of change in perspective, while the Fed was actively pumping $85 billion per month into US banks for a total of $1 trillion each year, in just the trailing 12 months ended September 30, Chinese bank assets grew by a mind-blowing $3.6 trillion!



China/Lflan – Contacting anti-gun lobbyists in the US?   Well, that's an incredibly ineffective group! 

BA/Wombat – That's just a normal story of their internal inspection catching a manufacturing defect.  Unfortunately for BA, bad timing as no one is going to read more than the headline to draw conclusions.