Archive for 2008

Steven P. Jobs

Here’s a couple excerpts from a NY Times article discussing the situation surrounding the rumors on Steve Jobs’ health status.  Towards the end, it’s revealed that Steve has had an infection more severe than the term "common bug" might convey, but no return of the cancer.   

Apple’s Culture of Secrecy

“No one wants to die,” said Apple’s chief executive, Steven P. Jobs. “And yet death is the destination we all share. No one has ever escaped it.”

"It was a little over three years ago that Mr. Jobs spoke those existential words, in a commencement address at Stanford. His thoughts about death came during a portion of his speech in which he publicly discussed — for the one and only time, so far as I can tell — his brush with pancreatic cancer.

He talked about how he had learned in 2004 that he had a tumor on his pancreas. How his doctors told him that he shouldn’t expect to live more than six months. How, after “living with that diagnosis all day,” he had a biopsy that showed that his was a rare form of pancreatic cancer, curable with surgery. “I had the surgery and I’m fine now,” Mr. Jobs told the Stanford graduates. He added, “Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose.”

It was an uplifting tale, and an inspiring message. It was also less than the whole truth. In fact, Mr. Jobs first discovered he had an islet cell neuroendocrine tumor — which is both rarer and less deadly than other forms of pancreatic cancer — in October 2003. This was a full nine months before he had the surgery to remove it. Why did he wait so long? Because, according to a Fortune magazine article published in May, Mr. Jobs was hoping to beat the cancer with a special diet.

The Apple directors who knew the gravity of the situation urged him to undergo surgery, according to the Fortune article. But it was only when Mr. Jobs realized that the tumor was growing that he finally agreed. And only after the surgery was successful did he inform employees that he had been sick,


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Money Flow Update

Note from Brett Steenbarger, at TraderFeed, on current money flow patterns.   

Money Flow: Fewer Sellers, But Still No Influx of Buyers

 


Excerpt:  "In my last post, we saw evidence of resilience in the price behavior of smaller cap stocks. I suggested that such resilience can be part of a longer-term bottoming process. Another part of bottoming is seeing an increase in the funds being put to work in the stock market. That is the function of the money flow indicator, which tracks the dollar volume entering or exiting stocks on a daily basis. It does this by tracking every single market transaction in every stock, adding the dollar volume (price times volume) to a cumulative total if the transaction occurs on an uptick and subtracting it from the total if the transaction occurs on a downtick.

…As much as I’ve been impressed with the resilience of many stock market sectors and styles, I will need to see more evidence of positive flows before concluding that we are out of bearish woods."  Full article here.

 

Note:  Please ignore the 48-delay box.  There’s no delay for these articles.  Comments and blogroll available at the backup site.  – Ilene





Mish’s Predictions

Here’s Mish’s summary of the actions of the key players in the financial crisis drama:Ben Bernanke

Bernanke’s, Paulson’s, Bair’s, and Cox’s Next Step

The Fed, the FDIC, the SEC, and the treasury department are all in panic mode. Here are the key players: Ben "Helicopter Drop" Bernanke is Fed chairman. Sheila Bair, the "Bureaucrat’s Bureaucrat", is the FDIC chairman. Henry "Sound Dollar Policy" Paulson is Secretary of the Treasury, and Christopher "Big Squeeze" Cox, Chairman of the SEC, is on a selective campaign against nudity.

Before we get to "What’s Next?", here is a short recap of actions taken to date: Bernanke has produced an array of lending facilities (TAF, PDCF, TSLF). Bernanke also likes throwing surprise parties during options execution week. The first was a surprise discount rate cut. A second was a surprise rate cut.

Sheila BairHenry Paulson, who would not know or admit to (take your choice) a strong dollar policy if it bit him in the ass, has stated financial institutions must be allowed to fail only to reverse course a few days later by asking Congress for unlimited funds to bail out Fannie Mae and Freddie Mac.

Sheila Bair wants to monitor blogs for exactly the wrong reasons, and Christopher Cox who also likes surprise parties, threw one of his own during options expirations week by selectively deciding to enforce restrictions on naked shorting. The action by Cox action triggered a big short squeeze in equities. However, the credit markets did not seem too impressed with it.

Mind Of An FDIC Bureaucrat

Given the above, let’s now see if we can figure out what a bureaucrat might do.

There is clearly a run on the bank at Washington Mutual. By now, few if any, large corporate accounts above the FDIC limit remain at WaMu. Indeed, any public corporation holding money at WaMu above the FDIC limit is an immediate short on grounds of stupidity.

With that in mind, and looking from the perspective of the bureaucrat’s bureaucrat, there may be nothing for the FDIC to lose by declaring "all deposits at Washington Mutual are FDIC insured".

Eyes Of The SEC

The SEC, (another useless bureaucratic organization) is as likely as not to look at the short term "success" of the recent short


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test post stock club

testing..





There is never a right time

Having been reminded of Willem H. Buiter, by William Poole’s "Too Big to Fail, or to Survive," I visited Willem’s blog at the Financial Times, and found his thoughts on Freddie and Fannie; he additionally discusses moral hazard and his preference for the fate of Fannie and Freddie equity holders and creditors.

There is never a right time to tackle moral hazard…

Ricardo Caballero’s argument in his Financial Times column of July 14,  Moral hazard misconception about moral hazard, is essentially that doing the right thing to minimize moral hazard would be too costly in terms of the likely negative impact of such actions on the real economy.  The way he presents his case is a textbook example of how a combination of lack of commitment/opportunistic behaviour, myopia and strategic interaction between the private sector and the government can create a very bad equilibrium.  I will refute his argument, focusing mainly on the case against bailing out Fannie Mae and Freddie Mac, unless this involves the euthanisia of the existing shareholders of the two GSEs and a material haircut for their creditors.

In what follows I show, first, that even if we wish to keep Fannie and Freddie in their current form, the immediate crisis need not get worse if their shareholders and creditors are treated harshly, thus maintaining incentives for future responsible lending, borrowing and investing.  Second, I show that a more efficient and equitable solution is available that ends the institutional obfuscation inherent in Fannie’s and Freddie’s current form: public sector sheep dressed in private sector wolf’s clothing.

In 1968, the US federal government privatises a public sector entity, Fannie Mae, that subsidises residential mortgage financing for middle America. In 1970 Freddie Mac is created by the government on the same model as Fannie to turn the de-facto monopoly into a duopoly.  The private sector knows that, even though the two GSEs (henceforth F2) are notionally private, with private shareholders and private other sources of finance, their liabilities remain de facto an obligation of the US federal government.  George W. recently confirmed in public that there was an implicit public guarantee for Fannie’s and Freddie’s debt.  Would be creditors to F2 therefore don’t worry about default risk and lend thoughtlessly and recklessly to these institutions. The management
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Too Big to Fail

Here’s an article in NY Times, "Too Big to Fail, or to Survive" by William Poole.  Poole argues that Fannie and Freddie shouldn’t be allowed to default, but while in receivership, their operations should be terminated.  The second two paragraphs stress what seems particularly unjustifiable — even before Fannie and Freddie were "wards of the government," lobbying by public-private hybrid companies with special priviledges would appear contrary to a free-market system (if that’s what we’re going to have).  This reminds me of an article posted a few weeks ago, Time for comrade Paulson to pull the plug on the Fannie and Freddie charade, in which Willem H. Buiter wrote (in sarcastic font) "The Soviet Union may have collapsed, but the cause of socialism is alive and well in the USA.  Granted, the US version of socialism is imperfect thus far.  The federal authorities have mainly intervened to socialise the losses in the financial sector while allowing the profits to continue to be drained off into selected private pockets.  But that is bound to be an oversight."  – Ilene

Too Big to Fail, or to Survive:

CRITICS of the Congressional housing package complain that we are now committing taxpayers to huge new outlays to rescue Fannie Mae and Freddie Mac. That view is wrong: Congressional inaction over the past 15 years had already committed taxpayers to the bailout.

Congress could and should have required Fannie and Freddie — which enjoy a peculiar and highly advantageous status as quasi-public agencies and quasi-private companies — to maintain more capital, but didn’t. Now the costs from Congressional inaction are becoming painfully apparent, and they cannot be avoided. To permit the two mortgage giants to default would set off a worldwide crisis. But we can decide what should become of Freddie and Fannie after this crisis. The best option is one getting little mention in Washington: get rid of them.

Because the government cannot permit Fannie and Freddie to default, their obligations are part and parcel of the full-faith-and-credit obligations of the United States. Thus, the national debt, usually viewed as the $5 trillion held by the public, is really $10 trillion once we add the Fannie and Freddie obligations and the mortgage-backed securities they guarantee.

For now, the Congressional Budget Office has entered a “place holder” of $25 billion to cover the bailout costs over the next two years but recognizes that


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Market Bottoms

By David Merkel (The Aleph Blog) — introduction to a subsequent post (tomorrow) discussing market bottoms.

The Fundamentals of Market Bottoms, Part 1

A large-ish number of people have asked me to write this piece.  For those with access to RealMoney, I did an article called The Fundamentals of Market Tops.  For those without access, Barry Ritholtz put a large portion of it at his blog.  (I was honored :) .) When I wrote the piece, some people who were friends complained, because they thought that I was too bullish.  I don’t know, liking the market from 2004-2006 was a pretty good idea in hindsight.

I then wrote another piece applying the framework to residential housing in mid-2005, and I came to a different conclusion  — yes, residential real estate was near its top.  My friends, being bearish, and grizzly housing bears, heartily approved.

So, a number of people came to me and asked if I would write “The Fundamentals of Market Bottoms.” 

…Tops and bottoms are different primarily because of debt and options investors.  At market tops, typically credit spreads are tight, but they have been tight for several years, while seemingly cheap leverage builds up.  Option investors get greedy on calls near tops, and give up on or short puts.  Implied volatility is low and stays low.  There is a sense of invincibility for the equity market, and the bond and option markets reflect that.

Bottoms are more jagged, the way corporate bond spreads are near equity market bottoms.  They spike multiple times before the bottom arrives.  Investors similarly grab for puts multiple times before the bottom arrives.  Implied volatility is high and jumpy…   full article here.

 





Housing Bill

Senate Passes Housing BillSenate Passes Housing Bill

by CalculatedRisk

[UPDATE: This appears to be an up-to-date version of the bill.]

Excerpt: 

"From the NY Times: Congress Sends Housing Relief Bill to Bush

Here is the WSJ version: Congress Passes Housing Bill

First, I think the impact of the original part of the housing bill will be minimal. The provision allows the FHA to insure up to $300 billion in new mortgages for certain borrowers. The key is that the current lender has to voluntarily agree to write down the loan balance to 85% of the current appraised value before the FHA will insure the new loan.

The CBO (Congressional Budget Office) has estimated that the FHA will only insure $68 billion in loans for about 325,000 homeowners. The number will be limited because only certain homeowners actually qualify, and also because lenders probably will not be eager to write down loans to 85% of the current appraised value.

My biggest concerns with this provision are appraisal fraud and adverse selection.

The other major provision of the housing bill is the Paulson Plan to support Fannie and Freddie. The cost to taxpayers is very uncertain, although I doubt it will be zero (the CBO’s base case). The GSE support does appear to be almost unlimited (limited only by the debt ceiling that was increased to $10.6 trillion from $9.815 trillion).

The actual cost of the Paulson Plan is a huge concern.

CalculatedRisk’s article continued here.  

 

Excerpt from the WSJ article: 

"Policymakers hope the wide-ranging bill will help invigorate a housing market that continues to collapse and has roiled financial markets worldwide. Data released in recent weeks reveal that home sales have hit a 10-year low and home prices continue to decline around the country. Importantly, the number of homeowners facing foreclosures continues to rise, raising the specter of vacant homes and neighborhood blight.

Foreclosure-tracking firm RealtyTrac said Friday that 740,000 properties received some form of foreclosure filing in the second quarter, a 14% jump from the previous quarter and soaring 121% from the second quarter of 2007. More breathtaking: One in every 171 households received a filing in the second quarter, and all but five of the nation’s 100 largest metro areas experienced year-over-year increases.


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Biotech Idea: EXAS

Interested in biotech?  Take a look at EXAS – a small biotech company.  Courtesy of Mike Havrilla who writes on the biotech sector, at MikeHav Market Blog.

ColoSure and Cost Reductions Are Key to the Future of EXACT Sciences

 
EXACT Sciences (follow link for my PDF stock profile) (EXAS) recently announced plans to implement a cost reduction strategy, which includes suspending a clinical validation study of its V2 DNA-based colorectal cancer [CRC] screening technology, eliminating eight jobs, and renegotiating fixed commitments. The Company expects these initiatives will fund operations through at least 2Q09 based on current liquidity, without the need to raise capital at currently depressed market prices for the stock. EXACT’s partner LabCorp (LH) has recently launched a single-marker, lab-based fecal DNA test (based on the Vimentin gene which is a methylated DNA marker associated with CRC) with a sensitivity range of 72% – 77% and a specificity range of 83% – 94% in average risk individuals.

ColoSure replaces the 23-marker, stool-based DNA CRC screening test, PreGen-Plus, which was the subject of a FDA warning letter last October based on concerns over the Effipure component which is not part of the new single-marker test. ColoSure is included in the latest American Cancer Society [ACS]

guidelines for CRC screening to detect the presence of any stage of CRC among asymptomatic, average-risk patients who are unwilling or unable to undergo a more invasive exam such as a colonoscopy. ColoSure retails for $220 with a reimburement price of $110 likely from insurance companies and other third-party payers.

ColoSure is poised to capture significant market share among the 8 million [M] tests per year from FOBT/FIT screening tests — which detect the presence of blood in the stool and require users to interact with the sample — because it is easier to use, only requires collection of a stool sample with no manipulation required by users, has the ability to detect CRC at a much earlier stage before bleeding occurs, and will be promoted by 1,000 LabCorp sales reps (each responsible for about 300 physicians over a one-year period). Current ACS guidelines recommend routine CRC screening beginning at age 50, which includes a growing population segment of about 87M people.

  • cash burn rate for EXACT of $1.5M per quarter with cost reduction


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Bear Market Phases

Mish on the Bear Market Phases.  We’ve been through these phases a number of times, and we can see the latter phases playing out on an almost daily basis — lawsuits, panic moves in the stock market, the Fed giving itself more power, congressional intervention, the taxpayer being punished….  If I were adding amendments to the Constitution, I’d address (after considerable study) "quasi-government bodies."  It seems in these, the checks and balances originally built into our govt’s structure get dismantled and, as illustrated by Bear Market Phase No. 9, the abuses spiral unchecked.  – Ilene 

Bear Market Phases

In a bull market, everyone ignores the greed and fraud that running rampant. No one wants to take away the spiked punch, even after it is perfectly clear that everyone is drunk. The party continues long after any reasonable person might have expected the party to end. Eventually the party goers all pass out on the floor and the pool of greater fools exhausts itself.

In a bear market, there are more distinct, readily observable phases.

Ten Bear Market Phases

1. A huge buy the dip mentality sets in during the initial decline. Most party goes cannot fathom that party has ended.
2. Moderate concern sets in when buy the dip stops working.
3. Initial panic.
4. Numerous bottom calls are made, all wrong.
5. Search for the guilty.
6. Punishment of the innocent.
7. More panic.
8. Lawsuits fly.
9. Regulatory power is given to those most responsible for spiking the punch bowl.
10. Congress gets in the act and makes things worse

Steps 4-10 are repetitive, may overlap, and may occur in any order during repetition. Certainly there have been numerous bottom calls for months now, but each rally has failed.

 

Search For The Guilty

In regards to number 5 it is ironic that Sheila Bair, FDIC chairman, is blaming bloggers for bank problems instead of herself. Please see FDIC Chairman Sheila Bair Is Out Of Control for more on how and why the FDIC is partly responsible for the bank mess we are in.

Regulatory Power Grab

Number 9 is in strict accordance with the Fed Uncertainty Principle.

Uncertainty Principle Corollary Number Two

The government/quasi-government body most responsible for creating this mess (the Fed), will attempt a big power grab, purportedly to fix whatever problems


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Phil's Favorites

Congress is considering privacy legislation - be afraid

 

Congress is considering privacy legislation – be afraid

Courtesy of Jeff Sovern, St. John's University

Supreme Court Justice Louis Brandeis called privacy the “right to be let alone.” Perhaps Congress should give states trying to protect consumer data the same right.

For years, a gridlocked Congress ignored privacy, apart from occasionally scolding companies such as Equifax and Marriott after their major data breaches. In its absence, ...



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Zero Hedge

Key Events This Week: Trade War, EU Elections, Durables, PMIs And Fed Minutes

Courtesy of ZeroHedge

Looking at this week's key events, Deutsche Bank's Craig Nicol writes that while the unpredictable nature of US-China trade developments will likely continue to be the main focus for markets again next week, we also have the European Parliament elections circus to look forward to as well as various survey reports including the flash May PMIs which may offer some insight into the impact of trade escalation on economic data. The FOMC and ECB meeting minutes are also due, along with a heavy calendar of Fed officials speaking.

The European Parliament elections will kick off next Thursday with voting continuing into the weekend across the continent, with results expected on Sunday. With the elections surrounded by internal and external challenges for the EU, members di...



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Kimble Charting Solutions

Will S&P 500 Double Top Derail The Rally?

Courtesy of Chris Kimble.

The rally off the December stock market lows has been strong, to say the least. The S&P 500 rallied 25 percent before hitting and testing the 2018 high.

The old highs proved to be formidable resistance and ushered in some volatility in May… and a 5 percent pullback.

In today’s 2-pack, we look at that resistance level – could that be a double top? We can see similar patterns develop on the S&P 500 Index and its Equal Weight counterpart.

Both indexes are testing short-term Fibonacci retracement levels of the recent decline at point (2).

What takes place here after potential double top highs will be important. Stay tuned...



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Insider Scoop

60 Biggest Movers From Friday

Courtesy of Benzinga.

Gainers
  • Fastly, Inc. (NYSE: FSLY) shares jumped 50 percent to close at $23.99 on Friday. Fastly priced its 11.25 million share IPO at $16 per share.
  • Outlook Therapeutics, Inc. (NASDAQ: OTLK) shares climbed 37.3 percent to close at $2.10 on Friday after the stock rose over 68 percent Thursday following an Oppenheimer initiation at Outperform with a price target of $12.
  • Cray Inc. (NASDAQ: CRAY) shares rose 22.5 percent to close at $36.52 after Hewlett Packard Enterpri...


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Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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 ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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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...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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