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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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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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

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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.

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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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