Archive for April, 2009

Scientists see this flu strain as relatively mild

Flu Watch Update – current genetic and other indications are suggesting the swine flu virus is typically contagious, but on the mild side in virulence.  - Ilene

Scientists see this flu strain as relatively mild

By Karen Kaplan and Alan Zarembo, LA Times 

As the World Health Organization raised its infectious disease alert level Wednesday and health officials confirmed the first death linked to swine flu inside U.S. borders, scientists studying the virus are coming to the consensus that this hybrid strain of influenza — at least in its current form — isn’t shaping up to be as fatal as the strains that caused some previous pandemics….

Flu viruses are known to be notoriously unpredictable, and this strain could mutate at any point — becoming either more benign or dangerously severe. But mounting preliminary evidence from genetics labs, epidemiology models and simple mathematics suggests that the worst-case scenarios are likely to be avoided in the current outbreak.

"This virus doesn’t have anywhere near the capacity to kill like the 1918 virus," which claimed an estimated 50 million victims worldwide, said Richard Webby, a leading influenza virologist at St. Jude Children’s Research Hospital in Memphis, Tenn….

The Centers for Disease Control and Prevention and the National Institutes of Health published genetic sequence data Monday morning of flu samples isolated from patients in California and Texas, and thousands of scientists immediately began downloading the information. Comparisons to known killers — such as the 1918 strain and the highly lethal H5N1 avian virus — have since provided welcome news.

"There are certain characteristics, molecular signatures, which this virus lacks," said Peter Palese, a microbiologist and influenza expert at Mt. Sinai Medical Center in New York. In particular, the swine flu lacks an amino acid that appears to increase the number of virus particles in the lungs and make the disease more deadly….

The swine virus does appear able to spread easily among humans, which persuaded the WHO to boost its influenza pandemic alert level to phase 5, indicating that a worldwide outbreak of infection is very likely. And the CDC reported on its website that "a pattern of more severe illness associated with the virus may be emerging in the United States."…

But certainly nothing that would dwarf a typical flu

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DOW 10,000!

Courtesy of Henry Blodget at ClusterStock

DOW 10,000!

cramer-bullhorns-tbi.jpgCelebrating the DOW’s best monthly percentage gain since 2002, CNBC has begun banging the DOW 10,000 drum.  Specifically, the network is asking guests whether they think we’ll be there by the end of summer.

In classic fashion, the prototypical CNBC guest these days is no longer talking about a "bottoming process." (That was three weeks ago.)  Now, seven weeks into a rip-roaring bull market, the guests are talking about… the new bull market.

We’re still skeptical.  We’re certainly grooving on those "green shoots," and we hope that the worst recession since the Great Depression is on its last legs.  We’re also glad we didn’t panic and throw in the towel at DOW 6500 when the Wall Street Journal ran that DOW 5000 cover story (which put in the bottom, by the way.) 

But we’re still not persuaded that stocks won’t suddenly head for the cellar again, especially as people realize that we still have a humongous bad debt problem on their hands.  Also, stocks are now almost back to fair value (see Robert Shiller’s chart below).


So if you’re banging the drum about stocks soaring from here, you’re arguing that they’re going to charge right back to being significantly overvalued again.

At today’s levels, stocks are priced to return about 9%-10% a year over the next decade.  That’s a much better return than they’ve been priced to return at any time in the past 15 years (other than 7 weeks ago).  But we’d feel more comfortable about betting the farm if/when they’re priced to return, say, 17% a year, as they have been at the bottom of other major bear markets.  That would be a single digit P/E…

See Also:

Economy: Don’t Look Now, But Worst Is Over


Chrysler Chapter 11 Case Assigned To Judge Arthur Gonzalez

More on Chrysler’s impending bankruptcty, courtesy of Tyler Durden. – Ilene

Chrysler Chapter 11 Case Assigned To Judge Arthur Gonzalez

Update 2: Top unsecured creditors include:
  • Ohio Module Manufacturing – $70.3 million
  • BBDO Detroit -$58.1 million
  • Johnson Controls – $50.3 million
  • Continental Automotive – $47 million
  • Cummins Engine – $43.9 million
  • Germersheim Spare Parts – $36.2 million

Update 1: Chrysler says will produce Plan of Reorganization by August 28. Uhm, my math is rusty but that is a little longer than 60 days.

Developing Story
. Gonzalez previously worked on Enron and WorldCom (here is a list of the judge’s opinions)

Corinne Ball of Jones Day will legally represent the company in bankruptcy.

Some more updates as I try to track down Chrysler’s bankruptcy case # in SNY (reader input welcome).

- Treasury to get 8% of equity in new Chrysler

- VEBA to get 55% of equity

- Daimler agrees to give up 19% equity in Chrysler

- Cerberus forfeits equity in the company and will waive its share of Chrysler’s 2nd lien

- In February Chrysler told U.S. it had $51.4 billion in assets

Here is the administration’s just issued statement on Chrysler:

Also conference call to be held to discuss the filing:

On Thursday, April 30 at 2 p.m. (EDT), Bob Nardelli, Chairman and Chief Executive Officer, Chrysler LLC and Chrysler Office of the Chairman Members will hold a media conference call to address the state of the company in response to President Barack Obama’s news conference.


USA Toll Free Number: 888-677-1046

International Toll Number: +1-773-756-0415


See also Senior Chrysler Creditors Revolt by John Carney in the favorites section – Ilene

Senior Chrysler Creditors Revolt

John Carney at ClusterStock reprints a statement by a group of Chrylser’s senior creditors complaining they have no voice in negotiations due to being shut out: "in its earnest effort to ensure the survival of Chrysler and the well being of the company’s employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades."  Anyone surprised? For more on the Chrysler bankruptcy, see the Zero Hedge section. – Ilene

Senior Chrysler Creditors Revolt

Courtesy of John Carney at ClusterStock

As Maria Bartiromo just reported on CNBC, a group of senior Chrylser’s lenders made up of firms that didn’t take TARP funds have issued a statement saying that they have been shut out of direct contact with the government during the negotiations.

Instead, they have been forced to negotiate through JP Morgan, which they view as having a conflict of interest.

Here’s the statement:

As of last night’s deadline, we were part of a group of approximately 20 relatively small organizations; we represent many of the country’s teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler. Combined, these loans total about $1 billion. None of us have taken a dime in TARP money.

As much as anyone, we want to see Chrysler emerge from its current situation as a viable American company, and we are committed to doing what we can to help. Indeed, we have made significant concessions toward this end – although we have been systematically precluded from engaging in direct discussions or negotiations with the government; instead, we have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds.

What created this much-publicized impasse? Under long recognized legal and business principles, junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full. Nevertheless, to facilitate Chrysler’s rehabilitation, we offered to take a 40% haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to 50% or more and being allowed to take out billions of dollars. In contrast, over at General Motors, senior secured lenders are being left unimpaired with

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Debt and income inequality (with additions 4/30)

Here’s an interesting discussion by Benign Brodwicz with charts on income inequality and the implications to society. - Ilene 

Debt and income inequality (with additions 4/30)

Courtesy of Benign Brodwicz at The Animal Spirits Page


  • Note the similarity between the graphs of income inequality and debt/GDP.
  • It took a war, not just a depression asset price collapse reducing wealth inequality, to reduce income inequality last time, supporting the hypothesis that a new social contract is required to cure this ill.  The war brought people more income equality, the New Deal didn’t.  Without the motivation to band together to fight a common enemy like the Nazis, will Americans tolerate deficits of 13 percent of GDP and inevitable tax increases, when there is no equalization of the income distribution and the highly compensated continue to receive outsized rewards?  This is the great risk to the social fabric, and why I think the social contract is [widely perceived to be, which is the same thing as being] broken.
  • All households took on more debt in the national run-up since 1980, but lower income households took on much more in a attempt to “keep up” with higher income groups.  Median household income stagnated relative to mean income during this period (U.S. Census Bureau).  The bottom half is deleveraging, implying that their standards of living will fall further behind the top income classes, implying further rending of the social fabric.
  • Fixing the banks won’t fix this; in fact, it will exacerbate the current quasi-feudal situation.


Source:  Emmanual Saez’ home page.  The income measure is personal tax return based, so is roughly based on household income.


Source:  Credit Suisse




Source:  Boston Fed

Honey I Shrunk The Treasuries

Courtesy of Tyler

Honey I Shrunk The Treasuries

10Y UST just got the Friend-O treatment. The yield now is a Fed vomit-inducing 3.15%.


Perspectives From The Great Depression

Courtesy of Tyler at Zero Hedge

Perspectives From The Great Depression

No less an authority than FDR’s Treasury secretary and close friend, Henry Morganthau, said in 1939: “We have tried spending money. We are spending more than we have ever spent before and it does not work…..I say after eight years of this Administration we have just as much unemployment as when we started, and an enormous debt to boot!” Similarly policy makers’ current aggressive actions remind me of the quote “Never in the history of the world has there been a situation so bad that the government can’t make it worse”.

And some comedy, compliments of the 1934 (now bankrupt) Chicago Tribune

hat tip Greg

Comparing Today’s Vegas Back Lot To A Real Bull Market

Tyler at Zero Hedge posts an analysis by contrary investor which compares our current market and economic situation to the ingredients that would support the birth of a real bull (not bs) market. - Ilene  

Comparing Today’s Vegas Back Lot To A Real Bull Market

Courtesy of Tyler at Zero Hedge

Zero Hedge has often been critical of the administration’s current policies, which are not unique or novel, or even sufficient, as many claim, to prevent a relapse based on a confluence of economic events that pushed the country into the Great Depression, and can be simply qualified as inflationary spending and credit bubble reflation. By peddling debt at even cheaper rates than the much maligned Greenspan did during the great initial credit bubble inflation, what is happening right now does not differ one bit from the scenario that brought us here. Attempting to set the basis for a true bull market by Obama would look totally different, most notably the elimination of massive amounts of debt to the pain of existing equity holders. Of course, that would never happen as those very equity holders are the bulk of his voting constituency and what politician cares about doing the right thing instead of getting reelected? But that is not news to anyone.

What would, however be newsworthy, is a comparison of the current market which has at this point become a speculative day trading casino, with the one, which in the early 1980s lead to a multi generational bull market, however ultimately fed by the same credit binge that has led us to our current predicament. For that purpose I present a great analysis done by highly insightful and contrarian folks over at contrary investor. The observations are stunning.


You already know that since “the bottom” in the equity market back in early March, the cries have grown ever louder with each passing point higher on the major equity averages that a major stock market bottom has been reached and a key turn in the economy is at hand as many an economic stat of the moment shows stabilization in rate of change deterioration for now. Moreover, we’ve seen a number of stock market extremes in recent months that we have to admit are generational in nature.

Has a major inflection point on the downside been achieved? It’s been a very…
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Obama Official: Chrysler To Be “Surgical” Bankruptcy

Courtesy of Tyler Durden

Obama Official: Chrysler To Be "Surgical" Bankruptcy

According to an Obama official, the company will receive a $3.5 billion DIP from the U.S. government and up to $8 billion in total government financing, will file in NY bankruptcy court, and GMAC will take over financing duties.

The bankruptcy is expected to last 30-60 days (this is the biggest load of misguided garbage I have ever heard).

Other facts: Chryler will name a new board of directors and the Chrysler-FIAT alliance is expected to go through.

According to BO "Bankruptcy is not a sign of weakness." OK: are we talking about the same process where equity holders are wiped out and bondholders get pennies on the dollar?

Nothing like blaming Xerion Capital (a subsidiary of administration darling Perella Weinberg) once the UAW finds another 100,000 unemployed in its ranks in 3 months.

Anyone willing to take the under on the 30-60 days?

At least Bob Nardelli who single-handedly destroyed Home Depot and is now the proud supervisor of two massive corporate failures, is out . Great work Bob.

PS – Is it a sign of the apocalypse if one agrees with Dennis Kneale?

This article updates a previous post by Tyler on Zero Hedge:

Chrysler To File Any Minute, Hedge Funds Blamed

Of course, as expected, the White House is placing the full blame for the impending bankruptcy on the hold out hedge funds. Here is the stupendously hypocritical statement releaseed from the White House:

"[The hedge funds'] failure to act in either their own economic interest or the national interest does not diminish the accomplishments made by Chrysler, Fiat and its stakeholders nor will it impede the new opporunity Chrysler now has to restructure and emerge stronger going forward."

How dare these hedge funds believe that debt covenants have any value under the current administration? After all, Obama himself is telling you that your economic interests have to align with the national ones. As long as they diverge, you can expect to pay 99% of all income as taxes in perpetuity compliments of soon to be implemented legislation out of Barney Frank.

By the way, isn’t it ironic that one of the biggest culprits

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Frontrunning: April 30

Tyler Durden’s Frontrunning: April 30

  • The quants are brewing real trouble at Morgan Stanley (WSJ)
  • Europe erases 2009 losses (Bloomberg)
  • Chrysler bankruptcy looms as deal on debt falters (NYT)
  • Howard Kagan sues Harbinger for $63 million of back pay (Dealbook)
  • Mexico plans partial shutdown to slow spread of flu (Bloomberg)
  • Japan’s industrial production up as Americans wait in lines to buy Toyota and Nissan cars (NYT)
  • Nasdaq follows SEC’ workaholic example and will take no action in Dendreon (Bloomberg)
  • Navigating toward Bretton Woods 3? (RGE)
  • Economy down, stocks up (Fundmastery)
  • What would Milton Friedman say? (Bloomberg)
  • US Protectionism takes its first bite (National Post)


Phil's Favorites

Antigen tests for COVID-19 are fast and easy - and could solve the coronavirus testing problem despite being somewhat inaccurate


Antigen tests for COVID-19 are fast and easy – and could solve the coronavirus testing problem despite being somewhat inaccurate

Antibodies are incredibly good at finding the coronavirus. Antigen tests put them to work. Sergii Iaremenko/Science Photo Library via Getty Images

Courtesy of Eugene Wu, University of Richmond

In late February, I fell ill with a fever and a cough. As a biochemist who teaches a class on viruses, I’d been tracking the outbreak of...

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Antigen tests for COVID-19 are fast and easy - and could solve the coronavirus testing problem despite being somewhat inaccurate


Antigen tests for COVID-19 are fast and easy – and could solve the coronavirus testing problem despite being somewhat inaccurate

Antibodies are incredibly good at finding the coronavirus. Antigen tests put them to work. Sergii Iaremenko/Science Photo Library via Getty Images

Courtesy of Eugene Wu, University of Richmond

In late February, I fell ill with a fever and a cough. As a biochemist who teaches a class on viruses, I’d been tracking the outbreak of...

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Boeing cuts thousands more jobs than originally said

By Michelle Jones. Originally published at ValueWalk.

Boeing’s job cuts are going deeper than initially said. The aerospace giant is cutting over 12,000 jobs in the U.S., which is thousands more than it originally planned to cut. The job cuts come as Boeing restructures and seeks to deal with the fallout from the coronavirus pandemic without a government bailout after years of share buybacks.

Q1 2020 hedge fund letters, conferences and more

Boeing job cuts number 12,000

Boeing said this week that the 12,000 job cuts include 6,770 involuntary layoffs. The company also said it's planning "several thousand remaining layoffs" in the coming months...

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Zero Hedge

Ted Cruz Accuses Twitter Of Violating Sanctions Against Iran, Demands DoJ Probe

Courtesy of ZeroHedge View original post here.

We've mentioned in nearly every single one of our posts about this week's dustup between the president and Twitter that the Ayato...

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Kimble Charting Solutions

Tech Indicator Suggesting A Historic Top Could Be Forming?

Courtesy of Chris Kimble

Tech stocks have been the clear leader of the stock market recovery rally, this year and since the lows back in 2007!

But within the ranks of leadership, and an important ratio may be sending a caution message to investors.

In today’s chart, we look at the ratio of large-cap tech stocks (the Nasdaq 100 Index) to the broader tech market (the Nasdaq Composite) on a “monthly” basis.

The large-cap concentrated Nasdaq 100 (only 100 stocks) has been the clear leader for several years versus the ...

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The Technical Traders

M2 Velocity Collapses - Could A Bottom In Capital Velocity Be Setting Up?

Courtesy of Technical Traders

M2 Velocity is the measurement of capital circulating within the economy.  The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth.  When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.

The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market colla...

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Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due


US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...

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Chart School

Is this your local response to COVID 19

Courtesy of Read the Ticker

This is off topic, but a bit of fun!

This is the standard reaction from the control freaks.

This is the song for post lock down!

What should be made mandatory? Vaccines, hell NO! This should be mandatory: Every one taking their tops off in the sun, they do in Africa!

Guess which family gets more Vitamin D and eats less sugary carbs, TV Show


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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve


Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...

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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking


Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...

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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
... more from Insider


Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  


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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:


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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. Contact Ilene to learn about our affiliate and content sharing programs.