Tuesday, July 24, 2007

Summer Tuesday Ramblings

S&P cash recovered OK and its chart looks like a bullish continuation pattern. The Nazz and Nazz 100 were flatish, but those charts were better anyway. The Russell 2000 is still the weakest - that will hurt the beefers this Q. The Dow Industrials chart looks strong. Trannies are OK, too. I still have that S&P long futures position - it's a trade, by the way.

EDU reported OK earnings - small beats of estimates on EPS and revenues. EDU is an Alpha Fund long position.

Soybeans and natural gas got smashed yesterday - ugh! My commodities trades have stunk lately. It's good I reduced my position sizes and leverage there. Still long. Joe keeps pounding the table on a very hot August. I'll give him some more rope.

Inflation data points: homeowner's insurance on my Mom's house in Ohio is down 10% year over year. This is an example of how inflation is low away from the coasts and Florida and areas overwhelmed by rich people buying everything. Starbucks raises prices - well, anyone being gouged $5 or more for a cup of coffee can't rationally complain about inflation.

Underwriters are having trouble selling some LBO debt - I hear the issue is terms mainly. The terms of last spring are long gone - they were idiotic anyway. This is a problem with bridge loans. The borrower has less incentive to agree to market clearing terms & rates, since they have a deal already. I guess underwriters are re-learning a lesson of the late 1980s.

These very large Chinese equity investments in private equity firms and deals are interesting. I'm still noodling over them.

PS: stocks went down hard today. It's wierd that I hear all this talk of disaster & panic from the traders and perma-bears like Bill Gross (wrong for over a year), yet is a single fact actually discussed? Maybe I'm missing them. Or they aren't there. Hmm. people who lend money to weak credits are ... losing some money ! What a shocker. I'll think some more. So far this looks like a beefer bear raid on the XLF. They can short that with impunity, especially in the summer. And with derivatives. Oh well. I'll have to figure out if anything is different.

70 comments:

Bud said...

I mentioned previously That I haven't seen Dr Strangelove. Will soon. Regerdless, I stick with my previous post. You sound like a phony.

Bud said...

Lmaooo......noodling.

Bud said...

Oh yeah.............drinking sucks!!

Bunkerman said...

Uh, peace and appeasement are different things.

Appeasement causes big and bigger wars. Strong military and crushing enemies ends them.

Bud said...

Front page article in Nytimes this morning about how Elliot Spitzer ( as governor) used the police to dig up dirt on his chief republican rival in Newyork. Absolutely outrageous and disgraceful and illegal. I am sure he did use similar tactics when he was attorney general ( people don't change that easily). And you guys wonder why I don't beleive the prosecutor in the Mike Vick case. Prosecutors lie and use their powers illegally all the time. I know at least B'man is on my side on the issue of nefarious and overzealous prosecutors. The rest of you that are not ...well....you prolly racist bigots.

Bud said...

Interesting how you guys didn't believe Nifong in the duke lacrosse rape case. But you believe all the allegations against Vick. B'man I think you have some Klan members who read this blog.

P.S. Nifong a lowlife dirtbag who I wish could be criminally prosecuted for his actions.

Spin-em said...

Bunkerman,...Do you have a $3000 word or phrase I can use to tell Bud to go f*** himself but in a civilized manner????...rofl

mfl59 said...

Bud, Vick is innocent until proven guilty in my mind....i agree that prosecutors target high profile guys to add credibility to their case...now the nba referee...he is one guilty sob!

Bud said...

Sheesh Frosty....at least let me get short before you start pounding KMGB. You off my email list. Lmaooooooo

Bud said...

Mfl....you sound like a fair and reasonable person. Some of the others in here....well....scroll above and that says it all.

Bud said...

EDU seems like a good report. But they knockin it down. May give me a chance to finally get in that.

Bunkerman said...

I don't trust prosecutors implicitly - too many want publicity to get elected to higher office. There have been plenty of cases here and in other states that were just horrible miss-carriages of justice. One needs the facts. But another problem is the press often just lies to get attention. Press lying makes it hard to get a clear view.

I have no opinion on Vick - heck the first time I saw anything on it (other than in this blog) was on TV in Vermont one evening. He did lose me money last fall, though, on a wager in Vegas.

maverick said...

I see Beamer standing behind Vick until......he cannot

Bunkerman said...

Bears are sure strutting today - I can't figure out why. They're shorting more and selling to real buyers lower. We'll see how the day progresses.

Bud said...

It's over maverick. No one gonna be standing with Vick soon. Except me and other followers of Dr King's dream. Mike gonna be very lucky if he walks away from this with his genitals in tact. We live in a very racist and bigoted country.

Bud said...

AAPL and CFC the bears fuel today B'man.

Bunkerman said...

What's wrong with AAPL? They're selling every iPhone they can. That two day data from T was stupid.

Bunkerman said...

CFC - that's that old housing - mortgage problem. Aren't they getting tired of flogging that one?

maverick said...

housing mortgage problem prolly gonna be around for a while bman

Bunkerman said...

I see the Russell is getting smashed hardest. That's a sign of the beefers' shorting heavily.

Frosty said...

it is vacation time with a great year under our belts....everyone needs a break even a raging bull. $NDX 100 gap 1985 will be filled, the sooner the better for the bulls.

Bunkerman said...

Seems like we've been resting and consoldiating since mid May when the old S&P high was cracked. I suppose more consolidation until seasonal strength returns in the fall is OK.

mfl59 said...

bunkerman what are your thoughts on the refiners? they have gotten flogged recently and surely trade at some very inexpensive multiples...

maverick said...

Bman, did you dip a toe in UNG?

Frosty said...

MLF...looking to fade me with the refiners...Bud making nice with him, a responable man...Bud and MLF treating me like mans best freind on the Vick ranch.

Bunkerman said...

The simple reality of the "mortgage" issue is that with 4.5% unemployment, defaults are not going to rise much for normal mortgages. Speculators and some people who lose jobs will have defaults IF they bought recently since home prices are soft. But that's it.

mfl59 said...

rofl frosty...that was a heckuva short on the refiners...let the record show i have no position currently...

Bunkerman said...

I own VLO in the Alpha Fund. I think refiners are ridiculously cheap and likely buyouts. Beefers like to hit those all the time. They just use them as a stock proxy for the crack spread in futures. They did it last year, too.

Bunkerman said...

I did dip my toe - I own some nat gas futures - I'm red - the shark bit my toe and it's bleeding slowly :-(((

Still holding - I have Sept contracts, so can hold until late August.

Bunkerman said...

Hmmm. my cost in VLO is about $55. Need more time for the long term gain.

Bud said...

Lmaooo frosty. Refiners short was good. But it's in the past. What you got for me now????

maverick said...

Bman, there are $700 billion in ARMs subject to reset, nearly three-quarters of which are subprimes.

Bunkerman said...

I guess mern was right - the NBA is crooked.

Frosty said...

uh Bud...I gave you PCAR and you should be up five smackers this morning...gesh, you want me to trade them for you.

Bunkerman said...

If someone can't afford a home on a conventional 30 year mortage when the 10 year Treasury rate is 5%, then they have a problem - overpaid or were speculating or were defrauded by a mortgage broker.

But rates are SO low for conventional mortgages, I see most getting refinanced easily.

Bunkerman said...

Also, the Fed rate cut I envision this fall will help the ARMs. If infaltion keeps dropping then the Fed can cut to 5% or 4.75% and help the housing market.

Bunkerman said...

My mortgage on our first home in 1984 was an ARM at 13% or so. Today's rates are really low.

maverick said...

Most of these subprimers don't have a penny in savings so there will be more foreclosures. Where is inflation dropping?

mfl59 said...

uhh maverick, simply strip out all of the inflationary data from the CPI and you will see that inflation is dropping....lmaoooo

Bunkerman said...

year over year core CPI and PCE has been dropping for several months.

Of course they will be foreclosures. Those 2-28 loans were time bombs needing home prices increase to get bailed out.

But with 4.5% unemployment, this is no big deal for the economy as a whole. People with jobs mostly don't default.

Bunkerman said...

I lived through the 1989 RE debacle. And the 2002 corporate lending debacle. And 1979-1981. And 1987. This is not even close. All this panic mongering like Bill Gross does is just way off. The press loves it so they pick it up & amplify it.

Bunkerman said...

I hope they knock the financials down more. I think I'll wait & buy some. BAC at 10x. C at 12x. JPM at 11x. Nuts.

Frosty said...

Bunkerman...how do you determine that is not a value trap? You and I have owned the fins much cheaper than that.

Frosty said...

the degree of selling is not virtual....the whales are leaving the table.

Bunkerman said...

I couldn't resist. Bought some C, BAC, JPM. Will add over time. Long term positions - not trades.

Bunkerman said...

I don't see the economy weakening more - I see it strengthening next year. I see the Fed cutting rates a little this fall to ratify the yield curve normality. So they will earn a lot more and the stocks will go up 50%. That's the "theory" aka speculation.

maverick said...

Bman, I don't remember 125% real estate loans in 70s and 80s. Were they present? Did not work in banking like you and frosty.

Bunkerman said...

yes, in the 1980s they were there.

In commercial RE, too.

Bunkerman said...

The S&Ls in the 1980s did lots. Of course they were later crushed, BUT it took a recession to do it.

That's my point. Unless unemployment gets a lot worse, this is no a big deal.

And with the world economy going full blast, I don't see that happening.

Bunkerman said...

dollars to zlotys that those CFC prime home equity loan losses are to people who borrowed home equity to speculate in housing.

mfl59 said...

here's what i can't comprehend re: 4.5% unemployment....if something like 1 out of 3 of the new jobs created was real-estate related in the last four years, and the real-estate mkt has slowed significantly, how has the unemployment rate actually gone down? shouldn't a meaningful rise in unemployment accompany a slowing mkt? perhaps it lags?

Frosty said...

Mav...weapons of mass destruction...Bunkerman and I helped create them...ever wonder why he owns a tank? it is a game of guts poker, just don't blink. penn square, settle first loaned with empty loan files in the 80's....this time it is consumer driven fraud...either way it comes down to avoiding the panic attack and reasonable, defendable valutation of those weapons. I want to load the fins myself....will let the snake pass the rat.

Bunkerman said...

lots of the people in home building went to commercial.

the extra women brokers just went home & left the labor force.

Mern's dental hygenist was an ex-broker, I think he wrote.

Some mortgage brokers are probably waiters. That's an old joke from the crash era, I think, re stockbrokers.

Bunkerman said...

btw, re unemployment, there are fewer people entering the labor force now due to demographics. And the INS crackdowns is helping low income workers get jobs by keeping more illegals out.

Bunkerman said...

I'm averagin in, frosty to the fins. Lots to go - but I wanted them on my screens so I took down a partial position.

maverick said...

Mfl, please run that by Ms Chao...
before publication...lol

maverick said...

I have a couple female friends that wrote subprime mortgages for consumers and were making between $350k to $750k per year. The one that made $350k will make less than $50k this year.

Bunkerman said...

lol, Penn Square - I remember that one, Frosty. Drysdale Securities, Continental Bank on & on. Frauds, etc. I think you really need to experience one good fraud to really understand lending.

Later in the early 1990s, I was doing some due diligence for a CMBS at an insurance company - the documentation was zippo - nada - nothing. Drive by on some properties saw burned out buildings in some places. They got their product from ... mortgage brokers.

mfl59 said...

lol Mav...she did go to Harvard, after all

Bunkerman said...

lol my alma mater. I have to put a bag on my head when she comes on.

Bunkerman said...

I think that joke after the 1987 crash was, "What do you call your stockbroker? .... "Waiter!"

Frosty said...

NBA....CNBC, never makes anyone money, why aren't they talking about taking the unders, at least the first part of the new season. won't the worm turn an make them appear fair and tight?

Bud said...

Still waiting for the $3000 word spin requeted from B'man. I know frosty doesn't know any.

Frosty said...

BOBJ sure like to spend a few days consolidating then gapping up...once the prior gap is filled...I like to keep it simple Bud, keep doing what works...rage against the man, rage, rage, rage....I get no respect...lol

Bud said...

BOBJ reports tonite.

Frosty said...

nasty 100 cboe....bears game to fumble away at 2018, let's see if they can press under that level.

Bud said...

uh Frosty..you like that list i sent yu last nite?...Lmaoooooooooooo

Frosty said...

yes Bud I did get your list...I forwarded it to general delivery, north pole, attention santa. the only decent fade was KMGB off you earlier post. working on your material and stock picks both these days....very impressive...lol

Frosty said...

trading curbs should go the way of the up tick rule....nice being able to press below support on the down stroke.

JJ2000426 said...

SWC down another 8.25% today. In the past three days it dropped a total of 20%. SWC is the only palladium and platinum producer in the US. Palladium and platinum are very important precious metals that see price trippled in the past three years. This is a stock with extremely bullish fundamentals and this may well be the CAPITULATION event where you get an excellent entry point. See my analysis of the SWC fundamentals.