Archive for February, 2008

The Day I’ve Been Waiting For…

I’m sorry I haven’t written all day, I’ve been in an offsite meeting until just now.

But when I finally took a look at the market, I was very, very happy.

Everyone knows that i’ve been beating the market drop drum for a long time. In fact back on the 12th of February, I said that unless the Dow Jones popped past 12,800, I would continue to bet on a fall.

Well, the Dow hit 12,800 – and didn’t pass it.

Now, i’m looking to setup a few more shorts (or put options) to take advantage of this fall. Plus, i’m actually looking at playing the Ten Year Treasury ETF (TLT) long as interest rates drop further.

Rates will drop – after all, we’re in a recession.

I suggest everyone start looking to short stocks (and capture some long gains). And if you choose to go long instead of short, start looking at the TLT and commodities.

The end.

>:)

President Bush – What an Idiot!

This is what President Bush said today:

“The economy was slowing down but not headed into a recession.”

I have to wonder, where the hell has Bush been? Has he stayed underground in Camp David drinking whiskey and thinking about old times in the Skull n Bones? Because he doesn’t have a grasp on reality.

I mean, not even a little.

Has he ignored the slew of economic reports that came out in the past two weeks that all say the economy is slowing? Hasn’t his rich poker buddies told him that they plan on slowing production because sh#t is slowing down?

Isn’t his homeboy Ben telling him “Hey George, I’ve lied to the public about a recession not coming – But don’t believe it, there’s one coming, so watch it”

Maybe I’m just over reacting.

Maybe Georgie boy (or is it Boy George?) knows what’s going on. He just probably thinks America is dumb enough to believe what he says.

Now that I’m done exercising my right of free speech by bashing the president, let me show you some proof.

Service sector? Contracting

Honestly, since services make up 80-90% of the economy, this is proof enough that we are in a recession. But then we can factor in lower home sales, higher inflation, lower consumer and business spending, higher interest rates which stifles lending, and I could go on and on.

These things weren’t nearly as present back in the fourth quarter of last year – You know, the quarter that registered only 0.6% GDP growth (that shows you how much holiday sales helped!).

So just use your imagination and ‘guestimmate ‘where our economy is headed right now. To me, it looks like negative growth.

Then again, adjusted for true inflation, we’ve been seeing negative growth for years now.

Will the economy get better in the second half? The market sure thinks it will. But why it thinks that baffles my mind.

Just because Bernanke (who’s been oh so truthful so far) said growth should pick up in the second half of the year.

Of course, he didn’t realize housing would be such a drag. And he didn’t think the credit crunch would last as long as it did. And he definitely didn’t think all of these things would take us into a recession (which he still doesn’t believe). So why would anyone believe that growth would pick up in the second half of this year?

You know when growth will start picking up? Once data starts showing it picking up, that’s when.

It could be next month or next year. Until then, don’t hedge your bets on a recovery. Wait until the news starts coming in better than expected. Then, make your bets.

The Metal High

Gold is at $970 an ounce…
Silver is at over $19 an ounce…

Have you put your money in either one of them?

I sure hope so. Me, I have some 1920’s silver coins that are letting me leverage this rise up the charts. My brother is holding on to various gold and silver coins as well.

Both of us are damn happy too.

But don’t worry if you think you’ve missed out on something – precious metals should continue scaling the charts.

And the only reason why – is the same reason why precious metals always go up – INFLATION.

I’ve beat the inflation drum until it broke. You all should certainly know my stand on inflation. But if you don’t, check out these two posts:

http://stockcharlie.blogspot.com/2008/02/inflation-is-poppin.html

http://stockcharlie.blogspot.com/2008/02/fed-has-made-their-choice.html

What I haven’t added to this is that so long as inflation climbs across the world, inflation should continue to climb here. And to make matters worse, so long as our economy is getting drop kicked by lack of credit and interest rates keep dropping, our dollar will sweep the bathroom floors.

That’s how far down it could go.

And if you know anything, you should know that as the dollar drops like a drunken prostitute who overdosed on methamphetamines – the price of oil, gold, silver, copper, and every other commodity will go straight up.

That’s not to say that this is a completely safe play. Metals have already shot up quite a large amount. What I’m thinking – is something Andrew Gordon pointed out – is that some of the money that poured out of banks and momentum stocks, have gone into commodities instead.

What that means is that this is HOT MONEY.

Be careful, you might get burned on the way out.

I Can’t Believe I Haven’t Talked About Oil

This is quite amazing because about a year ago, all I could talk about was oil.

So what’s up with oil? It’s my homeboy – to be exact. But it’s a homeboy I have mixed feelings about.

I always love watching oil rocket higher (because it lets me make sick money), but hate paying $3.30 for a gallon of gas.

So will oil keep moving higher? Yeah it looks like it’s bound to happen. Now that crude prices are above $100 a barrel, it looks like this could become support. Meaning, oil could easily hit $110 – $115 from here on out.

Now that spring is fast approaching, you’ll see a shortage as refiners switch their blends. And then of course, summer driving season will eat into demand.

And that’s just local reasons why oil could move higher.

Let’s not forget that China, India, Russia and a host of other nations are all using more oil every year. Yet at the same time, producers are having a hard time replacing reserves.

Saudi Arabia has far less oil than people think. And for now, the only oil we seem to be finding is the expensive kind.

This practically spells out higher oil prices. So I hope you’re hedged to take advantage of it. A perfect way to do that is to buy shares in the United States oil Fund (USO).

Robert Toll – What a Pansy

Sometimes, you just have to sit back and roll with the punches.

That’s obviously not what Robert Toll, CEO of Toll Brothers is doing.

He’s crying and whining his little heart out. Just today he uttered something about ‘ceaseless talk about a recession is dampening the mood of consumers’.

This is the guy heading a multi-million dollar company. And he’s being a little pansy!

For some reason, this guy thinks that when people utter the word recession, it makes others tighten up. He’s got it all backwards though.

Everyones mood had already soured before this recession… that’s the reason why we are headed towards one now.

Just think about it: The credit crunch we had back in August (which really was the main catalyst for all of this) was caused because the mood of major banks soured. They didn’t want to keep lending!

So Robert Toll – Do yourself a favor and keep your mouth closed. You just sound more idiotic when words exit your mouth. Maybe you’ll do better managing your business.

Inflation is Poppin

Well here’s a shocker: Producer Prices for January came out 1% higher.

That’s the highest increase since 1981.

And what’s pushing these prices higher? You can thank food and energy.

Actually, you can just blame energy.

The reason I say that is because energy – in the form of corn ethanol – is also pushing food prices higher. As farmers plant more corn for ethanol, they plant less wheat and soy. Since demand for those two things hasn’t really changed, prices move higher.

And since these three things are in nearly every food we eat, prices on cereal to chicken rise.

And these price hikes won’t stop until they figure out a way to stop using corn for ethanol.

When we’re in the middle of an economic downturn, the last thing we need is for inflation to move higher and shock the hell out of the consumer. If prices are rising while consumers feel uncertain about what’s to come, that spells a recipe for lower consumer spending.

Since consumer spending is what drives this economy, a further slowdown there should cement the recession I’ve been talking about for some time.

Now, let’s see how all this news affects the markets today.

Credit Card Debt has Skyrocketed 315%

According to research firm Demos in just the past year people have put on another $2.2 TRILLION in debt on major credit cards.

But here’s the kicker: delinquent card payments are at a three year high!

If this isn’t a sign that people are strapped for cash, I don’t know what is.

You should expect consumer spending to keep slowing down. And that means retailers like Target (TGT) and Best Buy (BBY) should continue to see a slowdown in sales.

But just remember that sales might go up a little bit in May and June as those tax rebates start mailing out. So retailers might start rising in April in anticipation of that.

This Week Should be Dizzying…

I hope you’ve got your puke bags ready – because last week’s nausea inspiring volatility isn’t over yet.

Today, the Dow Jones has already bounced in a 150 point range. Remember, last week the market was moving in ranges of 200-300 points.

But the ‘hold-on-to-your-seat-for-dear-life’ volatility should continue as faulty calculator brained investors are reminded how badly our economy is doing.

Tomorrow we’ll have a Producer Price and Consumer Sentiment update. Then on Wednesday we’ll have New Home Sales, Durable Goods Orders, and Crude Inventories. Thursday will be huge with GDP numbers coming in.

Considering we’re in a market that is slowing, I expect these reports to disappoint. Some may not disappoint by much, but they should still disappoint.

Whether star bucks drinking traders (who snort boat loads of coke and throw cocktail parties in the upper west side) actually pay attention to that is a different story.

It seems like the market is trying to hone in on how the second half of this year will do. That’s because there is still some hope left for a decent second half. After all, if Ben Bernanke says the second half should do better, than he simply HAS to be right… right?

Hey, Ben didn’t foresee the credit crunch. And he didn’t think housing would be a big drag on the economy either. So to listen to what he says and garner any ‘hope’ from it seems like a fool’s game to me.

But then again, I’m in this game to make money. So if I really think the market is going on any kind of significant rally, then you can be sure that I plan on making money on it.

I’ll also plan on shorting the crap out of underperforming, idiot led companies that went up for no good reason.

In other words, I’m still in sell-the-rally mode.

An Update on Riley (My Bird)

As I was in Orlando this weekend, I got word how my bird’s doing…

It looks like he has liver (or kidney) failure. He has certain levels far too high in his bloodstream. And the vet still doesn’t know exactly what’s causing it.

But he did tell us to start dropping his protein intake and instead give him more green and yellow vegetables (which improve function of the organ). In a few weeks, we’ll be taking Riley back to see if he’s gotten any improved function. He should get better, but we still don’t know.

I hope he does – I love that bird. : (

For everyone that wished Riley well, I want to thank you for that. It really means a lot to us both.

This Guy is a Freaking Idiot!

So I’m going through the news, and run across someone who could be the largest idiot I’ve ever read. And of course, he’s on the front page of MarketWatch. Here’s what he said…

Yesterday, for no good reason, the market decided to sell-off; there’s a tug of war between folks that believe that we’re at or near a bottom, and want to start to look through the first half to the second half, and price in earnings. Then there’s a second group that doesn’t believe in the ‘E’ in P-and-E levels, and believes every rally should be sold,” said Art Hogan, chief market strategist at Jefferies & Co.

Are you kidding me?!?!?! There’s a group of people – like me – who doesn’t believe in the E in P-and-E levels?

Did he get dropped on his head as a child one too many times?

Last time I checked the E (earnings) levels are DROPPING! And the economy is dropping, which means that earnings will drop even further!!!!

What is so hard to understand about this?!?!?!

Has Art ever been in a bear market? Does he even know how recessions work? Where’d they hire this guy from – some part time position as a gas station clerk?

This guy obviously knows nothing. And the reason why he’s front page on MarketWatch touting this Bull$#!t is absolutely unbelievable!

This man is no authority on the markets. He doesn’t even seem to understand how they work!

It’s like he’s been taking the last two months of economic data, and burning it to keep warm. Because if he had actually read them, there’s no way he could think that bears were being unreasonable right now.

There’s plenty of reason to sell off the market. And thinking that a market is only determined by earnings is like saying that a baseball game is won because of only one guy.

I think the Bush administration should look to higher this guy – because he’s definitely not keeping with reality here.