Tuesday, June 30, 2009

The Pirate Bay II

I like this eulogy from UK tech site The Register. My comments happened earlier today.

"So The Pirate Bay has executed the Web 2.0 business plan to perfection: give someone else's stuff away for free - then find a bigger idiot to buy the company."

That is all.

Case-Shiller Home Price Data

The April Case-Shiller home price data came out this morning and the second derivative continues to be slightly positive.

April prices were down 18.1% y/y vs. 18.7% in March and 19% in January, according to Bloomberg. You can see the far right data points turning higher.

While large improvements are not likely until the jobs market improves, I'm a believer that the bottom is being put in. The woes in this economy are significant but the healing, if not outright improvement, continues.

The Pirate Bay - Something Fishy is Going On

The Pirate Bay (TPB) is the best place to go if you want to illegally help yourself to music, movies, TV content or games. It is awesomely ironic that they have figured out a way to get consumers to play for the service, and not so ironic that they spent much of the last months in court defending their preposterous Robin Hood/Shylock business model, that their founder was sentenced to jail time (I don't know whether he served any) or that the site was temporarily shut down by court order last month. Today we have the announcement that a legit gaming company has bought the Pirate Bay and intends to take it in another direction, while not necessarily abandoning the former, illegal direction.

"According to gaming company Global Gaming Factory X, it is in the the process of acquiring The Pirate Bay for $7.8m (SEK 60 million). The acquisition is scheduled to be completed by August and will see the site launch new business models to compensate content providers and copyright owners.

“The Pirate Bay is a site that is among the top 100 most visited Internet sites in the world. However, in order to live on, The Pirate Bay requires a new business model, which satisfies the requirements and needs of all parties, content providers, broadband operators, end users, and the judiciary,” said [GGF CEO] Pandeya."

It is not TPB's peering technology that GGF is after, because they simultaneously acquired a little company called Peerialism to handle the peer-to-peer thievery.

I am inclined to believe that the packaged/console-based video game market is decelerating so sharply that GGF is making a land grab in the media theft enabling business before someone else snags the best property. Plus, the Pirates have already figured out a way to get people to pay a fee to steal something fair and square, which should be half the battle (staying out of court and jail is the other half.)


This is the last day of a very good quarter for equities. Dead cat? You decide.

Monday, June 29, 2009

Facebook Getting Grumpy

"Jonathan Heiliger, vice president of technical operations for Facebook, was being interview by GigaOm Network founder Om Malik here at the GigaOm Structure 09 conference. Malik asked him about unexpected problems in managing the fast-growing company's datacenters.

Reps from Intel (NASDQ: INTC) and AMD (NYSE: AMD), both running panels and present at the show, must have clenched their teeth when they heard this:
"The biggest thing … was less-than-anticipated performance gains from new microarchitectures, so new CPUs from guys like Intel and AMD. The performance gains they're touting in the press, we're not seeing in our applications," Heiliger told the audience."

The article, which appeared in online publication internetnews.com, has received little attention. That is surprising to me, given the fact that the coming cloud computing wave should put a premium on the input from large server customers such as Facebook.

Short Week

<--- 2-year look at the S&P 500. I just glanced at lots of time frames from 3 months to 40 years to try to find an S&P chart that made it look like more than a normal correction was in the cards. Couldn't find it.


Futures are pretty directionless this morning and foreign markets are creeping mostly higher. The M&A folks took the weekend off so nothing to report there.

Madoff gets sentenced at 10:00 am and the lynch mob wants nothing less than the high end of the range, in the well-past-his-death number of years. It doesn't matter to me as long as it's not a slap on the wrist.


According to DisplaySearch, TFT panel makers are set to hike prices in July -- on 26-47" LCD TVs by 5-10% and on 32" by as much as 16%. More signs that cyclical tech has bottomed and should continue to work.

Sunday, June 28, 2009

TechCrunch Proves It

Twitter-related folks are trying way too hard to make Twitter the next new, big thing. Check out this article at TechCrunch. Some tech startup whiz created a Twitter app to allow Twits to trade stocks via their Twitter feed.

"For instance, if you’d want to buy 200 shares of Apple, you would tweet ‘@pollytrade buy 200 shares AAPL’ and likewise for selling e.g. 100 shares of General Electric (’@pollytrade sell 200 [typo is theirs for a change] shares GE). After communicating with E*Trade, which should only take a few seconds, PollyTrade tweets back your order status along with your brokerage order number. In case something went wrong - because of incorrect formatting or a refusal from your broker - you’ll receive an error message instead so you know the order didn’t go through."

If you tweet this info publicly, everybody can see your trades, which if I know you, will be embarrasing. If you tweet this info privately, it's called email.

Understanding Engineers

An engineer was crossing a road one day, when a frog calledout to himand said, "If you kiss me, I'll turn into a beautiful princess."

He bent over, picked up the frog and put it in his pocket. The frog spoke up again and said, "If you kiss me and turn me back into a beautiful princess, I will stay with you for one week."

The engineer took the frog out of his pocket, smiled at it and returned it to the pocket. The frog then cried out, "If you kiss me and turn me back into a Princess, I'll stay with you for one week and do ANYTHING you want."

Again, the engineer took the frog out, smiled at it and put it back into his pocket. Finally, the frog asked, "What is the matter? I've told you I'm abeautiful princess and that I'll stay with you for one week and do anything you want. Why won't you kiss me?"

The engineer said, "Look, I'm an engineer. I don't have time for a girlfriend, but a talking frog, now that's cool."

Saturday, June 27, 2009

Possible Repost Joke

A construction worker named Chow Fun woke up sick one day. He called his boss and said, “Hey boss. Chow fun here. I sick. I no work today.”

His boss replied, “Chow Fun, we really need you today. We are two weeks behind on this job. Chow Fun, when I feel that way, I tell my wife that I need sex. After that, I always feel better.”

Chow Fun said, “OK boss, I try. I call you later.”

A couple of hours later Chow Fun calls back, “Hey boss, I did you say. I feel better. I come work now.”

The boss says smugly, “That’s great Chow. I told you it would work. See you soon.”

Chow finishes by saying, “Hey boss, you got nice house.”

Today's Random Thought

Brought to you by Reddit.

Metcalf's Law and IM

This, like many other "laws" of science, is really crap in that it is impossible to quantify the value of an incremental user. It is directionally correct, however. If only two people in the world have a phone, each can only call one person. If one more person gets a phone, there are now three people who can call two people each. The increase in utility is exponential.

Metcalf's Law has suffered a serious breakdown in the instance of my instant messaging (im).

I was a pretty early adopter of instant messaging for business purposes on Wall Street. It was probably around 1999 or 2000. At that time my assistant had a list of people who, if they called, I wanted her to interrupt me and get me off the phone. This worked fine but had her running around a lot. Somebody told me about im and that changed everything.
At first, only a select few people had my im address. They would routinely ping me something like "Big call on AAPL. Call me." It was very efficient. One interesting fact is that as far as I know, there is no directory or Yellow Pages equivalent for im. It is the ultimate "opt in" network so to a point you only get contacted by those who you want to hear from.

Sounds perfect, right? It was until everybody got im, and everybody wanted and got everybody else's im addresses. Blast im's to multiple (hundreds of) im users were happening. Users had so many message windows popping up that it was impossible to treat each one as a time-sensitive, important missive.

Not only did Metcalf's Law stop working, the incremental utility was negative in that most of it became noise. Or all of it became noise even though some of it wasn't. Now I routinely get an email saying something like "hey. sorry i missed your im last week. what's up? call me." Sigh. It ws good while it lasted.


Playng a very good track at 10:00 today. Too bad my game sucks lately. Enjoy the weekend.

Friday, June 26, 2009


Interpreting the news today is so uninteresting that it feels like Saturday. It might be a quiet July and August if the macro stays calm. So, yesterday:

  • Two major icons passed away

  • Bernanke bailed himself out

  • Still-capacity-constrained (for now) PALM reported a big quarter last night
  • The market shook off some bad jobs numbers yesterday
  • Oil won't go down

It's going to be 90 degrees in NJ today. It was only 80 in NYC yesterday and I was sweating like a pig.

Thursday, June 25, 2009

Do You Yahoo?

2008 $0.29

2007 $0.47

2006 $0.52

2005 $1.28

The above numbers are Yahoo's annual earnings per share ex. extraordinary items. FY 2009 and 2010 estimates are $0.40 and $0.45 respectively so it's not like the last couple of years were an anomaly.

Kara Swisher at the WSJ technology blog writes today about Yahoo's imminent effort to rebrand itself, perhaps around the new home page. Yahoo's core problem is not its brand per se, or its ad agency, but rather the fact that it needs to re-find something that it does better than anyone else. Google continues to be a darling because it has done just that.


This proves how old I am. The NY Times samples the Beastie Boys in the title,
"No Sleep ‘Til … Barclays?"
about Barclays paying $4 mil for a subway station naming rigts. At first glance I thought that it was funny or strange or something.

I Thought This Was Funny

No comment here on whether it was an honest mistake.

Wednesday, June 24, 2009

Bernanke is Going to get Roasted Tomorrow

Here is a link to a Washington Post blog entry that has people talking (the issue, not necessarily the blog entry... )

"Rep. Issa: Bernanke Engaged In 'Cover-Up' In Bank of America-Merrill Merger

Bernanke testifies on the Hill tomorrow before Issa's committee, so his provocative assertion today sets the stage for some drama. Issa is the ranking member of the House Oversight committee and has led the probe against Bernanke."

I don't know whether Bernanke should get another term but I am confident that there was a lot going on behind the scenes around Bear/Lehman/Merrill that every politician doesn't need to know and couldn't have processed at the time if given the info.

Tuesday, June 23, 2009

SAP and Oracle

That ->> is the Oracle campus just south of San Francisco. Oracle was a different company when those buildings went up.

I read a bunch of chatter today about the idea that Oracle rival SAP is about to make a significant acquisition. Oracle has made lots of them.

It's probably not a coincidence that the SAP stories were around today or that ORCL reported a very good quarter tonight after the close. Included in the ORCL conference call was very expected braggadocio that might have been true. A prominent Wall Street analyst in his conference call notes quoted ORCL as saying that they were: "Taking share from SAP across globe, even in strongholds (i.e. Europe +5% cc)."

Change is Good for Some

There is an excellent article at Ars Technica about the structural challenge to Gamestop (GME), and console/handheld video game software.

GME was an absolute darling in the $60s and is currently a pariah at $22 and looks like it's headed lower, even though there has been more optimism around consumer discretionary names.

It feels as though we're sticking a fork in the idea of getting in a car and driving to a store to buy this form of digital media. The timing of this type of paradigm shift is pretty impossible to game and prepare for, especially for a growth company. This cheap stock is likely to stay cheap.

Lots of Levels

The USA Today has a story today about how American executives have been shamed into playing less golf.

That makes sense in this type of environment. Especially the following quote:

""CEOs are golfing less … and those that are still golfing are probably talking about it less," says Steve Bennett.."

One thing that surprised me is the following set of stats:

"Many CEOs and CEO experts say image is largely at play. Just 25% of adults have a favorable opinion of CEOs in the June Rasmussen survey, the lowest of all professions surveyed, including members of Congress at 30%. Among other executives, only 14% have a positive view of CEOs, according to research released this month by Weber Shandwick."

75% of adults think CEOs stink? Sure, there are a lot of top execs who have screwed up, but I thought we were working in a meritocracy. They didn't get those jobs by lottery.

Monday, June 22, 2009

Samsung Gets In Line

I missed this at the end of last week but Samsung became the latest cell phone powerhouse to roll out an iPhone knockoff. Pictured at left is the Samsung Jet.

High praise for Apple who certainly got it right.


I'm tired of the speculation about whether Apple's board should have disclosed that Steve Job had a liver transplant. The company is executing and the CEO is on medical leave. Leave. Leave him alone.

Sunday, June 21, 2009

Happy Father's Day


3-month chart of the S&P 500.

I have been expecting a pullback based of the fact that things that have been working for the right reasons (in my opinion) got really over-owned. This observation is anecdotal and based on feel, so it easily could be off the mark.

I'm still not inclined to rush into anything.

U.S. Open

This is what kind of June we're having. Rain and more rain.

I have nothing better to do today than watch the U.S. Open and they aren't going to tee it up until at least 12:00 as I understand it.

Pictured at left is the current leader, Ricky Barnes, who should have a lot of trouble maintaining his current position.

No offense, Ricky.

Friday, June 19, 2009

Be Careful Out There

This is so stupid....

"Applying for a job with the City of Bozeman? You may be asked to provide more personal information than you expected.

"Please list any and all, current personal or business websites, web pages or memberships on any Internet-based chat rooms, social clubs or forums, to include, but not limited to: Facebook, Google, Yahoo, YouTube.com, MySpace, etc.," the City form states. There are then three lines where applicants can list the Web sites, their user names and log-in information and their passwords."

I can't imagine giving anyone my password for anything.

Does this mean that it is getting easier for people with good judgement - no neck tattoos, no face piercings, no Mohawk, no nude pics on the web - to get a job? Lower that bar.

RIMM - Not Quite

Blackberry maker RIMM reported last night and the results weren't quite good enough if you're not a patient woman. The stock was at $35 and change at the March low. The stock hit $85 before the correction started last week.

If a stock goes up 140%, expectations for near-term performance usually go up dramatically as well.

On April 2, I wrote the following:

"I'm looking for a 1 - 3 quarter spurt of margin discipline and a pop in the stock followed by a resumption of the innovation-rules construct - if RIMM can't get back ahead of the pack, the stock is not going to work longer-term."

isn't doing a bad job, it just got caught by Apple and maybe Palm. It is going to struggle longer-term if it doesn't find a way to out-innovate again.


A bankruptcy judge took only 10 minutes to grant GM's request to cancel the leases on all 7 of its corporate jets. 7. Seven.

It would be very rare for all top 7 execs at one company to be flying somewhere different at the same time, or even the top 10. We can therefore infer that the 11th most important exec at a company that rarely made money was too cool and important to fly commercial.

""The leases are not necessary or valuable to [GM's] business activities," the automaker said in the filing."

Ummmm. That's a quote.

Thursday, June 18, 2009

Apple iPhone for Enterprise

Not the Starship Enterprise. I've been expecting something like this for a while.

"Apple kicks iPhone for enterprise efforts into overdrive
Apple this week stepped up its efforts to take on rivals Research in Motion and Microsoft in the corporate smartphone market, releasing a lengthy guide aimed at helping system administrators deploy iPhones throughout big businesses while simultaneously taking advantage of over a dozen new enterprise features delivered this week."

This is an uphill battle for sure. Large company IT dudes and dudettes are notoriously change-averse. They know how to manage the Blackberry device and infrastructure and will resist the change. That being said, Apple definitely has a shot, as always. That battle ground, especially in financial services, is still RIMM's to lose.
edit - I was just looking through the RIMM numbers reported last night. 80% of net new subscribers last Q for RIMM were consumers, not enterprise. Could Apple be making a dent in large biz already? Maybe.

Balls in the Air

The 2009 U.S. Open kicks off right now. The weather is terrible, which will help the long hitters.

Tiger is not surprisingly the prohibitive favorite. I believe that ESPN coverage begins at 10:00. Should be a drama-filled weekend, unless Tiger hits his driver straight, in which case he could win by 10.

Money In

The WSJ is reporting today that equity funds in the U.S. had net inflows for the 13th week in a row. Given the fact that the move the market had off the March bottom through last week caught many or most by surprise, Portfolio Managers will be reluctant to let new money accumulate earning 1% or so. The fear of falling farther behind is powerful.

One aspect of where the money is going continues to be troubling. Equity funds generally are not restricted to only buying common stocks. Most can get some commodity/credit/real estate exposure if they want it. The following argument is way too easy:

"You have to buy commodities. China's economy is recovering and they are buying all they can get their hands on."
"But the rest-of-world economy still sucks and there's too much inventory."
"Doesn't matter. Oil is going higher."

It doesn't feel to me like oil should be above $70. Luckily for commodity "investors", I am still not in charge of that. If oil and other commodity prices roll over, my fear is that market participants will extrapolate that the global economy does still stink, and sell other assets as a result.


RIMM reports tonight. The stock is up big. It should be tough for them to put up numbers that are materially better than expected.


Who is going to buy PALM? I think someone will, as the new product has good buzz and PALM needs some backing. DELL? MOT?


Morgan Stanley has comments today that even if Sun Micro's revenue shrinks 20% post-merger, the deal will be at least $0.15 accretive. That in itself comes pretty close to make an otherwise head-scratching deal a good one.

Let's Make a Deal

Eddie Bauer is the latest retailer to hit the showers. From a Reuters story today:

"NEW YORK (Reuters) - Outdoor apparel retailer Eddie Bauer Holdings Inc filed for bankruptcy for the second time in six years and said it would seek court approval to sell its assets to private equity firm CCMP Capital for $202 million."

Some still might associate a negative stigma (redundant?) with filing for bankruptcy. I shop at Eddie Bauer and didn't remember that they were bankrupt in the last decade. Nor did I know they were on shaky ground at the moment, so it hasn't affected my retail behaviour.

A WSJ story today highlights that fact that bankruptcy court may be the best place for a struggling company to get a deal done, especially given the importance of the debt holders in the process and the conflict between the debt and equity holders.

"Mergers-and-acquisitions professionals have lamented that frozen credit markets are stifling big business transactions. But Chapter 11 bankruptcy reorganizations have emerged as the hottest venue for quickly buying, trading and breaking up big-name companies.

Bankruptcy court is "a place where you can't afford not to be," said Jere Thomson, the head of law firm Jones Day's mergers and acquisitions practice in North America, who helped strike Chrysler Group LLC's recent alliance with Fiat SpA."

M&A is healthy most of the time. Keep the market moving.

Wednesday, June 17, 2009

Video Game Violence - Could Go Either Way

According to gamezine.co.uk, the German government is close to passing a law banning the distribution and playing of all video games which feature violence against people real or fake.

"German ministers have today agreed to ban the production and distribution of all violent video games, with the law only having to go through parliament in the next few weeks. According to german website Chip Online and supported by Spiegel Online, ministers of the interior of all sixteen German federal states came together for a conference today in Bremerhaven where they agreed to forbid the production and distribution of all video games "where the main part is to realistically play the killing of people or other cruel or unhuman acts of violence against humans or manlike characters.""

The law might not pass, and if it does this way of thinking may not be adopted outside of Germany. The element of it that could go either way revolves around the idea that if 1st person shooter games are made illegal, they might become even more popular.

Watch this space, obviously.

Regulation - More For Sure

Lots of buzz this week about the unveiling of the New Financial Regulations.

I actually believe that we do need much better regulation of firms that pose a systemic risk to the economy. It would be nice if there were no firms in a position to do as much damage as AIG has done, for example, but there are so we need to deal with it.

The question for me is whether we are about to end up with a whole new set of regulators who miss some of the biggest issues until it's too late. I hope this ends well, or at least gets us to a better spot.

It's Gold, Jerry

This silly bit of news brought to you by the Financial Times:

"Long attracted to the safety of solid gold, Germans will soon be able to sate their appetite for the yellow metal as easily as buying a chocolate bar after plans were announced on Tuesday to install gold vending machines in airports and railway stations across the country."

Could this really be a good idea? If it is, why confine the machines to airports and train stations? How about putting them in banks?

Lots of tough questions.


Best Buy reported an inline quarter yesterday (light revenues, better margins) which is fine in this environment but opted not to give guidance for the rest of the year. I found that a little strange and investors hated it, sending the stock down 7+%.

The correction continues.

Tuesday, June 16, 2009


That is the S&P 500 index, year to date.

I still think we are in correction mode. If all you care about is the index level, then approximately nothing has happened in 2009. On the other hand, if all you care about is the index level, you probably need some hobbies.

My wife once pointed out that by using the term "correction", I was tacitly agreeing that stock prices were "incorrect" before the correction, and therefore should have gotten out of the way instead of seeing my holdings decline in value. That was kind of annoying.


Day 2 of the NJPGA Pro-Am today. I stunk up the joint yesterday. Time to make some birdies.

Monday, June 15, 2009

Banana Peel

Looks like the U.S. market is going to step on one today. Futures are down big here and markets are down pretty much across the board in Europe and Asia.

Six Flags is busto? Say it ain't so. My kids are going to be pissed if they can't pull this one out.

I'm going to play in a golf tourney. Actually a 3-day NJ PGA Pro-Am (I'm not the Pro). Be back tomorrow.

Sunday, June 14, 2009

Wow For Sure

It's not April 1st. Probably forgeries? From Bloomberg:

"June 12 (Bloomberg) -- Italy’s financial police said they asked the U.S. Securities and Exchange Commission to authenticate U.S. government bonds found in the false bottom of a suitcase carried by two Japanese travelers attempting to cross into Switzerland.

The bonds, with a face value of more than $134 billion, are probably forgeries, Colonel Rodolfo Mecarelli of the Guardia di Finanza in Como, Italy, said today. If the notes are genuine, the pair would be the U.S. government’s fourth-biggest creditor, ahead of the U.K. with $128 billion of U.S. debt and just behind Russia, which is owed $138 billion."

Go big or stay home.

Facebook - Victory

If the goal is to create buzz and stickiness at the same time, Facebook nailed it this weekend. According to Bloomberg:

"June 12 (Bloomberg) -- Facebook Inc., the world’s largest social-networking site, said members registered new user names at a rate of more than 550 a second after the company offered people the chance to claim a personalized Web address.

Facebook started accepted registrations at midnight New York time on a first-come, first-served basis. Within the first seven minutes, 345,000 people had claimed user names, said Larry Yu, a spokesman for Palo Alto, California-based Facebook. Within 15 minutes, 500,000 users had grabbed a name."

My wife and I each managed to get out own names registered the next morning, but our last name is not very common. This whole thing will continue to be cool until the next big thing comes along.


I wonder what they're selling in there.

Saturday, June 13, 2009

Restaurant Crooks

I took my boys to Monmouth Park race track today to teach them a little about horses and racing. Not that I know that much about it but it was a nice day and quality time with my sons is always a good idea.

We didn't get lost on the way back which at times is quite a feat in Central NJ going east-to-west but were hungry by the time we got back to the Princeton area and against our better judgement stopped at a TGI Friday's for dinner.

It was totally uneventful until the ladies across the aisle from us asked for the check and when it came, called our mutual waitress over. Something was on the bill that shouldn't have been. The waitress said to them, "Oh yeah, I noticed that but the manager didn't get a chance to take it off your check. Just give me your card and your total will be $5 less."

I didn't think much of it until our check came. There was an extra soda on there for $2.49. I immediately looked for out waitress but she was taking someone's order. She literally ran over to me after taking their order and the following convo occurred,

"I saw you looking at me. Is there a problem?"
"Yes, there's a soda on here that I didn't order." (I was drinking beer.)
"Oh yes. I saw that. I asked the manager to take it off but he didn't get around to it. Just give me your card and your check will be $2.50 less."

I guess this works a lot of the time if the manager is in on it. Not if I'm on to it.

Don't Give Up

Don't ever give up.

Friday, June 12, 2009

I Have Some Bad News For You

Two things actually.

1. If your TV looks like that <----beauty right there, it's not going to work starting tomorrow unless you get a cable box.

2. If your TV looks like that, that's also bad news.


This kind of story isn't being written very often. From Bloomberg. The populist drivel seems to be getting way more play.

"June 12 (Bloomberg) -- U.S. taxpayers have reaped a 7.5 percent return on the $45 billion used to rescue Citigroup Inc., more than three times as much as if the money had been invested in the Standard & Poor’s 500 Index.

The return since the government first purchased a stake in the bank on Oct. 28, which includes dividends, compares with 2.4 percent for the S&P 500 on that basis."

I know it's a silly comparison since the Treasury is not an equity investor, but the the fact that the government didn't "give" money to the banks still doesn't hit home with some people.

In retrospect, since managements got roughed up across the board and bonuses went to zero, the moral hazard bugaboo was most in play in the case of the bank bondholders, who should have borne some risk and could have been wiped out but instead got off scot free.


The House Holier Than Thou Committee did the usual job embarrassing BofA Chief Ken Lewis yesterday. I too believe that he should have known the extent of the Merrill losses sooner, but I don't want to go on TV and ask him about it.

Thursday, June 11, 2009

Facebook Observations

Starting Friday at midnight your Facebook homepage url can be.www.facebook.com/johnolerud instead of www.facebook.com/home.php?ref=home, but only if you claim "johnolerud" before anyone else. It's kind of like a vanity plate for your social web life. John Olerud is going to be pissed, though.

I'm sure that there are more than a few enterprising folks out there trying to figure out how to register non-trademarked company names before those companies do. Since Facebook is being used more for marketing, it might be worth it to stay up late Friday and do some e-squatting.


It was pointed out to me this morning that Google's total pre-IPO funding was $25.1 million. According to TechCrunch, Facebook has raised $716 million to date. That's not bad (it's good, in fact) but it's different and what happens when your revenue model is less obvious that that of Google.

Rainy Thursday

Rep. Elijah Cummings is on CNBC right now talking about the hearings that are going down today over the BofA/Merrill deal. The question at hand is whether Bernanke forced BofA to do the deal.

Cummings' point seems to be that the U.S. voters deserve more transparency since there is $45 billion in taxpayer money on the line in the form of TARP funds to BofA. I guess he means transparency into whether one party was coerced. I'm not sure why I need that specific piece of information.

What I'd like some transparency into is what is happening to the $68 billion in TARP funds that are being repaid. As I understand it, rather that retiring debt or money that was issued specifically to shore up the banks, the money - billions - is going into the administration's General Fund so that they can spend it on whatever they want. With no transparency.



I said yesterday that I am expecting a correction so there's no need for me to comment on the market today. Futures are a little higher, though.


Looks like Michael Dell is back in the house. His company sold $1 billion in bonds last night and he is in the press stating rater plainly that Dell will do a large acquisition soon.

Since this is almost exactly what I would do in this situation, I think it's brilliant. There is almost no unit growth left in the PC market and Dell and HP have about as much market share as they're going to get. Time do play a different game.

Wednesday, June 10, 2009

Not One Bit

That's how much I like this latest round of action out of the government on their "regulating" of the online poker industry. The latest news surfaced earlier this week:

"WASHINGTON (AP) -- An advocacy group for online poker said Tuesday that the federal government has frozen more than $30 million in the accounts of payment processors that handle the winnings of thousands of online poker players."

I know it's a complicated issue but if the justice department thinks it's illegal and nobody else does, isn't that a problem?

This Could Be It

After the 40% rip off the March 9 low, lots of people have been looking for a correction but we haven't gotten it.

It looks as though we might be getting it here. After a strong open, the market has rolled over. That <-- is a 2-day chat on the S&P 500 and doesn't look pretty. Let's see what the dip-buyers are made of today.

I'm not crazy about this tape in the short term right here because it feels as though everything that has been working off the bottom has gotten very crowded - oil, certain commodities, every decent story in tech, turnaround financials. A correction to shake out some of the renters wouldn't be the worst thing in the world.


Chris Christie is and his lead is.

"Chris Christie opens double-digit lead vs. Jon Corzine in N.J. governor's race"

One-term NJ Governor John Corzine is about to meet his comeuppance, I hope. Either that or it's going to be an interesting election this year.

Tax-and-spend union guy Corzine is seeing first hand how it feels to have the highest state taxes in the country when the country goes into recession. The Democratic machine is powerful in New Jersey, so this is far from over, but I like what I see so far.

Talking his Book

Tim Geithner is a real team player. Kind of like John Chambers at Cisco. He took some time out of his busy schedule yesterday to cheer the global economy ahead of the upcoming G8 meeting. Either that or he really believes that we're out of the woods.

"Tim Geithner on Tuesday identified “encouraging signs” in the US economy and a better outlook internationally, adding there would be a reduced role for a key US programme to stimulate the market for toxic assets and loans."

That was a quick full circle. We've gone from Fed and Treasury assuring us that everything was OK when it was falling apart, to now TG claiming that all is looking OK despite the fact that many people don't believe. The only time we had consensus was around the Lehman collapse, when everybody was sure that the financial world as we knew it was going to end.


According to the WSJ today, Obama's plans to limit Wall Street pay continue to get watered down. Good. Let's let the market take care of it. It wasn't going to work anyway.

Tuesday, June 9, 2009

Rocket Science

This from the USA Today:

"DALLAS — American Airlines (AMR) will test fuel-saving technology and tactics on a Paris-to-Miami flight this week that the carrier and federal aviation officials hope will help make the case for a new navigation system.

The plane on the Thursday flight will take a direct route guided by Global Positioning System, or GPS, technology instead of staying within the usual jetliner paths across the Atlantic."

I hope nobody gets paid for having come up with this gem. I don't know much about aviation but this has got to be the most obvious good idea to come along in a while.

Blackrock for the Win

It sounds as though asset management giant Blackrock is the front runner to acquire iShares and Barclays Global Investors from very large bank Barclays. I would have liked to be in the Blackrock meeting where they laid out the game plan - the game being to rip everyone else's face off at their moment of greatest witness. It was probably around the time of the Bear Stearns cardiac arrest and has been playing out spectacularly.

Blackrock was fresh off its acquisition of Merrill Lynch's buyside unit so you could argue that they already had a lot of their plate when all this started going down. Revenue has gone up tenfold since 2004 including the Merrill deal. Instead, through the turmoil, Blackrock has managed to insert itself a money manager or risk manager of choice in almost every important deal and workout from the Bear Stearns unwind up to and including PPIP if that happens.
Now they're getting a lot bigger for a price tag under $10 billion. Nice job.

Apple is Sneaky

<--- That is a 10-year chart on sneaky bastard Apple. The last couple of years in the stock have echoed what has been going on in the broader market but that run leading up to the turmoil was spectacular.

The Apple Worldwide Developers' conference kicked off yesterday and Apple didn't shock the gadget world with anything breathtakingly new or unexpected on the phone front. Nor did Steve Jobs roll out onto the stage like he never left. Sneaky.

Instead, they moved the existing iPhone down to the $99 price point and intro'd the iPhone S (speed). Faster, more features, better camera. Both moves were exactly what the market needed. Very sneaky indeed.

They did also announce a few updates to the Mac line but the lack of wow there was a little surprising. It's soon going to be time for the next big thing in the Mac portfolio.


The cyclical tech trade (be long it) continues. Texas Instruments took up numbers at its mid quarter update lase night.

Monday, June 8, 2009

Sell in May

"Reluctantly crouched at the starting line, engines pumping and thumping in time."

Summer Monday.

I played a 3-day Member Guest Thursday/Friday/Saturday. A little-known fact is that that kind event is the leading cause of heart attact and stroke in white American males aged 35 - 60. I survived. Weee.

Did you sell in May and go away? That ^^ is a 2-year for the S&P 500, right at the 200 day moving average. My gut is that not many people did. The old highs, and hedge funds' old high water marks, and the level where people (future retirees) think their 401(k) should be is still way above where we are now. There is lots of room to the upside from a technical perspective as well. That doesn't mean that socks are going higher but you gotta be in it to win it.

All that being said, futures are lower and the lack of news has me thinking that people don't really want to be here today.


The Apple Developers' Conference kicks off today and the Palm Pre went on sale over the weekend. There is still great interest in the wireless space, as spending here has proven to be recession-proof and the steady stream of new product gives investors lots to focus on.

Big iPhone price cuts coming.

Tiger Woods was made for television. Awesome weekend.


China continues to choose the road less travelled.

BEIJING -- China plans to require that all personal computers sold in the country as of July 1 be shipped with software that blocks access to certain Web sites, a move that could give government censors unprecedented control over how Chinese users access the Internet.

It's funny that there is no real backlash in the international community. Not funny haha.

Saturday, June 6, 2009

I Don't Know About You

But I don't like where this is going. The USA Today does its usual fine job of pointing out the obvious this week.

"Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009, the Bureau of Economic Analysis reports. That's the highest percentage since the government began compiling records in 1929.

In all, government spending on benefits will top $2 trillion in 2009 — an average of $17,000 provided to each U.S. household, federal data show."

The trajectory of this needs to change at some point. Can someone in D.C. please give Arthur Laffer a call?

Tuesday, June 2, 2009


Well, my allergies were so bad this past weekend that I came down with bronchitis. I went to the doctor last night and came back with antibiotics and an inhaler. I need to hurry up and get better because I'm playing in a member/guest starting tomorrow, for the rest of the week.

I'll be back next week. Maybe before.


If you go on CNBC today as a guest, please say the following; "Well the market is up 40% in the past three months so we're expecting a pullback." You're now prepared. You're welcome.

Monday, June 1, 2009

Amazon Headwinds

Amazon has a ton of momentum - they are arguably the best retailer, the best place to buy books for sure and Kindle is a killer product. I had been thinking and writing that the risk to the stock was going to be Apple's response to Kindle.

The NY Times outlines the case for Google having an impact at some point:

"In discussions with publishers at the annual BookExpo convention in New York over the weekend, Google signaled its intent to introduce a program by that would enable publishers to sell digital versions of their newest books direct to consumers through Google.

Google has discussed such plans with publishers before, but it has now committed the company to going live with the project by the end of 2009."

It should be no surprise that good innovations in large markets attract a lot of attention and competition. It is surprising how long it took this to play out.


Futures are strong and oil is strong. Looks like another big up day.