Friday, July 31, 2009

Wow Microsoft

"According to NPD, in June, nine out of 10 dollars spent on computers costing $1,000 or more went to Apple. Mac revenue market share in the "premium" price segment was 91 percent, up from 88 percent in May."

The article is over here, and I assume that it is fact but I'm not 100% sure.


Her hair, I mean.

That's my little girl and she turns two tomorrow. She's at grandma's house with the rest of my crew so I'll be hitting the road shortly.

Nothing wrong with that 2Q GDP number even though it flipped the futures negative.

I can tell from my IM friend list how many people are out of the office, and lots are. Therefore, today's action should be quiet and not very meaningful.

Peace out and have a great weekend. Ever once in a while it's important to pause in the pursuit of happiness and just be happy.

Thursday, July 30, 2009

Nintendo and Sunshine?

Super Mario is pissed.

Nintendo reported last night/this morning and the results were bad as expected and as a matter of fact, worse than expected. Console sales were down over 50% y/y and profits were down big as well.

This video game revolution continues to be over.


It has been super humid and rainy with occasional thunder storms for the last few days in Central NJ. It actually might not rain today. Yippee.


Dinosaurs, Abe Lincoln, Yahoo - dead. Microsoft has their Analyst Day today where they will explain how they deftly ripped Yahoo's face off in that search deal.


Wednesday, July 29, 2009

This Market

“Pain is inevitable, suffering is optional.”
M. Kathleen Casey

There will be pain.

<-- Year to date chart on the S&P 500. The market has been acting great lately, refusing to roll over and digesting bad news rather comfortably. What is also happening is that people who are long are getting complacent, and people who were underinvested are getting involved on the long side.

I still believe that there will be a nasty correction relatively soon that will really mess up the semi believers, then a move higher into year end.

The move higher would be standard economic recovery fare. The nasty correction, for those buying stocks right here, could leave a mark or two.

Microsoft, Yahoo, Snoozer

I know I should quit talking about Microsoft/Yahoo but I defy you to find a big, interesting story in tech which has taken a less interesting turn than this one. It as been going on forever and is almost guaranteed to either never end or end with a whimper. The rumored deal should provide Google an excellent, ironic opportunity to gain some share during the transition.

Microsoft should be embarrassed that they are spending millions marketing their new search engine Bing, which they claim is great of course, but still feel the imperative to partner with Yahoo in search advertising.


One in eight swine flu fatalities are pregnant women, which is quite a troublng stat.


Casino operator Wynn Resorts filed last night for a Hong Kong IPO for its Macau property. Gaming expert and efriend SkiSteve, who also happens to be tight with Waco, tells me that this is good news, even as his confidence in the name had been waning into earnings later this week. I'm no expert on gaming stocks but if they had a good quarter in this environment, that's a 2-outer and they should proceed immediately to the craps table.

If the IPO window is open for any gaming stock, that is good news for this market.

Tuesday, July 28, 2009

Speculation vs. Manipulation

The newly installed head of the Commodity Futures Trading Commission has his sights set on establishing tighter position limits on energy futures position sizes, or at least enforcing limits currently in place.

The conversation around this has led to an interesting debate on whether what the chart above depicts is speculation or manipulation. The price of a barrel of oil went from below $30 to $147 in the space of 6 years. That is fact. If it went there because someone forced it there, that's manipulation. If a lot of market players just really wanted to own it, that's speculation and not illegal.

Without abolshing the futures contracts, I don't see how you get rid of speculation. When's share price went from $2 to $100, I don't recall anyone calling that manipulation. Silly yes, manipulation no.

Cruel and Unusual

This guy is going to get no sympathy at all. He might get lucky. Might.

"HOUSTON (Reuters) — Allen Stanford, the Texas financier accused of a $7 billion fraud, should be transferred to another detention facility because there has been no air conditioning in the jail cell where he is being held, his lawyer said in a court filing."

Hotter than hell probably.


Home prices rose in May vs. April according to the Case Shiller index, the first montly gain in almost three years. Better days ahead.


If you're having a day like this lass over here -->, just stop writing.


Futures are down a little and it's very quiet again today. There was way too much focus on the new home sales number yesterday, so anther canard today could take center stage. Case Shiller home price data might be a big one, though.

There May Be a Solution

For the next time you call your sister a bad name on Facebook. Or tell your brother that his baby is not really that cute. New and interesting:

"On the internet, data lives forever. Once you post something to the web, you see, you simply can't take it back. Many people have had to learn this lesson the hard way, unfortunately, after discovering that the "delete" button doesn't really work to delete something from the internet as a whole. The embarrassing missive lives on and on, in the web service's archives, in Google's cache, and eventually in the Internet Archive itself.

That may be about to change, though, thanks to a new tool created by researchers at the University of Washington. Called "Vanish," the system places a time limit on any message posted to any web service through a web browser.

Perhaps the most amazing thing about Vanish is that it's capable of erasing messages posted practically anywhere on the web. For example, the system is able to erase messages from any web-based email system like
Gmail, Hotmail, or Yahoo, instant messaging chats, or even social networking sites like MySpace or Facebook."

Monday, July 27, 2009

Cramer on Cramer

Real life investor turned larger than life media jack of all trades Jim Cramer writes today at about the NY Post writing about founder Todd Harrison writing about Cramer in his new book. You follow? It doesn't matter if you miss this round. He'll probably talk about it on Erin B's CNBC spot later or his show tonight or network TV tomorrow.

I think you have to be an attention whore to be as ubiquitous as he has made himself in the financial media. Not that there's anything wrong with that. There is way too much financial media and it is going to get filled up somehow.

Serenity Now

Not that you care, or maybe you do, but I'm setting up for a crazy week. My mother in law and one nephew arrived yesterday, a niece and another nephew flew in from Tokyo in the middle of the night last night, the whole crew is turning around and leaving on Thursday and my little girl turns two on Saturday so I need to go join them at the inlaws'. God bless my wife for driving to EWR at 1:00 am or whatever time that was.

Oil is back close to $7 which I don't like, futures are up a little which I'm OK with. Lots of earnings again this week.

Watch advanced glass and fiber maker Coring as it reports this morning. The long tech cyclical trade, which had been working so well for months, ran into some trouble in the second half of last week.

Sunday, July 26, 2009


When I was in college, I had a roommate who played the drums. I asked him for no particular reason one day who the best drummer in the world was. He said in all seriousness that it was probably some dude nobody ever heard of playing in his basement.

I guess drumming is like that. If you can't empirically measure the result, it's less clear that the cream will rise to the top.

I was very interested to see this article on Netflix:

"Last month
news broke that a team of computer scientists had finally managed to improve Netflix’s recommendation algorithm by 10%, making them eligible to win the $1 million Netflix Prize, a competition that began back in 2006. The team, BellKor’s Pragmatic Chaos, is composed of two former leaders in the competition who banded together in attempt to finally break the the 10% barrier and managed to succeed with a score of 10.08%."

A million dollars sounds like a lot of money but it often isn't in an environment when a small difference can be all the difference in the world. In tech, #1 makes most of the money, #2 might make money, #3 thru #x probably do secondaries waiting to make any money at all.

We should see more of this. As difficult it is to get around the NIH, or not invented here bias, there is a world of untapped talent and intelligence out there. I'm not cheerleading. Imagine if Google, who can afford hundereds of such contests, had everyone working for it?

Saturday, July 25, 2009

Here We Go Again

That man ---> is Andrew Hall and the financial markets need him to hang in there. He runs Phibro LLC, an energy trading firm owned by Citigroup that constitutes a large part of Citi's commodity principal trading activity.

According to the Wall Street Journal, he is having a good year.

routinely adds several hundred million in trading profits to Citi's bottom line and last year Hall took home over $100 million. If his numbers hold up, Hall wants to make sure he gets what is owed him by contract - another $100+ million. Nobody in Washington and almost nobody outside Manhattan want to see him get it is my guess.

My view is that we need to know what the rules are. Are we honoring contracts or not? Do the true money makers need to move to China or the Cayman Islands?

If Citi signed the deal, they need to pay him. If the government doesn't let that happen, let's get that info out there asap.

Just Because

I like clowns. Not this one.

h/t to danzatap

Friday, July 24, 2009

Microsoft Down 9%

I don't know whether Microsoft is a growth cyclical or just a cyclical. I don't know why the analysts couldn't come within a billion dollars of getting Microsoft's revenues right this past quarter.

What I do know, or think I know, is that if you want to own it you might as well buy it in the next few weeks. What can go right?

  • Windows 7 might be a real product cycle, unlike Vista which was a bust
  • The installed base of corporate PCs is very old. A replacement cycle should kick in in a better economy
  • Hiring will be going up and not down at some point, and those hired will use PCs, not manufacturing equipment
  • Microsoft could actually use their balance sheet to make some good acquisitions

Everybody loved it going into the quarter. Everybody hates it today.

Perspective and Good Fortune

"If there must be trouble, let it be in my day, that my child may have peace."

Thomas Paine, The American Crisis, No. 1, December 19, 1776

I was thinking this morning how fortunate my kids are that the worst recession likely to happen in their their lifetimes will be over before they get to high school.


This market really needs a break and last night was the first of this earnings season that lots of reports were worse than expected. Add to those facts the possibility that the Tri State Area is possibly more corrupt than the writers of the Sopranos thought and the path of least resistance today has got to be down. I'll just stay out of the way.

Thursday, July 23, 2009

Quick Read - MSFT and AMZN

Microsoft and Amazon earnings are out and neither look good enough. Microsoft missed revs by a mile. Amazon was just OK. Both stocks are trading down.

Broadcom looks genuinely better than expected and it's trading down as well.

Tech is going to need another great existing home sales number tomorrow. Either that or the techs are heading lower. Short term only.


This market has had a huge run and if I were flexible, at the margin I'd take some off the table. That being said, I still like this tape and think it will be higher 6 months from now.

The bears will tell you that either stocks are not that cheap, or are expensive. My contention is that it is impossible to know.

If you own stocks, or are contemplating buying here, what you care about is future fundamental performance relative to current expectations. Since I believe that the economy is recovering, I am willing to bet that earnings will be much higher than current estimates at some point in the future, and probably next year. If you are only willing to use current earnings, trailing earnings or current estimates, you are putting huge faith in things not changing, or that the sell side has the correct estimates for the next few quarters or years. Good luck with that.

I'm cautious short term (next month or so depending on levels), still bullish longer term.

Great Expectations

Flash memory maker SanDisk reported last night and ran head-on into the kind of expectations dilemma that I have been writing about.

The company beat estimates, both top and bottom line, and raised guidance going forward. The stock is going to get hit today as expectations, probably for future earnings guidance, were higher than where the company guided to.

With the semiconductor cycle having turned, everybody it seemed either owned this name or was recommending it, including Cramer. It wasn't a bad quarter. It was a bad situation for the stock in the short term.


I don't know what the solution is but I have a huge problem with the terrible ads on CNBC in the early morning hours. The worst are CoCoPari, which looks like it was directed by a 16 year old boy,, and Arrrgh.


"Over the next few days, you will probably read headlines that say "Amazon acquires Zappos" or "Zappos sells to Amazon". While those headlines are technically correct, they don't really properly convey the spirit of the transaction. (I personally would prefer the headline “Zappos and Amazon sitting in a tree…”)"

The above is one strange paragraph from a strange email written by the Zappos CEO yesterday to employees. Amazon acquired Zappos yesterday and this CEO elected to pretend that synergies and accretion are not paramount for Amazon. We'll see.

Wait A Second

I missed Obama on TV last night so I was just reading the story in the Washington Post.

The following leap of logic, or lack of logic, makes no sense to me:

"WASHINGTON (Reuters) - President Barack Obama said on Wednesday he realized Americans were skeptical about his healthcare overhaul, but that the country's economic recovery depended on implementing the $1 trillion plan.

Obama, insisting the "stars are aligned" for approval this year despite discord in Congress over the plan, warned inaction would undermine the economy, worsen the deficit and cripple millions of Americans financially."

Is the healthcare plan now a stimulus plan? I was taught that rising taxes was exactly what not to do if you are trying to stimulate economic recovery. I guess it's different this time because the administration says it is.

Wednesday, July 22, 2009

Earnings Season So Far

Here is my summary of what has happened in earnings for far:

  • Business is bad and everybody knows it

  • Expectations for earnings were very low

  • Appetite to own stocks was increasing as the rally off the March lows gave people hope again

  • Revenue was weak as expected in the Q, but no weaker than company managements had expected which led to

  • Almost every company beating the bottom line estimates

  • Stocks rallied 10 days in a row

I think that game, or phase of the game is over. As some dude on CNBC just mentioned, people are beginning to realize that expectations were low and so consequently the metal bar of what is better than expected is moving up. I still think we get one more sharp pullback before the year end rally so it just might start now. The futures are looking weak this morning. Or not. You know.

Wells Fargo and Morgan Stanley report today. The large financials continue to be the most controversial stories. Cn we rally without them, how bad is commercial real estate etc.?


I need to get out of here (my house). The kids had a sleepover last and there are way too many of them here right now. At least I survived last night.

Tuesday, July 21, 2009

Haves and Have Nots

Apple earnings tonight were very good. Almost as if we are not in a recession.

Yahoo and AMD on the other hand were not good at all.

In the words of Sam Malone's Sportscaster buddy, "There are winners and losers in this world. Let's hope you're one of them."


Wow. Original over here.

Fully Grown Python eating a Deer - BBC wildlife

Bernanke etc.

"Overall, the Federal Reserve has many effective tools to tighten monetary policy when the economic outlook requires us to do so. As my colleagues and I have stated, however, economic conditions are not likely to warrant tighter monetary policy for an extended period. We will calibrate the timing and pace of any future tightening, together with the mix of tools to best foster our dual objectives of maximum employment and price stability."

Ben Bernanke is proving himself to be a masterful politician. I'm sure you noticed that the above quote from today's WSJ doesn't really say anything. Bernanke is giving testimony at the Humphrey Hawkins hearings this week, starting today, and got in front of the pack by writing an OpEd piece for the Journal today, assuring everyone that he does have a plan.

It is working for now. Futures are up a little but the flood of earnings continues so that will change one way or another.


The market - U.S. equities - is up year to date. I'm going to keep writing that because it sure doesn't feel like it and it seems like nobody is talking about it.


Intel has the playbook. With growth very scarce, Intel has turned to managing its balance sheet. They announced last night that they will issue $1.5 billion in convertible bonds and use the proceeds principally to buy back stock. If you're a value investor you probably love this. Growth? Not much here.


Apple reports tonight. Odds are the they beat and give conservative (silly) guidance, the stock trades down for a week or so then makes another big move.

Monday, July 20, 2009

Today's Market

Important psychological level to make a new high for the year. Maybe important technically as well but that's not my forte.

I wish this tape could rally without oil but...

Expectations for Texas Instruments in minutes are very high.

A Thousand Words

Summer Fun

  • If companies continue to report better than expected earnings and everybody is on vacation, does it still count?
  • The risk appetite in this market has got to be back, if CIT was able to find a cohort to give it $3 billion
  • Oil was below $60 again. Now it's almost back to $65. Confusing
  • If I was Tom Watson, I'd feel good today, not bad. He almost made history at the British Open and set an example for athletes of all ages
  • India gives the U.S., Hillary Clinton and everyone else a big no thanks on carbon emission control

Futures are higher by a little on continued earnings optimism. As numbers come in better expectations continue to move up. Enjoy the tightrope.

Sunday, July 19, 2009

Frank McCourt

One of my favorites - books that is. Talking about Angela's Ashes...

Sad to see him go.

"Frank McCourt, Author of 'Angela's Ashes,' Dies at 78

Frank McCourt, a former New York City schoolteacher whoturned his miserable childhood in Limerick, Ireland, into aphenomenally popular, Pulitzer Prize-winning memoir,"Angela's Ashes," died on Sunday, his publisher said."

A Lot Can Happen in a Year

Why is that ---> man smiling?

From CNET:

"Microsoft founder Bill Gates says his company is working on technology that would make computing mouse-less.

Gates told C-NET that controlling your PC with the flick of a wrist or pointing as finger, as seen the in the sci-fi thriller “Minority Report”, could become a reality in about a year.."

I have no doubt that Microsoft is feverishly working on this. I would be very surprised if they, and not some upstart, figure it out.

Saturday, July 18, 2009

Tom Watson Making History

See that guy right there <---? He is old. 59 years old. And he is leading the British Open after 3 rounds. He has a chance to make history tomorrow and I'm all tingly. On a related note, I was at a restaurant having lunch with my boys, 10 and 11, today, and watching the golf. For some reason, I picked up my phone and texted a golf buddy "Tom Fu**ing Watson."

My 10 year old said, "Why did you send that text?" Me, "Did you see it?" Him, "Only the middle word. The one that started with an "f"."

My NJ Father of the Year title is in jeopardy.

Go Tom. One more round around par should do it.

This Works

I'm not sure whether it's cool or annoying.

In Praise of Intellectual Flexibility

What do the following folks have in common?

Meredith Whitney
Nassim Taleb
Nouriel Roubini
T. Boone Pickens
David Rosenberg

They have all created a very profitable niche for themselves in the institutional investment world while at the same time guaranteeing themselves the luxury of never (maybe) having to change their mind, their tune, their call. None of them have in recent memory.

You might say that Meredith Whitney turned bullish this week when she upgraded Goldman but she didn’t. She’s still very negative on the banks.

Boone Pickens was a rock star when oil was at $145. He thought it was going to $400 or something. He went fishing when it tanked and now is out raising money again.

I know there is way too much financial media in this country, especially of the TV variety. I also know that Nickelback and Linkin Park sell a lot of music even though most of their songs sound the same. Is our attention span so short that we get confused if someone is thoughtful enough to change his or her mind? Jon Joseph was a very good semiconductor analyst at Salomon Smith Barney when he made a huge, vocal downgrade (2001 maybe?) of the semiconductor industry, precisely at the peak of the cycle. He put the peak of the cycle into the stocks. After that he became a rock star semi analyst. I'm pretty sure he owns a vineyard now.

I'm listening. Have the guts to change.

Different Rules for Tiger Woods

I am not a Tiger hater. As a matter of fact, I'm a fan.

I am not a fan of the free pass he gets for acting like a baby when things aren't going his way.

On the Golf Channel, one of the announcers (Charlie Rymer?) was just talking about how when one of his kids slams his club after a bad shot, he pulls the kid off the golf course. I know it's ridiculous to compare 12 year old kids to one of the best golfers of all time, but Tiger's reaction when he misses a 15 foot putt is way over the top.

Of course Tiger or anyone else is allowed a reaction to a bad shot now and then, but bad shots happen to everyone. Missed putts too. Just go hit your next shot.

What is the Opposite of Progress? is reportedly un-publishing some eBooks.

"This morning, hundreds of Amazon Kindle owners awoke to discover that books by a certain famous author had mysteriously disappeared from their e-book readers. These were books that they had bought and paid for—thought they owned.

But no, apparently the publisher changed its mind about offering an electronic edition, and apparently Amazon, whose business lives and dies by publisher happiness, caved. It electronically deleted all books by this author from people’s Kindles and credited their accounts for the price."

I'm not a fan of Amazon the stock in here. Not even close. I have no game this morning so feel free to ignore that.

The Wall Street Journal has been Texting

This is a real headline in the WSJ online today:

"Chartists Heart Stocks Again"


Friday, July 17, 2009

Mark Cuban - One for the Good Guys

Mark Cuban is crazy in a good way. From the NY Times:

"A federal judge dealt a blow to the Securities and Exchange Commission on Friday when he dismissed its insider trading lawsuit against Mark Cuban, the controversial billionaire owner of the National Basketball Association’s Dallas Mavericks.

The S.E.C. asserted in a lawsuit in November that Mr. Cuban had sold shares of a Canadian Internet search company,, after receiving confidential information from its chief executive in a telephone call that the company was going to sell additional shares through a private offering in 2004."

Here's my take on the situation from memory, since it's Friday afternoon and I don't feel like researching it:

  1. Cuban, a rich and influential private investor and owner of the Dallas Mavs, (and the guy who made $3 billion by figuring out how to turn a $2,000 PC into a $5 radio) owned a ton of stock in, a public company
  2. Mamma's CEO called Cuban and told him that Mamma was going to sell stock in a dilutive private offering
  3. Cuban told the CEO not to sell stock, and to go to hell
  4. Cuban got off the phone and sold his stock
  5. Mamma did the deal, the stock went down and Cuban's sale was a good one (financially, maybe not legally)
The problem was that the info that the company was about to do a deal was material non-public information. The SEC went after Cuban and he has been very vocally defending himself in the press and online, a move that I'm sure had most defense attorneys squirming in their seats, including his.

This will probably go to appeals court where the decision will likely be upheld. Maybe the SEC should redeploy some of the folks they have chasing high profile, legit businessmen and have them at least try to get in front of the next Madoff.

Video Game Sales - Ouch

"Revenue from U.S. video game sales dropped 31 percent to $1.17 billion in June, compared with $1.7 billion a year earlier, according to data released Thursday by market research firm NPD Group."

CNET and others are quoting NPD data that are truly miserable and getting worse. And I think that expectations for the rest of the year are way too high.

Apple announced earlier this week that there have been 1.5 billion downloads from the iPhone app store. I don't own an iPhone so I went to the app store to check it out. It is mostly games as far as I can tell. There are just too many options for gaming these days.

Baltic Dry Index

Still sort of hopefully trying to move higher. It's hard to find good charts on this benchmark.


Wall Street Journal blog All Things Digital has the following update on the search also-rans' progress this morning:

"Unless there is some major glitch, there might finally be a search and online advertising deal struck between Yahoo and Microsoft at long last.

Top executives at Microsoft–including SVP of the Online Audience Business Group Yusuf Mehdi, search head Satya Nadella and top digital exec Qi Lu, as well as others–have all flown down to Silicon Valley from their Redmond, Wash., HQ today to iron out the remaining issues, which seem to have to do with the deployment of technology."

Google growth rate in the quarter reported last night was 4%, so this is hardly a market that is thriving right now. That being said, it does look as though Microsoft has nowhere left to go. The last few months of this story have been quite a yawner.


BofA, Citi ad GE all report this morning. Should be very quiet by noon


Obama was in NJ yesterday. I don't feel any different. Weird.


Thursday, July 16, 2009

Am I Annoying You?

A few things:

  1. IBM - I was wrong. Better than expected and the cash flow machine rolls on and kicked it into high gear.

  2. Google. You never know on the day they report. The shorts are working hard and the company is happy to low-ball. I think it was OK.

  3. Henry Paulson - I'm not saying he did a great job through the BofA thing. My question is who, and by who I mean what highly qualified, rich, smart person is going to take a pro bono government job after the amateurish skewering he took today.

  4. The British Open needs some bad weather, or at least some wind.

  5. I try not to be too political in here in case anybody actually reads this, but anybody who thinks the Obama health care overhaul as proposed - how we'll pay for it and what the fallout will be - is a good idea is an idiot.

Comcast Stinks Part III

Technology is supposed to be getting easier.

The TV in the kids' playroom is an important factor in keeping the wa of this household in line.

I have documented problems with Comcast before. We (my wife) recently changed/upgraded our cable package and for some reason ditched our Verizon land line for Comcast as part of the bargain. Another part of the bargain was them switching out the set top box in the play room to one with a DVR. That set top box (refurbished, not new) is a piece of junk and does not work.

At times, and we have only had it for three days:

  1. It will not turn off
  2. You can not change the channel
  3. Every channel is black and white (current, very popular status)
My wife spent some quality time on the phone with them today (that is a joke). A tech is going to grace us with his presence or Saturday morning, which is nice since I was looking forward to waiting by the door from 8:00 thru 12:00.
Happy Ending Edit: Comcast posted a comment to this post. I emailed them and they got right back to me. The tech showed up on time with a new box. All better now. Thanks Comcast.

Make it stop. This is a joke.

Twitter. Still Not So Much.

Just in case you are still curious about Twitter, or have doubts about whether it's the most useless craze out there, here is pro golfer Ian Poulter's latest tweet from the British Open.

I have nothing against Poulter, plaid pants or showboating. I hope I forget my Twitter password soon beacuase I keep going on there thinking I'll find something worthwhile.

Thursday Earnings etc.

  • JP Morgan numbers will be out soon and I'd bet they're going to be good
  • IDC data indicate that Apple Mac shipments in June were well ahead of estimates
  • BofA and Citi have secret deals with the government? On the Day Hank Paulson gets grilled? He is going under the bus
  • China's GDP grew 7.9% in the 2nd quarter. Better than expected and better than ours. They must have directed their stimulus money at actual stimulus

Google and IBM are reporting tonight. The shorts have been trying hard to spook investors on Google's quarter. It was probably good. On IBM, in an up market, even their good news usually isn't good enough.

I'm hearing that NOBODY (investors I mean) is at Semicon West, the semi equipment trade show that analysts actually attend. The rally can probably continue is chip equipment if people aren't over thinking it.

Futures are kind of flat. JP Morgan and Nokia will probably set the tone this morning.


JP Morgan is a beat top and bottom. Should be good enough.
Nokia - the quarter was OK but the margin guide down for the rest of the year is very disappointing. Nokia sells over 1.1 million phones per day but their high end offerings can't compete with RIMM and Apple.

Wednesday, July 15, 2009

CIT - I'm OK With This

It looks like the government is going to let commercial lender CIT fail. Of course the dust needs to settle but this seems just to me.

The argument in favor of more bailout funds for CIT was clearly that the companies that CIT lends to could go under and millions of jobs - CIT's customers' employees - could be lost.

I'm willing to bet that the last lenders standing are strong enough and broad enough to step in and pick up the slack.

We'll see how the market takes this.

Google Chrome

Call me a conspiracy theorist if you'd like.

I downloaded Google Chrome a few weeks ago and tried it out. It didn't seem much better than IE and required getting used to it and re inputting passwords etc. so I went back to IE.

Google Finance had an update (mostly layout-related as far as I can tell) recently and while I was using it - clicking on charts etc., my computer has crashed 4 times in the last 13 hours, and seven of those hours I was sleeping.

I just opened up Google Finance in Chrome and can't duplicate the crash for the life of me.

If Google and Microsoft are going to fight, why can't they do it in the trade press and leave me out of it?

Predictions Are Stupid

So I'll go ahead and predict the next 6 months for U.S. equities.

My view is that the ~40% bounce from March 9 through late May was due to the oversold state of the market and the fact that the deterioration in macro conditions finally started to decelerate. The second derivative is your friend sometimes.

The pause/correction over the last 6 - 8 weeks was both healthy and reflected the fact that folks who still wanted to get back in needed some leadership horses to bet on.

Ladies and gentlemen, I present Goldman Sachs and Intel, front and center, with much better than expected earnings. Financials and tech are supposed to be early cycle, leadership groups. Many of the financials are broken and can't lead, so it's a good thing we have Goldman. Intel is just coming off a cyclical bottom like its old self. A buddy at Morgan Stanley called the quarter "a classic early cycle in-your-face rebound quarter".

As an aside, you may have noticed that Goldman and Intel were much cheaper on Monday than people thought they were. Particularly people who said that the market was not all that cheap and therefore had no upside.

Here's what I think will happen. I think we get a short term rally based on new optimism and leadership, and then a meaningful correction between next week and labor day, designed to shake out all the folks who don't really want to be involved and piss off everybody with an ounce of optimism in their body. Finally, I expect an investable rally through year end with the S&P 500 ending the year up 20% or so, and lots of angry people on the sidelines.

That is all.


Google Finance changed their layout this week and my computer keeps crashing. Very frustrating. Not only do I crash but all my user names and passwords get erased.

Big Numbers

"The People’s Bank of China, the central bank, announced on Wednesday that foreign exchange reserves reached $2,132bn after rising by $177.9bn in April to June, including a record monthly build-up of $80.6bn in May."

That's a lot of money.


Joe Kernen is being an asshole this morning.

Tuesday, July 14, 2009

Intel Earnings

Much better than expected - revenues and margins. Very positive for tech.


Intel is not the tail that wags the dog. It's the dog in tech hardware with the biggest tail (and longest lead times) so it's a big deal when it's better or worse than real expectations.

It is also, however, very good at being cyclical. I'm still willing to bet that Intel's good results point definitively to a cyclical recovery in tech hardware, and are not necessarily a harbinger of global demand recovery. Might be happening but I wouldn't look to Intel for proof.

In general, you can buy Intel when global supply is recovering. It doesn't have as much to do with demand. Just a positive indicator and not even always that.

Drives, memory and flat panels should rip tomorrow.

I write bad today, I know.

For My Next Trick

Let's see what the market has up its sleeve to follow up the big performance of yesterday. Based on what I've read last night after the close and this morning, the most vocal bears have been the technical analysts and yesterday's pop really has them scratching their heads.

Futures are up here and foreign markets are up overseas boding well for the open, for now at least. There will be earnings reports between now and then.


Dell made cautious margin comments last night ahead of its analyst meeting today. Lower priced notebooks are another secular trend not in their favor, but in addition short term panel and memory prices are not cooperating at all. I'm not sure if the magnitude of the margin pressure is clear or how much it was expected. Merrill Lynch's early comments indicate that they had been expecting some.

I don't know whether the PC supply chain can shake this one off today.

Monday, July 13, 2009

Earnings Eve - Big Move

+185.16 (2.27%)

S&P 500
+21.92 (2.49%)


+37.18 (2.12%)

That looks to me like genuine optimism ahead of earnings, which begin in earnest tomorrow, or genuine short covering ahead of earnings. It raises the pressure on the earnings to actually be better, though.

At least SkiSteve, my buddy who kind of turned bullish but isn't really, will be smiling tonight. Until he goes back to worrying about revisiting the March lows. Nothing would surprise me.


Video game maker Take Two takes down numbers big time. The video game market is falling apart.

Quote of the Day

Former Intel CEO Andy Grove writes an OpEd piece in today's WSJ, comparing unfavorably the U.S. government's current role in "fixing" the auto industry, partially via direct investment, to the dismantling of the mainframe computer industry in the 80s and 90s. I'm sure you recall that the government stayed out of that one. The quote is pretty close in spirit to the quote from Machiavelli that follows. I'm sure Mr. Grove knows that.

"History shows that most companies do not deal well with transformation. One reason has to do with senior managers. They usually "don't get it." They have a difficult time accepting that the future will be vastly different from the present because they rose to power in the old business environment. They excelled in the old environment and didn't acquire skills necessary to operate in the new."

Andrew Grove, former Intel CEO


“Nothing is more difficult than to introduce a new order. Because the innovator has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new…”

Niccolo Machiavelli, 1532 AD
It's a good, quick read.

Tech This Week

Intel reports earnings Tuesday after the close and Google, IBM and Texas Instruments report Thursday evening, so things are getting rolling.

Dell's analyst meeting is today. I had been trying hard to get more positive on this name but their efforts have not come with the normal Dell-like execution. I'm waiting and seeing since the stock could be very cheap.

Sun shareholders vote on the Oracle offer on Thursday as well, in what should be a landslide. Who in their right mind wouldn't want that deal?

Away from tech, many of the biggest banks are also reporting this week, and are probably more important for the broad market, which according to many technicians is hovering at an important level.


If this is a hoax, then this weekend it was one of the most widely reported-on tech hoaxes an a while. A Chinese firm appears to have already produced a knockoff of Amazon's Kindle reader, which should create a ton of pricing pressure, in a good way for both consumers and adoption rates.

Sunday, July 12, 2009

There is Always a Bad Guy

Check out this white paper written by a firm called Themis Trading, which I had never heard of until today.

Apparently super fast computers and smart programmers are coming up with new and clever ways to get an edge on the stock market.

"This [the move away from the exchanges to electronic trading] has resulted in the proliferation of a new generation of very profitable, high-speed, computerized trading firms and methods that are causing retail and institutional investors to chase artificial prices. These high frequency traders make tiny amounts of money per share, on a huge volume of small trades, taking advantage of the fact that all listed stocks are now available for electronic trading, thanks to Reg NMS and the NYSE Hybrid. Now that it has become so profitable, according to Traders Magazine, more such firms are starting up, funded by hedge funds and private equity (only $10 million to $100 million is needed), and the exchanges and ECNs are courting their business."

It is worth reading if you're in the biz.

The Problem With Google

I've touched on this in the past. Here is an excellent summary of why we all should be concerned that Google may have too much information - on us. Lots of us.

I'm sure that this isn't the line of thinking that Google wants the U.S. antitrust folks adopting.