Mini-Minyan Mailbag - Kevin Wassong - 3:28 PM
"Kevin-there is continued chatter regarding a Google-SunMicro alliance. I know you've talked about this but I was curious as to your thoughts. Thanks, Minyan T."
It makes sense. For Google (GOOG) to make a run at Microsoft (MSFT), they need an operating system and the server capacity. Remember, my theory on media is everything- and I mean everything--newspapers, magazines, comics, books, programs, games, etc. etc. etc. WILL BE CENTRALLY SERVED.
Welcome to Servers R' Us! Sun Micro (SUNW) and Google would be a kick-ass combo. Put them together with Comcast (CMCSA) and now you have a trifecta! Content management with content storage with content delivery. Now all they need is killer content.
Hmm....lemme see....Minyanville anyone?
position in sunw, Minyanville
Say What? - Kevin Depew - 3:16 PM
A look at commentary, opinion and analysis from around the world:
- With news the past couple of days of a Sino-Indian energy pact, the Asia Times takes a look at Japan's new energy strategy.
- Remember all that talk about the inversion of the yield curve? The Wharton School says don't sweat it. "No one really knows what it means."
Flip the script - Kevin Depew - 2:51 PM
As we near the conclusion of contra-hour, the markets have done their best to wake up a bit with the BKX (minus help from Citigroup (C) and JP Morgan (JPM)) exploring the upside. Energy (Natural Gas excluded, naturally, as it's down 1.7%) remains firm. Semis are off their worst levels of the day, now down less than 1%.
Minyan D pinged me earlier that in his view the VXN "breakout" is most likely due to earnings next week. Certainly a possibility, I told him, and while it's noteworthy, unless I get the necessary turndown in the percent of stocks above their 50-day moving average indicator or, stock specifically, a combination of DeMark or PnF sell signals in individual positions, I have no basis for action in my select tech longs.
Flashback! - Bill Meehan - 2:30 PM
Friday the 13th is spooky, and Jan 14 is just a better day all around, so I'm gonna look at that day because, well because I can.
Jan 14 in market history...
- Closing levels 25 years ago found
o DJIA: 966.47
o S&P 500: 133.47
o Naz: 199.08
o Gold: 556.50
o Me: 7lbs 15oz
Jan 14 in Minyanville history...
- In '05, Macke shared his infinite wisdom with TiVo in TiVo: The Problems and Their Solutions
In other Jan 14 news...
- In 1954, Marilyn Monroe and Joltin' Joe DiMaggio got hitched.
Thank you all for the birthday wishes. All I ask for is a solid performance from UK tomorrow to give me the slightest glimmer of hope for the season, but that seems doubtful. Have a great long weekend!
Launching pad - Greg Weldon - 2:21 PM
The technical landscape in Gold has changed rather dramatically, thanks to the intensified rhetoric surrounding Iran and their rebellious nuclear program.
- Note the upside leadership in Gold versus Silver.
- Note the dramatic tightening in COMEX spreads, which are reversing violently from new lows.
- Note the upside leadership in Gold versus the S+P 500.
- Note the upside explosion in US fixed-income.
- Note Crude Oil above $66. More so, note the spike
higher in NYMEX Calendar Spreads in energy.
BUT, we also note a BROAD based rally in commodities too. We remain bullish on bullion, and we specifically note the lift-off taking place in Gold versus a variety of currencies. Indeed, we are observing a potentially bullish upside resolution to our own famed 'Launching Pad Pattern', which is evident via a myriad of currencies.
See today's Mini-Metal Monitor for a unique chart perspective on this important macro-secular development.
Mini-Minyan Mailbag - Todd Harrison - 1:44 PM
"Hey Toddo-- I was pretty heavy into a lot of the energy names in 2004 and early 2005. I tried to get a little cute and sold most of my exposure in April with the idea of getting back in in August or September. I made great money on them. I believe/d in the long-term thesis of higher energy prices. But I haven't been able to get back in.
What do you do in situations like this? Here I sit, a firm believer in the whole inflation/falling dollar/higher commodity prices/peak oil dynamic with virtually nothing on in the energy space because I'm too chicken to go back in. Any feedback would be great. Thanks." Minyan Mike
A few thoughts:
Don't ever beat yourself up if you rang the register--just learn from the experience and better your process.
If you're stressing about a particular situation, make sure that emotion isn't a primary motivation for trading.
Trailing stops can sometimes help to keep positions on the sheets.
Trading "in between" (read: initiating partial positions) may remove that heavy burden.
Opportunities are made up easier than losses.
Thanks cookie--good luck.
position in energy
Globalize - Sanjay Somaney - 1:33 PM
Sify Ltd (SIFY) has announced plans to enter into neighboring countries like Sri Lanka, Bangladesh and Indonesia to set up its cyber cafes. These countries have a lower internet subscriber base than India's and the need for internet cafe is pretty big.
Sify is looking at ways at goosing growth and is also targeting the 62 million cable and tv homes as a way to goose growth as well since the relative lack of enough PC and broadband access is limiting internet user growth. By using these cable and television homes, SIFY could goose its growth pretty significantly.
The company is exploring joint ventures with Indian TV and cable access providers. I expect an announcement fairly soon.
This information has not been widely disseminated.
Position in sify
Don't you find it odd that....... - Bennet Sedacca - 12:53 PM
Despite the rally in Treasuries today on the weak core PPI numbers and lower than expected retail sales, REIT's are getting hammered across the board. And I mean HAMMERED, to the tune of 2% or so. Just take a look at iShares Dow Jones US Real Estate (IYR).
There are 82 components that comprise the underlying index, the Dow Jones REIT Index. Just how broad is the selling? 79 stocks are down, 1 is unchanged and just 2 are up. Now that is broad selling.
This is surprising action to me as REIT's and bonds are usually positively correlated. I believe this is very important to monitor as it may reflect investor's concerns about the strength of the consumer and economy as a whole.
That debt is simply outstanding! - Vitaliy Katsenelson - 12:05 PM
I have to agree with Dr. Fil. I owned NCO Group (NCOG), a collection agency that also buys portfolios, in 2004 as a hedge against rising defaults by an over extended consumer. Though the volume of work increased over time, confirming my thesis, the collectibility has declined dramatically and that was in the environment where consumers were able to borrow from their home equity to pay off their debts.
We got out of NCOG sometime in October 2005 (which worked out well as a the stock went on a downward spiral thereafter) because we were concerned the collectibility will only get worse as home equity gets depleted and housing prices decline.
Regarding Portfolio Recovery Assoc. (PRAA), I looked at the stock, talked to the company and shared my NCOG observations. Management's response was that it was NCOG's specific issue - I did not buy that argument. Also, accounting in this segment is very difficult to follow and it is subject to a very high degree of management assumptions.
"That toy is waaay to expensive! . . .But daddy!! you can just put it on your card and it does not cost you any money, don't you understand that?!!" (An un-named member of the Zucchi family) - Fil Zucchi - 11:33 AM
Incidentally, my long standing Booish-ness toward collection agencies such as Portfolio Recovery Assoc. (PRAA), spies an added catalyst for problems in the emerging mortgage troubles. As stretched consumers retrench in order to pay their mortgages, payment on unsecured debt will slip further down the food chain, and I suspect collections will suffer. Add rising receivable prices (as banks adjust to letting Trustees do the collection for them, instead of selling loan pools on the cheap) and you are likely to see margins getting hurt.
PRAA stock has jumped since the company announced that it was borrowing more money to buy more loan pools. Does this increase the possibility that EPS might surprise on the upside? Maybe. But it won't be able to mask falling margins on such loans, and the already slowing organic growth rate. In other words, PRAA is joining the universal m.o. of taking on incrementally higher risks for the expected returns.
Position in PRAA
'm leaving today. - Jeff Macke - 10:35 AM
I age three weeks for every day I spend in New York City. Four weeks for each of those days I spend with Todd-O. That puts me in about Mid-April as I get ready to head home this afternoon.
I mention this glitch in the space-time continuum to offer a Gentleman's Exit to the Prudential analyst looking for a Radioshack (RSH) turnaround in '06. While it may look to me as though Radioshack only very recently realized that their last turnaround was a failure, perhaps Prudential is analyzing the stock at the tail end of their own long trip to NYC (making it feel as though it's 2050, when Radioshack may again be a growth company).
On a totally unrelated point, does anyone else remember the naughty librarian in Adam Ant's "Goody Two Shoes" video? I've been thinking (fondly) of her all morning for some reason...
Mini-Minyan Mailbag - John Succo - 10:07 AM
My friend owns a small mortgage brokerage. Many of his loans go through Lehman Brothers. Today, a rep from Lehman met with him and told him that they were raising rates on second mortgages. This is esentially the riskiest part of the mortgage because it gets paid last in the event of default. My friend asked why the other companies didn't raise the rates. The Lehman rep said that Lehman was closest to the securitization market, so they are acting first, but the other companies will be sure to follow in the next few weeks. Is there potential for a LTCM type event based on this?
I think this is a real world example of how this can become a vicious cycle. Prices go down, and as a result banks become tighter, making it harder to buy a home causing prices to go down even more ... do you think that they are already experiencing higher defaults, and therefore raising the rate or is it just the fear of higher defaults?
Yes, this is the beginning of the credit contraction, when participants begin to attempt to "lower" their risk. My guess is that they are already experiencing higher defaults-personal bankruptcies have spiked. This has to be bad for regional banks-just too many headwinds at this point. Even if there are no blow-ups, other than on the spread they are making on deposits, I don't see how they are making money in this environment (flat yield curve).
This is an example of a deflationary force. These forces are desperately being fought by the government through extremely loose monetary (even though the Fed is being forced to raise short term rates by our foreign lenders, they remain extremely easy by printing money and monetizing long debt) and fiscal (government spending remains through the roof and we will see it get worse) policy.
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