Randoms: The Path of Maximum Frustration
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While I was a last second Sally on my S&P put addition into yesterday's bell, I booked that trade into the morning’s meltage given I’m trading with a scalpel not a sword.
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I continue to believe we'll soon ski down the other side of the "W' but discipline trumps conviction in environments like this.
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The headline that jumped out and bit me when I strapped into my turret this morning? Investors turn bullish on U.S. stocks for the first time since 2007.
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Does that psychology need to shift for us to traverse the Widow Peak?
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Yep, and it can take many forms. For instance, the NY Times ran a front page story today highlighting the insolvency date for social security and medicare is closer than previously anticipated. Not a shocker to Minyans, I know, but perhaps a wake up call for the mainstream?
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Seeing both sides (always), the drugs act well, as do consumer non-durables and select semis (Intel (INTC), Texas Instruments (TXN), Advanced Micro (AMD)) on the heels of the overnight news). The Matador Crowd will (correctly) note that stocks (sectors) that don't go down in a hard flush have underlying demand. -
Salmon vs. the Stream? I'm keeping a very tight risk leash on any "buy to sell" exposure vs. (the entirely more consistent) "short to cover" approach I recently shifted towards. Those trades are discussed in real-time on the Buzz & Banter.
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This face for radio will be on Nightly Business Report's "Street Critique" tonight on PBS.
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Minyans helping Minyans! If there's a NYC area senior technology analyst looking to hang their hat with one of the industry's best and brightest, gimme a ping and I'll do what I can.
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Is DJ Jazzy Jeff a modern day urban Art Garfunkel?
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I finally got in touch with my inner-Bauerism last night on DVR. Gotta love Jack, man—we need more people like him, folks that care and are willing the get their fingernails dirty making the world a better place. True story.
A Little Minyan Mailbag Action:
Toddo,
We own a private pawn shop company (about 50 stores) and loan demand in April was massive—the first 12 days of May has been like nothing we've seen. The stress in the system for lower income folks has not abated. In fact, it looks to have increased. The recent rally was "bank and government led" and has not made its way down the food chain. It’s way too early to celebrate, as many in Minyanville have offered. Just a data point from the front lines. Thanks for all you do.
Minyan Name Withheld.
Another Mailbag:
Todd,
I noticed the Pawn Shop Buzz and wanted to throw something similar at you. I work for a construction firm leveraged to the private commercial segment of the market. We have witnessed a massive evaporation in work over the last 6+ months. Without getting into too much proprietary information, we have for all intents and purposes hit a wall. There is little to no work in the private sector and we're bidding public jobs that we normally wouldn’t consider. In my two decades in this industry I have never experienced anything like it. 
I was chatting with my boss this AM and he stated that he had to laugh when he and his wife were watching the news yesterday and there was commentary of the recession being over or near over. Just a flavor for what is happening here in the real economy,
Minyan NW
Good luck, Minyans, and let's be careful out there.
R.P.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
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Was never that good at math, so if someone else wants to figure this out, I'd be grateful to hear the results.
Thanks.
Looks like the "greatest fools" have arrived on schedule and just in time for the Big Boys to unload their holdings. Got to recapitalize the banks somehow, I guess, and sure as can be Congress won't fork over the cash.
Since the Little People are now entering the market the supply of "greater fools" will soon enough be exhausted. They will have to be teased into buying. I don't know what this will bring.
Only The Joker knows. Some call him Mr. Market.
I can't see why GM stock isn't about twenty cents. The stock value coming out of bankruptcy depends completely on how the bankruptcy goes.
There may be a clique operating on "special" knowledge. Looks like it.
The UAW holdings, post bankruptcy, will be sold off as soon as possible, almost certainly. For this reason there may be an arrangement in place to keep the stock price high until the UAW is done selling. The same sort of arrangement (bank "stress testing") has made it possible for the money center banks to unload their new issues at very unrealistic high prices.
To paraphrase Warren Buffet, don't buy what you do not understand. My analysis is just my opinion, of course. Just guesswork.
I keep my ear to the ground, and word is that companies who usually pay for scrap metal aren't taking it. Gun sales are still through the roof, with battle rifles and high capacity sidearms hard to fine, and ammunition even harder to find. The foodbanks in my State are depleted, and they are campaining for more.
I still see other telltale signs of hard times; basements up for rent, cars for sale in the driveway, case lot sales very well received, and the timbre of advertisements somewhat desperate.
My insurance company raised my premium 50% then applied "discounts" so it was "only" up 25%. To me that means they need capital just as badly as the banks. I had earthquake insurance and it went from $310 a year to $884 a year; there response was that "The government required it". Really? My response was to cancel the earthquake endorsement. Why should I take the risk, when the government has already passed that risk onto me for bailing out the banks? FEMA can cover it, or they can have the house. Really now, do they expect me to be a sucker for another 20 years?
Cheers Todd - keep up the good work,
Eric
Not sure about the options markets, as you say, but as I understand it, only about 20% of the bondholders, tops, have CDS's. Don't the rest stand to lose nearly everything in bankruptcy? So as you say, in any other scenario, $.20 per share is probably a generous estimate of what they're worth.
Anyway, even if everything I've suggested makes no sense at all, it'll be fun to see if anyone comes up with some other workable plan besides the bankruptcy road they're on now.
Disclosure? For a lark, I bought about $100 worth of June GM calls a couple weeks ago, which is why I'm even interested at all. But no, as an average investor, I agree with you and probably wouldn't buy the stock at all.
