Cara's Commentary & Community Chat, Tues., Feb. 10, 2009

[7:43am ET] Interesting word, leadership. I have talked about it in the market; it’s been mentioned here a lot with respect to corporate CEO’s and politicians. Without leadership, all the work at planning, organizing, controlling and directing, go to waste. Wealth is lost. Spending serves one master, inflation.

But, insert a quality leader, and the army is able to march forward. Goals and objectives are accomplished. Wealth is built. Economic conditions stabilize.

Anyone who watched the one-hour first press conference of America’s new leader had to be impressed. The headlines today read,


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aucourant
aucourant
February 12, 2009 2:36 pm

Interesting article and discussion on Seeking Alpha of this company and its CEO Dr. Economu. I realized how ignorant I am in general in reading both the article–which almost had me convinced–and the discussion afterwords, which was very dissuasive. I went away with the feeling that it is the jockey, not the horse, that one should focus on, paraphrasing Bill. The article kept arguing that we should trust Dr. Economu to do what is in his own interest, even if there is reason to distrust him based on prior treatment of shareholders. Red Flag, Red Flag! In any event, it’s… Read more »

Grym
Grym
February 11, 2009 2:18 pm
Ron Sen
Ron Sen
February 11, 2009 11:43 am
swissrobinson
swissrobinson
February 11, 2009 11:02 am

Following remarks here vis-a-vis Geithner’s speech yesterday – took a look at it as well, thank you for the link. What I don’t fully understand is what unfreezing the credit markets will achieve? The US economy is consumption based and the consumer is tapped out. They cannot afford anymore borrowings. Combine that with enormous job losses, which will continue this year. Earnings will drop further or at best remain stagnant, because the consumer is not consuming. What, best case scenario is that people might be able to keep their houses – if they can pay the mortgage? (This suggests that… Read more »

David
David
February 11, 2009 6:09 am

are steadily but slowly rising during the initial hours of trading, which in the past led to a positive open the next day (and often a positive close as well).

Placing a buy to cover limit order at $39.50 for the 40 FAZ shares I shorted today at $49.50.

NYUGrad
NYUGrad
February 11, 2009 5:18 am

I really wished he made it all the way. I would have voted Ron. Or at least as Treasury Secretary.

http://tinyurl.com/dfjtqe

Mark Barry
Mark Barry
Reply to  NYUGrad
February 11, 2009 5:25 am

Hi NYU- I can’t figure out how to post web pages, but there was a curious piece in Bloomberg about China looking for “guarantees” from the US regarding treasures. I think the community would find it interesting.

NYUGrad
NYUGrad
Reply to  Mark Barry
February 11, 2009 5:39 am

Mark, copy the entire URL. got to http://www.tinyurl.com. paste the url into the box then click the button “Make tiny url” then use the url generated. Here is your Bloomberg article. http://tinyurl.com/blhvem There is even an easier way but a little more advanced. I don’t know your level of knowledge but you can also drag the tiny url application onto your favorites. So whenever you are on the webpage you want to make a tinyurl for, you click the favorite you dragged and it does it. that link & instructions can be found here: http://tinyurl.com/#toolbar Regarding that article; we should… Read more »

Chickenpookie
Chickenpookie
February 11, 2009 4:27 am

Damn, no details whatsoever, and to think I was expecting him to announce something progressive, like the abolition of the Fed….

tango6
tango6
February 11, 2009 4:17 am

This is an emotional CBC news broadcast but, despite the dramatic music (producer gone nuts) the story is well researched and explains part of the male bovine excreta — concerning the wall street scandal and insufferable Canadian smugness about being immune from the crisis.

http://www.cbc.ca/sunday/2009/01/010409_1.html

FranSix
FranSix
Reply to  tango6
February 11, 2009 4:36 am

I wish the morons at the CBC would do some investigative journalism on the market corner in oil. If anything affects the Canadian economy it will be sluggish oil prices. But Canada is still in the very beginning of the collapse of its housing bubble, so they have no meat on the bones of the story unless Canadians are out on the street.

A monthly chart of Toronto housing prices is available at Getting Technical.com. Its probably the only source:

http://www.gettingtechnical.com/01_home/index.shtml

Just getting started.

Illini
Illini
February 11, 2009 3:49 am

“I know this isn’t a board for mutual fund investors, but I’ll have you know, a close personal relative of mine is 2nd in command at a huge U.S. mutual, and all I can say is, people would be awestruck at the way their 401-k money and pension money is being mismanaged by these ego-monkeys. The dumbest person on here can out-think the average mutual fund manager.” Posted by: shark_attack [TypeKey Profile Page] at August 1, 2007 10:15 AM [link] Thanks Shark for the insight. I been crusin for pithy past posts and this is a good one. Keep it… Read more »

yaba
yaba
February 11, 2009 3:18 am

Vinod, DNDN Today 4.2million shares traded in the last hour. Looks like some are willing to take chance with this one. Keeping an eye on it as a pure speculative play. Thanks DNDN newSubmitted by vinod (308 comments) on Mon, 02/09/2009 – 21:57 #11001 Friend send me this Email DNDN -before April trial results are in. Gamble pure speculation high risk reward. Provenge is expected to have yearly sales of $1 BIL. If it’s approved, you can expect DNDN to trade in the $30s within 6 months. The company will not be DNDN for long after that, it will be… Read more »

vinod
vinod
Reply to  yaba
February 11, 2009 12:08 pm

yaba They announce yesterday Feb 10 (Reuters) – Dendreon Corp: * CEO says blinded new data from ongoing phase 3 study of provenge raise no red flags * CEO says blinded new data from ongoing phase 3 study appear on track to confirm positive results of earlier phase 3 study * CEO says pooled blinded survival data from placebo, provenge arms of new “impact” trial are similar to data seen at same 2-year mark in earlier “9901” study * CEO says trend boosts confidence that final data, to be unveiled in April, will replicate earlier positive results * CEO says… Read more »

Vadym Graifer
Vadym Graifer
Reply to  yaba
February 11, 2009 3:53 am

That spike was news-caused:

03:31pm [DNDN] CEO: Data from continuing Phase III study raised no red flags for Provenge, blinded new data seem to be on track to confirm results of earlier Phase III study

I got my quick 30 cents out of it, that’s how I know 🙂

jock
jock
February 11, 2009 3:17 am

Hard to understand what Gold Reserve’s game plan is. Maybe to keep their considerable cash, and look for greener fields outside Venezuela – to start over again? Because I can’t see how their court victory will lessen the resolve or ability of Chavez’ regime to combine the Brisas and Cristinas deposits and to mine them as one in conjunction with their chosen joint venture partner. I was also surprised that a low % of Gold Reserve shareholders tendered their shares. The company has been in Venezuela for 15 years. What do Gold Reserve shareholders have to show for it? The… Read more »

FranSix
FranSix
Reply to  jock
February 11, 2009 3:34 am

I would say that Rusoro offered shares instead of cash. This scuttled the deal from the outset. Its very possible that the Chavez regime will take umbrage that Rusoro can’t live up to its aggressive claims and turn around to offer a sweetheart deal to GORO.

jock
jock
Reply to  FranSix
February 11, 2009 6:38 am

Fransix –

I believe you are confusing Gold Resource (GORO) which explores with Mexico with Gold Reserve (GRZ) which has been developing in Venezuela.

Also, I doubt that Chavez would abandon Rusoro for GRZ in a fit of pique. Chavez has made major state-to-state commitments with Russia (indeed directly with Putin) jointly to develop resources in Venezuela including gold.

In Russian delegation to Venezuela, Polyus – Russia’s largest gold miner – was represented.

shark_attack
shark_attack
February 11, 2009 3:20 am

Since it isn’t a question of stocks going up or down based on anything but mass psychology, I see today’s action as being just a good healthy selloff based on the idea that our main economic problem (homes cost too much, large percentage participation in the market, not enough new buyers with the means coming along to pick up the slack, not to mention no one in their right mind would lend in such an environment even if they had money TO lend) came nowhere near being addressed. When mass psychology improves stocks will rise. Today happened because the markets… Read more »

Mackinaw
Mackinaw
Reply to  shark_attack
February 11, 2009 3:32 am

“Today happened because the markets (you and I) sent a simple message to Washington: …..Namely……….. “WE DON’T BELIEVE YOU”!” (or some 8-letter profanity) Nah. Markets sold off today because we are in a trading range and are likely to remain so until some good economic news lifts us to a breakout which will probably signal the start of a new multi-year bull market. Economy is not yet signalling lift-off time so Geithner’s speech is as good as the next thing to – what was that cute phrase CP used the other day, “smack the mole”? After all, we were at… Read more »

Dr. Strangelove
Dr. Strangelove
February 11, 2009 3:05 am

Geithner’s “stress test” implies to me that the Fed intends to limit TARP II funds to the big 3-5 banks to boost their balance sheets and allow M&A takeover of the regionals using new tax rules. Simply disqualify all the little guys while he doles out billions more to those ‘too big to fail’ using a one page test available on the net … I don’t trust the Fed and its deep capture representatives like Geithner. As an aside, anyone know silver consumption breakdown? Gold consumption is something like 70% jewelery mostly to India and this portion of gold’s market… Read more »

EDC
EDC
February 11, 2009 2:32 am

Let’s be reminded of the scale of the asset backed securities market. It is totally frozen and accounted for over 40% of the debt created over the past 8 years which is over 10 trillion. We know much of that is toxic and will never recover also since this is dead and the glint caught on to the scan it will never be 40% of debt creation. This is a problem because government and traditional banking cantmake up that 40% perpetually or increase concert 66% to make up the differwence. If that is kept in mind, how long can the… Read more »

FranSix
FranSix
February 11, 2009 2:19 am

Here is a market comment on trading the anticipated rally:

http://www.theglobeandmail.com/servlet/story/LAC.2

Vadym Graifer
Vadym Graifer
February 11, 2009 2:17 am

When you watch and trade the markets day by day, minute by minute for years, you develop kind of sense of sentiment behind the ticks. Now, it’s not always possible to tell the real market sentiment from the projection of one’s own impressions, so take it for what it’s worth – my personal sense of what happened today. If you noticed at the moment when Geithner’s speech started (and pieces poured out on wires), market hesitated for a few minutes. It went up first, not big but sharply, then stalled, spent about 5-7 minutes in contemplation, then selling started out… Read more »

Mackinaw
Mackinaw
February 11, 2009 2:15 am

One, bright-side, viewpoint of the placement of all the young GS-type bucks into positions of power (e.g. Carney, Geithner, et al.) is the fact that they ARE financial innovators and not all innovations are bad; especially in this complicated 21st Century investment environment. Take Securitization, and CDO’s – great idea! But, unregulated and poorly rated, they got all flabby, excessive, and damaging. I remember watching this video a while back thinking – what a great idea! If only they had stopped at Tranche 1:

Crisis Explained: http://www.youtube.com/watch?v=eb_R1-PqRrw

johojo
johojo
February 11, 2009 1:54 am

I don’t know why anyone who votes either Democrat or Republican would expect any real change from “business as usual”. The American people vote . . . the boondoggles continue, as usual.

Mark Barry
Mark Barry
February 11, 2009 1:06 am

OK 2nd, I’ll listen to it twice.

2nd_ave
2nd_ave
Reply to  Mark Barry
February 11, 2009 1:15 am

Mark- Rather than listen to it, try reading it:

http://tinyurl.com/ac5t8k

Some people just aren’t great speakers, and if Geithner’s voice cracked a couple of times, so what. On the other hand, people tend to write exactly what they mean, and the impact of their statements comes through clearly.

Mark Barry
Mark Barry
Reply to  2nd_ave
February 11, 2009 3:14 am

2nd- Read it twice and pondered….OK, the outline seems there and the concepts sound. However, this seems like a game plan that could have been worked out a couple of months ago and the details should have been presented today. At least that’s what I “thought” was promised. As a trader I will give your thoughts the weight they deserve.
Just a thought…If we replaced “banks” with “health care”, I wonder how different this statement will be from the one for health care reform?!
I like my position though for tomorrow. Still feel this was over sold.

Mackinaw
Mackinaw
Reply to  Mark Barry
February 11, 2009 3:45 am

“However, this seems like a game plan that could have been worked out a couple of months ago and the details should have been presented today.”

Let’s not forget that the Treasury, like any investor, does not want to be too early to make their move. How would it look if they took a huge position now and the market had a sudden sharp drawdown, say, on some unexpected news or data? A (short-term) failure of their “trade” might be an especially horrible blow to investor confidence. Patience, Mark, …

Mark Barry
Mark Barry
Reply to  Mackinaw
February 11, 2009 3:55 am

“Patience, Mark,..” Yep, you got me pegged! If I can over come this (life long) issue through trading discipline, my whole family will have to buy the community a beer. I’m just learning and value the input. I thought today was my best trading day overall. I let things come to me and although I got clipped for 2%, I feel I am in better position than this morning. BTW, no patience=high beta.

David
David
Reply to  2nd_ave
February 11, 2009 2:33 am
SiO2
SiO2
Reply to  David
February 11, 2009 2:52 am

Re. “The heart of this problem continues to be the need to restructure the payment obligations of borrowers. “ This seems a little over simplistic. That reason may be what triggered the collapse of derivatives casino that was built in recent years. Helping those homeowners pay their mortgages, by lowering their principal or reducing their interests, (or acquiring part of their residences?), will not solve the problems. Those houses should not have been built and now there is a very large oversupply. That cannot be fixed artificially IMO. What I am wondering is if the recent years of progress were… Read more »

Mackinaw
Mackinaw
Reply to  2nd_ave
February 11, 2009 2:39 am

Good link, 2nd_Ave. When I was listening to it, one statement, especially, caught my ear – an obviously necessary element for any public initiative to work: “We believe our policies must be designed to mobilize and leverage private capital, not to supplant or discourage private capital. When government investment is necessary, it should be replaced with private capital as soon as possible.” What, I wonder, are the traditional financial instruments available for this – ultimate – transfer of public investment to private hands? Warrants, Options, … [edit: an IPO of the “Great US Recovery Corporation” in a couple of years]… Read more »

Mackinaw
Mackinaw
February 11, 2009 12:48 am

Catching-up this evening with all the day’s action… Just listened to Geithner’s speech; trying to weigh it against today’s market action. Aside from his voice cracking a few times (nerves), I was fairly impressed. Essentially, he laid it all out there just as it is. Some might have interpreted today’s market action as a sign that he (and the new admin) has somehow failed. Pfft. I don’t see it that way. Today’s down is NOTHING. It barely trimmed off the gains of the last 5 days. Compared to action we’ve lived through Oct-Nov this is nuttin! If you weren’t positioned… Read more »

Mark Barry
Mark Barry
Reply to  Mackinaw
February 11, 2009 12:59 am

Mackinaw- I agree about the market. Seems over done to me. I took some profits early on some recent winners, re-bought more shares @ mid day, ( a little early) and held back some profits. Still took about a 2% hair cut but have increased shares in core holdings. Can’t agree about Geithner. The last thing I expected him to say was…”Hi, thank you all for coming. We have a big problem that is going to cost a ton of money, but we are working on it. Thank you.” Sorry, but this is the “Bigs”. I’m going to listen to… Read more »

2nd_ave
2nd_ave
Reply to  Mackinaw
February 11, 2009 12:56 am

Congratulations, Mackinaw. I see nothing in the media tonight that comes close to your point of view, yet your POV is the one that makes the most sense to me. Geithner didn’t blow it. In his own words: “We will have to adapt our program as conditions change. We will have to try things we’ve never tried before. We will make mistakes. We will go through periods in which things get worse and progress is uneven or interrupted.” And his guiding principles: “We will be guided by the principles of transparency and accountability, dedicated to the goals of restoring credit… Read more »

Mark Barry
Mark Barry
Reply to  2nd_ave
February 11, 2009 1:03 am

OK, I’ll listen to it twice!

kar
kar
February 11, 2009 12:19 am

I wonder how likely their real motivation is they don’t want any govt oversight that would prevent them from handing out whatever bonuses they want to. Hm-m-m.

Grym
Grym
February 10, 2009 11:48 pm

bigwad1, I totally agree. On CNBC’s “Fast Money” tonight (the only show I watch with the sound on except for when Rick Santelli speaks) The had a banker who manages $1billion. His bank needs/wants NO money from the government, along with the whole panel also agrees with your view. The bailout is focused on saving these few big banks as if the nation should revolve around them. We need to dump the trash, including those who led the country into this mire. Let other banks and bankers take over and move on. While all this attention is centered on these… Read more »

jack black
jack black
February 10, 2009 11:23 pm

How do you know selling is over? While I almost reached my targets for some of my shorts today, I am going to wait before buying. Another thought that occurred to me is that maybe the US equties will be locked into a trading range (say 800-1000 on SPX) for not only weeks but years to come. We had that for entire decade in 70’s with the Dow 1000 graveyard ceiling. I guess the ceiling can go up some with inflation and go down with deflation (now, the slant of the trading range is down due to deflation). That would… Read more »

2nd_ave
2nd_ave
Reply to  jack black
February 11, 2009 12:03 am

jack black/(David)- Apart from the intraday trades in the financials, I have maintained a core position in the sector since January 21, which is of course the day after they got trashed in what I still feel was a capitulation day. Now, as someone pointed out earlier, C at 3 can still go to 1. True. But it can also return to 50 in a few years, and I for one am not going to pass up the opportunity to say I bought it at 3. So I trade the financials every day, but I leave the core alone. I… Read more »

David
David
Reply to  2nd_ave
February 11, 2009 12:08 am

2nd_ave, it looks like your 80% position in FAS is a part of your “core” positions. Aren’t you concerned about the fact that FAS looses about 6-7% each month due to fluctuations? That would be a huge compounded loss after one year, which is a big “head wind” to fight. Why not keep a core position in FAZ short, and add money to it gradually as FAZ itself “melts away”?

2nd_ave
2nd_ave
Reply to  David
February 11, 2009 12:16 am

David- No worries. No ultra ETF will ever be part of my core holdings, thanks in great part to your pioneering comments on the subject. I’m just giving FAS a little room.

vinod
vinod
Reply to  2nd_ave
February 11, 2009 12:31 am

3X been around only couple month. We have knowledge what happens in bear market to these 3X. What happens in bull market to 3X like FAS/TNA/BGU is yet to be found out, rest is just a study?

David
David
Reply to  vinod
February 11, 2009 1:55 am

vinod, you already asked that question once, and I already replied to it. 🙂 I’ll repeat it again: if the underlying index rises P% in a month, the corresponding 3X ultra-long will rise about (3P-5)%.

EDC
EDC
Reply to  jack black
February 10, 2009 11:37 pm

70s was not the largest credit bubble in history, this is…. There is so much de-leveraging to go, it is sickening to realize or think about for that matter. Your targets might hold for the “short” term but over a middle period no chance. Call put ratio is still bullish at .88, not that, that is “the” indicator. Our problem that it be is “investors” are hopeful about something working. The truth is this; either time will heal this system, which no one wants to hear. Or the Major money center banks all need to file chp 7, go through… Read more »

EDC
EDC
February 10, 2009 11:15 pm

rusoro drops bid today.

Finger Lakes
Finger Lakes
February 10, 2009 11:10 pm

Tomorrow the 8 financial company CEO’s that received the most TARP money are testifying before the House Financial Services Committee. Hopefully they’ll broadcast it on the web as we only have rabbit ear TV here.

I’m pretty sure Ron Paul is on that committee. It would be great if he grilled them to no end and then announced his own plan to help the economy. I doubt if he’ll announce anything but it will be fun to see him make them squirm.

Rob.

NYUGrad
NYUGrad
Reply to  Finger Lakes
February 10, 2009 11:18 pm