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Worst part of SJ news? Astronauts galore.../eom
What position? Haven't had one in AAPL for awhile now... I might trade it short/intermediate term at this point if it craters to 60s, or sell puts to that effect, but not going to hold shares long term until more is known... didn't like what happened the last time Steve wasn't at AAPL and have always planned to be out completely and perhaps forever if/when the time came that he leaves/left again for whatever reason.
This is going to be tough on AAPL at a critical time, IMO... these "challenging" types of times are when Steve typically pulled some chestnut out of the fire that radically helped AAPL in the long run when things became less "challenged" in the market.
Perversely, if/when Steve leaves for good, it might create a short term product-buying frenzy on fears of a slow decline in all respects from that point on... would love to see some insanely great person step up to the challenge of replacing (successfully) a legend like Steve, but those kind of folks are quite rare -- but if anyone could attract such a person, it would be Steve himself (Scully notwithstanding)...
Jim
roni: (Arkansas? Alabama? Southern Missouri?) Bleh! Remember I lived 70 miles east of Memphis for 8 years (that seemed like 108 years) and finally fled -- living is indeed cheap in the midsouth, but the climate sucks big time and one reason it's cheap is there are virtually no public services or access to good healthcare unless you have muy mucho bux...
I guess if that Russian pundit is correct, SoCal will be annexed into Mexico later this year (after the US splits into 4-5 fiefdoms) and I won't have to move at all...
Jim
roni: (the many small pots and we won't starve retirement plan) -- yes, the ultimate diversification... I guess between the two of us (the iWife and me) we have a lot of different pots, too... only clouds on the horizon I suppose is that all of them seem to be in jeopardy of some sort if the economy doesn't improve significantly in 5-10 years; and/or the iWife boots me out of the cardboard box to fend for myself if I become a financial anchor in retirement...
I guess I should start being nicer to her
I wish they spoke French on the Yucatan... I don't see myself becoming fluent in spanish after retirement -- after 20-some years in San Diego, I know just enough spanish to get myself shot... actually, though, because of the similarities, I can usually read spanish well enough to get by, it's the talking part that would do me in...
Know any place cheap to retire where they speeeeeeeak French (or English)???
Jim
A fast deflating bond bubble?
Posted by Neil Hume on Jan 07 17:20.
Here’s some bad news for all those governments around the world looking to raise large amounts of cash to pay for their stimulus programmes.
From FT.com, Wednesday.
Investors shunned one of the most liquid and safest assets in the world on Wednesday as a German bond auction failed in a warning for governments seeking to raise record amounts of debt to stimulate their slowing economies. It is the first eurozone bond auction of the year and an ominous sign of potential trouble ahead for governments around the world, with an estimated $3,000bn expected to be issued in sovereign debt this year — three times more than in 2008.
The auction of 10-year bonds failed to attract enough bids to reach the €6bn the government wanted to raise. Although a number of German bond auctions failed last year, it was almost unheard of before the credit crisis.
Meyrick Chapman, a fixed-income strategist at UBS, said: “When a German bond auction fails, then that does suggest there is trouble ahead for governments wanting to raise money in the debt markets.
“There was certainly a supply/demand imbalance because of the large amount of issuance in the last quarter of 2008 and the large amount due in the coming months. Before the financial crisis, German bond auctions just did not fail.”
In fact, the timing of this failed bond auction is far from ideal. US Treasuries have been in under pressure in recent days partly because a glut of new issuance is about to hit the market. A total of $166bn in fact, this week.
All of which may explain why the yield on the 10-year US Treasury rose on Wednesday, in spite of dismal US job numbers rekindling deflation fears elsewhere. For the record, the yield on the 10-year note is currently above 2.5%, against 2.46% late on Tuesday.
Perhaps the bond bubble is starting to deflate.
For a more in-depth take on the bond market bubble, this morning’s analysis piece in the FT, Onerous issuance, is well worth a read.
What's a pension? What is retirement?
...
OK, my brother retired early (twice now and he's still in his 50s) and gets a decent pension after 30-some years at UPS... but he's looking to unretire again... my father gets a pension after 37 years @ what is now IP, but it is less than half my modest salary and they will likely yank his medical benefits any day... and then there's the iWife who's been teaching for over 30 years and gets rosy predictions of what her pension will pay at X age... this has her thinking of retiring in 1-5 years... I gently try to point out to her that CalSTRS (not as big as CalPERS, but still pretty freaking big) has been hit hard lately and those rosy projections will likely be slashed at some point...
As for me, I've never worked anyplace that even offered a pension, only meager 401k matches with terrible mutual fund options to invest in... in some ways, I think I'm better off than all of my family with pensions... I've known for over 3 decades that I couldn't count on SS and would have to fund my own retirement... and that I could easily beat most mutual fund performance in the open market via self-directed IRAs and Keoghs...
My latest lesson learned (from my father) is that traditional IRAs are NOT such a hot deal because of the min. distribution rules, etc... Roths are the ONLY good retirement plan out there...
It's hard for me to tell which is worse: to rely on a pension or on SS for retirement... but then I see my no-good brother-in-law who hasn't ever worked enough in his miserable life to even qualify for SS... his retirement plan is my sister working 2 jobs forever...
/rant
Jim
OT: recommendation needed... we have a law in Cal. that one can only use handsfree when making/taking cell calls... the iWife wants a bluetooth device to enable her to comply, but detests the in-ear bluetooth headsets.
Does anyone here have any experience with bluetooth visor-clip/dash mount speaker devices?
Any recommendations?
TIA,
Jim
Blue: that last point is a good one... 11 years ago or so, AAPL was "beleaguered" when SJ returned to the helm... now it is the most actively traded stock on the NAZ day in and day out... when the most actively traded stock on the NAZ wants to schedule a media event, you can be sure the media will be there...
AAPL is in a completely different universe today compared to when SJ returned.
Jim
Or the USD might end up as part of a carry trade in the future, instead of, or in addition to the yen.
Jim
He should have been more stealthy and used sneakers.../eom
OT: apparently that is one of the worst insults in that culture. A few thousand are "demonstrating" to have the guy released from detention. Of course, that's never gonna happen.
Jim
OT: tomm... I didn't notice X in your previous post... most steel cos. were up 20% alone yesterday... nice trade... I'm mostly trading SDS these days.
Jim
OT: tomm, the idea was/is good... maybe just a bit early... have to see if infrastructure stimulus actually passes -- perhaps the time to begin nibbling would be right before any public debate on the plan... as it is, that won't be until late Jan. at the absolute earliest and nobody seems to look beyond 5 sessions out these days when it comes to the markets.
Jim
OT: yes, and I may be wrong about the violence mostly near the US border as I read about 11 killed in Acapulco in running gun battles yesterday... including one soldier...
Part of the problem is also the loss of income sent back to Mexico from people in the US... was 2nd largest source of money (behind oil) for Mexico, but the US financial meltdown meant a lot of people who'd been sending money home to Mexico are no longer employed and many have moved back, according to local news reports.
Jim
OT: over 700 killed last month alone in Mexico's drug wars... more than were killed in Iraq, Afghanistan and India combined for the month... more than the 400 killed in Nigeria last month
Here in San Diego, every weekend the headlines carry the body count in Baja -- reminded me of Vietnam's nightly body count on the news.
And, as someone else posted, even Mexican citizens do not go there if they don't have to -- we have 3 eng/techs who commute from TJ, but they are renting a place for "awhile" on this side of the border for now.
But, 90% of the violence is withing 60 miles of the US border... the tourist places further south (like Cabo, for example) are not seeing the same violence -- need those tourist dollars... and closer to the border, Rosarito Beach now has 200 extra federal troops to patrol the beach area as the usually popular tourist spot just 30-40 miles south of San Diego had become a ghost town of late.
Jim
tomm: and remember the NY fed head is going to be our new Tsy. Sec.
I always find it interesting to see what the "official" spin is on things like predicting the economy 12 mos. out.
Jim
tomm: just stumbled on this "right from the horse's mouth":
Think you'll find this interesting:
http://www.newyorkfed.org/research/capital_markets/Prob_Rec.pdf
Shows the NY Fed's prediction on bond yields and recession probabilities 12 mos. out into the future.
Thanks to M Paquette for the link.
Jim
That's the funniest thing I've read in a long time:
"I am going to keep XP on it, since X doesn't it cut it anymore.."
I live in XP Pro all day at work on a Dell.
It is always a relief to get home and use OSX... shoot even the old machine running Tiger is way better.
I wish I had a buck for all the times XP forces me to "work around" obstacles, problems and even crashes. At least 1-3 times a day, I have to use Task Manager to end tasks (usually Office related)... doing same things in Office at home? No problemo. Haven't had to reboot my main mac at home (except for SW updates) in... I can't remember when... literally can't remember the last time OSX crashed or any apps crashed running on it.
I am curious as to what you think XP does better than OSX.
Jim
tomm: I remember when you posted that you were in bonds -- much earlier than many... the risk/reward is too high for me now, so I am mostly watching things, sitting on cash and a few small energy positions, as well as a bit of CEF and a stub AAPL position to keep me focused... but cash is my largest position by far -- hope to deploy it in time if/when we see flip to high inflation.
Jim
And a rebuttal to inflationist/deflationist outcomes:
Hey Greg, did "inflate or die" work in Japan? They had 0% interest, free money also. It didn't quite work out over there.
The two scenarios you're painting are too extreme. I don't think the inflation vs deflation argument is so black or white. There is a lot of gray in the middle. And you didn't go into the details of HOW the fed will inflate. Yes, the details of how the fed will inflate will determine the end results of the inflation. Are we talking about dropping money from helicopters Uncle Ben style? Or are we talking about the fed operating within the existing open market operations framework. The former will create hyperinflation. The latter will not. Hyperinflation will fail with 100% certainty.
How about the following scenario:
The fed injects massive amounts of money into the system by buying:
1. Long term 10- and 30- year bonds in order to drive down the yield. That has to be done because mortgage rates are indexed to the 10 year treasury notes.
2. Massive amounts of stocks openly in the stock market. Not just the preferred shares from AIG or BAC that are not publicly traded. I'm talking about Plunge Protection Team style buying of common stocks on NYSE and NASDAQ to prop up the stock markets.
3. Commercial paper and holding it indefinitely. In essence, lending money directly to businesses. Not just commercial banks that have direct access to the discount window.
4. Mortgage, Credit Card, Auto, based securities. Anything that has been turned into a security the fed buys it and then holds it.
All this money is created out of thin air by the way. It's all just numbers on the computer screen these days. No printing press needed.
That's a lot of inflation. And I think that will work in propping up the financial system and prevent it from collapsing. But will that turn the economy around? Inflation within the existing financial framework is a form of TRICKLE DOWN ECONOMICS. You're making the banking system stable from the top. And you've succeeded. But for the benefits to trickle down, the average american needs to spend his hard earned money in order to create economic activity.
Here is where we differ. You think that because you have inflated, economic activity will rebound. People will go out and buy a new iPhone every year even though they already have 5 older model but perfectly working cell phones. People will also start eating out at restaurants more often even though they're overweight. People will also buy new cars even though there are over 250 million cars out there on the road. Oh last but not least, people will also continue to put money in the stock market even though they're near retirement age and need the money within the next 5 years (baby boomers).
Our total credit card debt is about 2.5 trillion the last time I saw the numbers. Going into debt by buying stuff we don't need and overeating at restaurants are the reasons why we're in this mess. That debt is not going away unless you want the federal reserve to hand out money directly to the American people from street corners (hyperinflation). How about the letting the American people save some money and slowly pay off their credit cards?
Old people tend not to buy useless things they don't need. And we have a lot of baby boomer getting old and not spending money to buy useless things. The Bank of Japan failed to get grandpa and grandma to go shopping at the mall. Did they succeed? You know the answer.
george orwell
Outcomes for deflationists and inflationists... interesting macro thoughts from an energy analyst/blogger named gregor:
http://gregor.us/debt/
Outcomes for Deflationists and Inflationists
December 2, 2008
Although Gregor.us is ostensibly an energy blog I sometimes feel the need to tackle macro issues. Over the past few weeks I’ve been trying to focus my thoughts on our current moment, where we find that deflationary pressures are rampant but reflationary policies globally are of a historic magnitude. What follows is my attempt to take the two outcomes through, to their most obvious conclusions.
Deflationists
If you believe deflation will take hold, and no amount of monetary policy or fiscal policy globally can prevent it, then prepare for the collapse of the US financial system for the following reason: there will not be enough economic activity to support the asset base of the key banks and financial institutions. Operations of the kind that took place last week with Citigroup would occur on a weekly basis. In such an environment, even the good debtors will lose their jobs, run down savings, or walk away from their homes. The FED will respond with more printing of money to give to the banks, but this frankly becomes nationalisation and then the government will mediate the aggregate private debt by forgiving most of it: all the mortgages, credit cards and commercial loans. It will become painfully clear that no future economic activity will take place unless 90% of the previous debt is forgiven.
Bottom line: in deflation there will be no condition present that will allow Americans to increase their savings, pay down debts, and repair balance sheets. In deflation, the repair model simply will not happen. It will be a collapse. And the government will also default on its debt.
Infllationists
If you believe inflation takes hold and/or deflation never takes hold, then there is a chance that enough growth can take place while the debt is reduced by inflation that would allow Americans to keep working and devote capital to pay down debts with weaker dollars. But, even with inflation, there is only a chance that this happens. But, it’s a decent chance.
Bottom line: it’s crucial that the USD weaken substantially so that purchasing power is reduced to inhibit consumption of foreign goods, while at the same time earnings inflate via wage growth and proceeds are used to reduce debt. The sign that reflation is taking hold would be a weakening of the USD, a rise in the stock market, and a good uptick in demand for money which would initially take place on a landscape of very low interest rates.
The Surprise
Thus, we arrive at the conundrum that I don’t think the deflationists have figure out yet. They are at present busily cheering on the rally in Treasuries, as yields plummet, only happy to have their thesis (apparently) confirmed. What they have not figured out yet, and I am unclear why, is that deflation will detonate the private banking system, which will in turn detonate the US ability to rollover its own debt. The government will own the banks, but, will not have enough tax revenues to service its debt. Treasury auctions will fail, because supply will either be too large, or, the FED will be monetizing the auctions. There will simply not be enough buyers of US debt under those conditions.
The surprise is therefore counter-intuitive: US Treasury bonds will default eventually if deflation takes hold, but, if inflation takes hold US Treasury bonds will simply go into a bad bear market–they’ll be paid off but with cheaper dollars.
For the United States, a nation of debtors not savers, no truer words were ever spoken: inflate or die.
Too much fog... can't see the top of the house...
So, apparently I am not alone: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=33774073
OT: I'm seeing IT bottom in oil... but also seeing increased chances of visiting $30s after a ST/IT rally to $60s, maybe 70s...
NG is going to get a weather boost for a month (against a backdrop of 150 bcf less in storage than last year despite 8% increase in production this year -- even including 350bcf lost production from GoM because of hurricanes)... the bottom drops out of NG in spring...
This is counter to my feeling a couple years ago that we'd be in deep doodoo wrt NG... I did not account for multi-frac'ing technology and adoption of horizontal drilling on land to successfully exploit the tight shale plays... however, those plays are expensive to drill and deplete quickly... my long-term thesis is intact, but delayed by 2-3 years, maybe 5 at most...
Jim
tomm: oh great... another guy heavy on theory... I think we've had enough economic theory running things lately and not enough practical/pragmatism...
I'm not saying theory is bad, but we need balance...
Think of the program to get a man on the moon... we needed theorists and engineers and technicians to get the job done... failure to include all three and we'd never have achieved the goal.
At least Tim's prose isn't as dense as Greenie's... but on first glance is just about as useful/effective in the real world.
I took your suggestion about possible things to play a step further and have decided to search for companies that make cardboard boxes...
Jim
Sounds like Greenspanspeak to me, but could be Warren given the content...
Jim
tomm, thx again... also suppose it wouldn't hurt to wait and see if the fed will cut fed funds rate target again before rushing into something like TBT...
Searching for ways to play for someone who can't watch the tape all day... but shouldn't complain since the best investment anyone can have these days is a secure, well-paying job... I suppose I'm secure as long as oil doesn't tank to $30 and stay there for a year.
Jim
tomm: thx for that link... very interesting... I still think the tsy bonds are in bubbleland... eventually it will pop?
What's your read? I know you do a lot of bonds...
TIA,
Jim
Somali Pirates in Discussions to Acquire Citigroup
<got this from Big Dog's board at SI>
2008-11-20
14:23:00.260 GMT
By Andreas Hippin November 20 (Bloomberg)
The Somali pirates, renegade Somalis known for hijacking ships for ransom in the Gulf of Aden, are negotiating a purchase of Citigroup.
The pirates would buy Citigroup with new debt and their existing cash stockpiles, earned most recently from hijacking numerous ships, including most recently a $200 million Saudi Arabian oil tanker. The Somali pirates are offering up to $0.10 per share for Citigroup, pirate spokesman Sugule Ali said earlier today. The negotiations have entered the final stage, Ali said. ``You may not like our price, but we are not in the business of paying for things. Be happy we are in the mood to offer the shareholders anything," said Ali.
The pirates will finance part of the purchase by selling new Pirate Ransom Backed Securities. The PRBS's are backed by the cash flows from future ransom payments from hijackings in the Gulf of Aden. Moody's and S&P have already issued their top investment grade ratings for the PRBS's.
Head pirate, Ubu Kalid Shandu, said "we need a bank so that we have a place to keep all of our ransom money. Thankfully, the dislocations in the capital markets has allowed us to purchase Citigroup at an attractive valuation and to take advantage of TARP capital to grow the business even faster." Shandu added, "We don't call ourselves pirates. We are coastguards and this will just allow us to guard our coasts better."
--Editor: Colin Keatinge
To contact the reporter on this story: Andreas Hippin in Frankfurt at +49-69-92041-208 or ahippin@bloomberg.net
To contact the editor responsible for this story: Lars Klemming at +46-8-610-0728 or lklemming@bloomberg.net
There might be a great opportunity trading TBT when people start pulling out of T-bonds, or at least stop buying them...
USD is taking a pretty good whacking today.
Jim
Am I the only one who thinks T-bonds are a bubble right now?
Am looking at TBT to play the popping of the bond bubble, which should also signal the death spiral of the USD...
Or am I missing something?
Anyone?
Jim
tomm, yes, it is getting crowded here under the overpass again... what is strange is that the last time our unemployment was high like this, traffic dropped noticeably... but traffic nowadays is as heavy as its ever been... must be because gas here is now averaging $2/gal. and we are usually the highest in the nation (except for Alaska and Hawaii)...
I think we've seen the IT bottom in oil for now -- not saying it might not visit the $30s again, just saying IT it looks like $48 might be tradable bottom... already seeing data that demand is climbing back towards pre-$147 oil levels... I guess we never learn...
Jim
Bootz: when I lived in TN in the 1980s, every once in awhile they'd bring up the New Madrid fault and wring their hands for a few days, and then forget all about it -- flooding, tornadoes, killer heat/humidity waves etc. always crowded the weather/disaster news... the first morning I was in SoCal, I awoke to a 6.7 earthquake... I literally had nothing in the condo yet as the moving van had not arrived... so I just lay in my cot and rode it out... it was weird to this midwestern born person... I can only remember one 2.3 earthquake in roughly 30 years living east of the Miss. river...
Memphis and St. Louis have been warned repeatedly about New Madrid, but they do nothing about building codes -- codes that aren't even up to snuff for tornadoes, let alone earthquakes -- in fact the biggest disaster in the area was when a heavy, hard rainstorm caused a strip mall to collapse on 4th of July weekend -- code was inadequate for the amount of water that hit the roof and wind blasting out the windows... and it wasn't even built to code... the people who live there say it's wasted money... of course, you get outside the metro area and a lot of indigent poor still live in shacks that have cracks/holes in their walls you could throw a cat through and a foundation is simply a few scattered cinder blocks, and many still do not have indoor plumbing... shoot, the town where I lived didn't have a paved road or street until the 50s and TVA power didn't arrive to every household until about then.
Jim
(is Jim)
Well I didn't do it.../eom
Well, if roni shows up to post, we'll have all the pieces in place for a true (but maybe short-term) AAPL rally...
Have not seen roni on any of the boards he sporadically posts on for quite some time... hope all is well...
Jim
I don't think you are missing anything and I don't expect AAPL's fiscal Q4 numbers to be all that bad... and I may be in a minority, and while I think the calendar Q4 numbers won't be as strong as last year, I don't think they will be a disaster either -- have not read or seen any data that would suggest a large downside surprise, but maybe I've missed some critical data point...
Next year's risk would seem much higher, but maybe INTC's numbers are a better clue than I think it is.
Jim
Tomorrow's reaction to INTC's news will be quite interesting... if it is used as an excuse to take the broad markets lower, same-old, same-old... but if the market yawns?
My WAG is that tech will not be pretty at open.
I keep reading that we won't bottom until bad news no longer gets much attention in the market... I'm skeptical, but... can't be worse that consulting my magic 9-ball...
I see that AAPL is off another 3% at the moment in AH trading.
Personally, I've had enough "interesting times" lately to last a lifetime... getting nostalgic for days when the DOW or S&P only went up or down 1% or so daily.
Saw a piece about the death of B&H investing and agree that current market is no place for B&H -- too much like gambling... it is a traders' market for now, but those of us with day jobs cannot watch the tape all day and trade so we (or at least I) mostly just watch with few irons in the fire and a lot of cash/cash equivalents on the sidelines... and although moves like the recent tanking of the Baltic Dry Index are something to watch, after awhile it becomes tedious -- extreme volatility can indeed become tedious, or at least wear one down in the extreme to where one no longer gives a damn what the squiggly lines are doing any more... money becomes less interesting in general and even gaining/losing it becomes just another event -- like walking the dog, cooking, working or cleaning the house.
If this attitude I'm developing becomes widespread, then perhaps that will signal a real bottom.
Jim
KCMW: sorry, not singling you out... just happened to snap when your post came up after reading so many in a row.
Of course economics and politics are intertwined... what is being posted lately though is highly repetitious and not likely to help enlighten anyone on ways to navigate these markets.
In other words: the signal to noise ratio was getting pretty low around here of late, and I snapped.
Sorry.
Jim
Why can't the election, and all discussion of politics, end? I am so sick of it all. Nobody changes anyone's mind and yet everyone still acts/posts as if THEY have the one true argument that will trump all and make everyone agree -- never happens and we just get a repetitious litany of bellyaches and headaches...
Get a grip everyone!
The election is over and we are facing true financial crisis. Save some energy and thought for how to survive this mess rather than continue to parrot partisan nonsense on all 3 (or is it 4 or 5) sides of the political spectrum.
Hizzzonnner,
Jim
OT: just a quickie... the major US oil companies only control 10% of the world's oil supply... not a monopoly at all... in fact, Aramco, the Saudi oil company is many, many, many times bigger than XOM, COP, RDS, BP, Total, etc. COMBINED... XOM is only the 14th largest oil company in the world -- the state-owned ones are much larger.
Jim