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Andres Rueda  

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  • There's No Longer A Bernanke Put [View article]
    Ok, so irrational negativity will now be replaced with irrational exuberance. Fine. At least irrational exuberance is fun.
    Sep 14, 2012. 07:12 PM | 2 Likes Like |Link to Comment
  • More on Consumer Sentiment: Importantly, according to the report authors, the large gain was evenly split between the first and second halves of the month, suggesting continued gains into September. Panic hits the bond pits thanks to a combination of a Fed adding stimulus to an economy maybe not needing it. The long bond yield +13 bps to 3.06%. TLT -2.6%[View news story]
    Panic should have hit the bond pits a long time ago. The panic of - gee, I guess I just realized that I did not know what I was doing. Bond traders who paid yields of 1.38%, 1.47%, 1.63%, or even the current yield of 1.85% for the 10-yr bond apparently can't do math. The long T-bonds are a deteriorating asset at recent yields. Anyone with a spreadsheet can play around with the coupons, repayment schedule, and govt inflation data and Fed targets, and confirm the size of the built-in loss. You can also play around with sensitivity to upward movements in interest rates, to confirm the sharp pain as long-term interest rates creep up. Long bonds are the idiot's version of greed: lots of risk for no yield.
    Sep 14, 2012. 12:09 PM | 1 Like Like |Link to Comment
  • Monster Energy - The Momo Train Is Letting Off Passengers, Time To Short [View article]
    Yeah, yeah. Nice analysis. Blah, blah. I still don't understand why anyone would short ANYTHING in this market environment, given that the Fed keeps pumping huge amounts of liquidity into the system. You can easily get your teeth knocked into the back of your mouth, if you short.
    Sep 13, 2012. 05:31 PM | 3 Likes Like |Link to Comment
  • Seriously, Can Hewlett-Packard Be This Cheap? [View article]
    The technology sector is all about intellectual property. Research and development costs are not capitalized. They are expensed when incurred. Therefore, book value does a poor job of measuring the company's true "capital". There are other issues.
    Sep 8, 2012. 02:19 PM | 5 Likes Like |Link to Comment
  • Seriously, Can Hewlett-Packard Be This Cheap? [View article]
    I disagree. In the technology industry, book value means very little. It's almost a meaningless metric in terms of valuing the cash flow potential of a company.
    Sep 8, 2012. 01:44 PM | 4 Likes Like |Link to Comment
  • Is The Outlook For YPF Growing More Positive? (Part 1) [View article]
    The obvious question - what about political risk? This is a company that was recently expropriated. Down the road, will minority shareholders be treated fairly? Is there a prospect of dividends resuming at some point in the future, or are would-be minority shareholders buying the proverbial share in somebody else's swimming pool? Given the recent expropriation, is it realistic to assume that the company will be able to secure partnerships to develop its properties, other than perhaps at a huge discount? This may be one of those instances where the share of the company is cheap for good reason.
    Sep 8, 2012. 10:49 AM | Likes Like |Link to Comment
  • Market Euphoria Continues As We Get Ready To Jump Off The Fiscal Cliff [View article]
    After "Greece", the "fiscal cliff" is the new short-sellers' boogeyman. Meanwhile, 10-yr T-bonds stand at a yield of 1.66%, well below inflation. If there is a "fiscal cliff", long T-bonds would be massively sold off, and where would the dollars go? Other asset classes, including equities.

    If the Fed wants you to go long equities, you should go long. End of story. You don't want to end up a statistic - just another short seller who loses his shirt fighting the Fed.
    Sep 7, 2012. 08:12 PM | 2 Likes Like |Link to Comment
  • Market Euphoria Continues As We Get Ready To Jump Off The Fiscal Cliff [View article]
    After Greece, the so-called "fiscal cliff" is the next short-seller's boogeyman. 10-yr T-bond yiels are at 1.67% right now, well below inflation. If there's a fear of the so-called "fiscal cliff", long T-bonds would be massively sold off, causing yields to spike. Where would the money go? Other asset classes, including equities. End of story.
    Sep 7, 2012. 08:04 PM | Likes Like |Link to Comment
  • Nokia (NOK -8.1%) dives as it unveils the Lumia 920 at an NYC event. As expected, the Windows Phone 8-based 920 has a 4.5" display, supports wireless charging, and (perhaps critically) contains a PureView camera less impressive than the one in the Symbian-based 808. Also included is an augmented reality app called City Lens. Will this be enough for Nokia to gain significant ground against the iPhone 5 and Samsung's high-end lineup? (live blog[View news story]
    Market reaction is exaggerated. The new Lumias appear to be innovative, quality products. Who knows how well these Lumias will sell. Wouldn't be surprised if they're a hit, or at least sell decently. The drop off today is however so steep and out of whack, driven by massive short selling and speculative players, that one can pretty much safely assume that the stock will see a big bounce tomorrow as shorts scramble to profit/cover and in doing so trip over each other.
    Sep 5, 2012. 03:08 PM | 1 Like Like |Link to Comment
  • Zagg: 10 Times Earnings And The Shorts Are Sill Not Covering [View article]
    I am not in love with many of the companies described in your article. LULU has been in a short squeezed for years, to be sure; however, it has also been ridiculously overpriced for years. However, in this environment I would not short any of these names, including LULU. There is too much liquidity in the system, compliments of the Fed, and these names could shoot up in no time and really hit you hard in the teeth if you are short. Not because the companies deserve their lofty valuations, but just because there is too much cash out there.
    Sep 3, 2012. 04:54 PM | Likes Like |Link to Comment
  • Technician Louise Yamada urges clients to keep stops tight as she watches equities with growing unease. "You could call it a vacuum rally," she says, characterized by short-covering, low volume, and deteriorating new highs vs. new lows. The lagging Transport Index (IYT) has her attention as well, but following this indicator kept some out of the big summer rally. [View news story]
    Technical analysis is a form of withcraft, in my humble opinion.
    Sep 3, 2012. 04:31 PM | Likes Like |Link to Comment
  • QE3: No Details, But The Market Likes It Anyway [View article]
    If you have a short position, you need to close it out right now. Folks with short positions are out in the open sitting on a fishing boat with a hurricane just around the corner. Even if the CEO of the company is a crook or the company sells ice to the eskimos, you cannot beat Hurricane Bernanke. Bring your ship to shore, and close out your shorts. This is a public safety announcement.
    Sep 2, 2012. 07:21 PM | Likes Like |Link to Comment
  • ECB Meeting: What To Expect And How To Position [View article]
    Southern euro countries are not insolvent, with the notable exception perhaps of Greece. If you however charged the US govt the same interest rate on its debt that panicky investors require from Spain or Italy, it would be inches away from insolvent (unless of course Bernanke, with a magic wand, decided to monetize its debt).
    Sep 1, 2012. 12:56 PM | 5 Likes Like |Link to Comment
  • Bernanke Doubles Down On Fed Put [View article]
    Just a reminder that no matter how skilled you may think you are as a short seller, you should never bet against the guy with the bigger guns: The Fed. You may think that the stock of a particular company is overpriced, but if you discount the company's cash flows at an interest rate of 0% is it really so overpriced? The Fed is telling you to go long, so by jiminy you should go long.
    Sep 1, 2012. 12:38 PM | 1 Like Like |Link to Comment
  • ECB Meeting: What To Expect And How To Position [View article]
    The moves against the German bunds will be brutal as the ECB plan materializes. German bunds are grotesquely overpriced, with tiny yields, and some recent auctions have seen negative nominal yields. When a bond hits a zero yield, you pretty much know that the run up in prices is over. I mean, how could it not be? The herds of panic-stricken euro currency investors have nowhere to go, and will be pushed back into risky assets or periphery debt. A muscular ECB response will just turn what would be a gradual process into a stampede in reverse. I would steer clear from Geman debt (particularly long bonds) at this stage.
    Sep 1, 2012. 11:13 AM | 3 Likes Like |Link to Comment