Anthony Alfidi

Rare Earths: A China Price

Would Chinese manufacturers be prohibited from re-selling the rare earths they buy? They would find the arbitrage tempting if the domestic market for whatever they're making has a bad year. Or would export of Chinese rare earths be strictly controlled to ensure that domestic manufacturers don't try to hedge their supplies?

Wall Street Breakfast: Must-Know News

JPM's dealmaking would be impossible without TARP backing. Consolidation and control are on the bailout's hidden agenda.

GE's China deal is the handwriting on the wall for the U.S.'s last truly competitive industries: aviation and defense. GE may be trying to get secure access to markets for its big goods, not to mention the resources (rare earths?) needed to feed them.

UBS' turnaround plan will have to include a sale of its PaineWebber unit, as its clientele are too downmarket for Swiss tastes.

Too Big to Fail Banks: A Simple Solution

The TBTFs will survive as long as they contribute campaign cash. Perhaps credit unions and community banks should step up their own giving so they get a seat at the table should a big bank need to be wound down and sold off.

The Unsustainable Lie of Inflation

Gold was a good hedge against inflation when currencies were backed by a gold standard. After 1973, gold is more useful as a hedge against uncertainty of any kind. That's what the spot price has been measuring since 2007.

Value Investors Are Worried About Inflation

Value investors who buy at large enough discounts don't need to worry as much about inflation.

Don't Believe Long-Term Oil Forecasts

If our knowledge of future oil supplies is so deficient, it makes sense to increase the availability of other energy sources whose flows are more certain. A crash program in renewable energy would have been a fine use of the first stimulus, but that chance was almost completely blown (aside from supporting more R&D).

Don't Believe Long-Term Oil Forecasts

If our knowledge of future oil supplies is so deficient, it makes sense to increase the availability of other energy sources whose flows are more certain. A crash program in renewable energy would have been a fine use of the first stimulus, but that chance was almost completely blown (aside from supporting more R&D).

IEA trims its global oil demand outlook to 105M b/d in 2030, down from 106M a year ago - but still 40% growth between now and then. Satisfying that projection puts the world on track for a worldwide temperature rise of up to 6°C, IEA says.

There won't be enough supply to meet that demand if Peak Oil is true. Start building those windmills and tidal plants, right after we curtail consumer goods production.

Wall Street Breakfast: Must-Know News

An AIG comeback "if" financial markets stabilize is a pretty big "if," so the taxpayer had best hope the Fed keeps ZIRP in place to support the phony recovery.

Barclays' theft of $5B from Lehman's creditors shows us the agency problem again. Lehman's managers put their own personal interests ahead of fiduciaries. What else is new on Wall Street? Maybe we need to scatter the Street's traders around the country and build brand new firms based on partnerships. That way execs risk their own capital on every decision.

12 Cheap Growth Companies

The health reform bill that passed the House today will more likely than not put a cap on health insurers' profitability, knowcking them out of the growth category.

Defense spending is heavily dependent on deficit spending. That won't continue forever. The U.S. defense budget is larger than those of the next 44 nations; can any contractor grow its way into markets that small?

Lockheed Martin Passes Important Missile Test

A contract for $4.4B running for 13 years annualizes about $338mm per year. That's not enough to meet the shortfall in LMT's defined benefit pension plan.

Lockheed Martin's Great Week on Main Street

Those contracts run for multiple years, but unfortunately LMT books the revenue up front. What happens when a bond market discloation disrupts defense contractors' favorite gravy trains? The contract termination fees won't be a fraction of projected revenue. Future earnings statements will have to be restated downwards.

Furthermore, LMT had had to put over $1B in Q3 into its underfunded pension plan. Read the transcript of their conference call and you'll see that LMT executives employ "Rosy Scenario" from the Reagan Administration's budget office. That's $1B no longer available to shareholders.

LMT is a lot riskier than it appears at first glance.

Cause for Concern: No Change from the Fed

Exercises like this always end badly. Just ask the Japanese. Dr. Roubini is probably correct about this QE funding a dollar carry trade and the Fed knows it. The slightest uptick in rates would be a disaster for the markets.

Market Bulls Are Clearly Exhausted

The bulls may be exhausted but continued QE is like an intravenous drip full of adrenaline. I'd like to think the market will break downwards at some point. The length and strength of this rally has been absurd.

Wall Street Breakfast: Must-Know News

The Fed's inaction supports the bond and housing re-bubbles. No money to be made shorting those for a while. It also means gold will probably continue its steady climb. The only good short idea here might be HYG given the rising junk default rate.