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Dave Kranzler
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I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for a large bank. I have an MBA from the University of Chicago, with a concentration in accounting and finance. Currently I co-manage a precious metals and mining stock... More
My company:
Golden Returns Capital
My blog:
Investment Research Dynamics
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  • “Too Warm In March To Spend Money On Amazon.com?”

    Quote courtesy of Zerohedge. Retail sales bounced in March thanks to a spike in auto sales fueled by the huge jump in non-revolving credit in per the latest Fed report. Retail sales gained .9% in March but missed expectations for the fourth month in a row. Electronics dropped, as did grocery store sales. Online sales declined .1%.

    Wasn't Easter and Passover a bit early this year? Shouldn't holiday sales at the end of March help to boost March retail sales?

    It's just amazing to me to that the media continues to repetitiously insist that the weather is having an affect on the economy. This absurdity symbolizes just how Orwellian our system has become.

    This reminds me of a story a colleague told me about how Wall Street analysts feed business reporters their storylines. At the time this colleague was an analyst in the junk department of the bank where I traded junk bonds. He had just fielded his first call from a reporter. After he got off, he went the head of the research area and asked her how to handle media inquiries about why the bond market is moving.

    This was her answer: Go over to the Bloomberg terminal and pull up "headlines." Take the top three headlines - regardless of their content - and give those as the reasons for the reasons the market is moving. Then hang up.

    That's it folks. Whoever decided to use the "bad weather" attribution for poor economic reports starting in November 2013 started a trend that has become virile. I wonder what the excuse will be in July when the consumer is in the intensive care ward: "people are staying home to watch baseball."

    So retail sales are estimated to have had a dead-cat bounce in March after 3 consecutive months of declines, including a decline in the biggest retail sales month of year (December). I would suggest that the March number will be revised significantly lower next month. This serves two purposes: 1) it covers up what would have been a bad headline number for March; 2) with a lower comparison number used for March, it makes the April headline number look better or less worse on percentage gain/loss basis.

    Either way, this stock market is setting up for a colossal fall. I would suggest that, given online sales dropped in March. Amazon.com reports its Q1 at the end of this month (April 29). It has already forecast a deeply negative operating income number. Although I'm sure AMZN will use a full array of GAAP accounting gimmicks to stretch its reported net income (which will be a loss) into a "beat" of expectations, the stock will likely get hammered.

    If you want to make money off of this event, you need to be positioned ahead of the event. I am short AMZN and adding to my position via various options strategies. My AMZN report explains how the Company uses highly misleading accounting to make its numbers look better than the actual economic rent (cash flow) being generated by the Company. My report also explains how to use options to play a downside move if you don't want to short the stock outright (I recommend a combination): AMAZON dot CON

    This can only be described as the look of a man (Jeff Bezos) who knows he's pulling off a scam that makes the Madoff Ponzi scheme look like a small scale drug dealer selling oregano to high school kids (ironically, Bezos started out his Ponzi finance career at Bankers Trust - the same crooked bank at which my colleague and I toiled):

    Bezos1

    Apr 14 8:28 PM | Link | 3 Comments
  • Amazon Is Ready Sell-Off Hard

    Yet another reader testimonial on my Amazon.Con research report:

    I have been involved in providing investment research for almost 30 years and have seen plenty of good and bad products in that time. During the 1998-1999 tech bubble, a select few of us used to gather and laugh at the lunacy that passed for research in order to justify tech company valuations (while we bought precious metals shares). No one was doing credible work when the public most needed it. And here we are again but this time we have your inputs establishing sanity, a true guiding light. The Amazon.con report is a seminal piece of work-thorough, easy to read, based on real proprietary investigative work demonstrating the lack of equity value and clear on both conclusions and trading strategy. Thanks for giving investors non-cheerleading reality, delivered in the name of moral decency. - Mark in New Jersey

    I've noticed that AMZN has quickly retreated every time it pops up to the $380 area. Today, for example, AMZN was one of the few stocks that were green in the morning. It was up $6 to $380 at one point, while the SPX was sliding lower. AMZN ended down over $3 today. It put in an "outside reversal day" down, which is when the high and low of the day exceed the previous day's high and low. It closed lower than yesterday as well, which is technical signal that hedge fund algos will likely pick up on and begin unloading shares. Note: the hedge fund world is significantly over weighted in AMZN. Click to enlarge:

    (click to enlarge)

    One fact I had not paid attention to until today is that AMZN hit an all-time high in late January 2014. It sold off hard. While it has traded higher on its fraudulent Q4 earnings report (see my research report for details), it has failed to come close to its all-time high despite the SPX having reached several successive all-time highs. This is another very bearish trading signal the hedge fund black boxes will no doubt exploit.

    When the downside momentum grips this stock, it will be a sight to behold. AMZN has experienced declining operating margins since 2004. In 2004 it was achieving industry norm 6% operating margins. Now its operating margin is zero. Plus it's consuming cash like starving wild animal ($9 billion in debt issued in the last 24 months).

    Now is the time to short this stock and my research report explains why this Company is at risk for eventually hitting the wall: AMAZON.CON

    Mar 25 7:14 PM | Link | 1 Comment
  • Homebuilder Stocks Throw A Flag On The Existing Home Sales Report

    I'm not wrong on my bearish housing market call. I've perhaps underestimated the ability of the Fed and Wall Street to manipulate, obfuscate and fabricate the actual data. But the homebuilder stocks are not buying today's "seasonally adjusted and annualized" number published by the National Association of Homebuilders - click to enlarge:

    (click to enlarge)

    The above graph shows the intra-day (1-minute) trading action of the Dow Jones Home Construction Index today. There was a huge sell order at the open (big red bar on the left side) followed by a grind higher into the 10:00 a.m. EST release of the report. Someone had an early glimpse at the report as there is a big green bar with some volume at 9:58 a.m. EST. The DJUSHB rallied up to its high of the day of 579.61.

    The homebuilders began to sell-off right after it hit that level. The S&P 500 has held steady most of the day and 10yr Treasury rates are slightly lower today. Homebuilder stocks have sold off because the market sees through the statistical games being played by the NAR. Furthermore, the Chicago Fed National Activity Index (per my earlier post) shows that consumption and housing declined in February. Whom do you trust less - the Fed or an organization (NAR) that functions as the cheerleading section for the housing industry?

    I'll have more in-depth analysis of today's existing home sales report later. But the homebuilder stocks are more overvalued now than they were at the peak of the big housing bubble. You can take advantage of this with my homebuilder research: Homebuilder Equity Reports.

    I show in detail how the homebuilders are using misleading accounting to make their reported income look higher than it really is. A couple of them are losing money when you back out the b.s. accounting tricks. All of them are bleeding cash. Interestingly, more housing analyst bears are starting to show up on Seeking Alpha. I was early but I am right.

    Mar 23 3:55 PM | Link | 1 Comment
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