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Latest comments  |  Highest rated
  • Rumors of Hedge Fund Liquidation [View article]
    The funny thing is Europe can stop the crash and reign in PIIGS. The fact that they don't is what causes jitters. Let the civil servants protest. The simple fact is there are a lot of people in a lot of governments that shouldn't have a job and they are dragging their whole country down with them.
    May 6 08:14 PM | 24 Likes Like |Link to Comment
  • When Will Housing Come Back? [View article]
    You can not depend on housing to drive the economy. It is a lagger not a leader. Also, the assumption that overbuilding is not occurring is wrong. Although existing homes sales dropped new home sales increased by .5% and the rate of construction is still underway. Over-financed construction by banks which don't want them to go under are the bane of all existing homeowners.

    I wouldn't count on a housing recovery for quite some time and only after the rest of the economy is firmly in recovery mode.
    Mar 25 08:14 PM | 24 Likes Like |Link to Comment
  • Goldman Sachs: Thoughts on the Developing Stolen Trade Secrets Scandal [View article]
    "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways" the same way it uses it every day. I personallly would like to see the code. I'm sure it would go a long way in explaining how GS gets market advantages that other traders don't get.

    Most likely it involves 1) seeing the volume of its own trades before orders are actually placed 2) taking advantage of its high volume to push around prices and punish those going against it 3) working with others to squeeze out small players when markets get illiquid 4) and take advantage of less fortunate market participants who can't act in under 1 second when trading. Or you can put it another way:

    Basically, the code is probably very good at helping GS use its trading platform to bully around everyone in markets it dominates. Whether it is technically illegal I don't think GS really cares about unless it gets out in the open (ergo the national security cloak). Whether the NYSE or others should prevent one company from dominating any form of trading or even dare to prevent such trading via antitrust is a question they should have considered long before such a scandal raised so many people's heads.

    Right or wrong, conspiracy or not, bringing attention to what GS is doing is something that should have been be looked into long time ago. Personally, I think this attention on their proprietary trading methods is good.
    Jul 7 05:17 AM | 24 Likes Like |Link to Comment
  • Contemplating the Demise of Bank of America, Citi and JPMorgan [View article]
    In all cases they will be the recipients of TARP. And in exchange for free cash the government has a full right to flush out every last exec from those banks. They are already currently nationalized. The only difference is someone is paying themselves fat salaries for destroying the bank and the strength of the American economy.

    Banks are playing build Frakenbank so that they can hold the US economy hostage for free money and playing Where's Waldo with their CDS and bad mortgage debt. How is this good for the American public. Especially as they hoard cash and cut jobs.

    BOA was already bailed out by the government once. I suppose we should have let it die then.
    Jan 21 04:42 AM | 24 Likes Like |Link to Comment
  • Why The Fed's Outrageous Gift To Foreign Banks--- Risk Free Aribitrage On IOER--Is Just The Tip Of The Iceberg [View article]
    Agreed, China implements the same sort of low rates to its populace to enrich the state. China tries to prevent the arbitrage you describe by preventing free RMB trading outside its sphere. On the other hand the US can not do this because it depends on foreigners to finance its out of control debt. This process not only deprives savers a decent return and deforms markets, but it undermines capitalism itself.

    The author has a great quote, "central bank financial repression and interest rate pegging defeats these beneficent market forces and, instead, locks-in arbitrage opportunities that linger indefinitely." The indefinitely is where capitalism is disemboweled by a government and central bank filled with looters.
    Aug 24 07:52 PM | 23 Likes Like |Link to Comment
  • The Stock Market Has Reached "A Permanently High Plateau" -- If The Fed Does Not Mess Up Again [View article]
    The Federal Reserve is just arguing that it has fixed the market due to its artificially low yields. Unfortunately that fix also discourages savings, investment in capital for businesses, and long term fiscal sanity and prudence. This creates the lack of recovery because everyone's too busy playing the cheap money game to actually try to grow or invest in the future. Why invest in the future when you can make your stock go up by borrowing cheap and taking your capital and buying back stock. Why care about depositors at all if your a bank that can get money cheaper from the Federal Reserve. And who cares about savings when you can't get a decent return on your savings. Once again the Federal Reserve is encouraging spending it all and running up debt. That is a long term recipe for boom bust.

    A permanent high plateau is a illusion in real economics and was the same type of ridiculousness that Greenspan spouted as he ran the US into the ground.
    Jul 24 12:46 AM | 23 Likes Like |Link to Comment
  • The Only 20 Companies That Matter [View article]
    Thanks for the article and the balanced viewpoint which is refreshing. Not only are these companies profitable, but also generally generate real positive cash flow. I would tend to discount heavily leveraged companies like Freddie Mac who's real profitability is not clear and is more a function on how it does bookkeeping and reserves for losses (poorly). In reality, Freddie Mac, is supported by the government because its obvious to everyone that what they do is a net loser and the taxpayers will have to bail them out sooner or later yet again.

    One big takeaway is that the total economy grows on the backs of small and middle sized businesses (SME's). If you are hoping for these big companies to pull America out of recession you are 100% wrong. If the economy is bad they will just slice costs and employees. Whereas they are focused on profitability real GDP is grown off of innovation and growth. If a small business doubles its size and keeps the same slim profits as before it is seen much more as a success than if a corporate titan does. In fact, it probably will lead to new management and a slump in stock prices.

    This recovery is utterly devoid of real growth or real recovery simply because SME's and thus the vast majority of the middle class isn't participating in the mass liquidity giveaway the few privileged companies are getting hoarding and profiting off of. This is the same crony capitalism all socialist economic policies fall prey to. If countinued the most profitable companies will increasingly be all those tied directly to feeding off of the central bank and government much like the USSR or communist China 30 years ago looked like. An equally disastrous economy will be the result of that. Thus tracking this list over time is a great indicator of US economic health.
    Mar 26 11:16 PM | 23 Likes Like |Link to Comment
  • Is The U.S. Bankrupt? [View article]
    The real issue is not the percentage debt is to GDP But the enormity of it and who can and will finance it. Clearly with citizens continuing to pile on their own debt, they won't.

    In the past foreigners financed it from our burgeoning trade deficit which is another matter, but due to QE foreigners increasingly refuse to buy long term US Treasuries because they are not the complete morons the Federal Reserve wishes them to be. In fact, the weak taper move this week was stimulated by none other than the US running into weak demand for even its 5 year US Treasuries.

    "The government debt market had been lower on the day after the Treasury Department sold $35 billion of 5-year notes in a weak sale ahead of the Fed announcement. The notes sold at a yield of 1.600%, well below where the broader market was trading at the time. Buyers offered to take down 2.42 times the amount of debt for sale, below the average of 2.52 times during the past six sales, and the second smallest ratio since 2009."

    Clearly foreign governments will not put up with continued QE that is used to gyp US Treasury holders of interest by constantly bid rigging the rate and manipulating US Treasury yields down.

    Which leads to QE itself which was designed not to help the US economy but to create artificial demand to buy US Treasuries in the downturn while at the same time lowering interest rates when they should not have been because the risk premium is higher not lower. At close to a trillion a year, the Federal is now becoming part and parcel to the risk profile of America by overleveraging themselves as well.

    The Federal Reserve has already called into question their fairness and their morality by buying up bonds from their most favored friends and refusing to disclose who they are as well as rigging their own US Treasuries. If their QE goes so far as to exceed the US Deficit it will become clear the monetization scheme is nothing more than the US Government running debt and its central bank buying it up which is completely synthetic and fits a socialist/communist monetary scheme and resembles nothing close to capitalism.

    At close to $1 trillion a year after the taper, it still won't take long for the Federal Reserve's QE to exceed all Federal government debt. And they still have no viable buyer for their rising debt. The longer the Federal Reserve clings to QE the less anyone will be willing finance significantly more US Treasury debt. This quandary will eventually make their money printing schemes to enrich member banks worthless and will sink the US Treasury bond market with it.

    Realizing this, they are taking the thinnest measures to keep the game going without crashing the economy in the process. The typical problem with QE is a simple one, to keep it rolling you must constantly increase its size and scope to have any effect (look at Japan) or if you decide to end it you face a terrible economic collapse (see the end of US QE in 1929). Feel free to speculate which outcome will the Federal Reserve choose this time.

    Needless to say, the US is dancing to the brink of monetary destruction, not because they can't print more (they already do in profligate amounts), but because the US Treasury bond market that sustains it is being destroyed by the Federal Reserve itself who's primary duty is to carry out successful sales of US government debt not grow the economy while insuring low inflation and low unemployment.

    The effects of good monetary policy are the seeds of a healthy free market economy which can result in low unemployment and tame inflation through a healthy economic expansion. We do not have a healthy monetary policy right now and that is why we don't have decent economic growth, low inflation, and low unemployment. The longer people focus on the symptoms without addressing the problem the worse the patient will get.
    Dec 20 12:00 PM | 23 Likes Like |Link to Comment
  • The Fed Creates A New Germany Out Of Thin Air [View article]
    Trust me, I don't think the Federal Reserve makes its decisions on the move of the stock market to reverse QE. QE essentially does only three things which pleases the Federal Reserve, it enriches member banks and thus themselves since they are merely a collection of the most powerful banks, helps them sell US Treasury bonds when no one else will buy them, and it gives them power free from the government or the public.

    The money created helps make a big distortion in the spread of interest rates between the price banks pay and the price the public pays, it also frees them from needing public deposits since they can continue zirp (zirp would not work nowadays without QE) and helps them bolster their reserves. In effect the money is illusionary because it is created just to sit and look pretty in bank account numbers never to be spent in the free market. This is why it doesn't cause much inflation and doesn't help the economy and the federal reserve knows it. It's merely a machine to enrich the few without working.

    QE also has distorted the US Treasury market so much no foreign entity should ever buy more than short term bonds since it is clear the US Treasury rates don't reflect the real market, risk, or anything else. They are merely the result of a artificial price rigging created through the purposeful devaluation of current bonds and loans. Sure maybe China has a trillion in US Bonds, the Federal reserve has just thumbed their nose at them and said they don't really care because they just made a trillion out of thin air and will keep doing so, so don't expect any real interest ever from them. QE makes current capital worthless in comparison to new money created out of thin air. You want to own the new money stream created, not the old dead money. Sadly, this means capitalism is turned on its head and all those who feel rich are 1 step away from having a bunch of toilet paper. You don't get a decent return on bonds or by putting money in the bank. QE destroys capitalism because it destroys the value of capital. It is the purposeful destruction of capital to force people to get rid of it.

    Last who cares about Congress or the government. In fact, QE successfully cedes all money supply decisions to the Federal Reserve who can create unlimited streams of liquidity far in excess of what the President or Congress creates. They can make a trillion a year, this easily counters and cut in government spending. and if government cuts 10% more they can make a new QE that makes 2 trillion. In effect, they are power grabbing primary money creation out of where it should rest, with Congress who makes money by running debt. Why would they ever give it up? They don't intend to. Any cut in QE they will cause such a collapse everyone will demand more and more. Japan never got off QE and neither will the US. That's because it serves the federal reserve at the cost of the public and the only way to prevent them from using it as a weapon against cutting their power is to abolish them and/or strip them of their power. they will destroy the economy before they let this happen. After all, the US successfully fought off the last 2 central banks before this one. They learned their lesson. They will not go away without causing the worst depression they can create and QE enables them to do just that, or the stopping of QE. The bigger they make it the more power they have and politicians are powerless to do anything about it. How will they explain a great depression because they refuse to let the Federal reserve keep doling money out to whomever they please. They will argue, some money is better than no money even if it only goes to crony capitalism meaning their friends. Welcome to communist socialism Federal Reserve style.

    thus is clearly a
    Nov 28 03:11 AM | 23 Likes Like |Link to Comment
  • The Real Reason for Silver's Run [View article]
    The issue is production in silver is very limited and is a byproduct of other mining in 90% of the cases. This means just because silver rises, production can't just magically rise to meet demand. The spread is why we get the big price gap up. Just because silver rises that doesn't mean they will mine more gold just to get the small benefit of higher silver.

    Likewise, silver reserves pale in the face of gold because they haven't been held as a store of value ever since everyone dumped the silver standard after dumping the gold standard. Now that people are seeing silver as a store of value I don't see why it can't rise more.
    Mar 4 07:37 PM | 23 Likes Like |Link to Comment
  • Is a Boom in U.S. Homebuilding Coming? [View article]
    Builders are only building because they need constructions jobs to keep getting loans from the bank. And banks keep loaning so that builders won't default and their other glaringly bad investment in real estate is found out.

    What the market needs is less building and allowing the existing housing market to get on its feet. Yet, banks don't want to lend money to consummate existing home sales forcing Fannie Mae and Freddie Mac to cover them all (backed by the taxpayer's money of course).

    This is not a healthy market. I don't expect one as long as the current system survives. I just feel sorry for 25% of the US population sitting on underwater mortgages. They have been working their ass of for years on end for nothing.
    Apr 12 08:52 PM | 23 Likes Like |Link to Comment
  • Looking Deeper Into the Employment Abyss [View article]
    Depending on California is basically depending on the tech sector. Aside from that you can just forget California recovery. Mass government deficits, falling housing, reverse immigration, mass jail populations, an inefficient government, underfunded education, and crime plague this State. If it keeps up even high tech will eventually give up on this State.
    Mar 6 11:26 AM | 23 Likes Like |Link to Comment
  • Fed to People: It's Not Our Fault [View article]
    If lack of regulation and oversight was the cause of the bubble and collapse, why isn't the Federal Reserve responsible since they officialy carry the mantle of being the consumer protection arm of the financial community. In fact, they argued for creating the big black box to hide derivatives in 2000 and did not oppose the abolition of Glass-Stegall. Nor have they rallied for a single pertinent financial reform to stop another low interest rate bubble from forming.

    They are the cause even if low interest rates are not the primary cause of this meltdown (even though Bernanke himself blamed Greenspan's low interest rate policy just a year ago for it). Once again Bernanke is shoveling manure to hide his own bad smell.
    Jan 10 06:47 AM | 23 Likes Like |Link to Comment
  • Celebrating the 'Recovery': I'm Disgusted [View article]
    Conceptwizard: I agree a accounting change does not make the world instantly sunshine and roses. It just cover up lies, damn lies.

    What is disgusting is the lack of morals and honesty all the way around from Congress, the Administration, the Federal reserve, the Treasury, and all the Regulators starting with the SEC. It is true they are all doing it to protect their job and calling it "doing what is neccesary to prevent a meltdown but they have now been saying this for about 2 years. Will they be saying this 2 more years from now? The simple fact is that their actions at absolving wrongdoers and covering up losses are preventing anyone from actually fixing anything.
    Aug 24 10:28 PM | 23 Likes Like |Link to Comment
  • Has President Obama's Mortgage Modification Plan Failed? [View article]
    #1 what in Bush Jr. and Obama's stimulus plans have been a sucess let alone a long term success? A big fat 0. Why do I lump them together, because they are essentially the same broken tired, run mass deficits through a corrupt broken government system that gives money to friends at the expense of everyone else and pray things get better (Of course the ones that get money say things are much better suprise suprise.)

    So far, there is no difference that I can see between Bush Jr. and Obama, nor Republican or Democrat. They are both giant government spending machines that care only about their friends and campaign donors and 0 for the middle class or American public.

    But isn't that what we have made our political system to be? If I have learned anything in this recession it's how nothing will get better until the root of the problem is fixed, government and politics and their big money politics which strips American's of their money so that the few can totter around without a care in the world. Call it stimulus or what you like, but every big government program ends up being a givaway to a select interest group who spend a few million lobbying really hard. It doesn't do justice justice.
    Aug 20 10:47 PM | 23 Likes Like |Link to Comment
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