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Robert Weinstein
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Follow me on https://twitter.com/#!/RobertWeinstein Owner of 1 Reason Insurance, a full-line insurance agency licensed in Wisconsin and Minnesota, and 1 Reason Real Estate, licensed in Wisconsin. http;//1reason.com Let's connect on Linkedin http://www.linkedin.com/pub/robert-weinstein/12/129/651... More
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  • Mexican Health Ministry given emergency powers

    While this was largely baked into the market on Friday it needs to be closely monitored.

     

    Firstly,  the World Health Organization states that there are 3 to 5 million cases of seasonal influenza each year and around 250,000 to 500,000 people die from influenza A and B each year.  So when less than 100 people die out of a city of over 22 million and not all deaths are in Mexico City its not even a data point much less a current crisis outside of Mexico.

    What we do want to do is watch and see if this flu gathers any traction and is actually spreading from person to person. At that point the flu could be market influencing very quickly(along with the obvious social impacts).  If Mexico can’t keep a lid on this and with their health care system it would not take much to reach a tipping point, the entire government could become unstable.  Mexico plans on  administering its remaining 500K vaccines from the flu season to health works.  It appears that the Mexican health system currently has enough generic Tamiflu (which appears to be effective against the new stain) to treat about 1 million people or less than 5% of Mexico City. Roche Pharmaceuticals the maker of Tamiflu has stated that the company is prepared to immediately deploy a stockpile of the drug if requested*

    The Mexican Health Ministry has been given emergency powers as a result of the Swine flue outbreak.  While still statistically insignificant in terms of the number of deaths Mexico City has closed all its schools & Universities along with handing out face masks.

    Also troubling is that the CDC has stated the DNA is unique with unknown gene segments that have not been seen in people or pigs before. This of course brings up the question of is this a virus that mutated or is altered in a lab?  It also means that we do not have enough time to react with news drugs and will be dependent on whats available.

    This was somewhat baked into the market Friday but should be monitored.  Any news coming out this week could really send the volatility higher and I would not want to be long anything Mexican right now without being fully hedged.

    * In a world wide fast spreading deadly virus outbreak its my opinion that leaders of countries with supplies of needed Tamiflu and other related drugs would be pressured to restrict the export to other countries

    http://www.dallasnews....

    http://www.cnn.com/200...

    http://www.foxnews.com...

    http://www.msnbc.msn.c...

    Disclosure: No positions

    Apr 27 5:35 PM | Link | Comment!
  • Obama administration seeks approval from Congress to contribute up to $100 billion to the IMF

    Another huge amount of money that are kids will be obligated to pay back with interest.

     

    Also the IMF considers a Bond Issue with China and Brazil actually expressing interest in the issue.  I doubt either will be stupid enough to buy and Brazil is already asking for a higher interest rate than Treasuries.   One has to question at what point do countries stop indebting themselves to give away money to failed institutions.  With the constant “its different this time”  over and over the tune gets tiring.

    The only positive thing I can say about the IMF is that some American companies make a lot of money off of IMF projects but its of little reward for borrowing money to give away.

    Keep an eye on gold prices in the coming few months if/when the IMF starts unloading some of its holdings to raise cash.  They have announced that they would begin selling off some of the holdings  but one thing that doesn’t appear to make a lot of sense is why would you pre announce that your going to sell a large amount of anything on the open market when your one of the largest players.  They are either some of the most inexperienced and unqualified traders or they are bluffing/semibluffing.... Why would the IMF bluff like that?  Simple,  India is the largest importer of gold and with pressure from both India and China to contain the price the IMF is able at no cost to aid both economies as well as build their gold reserves at a lower cost.  Of course this doesn’t have the gold producers singing any praises but they don’t have the population or the infulence that India and China have.

    http://www.bloomberg.c...

    http://www.commodityon...

    Apr 27 5:34 PM | Link | Comment!
  • Question on LVS

    Hi Robert,

    Like your approach..Any views on LVS..I feel it is still a cheap buy but getting mixed views..interested in your view

    I do and I currently own LVS.  What a great week huh?

    Ok,  LVS status and my thoughts.

    LVS has a huge debt load to carry as you probably know. It also has an active ‘owner’ Adelson that is way up there in age which is my second worry. City center looks like its going forward with new financing from Dubai and this is going to open up a LOT of room inventory especially on the strip. On the other side LVS also has a premium product that has a great location in the middle of the strip. The PA casino goes on line very soon and I have the belief that it will turn profitable very soon after opening. Macau appears to be on the way up as China lessens travel restrictions and it is my belief that China will open it up more especially when they see Singapore open or about to open up later this yr. I also think that Singapore will turn cash flow profitable no later than 2Qt 2010 (based in part by how quickly WYNN went profitable) and fully profitable by end of 2010.  The total wealth of China increases at a bullet train (Japan I know) rate and even in this world downturn China is still increasing by over 6% GDP per annum. Adelson has recently offered to pay off some of the higher cost debt at a discount with the apparent approval of the senior debt holders and this has greatly lowered both my fear and the markets fear of the debt load crushing the company. So with all that being said I am not as big of a bull with LVS as I am an anti bear. I have been a writer of non front month OTM puts for at least six months now. I think the road to making enough profits that the stock sees 20+ is further away than most people (especially DC) want to admit. I think the overall US recovery could be years away and not months. As long as unemployment is high profits will be squeezed and once city center opens its gonna be a tough haul for all the casinos on the stip and worse for those off the strip.  We could see a mini GM situation where Asian opperations support the US along with the debt load and thats not somewhere we want to be.  There is no doubt in my mind that the management of LVS is far and above that of GM though.  Another way to view it is that LVS had the wisdom to expand into Macau and Singapore the way they did even if the jury is still out with Macau. The other major threat is that the White House just pushed the EPA into helping prod along the Cap and Trade legislation. While doubtful of passing the only thing I can think of that would be worse for vegas is maybe dropping a nuke on the city. If that legislation appears to be making it through the Senate its time to jump ship on LVS if your not already beat to the punch. So currently I like LVS but I am a seller of puts and would not buy the stock directly (I do own the covered stock that has been put to me with an average of just under $5 per share). I know its a lot but a quicker answer would be incomplete.

    Best of trading to you

    Robert

    Apr 27 5:33 PM | Link | Comment!
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