jstratt

Consumer Credit Falls in Q2

Some thoughts on this excellent information

1) Overall some significant drops are indicated in consumer credit which is a good thing. You cant complain about consumer spending not being high enough and consumers being to deep in debt at the same time.

This is good news if the drop is due to consumers paying down their debt. It is possible however that it is just consumers failing to pay debt and defaulting. That may also be a way of reducing debt.

Are the Telcos Shrinking?

I acknowledge many of the points in this article. They are thrown together in an overly negative manner however.

The reality is both companies have ended up holding roughly even on a revenue basis through one of the worst downturns of my lifetime. At the same time their stocks have been severely punished.

Both companies are winning the wireless future rapidly with not only strong additions in customers but even stronger additional usage patterns.

Further, their wireline losses seem to me to be beginning to stabilize. Many people want a wireline phone in this day and age because of safety reasons, reception or desire to keep existing alternative. Finally internet service keeps growing.

Add it all up and some companies that held on and continue to hold on are aggressively putting in place a future with stronger profits. I will take the 6% dividends as well as strong future share price growth. I believe both T and VZ are compelling investment alternatives with stable and high dividends providing some protection from further drops.

My expected 1 yr return is 34% based on a rise to $32 plus the 6% dividend in ATT.

I like VZ a little more due to their long term build out of FIOS which offers a bright long term earnings growth future. They can decelerate investment as needed to support earnings but their growth supports it up to this time. I think they have done much of the heavy lifting to build a bright future and plan to purchase more shares if it falls.

Nine Notes on Residential Real Estate

Great article! Keep doing what you do best.

I have a few additional observations.

1) Case Shiller numbers can misrepresent the overall market. That is because the markets they measure are overwhelmingly impacted. Vegas, Phoenix, LA, SF, SD, Tampa, Miami, 3rd FL city possibly Orlando etc. In all 12 of the 20 were severely impacted areas.

2) Looking at long term needs of homeowners is important. Many of the huge homes of the past 10 years are functionally obsolescent. To heat, cool, pay taxes on, and maintain these monster homes is financially impractical. Many older homes also are functionally limited. Look for prices to remain depressed for a long time on these homes.

3) Home financing drives home prices. People will buy whatever they can get a loan for in a macro sense. They seem to think it is a banks fault if they cant afford it strange as that seems to me.

4) Your strategic default point seems right on the money after I heard a person at work telling about declaring Chapter 7 bankruptcy and being given a list of properties to consider purchasing. Something like lost home was 900 sq ft now looking at 1600 sq ft home on 3 acres. Agent suggests he shouldnt have a problem?

5) If rates were normal or rise from here we will see another leg down. Otherwise signs appear to show a bottoming process.

Just a few of my thoughts that I hope are worth marginally more than their cost.

Cap-and-Trade: The Only Alternative to EPA's Power Grab?

After looking at Cap and Trade I fail to see its advantages. It is a huge agressive taxation scheme that will only benefit traders like Goldman Sachs.

Unilaterally enacting such a scheme has no reasonable chance of making a difference.

We would do much better to enact a voluntary plan to reduce energy usage with incentives to become more energy efficient in every walk of life. Suggested reductions in Auto, Home and Business energy usage with investment incentives would move many or most down the path. The rest would have time to recognize that they will have to change as well.

Enacting a huge additional taxation on poor and middle class citizens and business would injure our economy and our citizens. How can we expect to make a difference by eliminating unilaterally a few coal burning utility plants when China is building and bringing on line several each week.

Stop trying to divert more US earnings to Goldman Sachs and other traders who expect their politcal contributions to be returned 1000 fold by taxpayers.

Our % of world energy usage is 15% and dropping like a rock. With what we are doing to business and jobs it will continue to drop.

I dont know if the $1600 additional cost per person figure is accurate but I do understand clearly that Cap and Trade will be a huge additional tax on taxpayers.

Why This Rally Will Continue

Excellent article with lots of disagreement!

I am pulling back slightly from the market and here are my conflicting thoughts

1) Looking at 5yr and 10 year charts I think the long term is up from here
2) At this moment we are ahead of ourselves and stocks have risen to far to fast.
3) My guess is we drop to a low between 800-850 in the next 3 months.
4) After severe retrenchments however people will not consider and are unable to see positive developments.
5) The comparisons in coming months to freefall frozen credit fears of a year ago should not be hard to beat.
6) I am a PE earnings guy and I dont like the PE valuations. However after the cost cutting that has largely been completed which has restructured businesses to profit at current activity levels I am ok with it.
7) Think Long! Trying to trade the market is difficult. Those profits largely go to flash traders who may see your trade data and take your ideas and profit on them ahead of you. I think it is stealing to get an advance look at others trades but it happens.
8) Based on what I see we drop to 825 in Oct and end the year at 1100. We end 2010 at 1275.

Lots of volatility for the next 3 years. Here's to big profits for all.

Volkswagen Chief Lays Out New American Strategy

Looking thru Auto loan data I noticed that Auto loans in 2009 have jumped from an average of $25k to an average auto loan financed to $28k.

Does anyone know why? You would think this year it would have been the opposite. Also for as bad a shape as we hear about consumers who is borrowing $28k for a car?

Without knowing I will guess that the government is backing auto loans through an alphabet program. The crowd that believes they should buy anything if financing is approved then jumped all over it.

I would like to know for sure.

The Case of the Goldman Sachs Trader Gone Wrong: Settlement Edition

To Goldman Sachs

I am going to use 2 words I havent used in years.

I hate you fuckers and your politician enablers!!!

Have a good day

Paulson and Goldman Sachs, The Plot Thickens

Goldman should be investigated. If it is proven that they have been fleecing investors and violating the Securities Act of 1933 as well as various torts they could create a billion shares which would be awarded to injured investors.

As it is stocks in the US may no longer be good investments as flash trading and other activities which may be nothing more than stealing draw most of stock wealth away from true investors and into those able to exploit systems. Systems which they may have created as well.

In the absence of perceived integrity perhaps only one stock is worthy of investment. That would be a stock which is perceived to effectively own the financial operations of the US government. A stock that is guaranteed to do well and be bailed out and then be able to make demands on the government which are immediately granted. If I found such a stock I would either invest in it or vote against any politician that has ever supported it and actively campaign against such politician that supports theft, stealing, the elimination of the middle class and the harassment of his/her constituents.

but thats just me

Goldman's Board Is Getting Too Cozy

Goldman Sachs appears like a vampire squid to me. As an example flash trading sounds alot like stealing. If I developed supercomputing systems and techniques to secretly obtain trading information of others to profit from it at their expense I would probably have a criminal record.

I am sure Goldman must do some good things with their supposedly smart people.

1) Flash trading isnt one of them.
2) Getting so intertwined with the government that they cant possibly be seen as acting in an honest and above board manner is another
3) Proving they own the government financially by demanding their bailout shares back, possibly getting rid of their competitors and getting what they want is another.
4) Giving huge mega bonuses for getting bailed out is another

Finally a commission is needed to make sure GS is not looting the nation.
Who have they contributed political donations to and in what amounts?
Would the transactions that took place including the communications occur in an arms length transaction?
What occurs to make Goldman Sachs employment the primary qualification for top government jobs and is it legal?
Are taxpayers being injured by the huge transfers of wealth from taxpayers to Goldman Sachs?

The Feds and UBS Reach a Squeal of a Deal

This is my take on the negotiations. The negotiations were over the handling of 3 different categories within the 52000 total.

1) Regular cheats
2) 100 Million + cheats
3) Those who made substantial political contributions

If you are in class 1 you are being handed over. If you are in class 2 you have been invited to make political donations and if you are in group 3... no one will ever know.

Here is how you will if I am correct. If out of all the big money tax evaders a bunch of political contribution issues dont get raised you will know the fix was in.

Unemployment: Historical Chart Sends Scary Message

The length of Unemployment is affected by more than how hard it is to find a job. With Unemployment Compensation extended to nearly 2 years many more people will decide to avoid work and take free money as long as it lasts.

Dont get me wrong I am not advocating letting people starve. I am however suggesting that employment is affected by additional pay offered. Perhaps some work of any kind would be preferable to collecting money for nothing.

On the other hand maybe we are moving as a society to the autoworker layoff model.

China Piles Legal Pressure on Rio

I would add that companies doing business with China have a history of losing out. People continue to underestimate the value of the rule of law.

China is negotiating with Rio Tinto. They now have a few extra poker chips. I predict the Rio employees will be put on trial and perhaps sentenced to death.

Then a long term contract will be worked out that reduces the going price of iron ore by 200 billion to China over many years and the Rio employees will be sent home.

Goldman Correlation Desk Profits from CIT CDS; Is Sallie Mae Up Next?

This guy got it write back in 2007 when he said

Lindzon writes that “Goldman is the world’s largest bookie that fixes games and legally sells you shit while they are dumping it out the back door.”

Dave's Top 10 Reasons This Recession Will Last Forever

The article succeeded in bringing several points to light with some good give and take.

Comcast Q2: Earnings Beat, Cash Flow Above Expectations

Comcast is a good investment is the only conclusion I can make. Companies that are able to defeat this recession are few and far between.

A 5% increase in revenue may mean a much higher penetration rate as it comes in a period with declining households.

A cable company isnt going to win many awards but Comcast has the size, products and leadership to do very very well for shareholders.