Dan Schmeidler

47 Comments

    • Fannie/Freddie Rally: A Product of Fed Intervention [view article]
      The Feds are doing everything to keep FNM and FRE debt offerings alive and well. Heck, they even participate in the very purchase of its debt. At some point the Feds will have to look more closely at what exactly they are picking up at these offerings. I believe, they will also take clues from previous creditors coming to the table, hence future debt offerings. Aug 29 05:36 PM
    • The Mighty Greenback Gets Some Breathing Room [view article]
      Going to gold would appear to be the obvious choice considering the feds policies to support the financial system at the expense of the dollar. But one can not and should ignore that the credit crunch is now a global issue as a result of the US trade deficit getting substantially smaller. Gold right now is trading at the low 200 day moving average of $850. That average can be deceiving as a good entry point. Gold could easily fall below $800 and even further considering where it was in 2004 to 2006. Commodities are not hot market plays right now. And the dollar is on a rebound that could wipe out a lot of the losses it had against other currencies over the last year or two. It's insane to be thinking of that kind of market action in an environment of a collapsing US financial system. But it could very well unfold. Look at how the equities of the garbage US financials are trading as a desparate attempt to pump up their liquidity in order to restore the old status quo of the US as the great nation of debt. These are dangerous times to bet for a weaker dollar and stronger Gold. Aug 09 11:59 PM
    • Buy, Sell or Hold: What to Do with Potash Corp.? [view article]
      Anything equities right now is damaged. The market is completely upside down and irrational. This is reflected in how Financials have become market leaders and the Energy sector a laggard. The fundamentals show completely the opposite. This must be one of those summer trading days where the heat must have gotten into people's head. There is simply no explanation to how stocks like Merril "and the rest of the gang" are able to sustain current levels, while POT or FCX are experiencing brutal sell-offs. This can mean nothing more than a set-up for more of the same we had all year: Sell-offs in the Financials and run-ups in anything commodities. I figure late August, early September, might be a good time to see those rotations again. I do not believe though that commodities will make higher highs in the near to long term, unless the Feds come to their senses (probably some months after the election). Yes, we had run-ups in commodities last summer (especially after sell-offs), but we were not as negative on econonmic growth as we are this time around. POT is just not a great play right now. It is unfortunate, because spending a lot of time studying this company is guaranteed to turn anyone into a bull. Aug 04 11:44 PM
    • Ten Reasons Why I'm Waiting to Buy PotashCorp [view article]
      Yes, to some, meat is an essential component of the diet. But there are other ways to feed a global population than to rely soley on expensive fertilizer products. There is a supply story attached to it that has allowed Potash to profit massively from price increases. How high can Potash Corp. continue to push up its prices before countries such as China or India or going to find alternative solutions to feeding their people. Does this theme sound familiar? Look at what happened to the supply side of oil when it hit $140. It took weeks to figure out that inventories were starting to "fill" up, because everyone was so obsessed with the essential necessities to run the world on oil, no matter at what price. Well, price mattered in the end. And as oil dropped, no one wanted to get near it for about $20 to the down side, and still, more to go. I am not sure when potash and other fertilizer makers are going to run into this issue, but eventually, those empty warehouses are going to fill up with fertilizers if the ag group keeps raising their prices. Don't count on Q-3 to deliver on their earnings forecast, and don't count on the next quarter to be revised upwards once again. Jul 27 11:01 PM
    • Ten Reasons Why I'm Waiting to Buy PotashCorp [view article]
      Looking at the POT chart, I am going to have to agree with this article with respect to a potential downward POT stock move. A lot of the commodity stocks (granted, outside of the AG group), have recently visited their 200-day moving averages. Many experienced sharp and sudden declines from their 50-day averages. The recent sell-off in POT to just below its 50-day moving average, could be a sign of the markets setting itself up for a further downward move. Certainly, a move back up to $220 is a possibility, but then, market expectations would be to break a new high above $240. If a susbstantial move above $220 fails, look out below: $160. And who is not to say that the world's rampant carnivores, might opt for a healthier diet of fruits and vegetables for a while. Jul 27 04:49 PM
    • PotashCorp: UBS Analyst Cautious Despite Record Quarter [view article]
      The Ag group is the last of the commodities still hanging on. Oil, Steel, and Nat Gas, especially, have already lost their floor. I am still wondering why one would think that the Ag group deserves to be so expensive. POT is trading at a PE north of 40. Nat Gas is around 20. RIG (driller) is around PE 8. I believe the potential is indeed there for the market to rotate and assign the Ag sector as a whole a lower price tag. Even with the amazing earnings coming from POT in Q-2, a peak in its stock price $240 is a good possibility. Jul 27 04:23 PM
    • Agriculture: Are There Still Bulls in the Supermarket? [view article]
      Tough call here, but I think it is a good idea to be taking a breather here from the ag group. Oil has dropped significantly, so has gold. POT, for example, reported phenomenal Q-2 results, but it is starting to hit resistance trying to break the $210-220 level. One might think the stock is cheap right now considering the company expects to earn an annual $9.50 - $10.50 EPS. That would give the company a P/E of about 20 at $200 a share. the question is if the market is willing to bid this stock up to let's say P/E 25 ($260 stock price) based on the company's current full year guidance. Maybe, but I think there is also a possibility that fertilizer products such as Potash might experience similar downward price pressures as many other agricultural commodities have recently. Jul 25 12:53 AM
    • Financials: How - And When - We Reached the Bottom [view article]
      This is a very misleading article. But I have to give it up for Tom Brown's brilliant timing. The article bases its assumptions on strictly stock meachnics and how stocks respond in extreme situations. We are in a very sad situation with equities, and our overall economic condition, especially in the financial sector. The equities within the financial sector got a big jolt that pushed them all higher. The question now is how well can they sustain their current levels. A lot of that is dependent on their abiliity for capital expansion. Unfortunately for them it is a diffucult road up from here on. Maybe a few more upward jolts the next few days, as investors interpret more bad news from the sector as the bottom of all bottoms and then drive their stock price higher. But, unlike investors in the last 7 trading days or so, those investors are going to be far and few in between. This will occur as the realities of the credit market will kick in. The effect of deleveraging inflated balance sheets will contract and constrict and choke anything that deals with the trading of financial instruments and severly punish everything that sits on a balance sheet that has anything remotely to do with leveraged derivatives and other financial instruments. In other words all the financial stocks are going to head lower. But that is not to say that clever, in fact, brilliant, (and deservingly so, well paid) fund managers such as Tom Brown are not going to have a field day obliterating the shorts and reaping the last bit of profits possible before the final curtain is drawn on them. Jul 22 06:28 PM
    • Earnings Season: Fundamentally Flawed [view article]
      Very revealing article. Also, take into account the feds role in restricting the short selling of 19 financials. In combination with the analysts providing assistance to the financials with their guidance, it is not certain to predict any sort of price action in these stocks. The mechanics in the price action of many of these stocks is beyond repair if you are looking for any kind of consistency for a trade. The only consistent thing that I can see is that the action in the financial stocks looks horrible and broken from being thrown around all over the place. I would have covered my short positions on the first day of the rally on the financials. However, I decided to hold my short positions the moment I found out that the SEC is restricting naked short selling on some of the financials. I was even ready to load up the truck on the short during the next couple days, but my broker did not have alloted shares to short, courtesy of the feds. Guys, this is a no-brainer. If the federal government is stepping in and restricting a certain price action, it probably means that being short puts you on the right side of the trade and that without the restriction you would be in for a hell of a good time. Kinda like driving your car as you please, as if you owned the road. That is what the shorts were to the feds. Jul 20 03:55 PM
    • Earnings Preview: Bank of America [view article]
      oops ... unconscionable of course Jul 20 02:01 PM
    • Earnings Preview: Bank of America [view article]
      The federal government has made so many mistakes recently, it is becoming unconsnoiable to just be thinking about it. We had a perfectly free and efficient market system in place until the federal government decided that it is single-handedly going to determine the outcome of this credit crises and force their determination on the outcome upon the market place. I believe that there was no crises to begin with, only a shift in credit. The intervention of the feds and the central bankers is now more apparent than ever, and this only adds to the instability in the markets. This is because at the core of the problem are all those securitizations of mortgages that originated in the US (including those recycled and repackaged by FNM and FRE) and that ended up as debt held by foreign governments or even US pension funds. These institutions and governments that hold this debt are now questioning the dubious policies of the US government and its central bank. As a massive debtor nation, the US has so far been able to keep its creditors happy. This recent trend by the feds can lead this crises into an even more dangerous and treacherous path. Jul 20 01:59 PM
    • Earnings Preview: Bank of America [view article]
      The government was foolish to interfer in the financial equity markets of the banks. To me, that was the give-away. At first I almost broke my skull by hitting my head against the wall because I could not for the life of me figure out why the feds are attempting to rescue the value for the shareholders and investors in these companies. Wouldn't it be wiser to allow the equities to go to zero and then just sell off the assets to the debtors. I mean, that is kind of what is going on right now, except that the companies themselves are doing it. Bancruptcies would at least preserve the credibility of the US as a debtor nation and save our dollar. The sooner we allow the debtors to take over, the sooner we will come out of the recession. Capitalizing these companies over and over again only allows these companies to continue to write-down their inflated balance sheets. Such erosion of capital (from the balance sheets of these companies) contributes to the contraction in the credit markets. The write-offs do not result in the ability of the financials to generate all sort of income producing assets. Capital infusion only serves to pump life into the equity section of the companiy so that it can continue to function or just "live". We should not allow these companies to continue with those write-offs because it also erodes the value of the debt that we owe as a nation, (as is the case with FNM and FRE, assuming explicity), and also eroding our standing as a debtor nation (and that we certainly are). The better solution is to bring this nonsense to an end and let the debtor call the shots so that we can move on with capital expansion. Let all 19 institutions recently protected by the government from naked short selling all come to zero equity. Have a fire sale on their assets. The proceeds of every dollar generated from such a sale would be worth significantly more then the value of the dollars currently being infused into these entities.
      Jul 19 11:38 PM
    • The Long Case for Cheniere Energy [view article]
      Stock is currently approaching $3. It amazes me that an alternative energy stock such as LNG is trading as if it is insolvent. Maybe investors are trading down the stock as a signal that this stock will not survive the credit crises. What amazes me even more is that brokerage and financial stocks are trading up (as the did in the last few days) when we are in the midst of a severe credit crunch or revaluation of credit worth. What can possibly lie in the future earning power of theses financials in comparison to that of a struggling alternative energy company. This kind of irrationality in the markets makes me hold on to my LNG position and even consider a further downward move by LNG as an even greater buying opportunity. Jul 05 06:33 PM
    • Long Ideas for an Upcoming Crash [view article]
      An earlier posting here made a very good reference on the ability of this government (and its federal reserve) to turn things around quickly and raising interest rates drastically. But is it really necessary for the government to do that. In other words, are we really going to see those run-ups in interest rates? Maybe the executive bodies, (yes, along with the legislative, etc.) don't really see the need for a federal reserve and believes that this country is self sufficient and self-reliant and that at the end of the day we all know that we don't really need to rely on foreing oil. At least in the long run. I mean, they must think that there are enough alternative energy ideas out there to eventually relieve all ths pressure on energy prices. Maybe they think that all those wonderful innovations in energy are all going to take place here on US soil, and of course, run by more growth obsessed american corporations. If they do believe all that, they better start investing in those areas very quickly. Jun 29 07:38 PM
    • Long Ideas for an Upcoming Crash [view article]
      I like the price target of Gold at $1,100 by Q1_09. I think by then that number will be a bottom and not a ceiling. The Federal Reserve has shown that it has no control over negative sentiments towards tha value of its currency. The markets more than ever or not treating the $US Dollar with much positive considerations of its future value and that is reflected in how the markets are willing to bid up Oil into these high and near ridiculous prices. How much extra dollars must there be lying around to pay for oil at $140 for a little barrel you can put in your garage. And what purpose can gold really have at $1100 an ounce, other than to give its owner some comfort that maybe the gold's value will fare better in the future than the dollars that are circulating around us. Jun 29 07:08 PM
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