orca

26 Comments

    • AIG and the Lunacy of GAAP Reporting [view article]
      You can take all equations, figures, graphs, ratios etc but the question remains: Do you trust this company? The market sure doesn't, neither do I, and the reason is very simple, Greenberg is still pulling the strings, through the STARR vehicle. I have said it at $50, I said it at $25 and I say it now at $15, it all starts and ends with trust. I sincerely hope this joint goes belly-up real quick. Sep 11 09:38 AM
    • The Disconnect Between Supply and Demand in Gold & Silver Markets [view article]
      Little bit of historical perspective here. HH stands for Heil Hitler, sometimes these neo-nazis use 88 as it stands for the numerical value of the letter H. So much for that moron, let him/her die in a painfull fashion, I am not the "other cheek" kind of guy.
      Now some European input, just FYI. All standard 1 oz coins are out of stock except for Krugerrand. Coins with smaller quantity of gold are available but only at relative (relative to before) small numbers. Gold bars are available (Credit Suisse stamped), also in small quantity. I checked yesterday (Friday August 22). Silver I have no idea, I am only interested in gold. Bottomline as far as I see it is that if you are a small investor, 1-10 oz buyer at a time, you can get your phisical delivery, although you have to compromise on the denomination (Kruger instead of Maple for example, or 100 gram bar instead of roughly 3.3 coins), however if you are in the market for a big lump at least through retail channels you are finding it impossible to fill at 1 stop. I am just really curious how some multi-millionaire is going to play this thing, when he wants to diversify out of paper (money, ETF, whatever). Hopefully one day I will be burdened with this problem, hahaha!
      Good input here by the way.       Aug 23 05:11 AM
    • AIG: Willumstad's Hard Choice [view article]
      E Nuff Sed, I have no clue where you got the leverage 11x number but suppose, for arguments sake, that it is correct, then you must have gotten it off their on-balance statements. My point was, is, and will be that they can show you anything on-balance they want you to see, but you can not see their off-balance exposure. This is the problem with a lot of the financials, so before even bothering with numbercrunching ask yourself 1 simple question: Do you trust this company? The market sure doesn't, not only with regard to stockprice but more important with regard to credit spreads. I will be crystalclear here: I hate AIG and everything it stands for (uncle Hank comes to mind, the Angelo Mozilo of the insurance world, and his sons chipped from the same wood), have hated it for years, and the day they implode will be a joyfull day. Aug 13 10:21 AM
    • AIG: Willumstad's Hard Choice [view article]
      Said it before, say it again, AIG is run like some sort of mob outfit, with their STARR shell in the Caribbean, headed by uncle Hank. Nobody has a clue what they are holding, where they are holding it and how it's accounted for. IMHO examining their balance-sheet is dangerous, since you are seeing only what they want you to see. First you have to trust a company. Honestly, do you? Aug 11 09:44 AM
    • The SEC's 'Sacred Cow' List: Where Are WaMu and Wachovia? [view article]
      This is interesting information. I saw the list, didn't understand why some were and some weren't on it, especially the foreign ones, and although I'm not sure yet LBMA is the trigger to the compiled list it is not farfetched. Questions remain: why GS, why not WM/WB/etc, why not all 120 LBMA members (insofar that they have a US listing), but this truly is eye-opening. Good work Mark. Jul 21 01:35 PM
    • Did the E*Trade Baby Pay Off? [view article]
      Subprime is soooo 2007-2008. About a month ago I said that ETFC only has a chance if trust is regained. For that to happen you need time, which is running out, with the the 3rd phase of the 1st wave (subprime - arm option reset) about to hit the beaches simultanuously with wave 2 (durable) and wave 3 (non-durable). I said it at $4 and I say it again at $3: play this baby (pun intended) long under $2 and short above $5, with defined risk. Jun 30 01:56 PM
    • S&P Upgrades E*Trade Despite Struggling Financial Sector Peers [view article]
      Well well this is getting interesting!
      Since what is happening here seems to be some sort of extrapolation on general sentiment I will make a serious effort to share my thoughts and observations with you all. Sit back and enjoy the ride.

      First off though I want to state my position on ETFC, just so I won't be accused of being a pumper nor a basher. Currently I have no position in ETFC. When I said they will out-beta any index by 300-500% it should be clear that beta works either way. The $5-mark / 90% fail-break observation (and $2 for that matter) didn't get any feedback, which is a pity since it is one of the most overlooked yet reliable rules in the whole wide stock universe (valid even with optical plays such as reverse splitting).

      Now for the real work, starting with the general state of affairs. In my opinion we haven't yet scrathed the surface of what will become a world of pain. The Dow is off by some 20%, peanuts, in EUR terms the Dow has been stuck, for 5 years running, around the 8k-10k mark. Currently it is at 8k (12307,35 * 0.65), and yes, as you perhaps had guessed already, I am European. That's what happens when the USD goes Zimbabwean. It is my belief that we're currently in the 2nd phase of the 1st wave (mortgage meldown). The 3rd and final phase will start shortly, with (Option) ARM reset. The second and third wave will come ashore this fall, they are durable-credit and non-durable credit, and these waves will be bigger, longer and have a much greater impact than the first wave, difficult to imagine as it is, because they will affect not just upside-down home-owners and financials, they will hit everybody. This is the real unwind, affecting people in mortgage-free houses too, and it will take at least a decade to work through it, possibly much more (just ask our harikiri friends how they are doing, some 20 years after the top). Cash will be king, which doesn't spell much good for stocks, and you can see Treasury yield ticking up already. Actually spiking up is a better name for it. Cash is getting more expensive regardless of the FED Funds Rate. FED up, that's what the market is.

      Let's enter the financial subfield of brokerage now. I have no doubt that the ETFC platform is great, many people here attest to that. I have no idea but will take their word for it. Good for ETFC. The problem is that ETFC is a bank disguised as a broker. Cindy has been busy combing through the numbers, which in my opinion is useless, since we won't know what we won't know, Rumsfeld's unknown unknowns so to speak. Trust should be regained in that matter, which will take time, which is running out, as stated above.
      Also the longterm profitability of ETFC (per share) must somehow be factored in, and here it gets interesting. Some of you may have heart of VanderMoolen (MOO), a Dutch brokerage. They used to have American operations, since wound down / sold. Search for the stockchart of this puppy, it is almost a carbon-copy of ETFC. History doesn't repeat itself, but it rhymes. MOO currently stands at EUR 3,27, with a 12 month high/low of 4,29/1,75. All-time high was over €40 7 years ago. My point here is that the 2-5 rule, with a slight undershoot, is alive and kickin'.
      This week S&P upgraded ETFC. I won't go into S&P, apart from saying that whatever they think doesn't interest me in the least, just to be clear on that one. Cindy probably climaxed on that call, but the stock didn't, being exactly in the beta observation, 111m shorts included. It is my belief that almost all shorts above $5 have hedged by now, so I do not see a short squeeze above that level.

      I am winding down Your Honor. If you ask me gun to head where ETFC will be in 2 year's time: $3,50. We will see $2 ánd $5. Since I have no idea which one will come first I will sideline until one of these levels is breached and then, with defined risk, will take a contrary position. Pumpbaby Cindy, and friends, will fade over time, although in the meantime they are mighty irritating. The relentless pumping was what triggered me to respond in the first place. ETFC the company I wish all the best, no grudges here, have made some money with it, not much, but my position wasn't big to begin with. Any questions?
       Jun 14 06:46 AM
    • E*Trade's 'First In, First Out' Position: Yes, 111M Shorts Can Be Wrong [view article]
      Dear Veronica,

      If you have big brown eyes and a happy disposition I will concur with your chicken call. As to ETFC, my view is that it will out-beta the index (any index) by 300-500%, just because it is listed, not because of intrinsic value, which I believe to be a non-starter in this environment. And this environment will not go away anytime soon.
      In investing as in romance time will tell, in the meantime keep smiling!       Jun 11 09:11 AM
    • E*Trade's 'First In, First Out' Position: Yes, 111M Shorts Can Be Wrong [view article]
      Veronica, was that 10% down in 2 days a bankable fact? My point is that there appears to be an inverse relationship with regard to Cindy's incessant plugging and the share price, hence the "take a hike" advice. Also, she (and others) are marketing current conditions as t.h.e. low, well let me tell you we ain't seen nothing yet. Just suppose WM or C goes belly-up, or GE catches a cold to $23, or GM/F are collected to the Big Honcho in the sky, or the Naz craters, or the USD goes Zimbabwean, or or or, than we have Cindy plugging her love-baby at $1,60 and the herd still likin' it.
      E*Trade may be great (no idea, but generallly good comments) but the share-price is composed of many factors, some of them micro (the company itself) and some of them macro. And by the way, what I said about 90% of stock falling through $5 never regaining that level is a valid observation, we can argue chicken/egg here as to why, but we won't.
      Finally, I am trading this cracked fountain of hope, not investing in it, and no, I am not short in it and neither do I have puts or short calls.
      And a final finally, not all 111m shorts are at $4 and there's also no way of knowing if they have hedged their position, so that number in itself is not very instructive.       Jun 11 08:31 AM
    • Is the Dollar Doomed? [view article]
      100% correct. I see only 2 bids on the USD, one good and one bad. The good one is by jacking up rates, as above already mentioned, but there is a bad bid as well, the unwind bid. Think about it, with all the leverage in the system, partly through the carry trade (JPY for example), coupled now with massive vaporization on big asset blocks (RMBS only the first shoe to drop), it is just possible that the USD will catch a bid. It is not a productive bid nor a sign of belief in the currency, but at this stage I (a European) am happy with any bid, for any reason, on the USD. Fundamentally I can not assign a fair value on the USd any more, since there is no way to know how many are actually in circulation. What a complete mess. Jun 11 07:17 AM
    • E*Trade's 'First In, First Out' Position: Yes, 111M Shorts Can Be Wrong [view article]
      Darling,

      You don't need to write yet another hysterical piece on your love-baby, no no, what you really need is a vacation, preferably somewhere with no internet access. Relax, have a Bud, get bronzed, let the hair hang loose, and enjoy life for a week or two. Clear up the mind and pamper the body. ETFC is going nowhere until some macro issues are dealt with and huge imbalances are worked out of the system. Will be over in a year or 10, so no use auto-mutilating your brain with each and every ETFC tick. I very much doubt ETFC will survive in the current form and even if they do that it will be profitable from $4 upwards, but hey what the heck do we care with the US financial and monetary system imploding all around us. From a statistical point of view: 90% of stocks that fall through $5 never regain that level. Basically the same thing applies to $2, so worry about that, but only after your (and our) vacation.
      Hasta la vista, bon bini, surf's up and all that,
      Your tourguide
      Orca       Jun 11 02:56 AM
    • Bernanke's Backfire: Now What? [view article]
      As we speak uncle Hank is at it again. Unless it is followed up by action the recoil will be ferocious. Also concerted intervention will not work for more than 2-3 days, there is only so much dough you can spend on buying something the issuer doesn't want to defend with structural reforms. Jun 09 01:47 PM
    • Bernanke's Backfire: Now What? [view article]
      True, bearfund. The same happening over here (Europe) by the way, although here it can be sort of explained with higher rate expecation. In the USA it is probably something else, more inflation- and save parking-related. Can't put my finger on it yet. We have had a brutal move on our EUR-dominated state-treasuries, falling 550 bbp from the March-top on 4-year maturity. 10-year even more savage at -600 bbp. Interesting times, that's for sure. Jun 09 12:55 PM
    • Bernanke's Backfire: Now What? [view article]
      The whole world is royally pissed off, excuse my french. Couple of weeks ago you saw it with Bush in Saudi-Arabia, regarding production quota (Bush looking even more stupid than usual, which is an accomplishment of sorts), and with OPEC explaining that every USD fall of 1% will be accompanied by a crude spike of 4%.
      Last week you saw it with Trichet calling Bernanke's / Paulsons bluff within 2 days. This morning your prez, oblivious of everything around him, also reiterated that moronic "strong $ policy" phrase.
      G8 tried and failed too last month to verbally support the USD.
      You are spot on regarding credibilty. After the subprime fiasco, the rating agencies, the monolines, LIBOR, the FED facilities, "strong $ policy" BS etc nobody listens any more, they want to s.e.e. something. That something is the patient taking the medicine, in the form of multiple rate hikes. The question is will it happen in a week, a month or a year. It will happen, no doubt about it, but seeing your "leadership" probably later than sooner. BS time is over.
       Jun 09 10:53 AM
    • ECB Move: An Opportunity To Trim International Exposure [view article]
      After 10 years of f@#$ed up FED policy the ECB/Trichet is now actively pushing for Bernanke to do the right thing. We in Europe have been hearing about "strong $ policy" etc for ages now and enough is enough. This will become ugly, with either the FED jacking up rates (not likely) or the USD falling rapidly, combined with a commodity price explosion. In Europe we have much more leeway and although crude at $200 will hurt, it will destroy the American economy. And then, finally, you will still be forced to jack up rates, with the EUR/USD at 1,85.
      Something else, though related, remember the talk at $60-80 that the Iran-scare was worth at least $20 and that we could spike to $100? Well here we are at $140 and Iran is laughing their ass off. You can thank Bush for "protecting" the US interest in that regard.
      The thing with both problems (USD, crude) is that finally you will be forced to do the right thing, but it will needlessly hurt much more then than now. Apparently your leaders don't seem to have any capacity for leading in the right direction, explaining their decisions and sticking to them. Paul Volcker is called for, that's who.
      As a European who loves the USA I am completely sick of that spinelessness and wholeheartedly support the ECB, because I am convinced it will be the right decision for the long run. In the meantime we reach for the barfbucket the moment Paulson, Bernanke, Cheney or Bush come on stage. And no, this is not about Iraq, that's another story altogether, this is about cowardice under fire. Boy am I mad. Time now for a cool beer in the sun, tomorrow we have to be relaxed for trading.
       Jun 08 10:24 AM
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