Sunday, January 18, 2009

All Your Thermostats Are Belonging to We

Welcome 21st Century. When you hear "smart grid" you need to start thinking socialized power. Rather than build capacity you'll hear about smarter uses of the electricity we already produce. By "smarter" the government means they know better what temperature your home should be than you do.

Saturday, January 17, 2009

Cars cars cars

One of the three major auto processing facilities in Port Hueneme, CA. Not only are they all full, they've leased additional space for overflow. Automobile prices are headed down.

Tuesday, January 13, 2009

Barry Needs Us

13 Jan 09
RE: Administrative Priorities

Mr. President-elect:

Treasury Bond integrity. There is no greater concern nor any greater opportunity.

A nation that enjoys the respect and endorsement of the international debt markets can do anything. Anything. Not hyperbole but recognizing the reality of our circumstances.

Unfortunately, you inherit policies that appear almost designed to erode confidence and/or devalue the US Dollar. Reestablishing US creditworthiness won't be easy, painless or quick. Without it any other efforts will be for naught.

Monday, January 12, 2009

The Enzo of Auto Sales

Jean ValJean asks:

And speaking of predictions to the downside.. how about a thread for predictions of 2009 car/light truck sales?
I call 9.5 Million.

I'm normally not one for hyperbole but I don't think this is even close. 2009 is the year of the used car. First a little background:
2000-2007 New Auto Sales
13,181 13,510 13,639 13,594 13,609 13,551 13,271 13,671

This from the BTS.

The MSM is predicting 10.5m and JVJ is saying 8.5m. I'm saying 7.5m. We all know what's going down and normally I'd like Jean's number but there's a wildcard; deflation. The hit for a new vehicle purchase is bad enough but when residual value is a function of new model yer prices you don't want to take the chance that next years' model will be cheaper. Right now I'm chasing down something like a 2005 Volvo V70 2.5T. $14k is easy but I'm looking for an $11k cherry.

BTW, the Ferrari Enzo pictured above is being repaired by Ferrari. It "belonged" to a fugitive German software crook and crashed on PCH about 15 miles away. I just thought that the idea of autos being half-off was amusing.

Warren Warning

I guess if you are going to jump the shark" it's good that you own a motorcycle insurance company. Buffett bought Geico in 1996 and by all accounts is still a profitable and well run wholly owned subsidiary. The problem is what you pay is only part of what it costs to be insured. The rest comes from investment returns. You know like high value companies like Berkshire Hathaway:

And like Citigroup of the previous post seems somebody knows something based on the volume at the turns.

And now back to Sesame Street where we play "one of these things is not like the other:"

Those four lines are Citigroup (red), AIG (yellow), HIG (blue) and Berkshire Hathaway (green). What do you think? C, HIG, AIG are going to quadruple in price to get back to tracking BRK? There is always the other possibility.

"C"ing The Bottom

Somebody knows something. There was Citigroup all flush and happy with TARP money to swim in. Bloomberg reports an incredible piece of good news that proves financial engineering can paper over and structural defect. That article shows Citi "booking" a $10 Billion Gain on Morgan Stanley Deal. How you may ask incredulously? The pretax gain would come from writing up the value of Citigroup’s Smith Barney unit to a new price set by the deal, said the person, who declined to be identified because the talks are confidential. The gain of $5 billion to $6 billion after taxes would flow into Citigroup’s capital, a loan-loss cushion
Yep, a forced and subsidized merger of Morgan Stanley and Smith Barney for a fire sale $3 billion turns into a $20 billion deal.

Okay, look at the chart above. Look at the volume. Those of you so inclined can also look at the heavy volume on the open this morning (Mon, Jan 12). Somebody knows something and when the news hits the rest of us it will be in the form of a bill for the clean up.

Saturday, January 10, 2009

The Arlo Guthrie Strategy

In a previous post I suggested a store level protest of Oxnard's new sales tax increase. This was one reply:

Seriously, how will this help? The clerks suffer, the manager of the store may hear about it, but probably won't. Outside the store? Nobody will hear about it.

I guess I need to explain the Arlo Guthrie Strategy in his own words:
And the only reason I'm
singing you this song now is cause you may know somebody in a similar
situation, or you may be in a similar situation, and if your in a
situation like that there's only one thing you can do and that's walk into
the shrink wherever you are ,just walk in say "Shrink, You can get
anything you want, at Alice's restaurant.". And walk out. You know, if
one person, just one person does it they may think he's really sick and
they won't take him. And if two people, two people do it, in harmony,
they may think they're both faggots and they won't take either of them.
And three people do it, three, can you imagine, three people walking in
singin a bar of Alice's Restaurant and walking out. They may think it's an
organization. And can you, can you imagine fifty people a day,I said
fifty people a day walking in singin a bar of Alice's Restaurant and
walking out. And friends they may thinks it's a movement.

And that's what it is , the Alice's Restaurant Anti-Massacre Movement, and
all you got to do to join is sing it the next time it come's around on the
Now Arlo was talking about the draft and the Vietnam War but regardless of the issue the concept is timeless.

Friday, January 09, 2009

Olympic Fail

From Reuters:
Home Depot ends Olympics sponsorship program
Thu Jan 8, 2009 3:03pm EST
ATLANTA (Reuters) - Home improvement retailer Home Depot Inc is ending a sponsorship program under which it paid full-time wages and benefits for part-time work to athletes training for the Olympic Games.

The company currently employs 98 people in the Olympic Jobs Opportunities Program, in which it had been a sponsor since 1992.

After March 2, those athletes will no longer receive full-time benefits. They can remain in their part-time jobs, apply for full-time positions, or discontinue their employment at Home Depot.

"We feel the time has come to look at new ways to enhance our brand and provide exciting, new programs that appeal to our customers and associates," spokeswoman company Jean Niemi said on Thursday.
Anybody who spins this badly deserves to to screw themselves. On second thought I'll just take a closer look at those rings.

Thursday, January 08, 2009

Sweet Onions

This from The Onion:

OS X Snow Leopard vs. Windows 7
Microsoft announced it will be releasing a new edition of its operating software, called Windows 7, while Apple is working on its new OS X Snow Leopard. How will they stack up against each other?

Citigroup Pulls a Casey

WSJ reports:
In a concession to lenders, if a lender is found to have violated the Truth in Lending Act during bankruptcy proceedings, the institution would be subject to fines, but would not have to forgive the loan, as is the case currently.
Anyway, winter is almost over so it is time to get in shape for the spring rugby season. Scrum down everyone:

HMS Walmart Warns

StreetInsider reports on Walmart December sales. I will grant one excuse I usually dismiss. The weather was bad in some regions. Of course I've yet to hear good weather given any credit for increased sales.
"Due to the difficult economy and severe winter weather in some regions, the holiday season was more challenging for retailers than expected," said Eduardo Castro-Wright, vice chairman, Wal-Mart Stores, Inc. "We are pleased that we had positive traffic for the third month in a row and that Walmart performed relatively well given the environment."

EPS guidance $1.06 Nov 13th versus $0.91-$0.94 Jan 8th. The morning futures and the stock tanked in pre-market trading.

More evidence of containment not being contained. The talking heads were all inventing unsupportable theories of moving downscale or grabbing market share or I don't know, Princess Ponies pooping pillow mints.

It can only be hoped that bad news actually shows up in the markets. We've been disconnected for far too long. Otherwise we'll all be in the urinal:

Wednesday, January 07, 2009

2009 a Year to Endure

We got the end of year relief rally after meeting fund redemptions. 8800 and 8200 seem to bring back any pice tthat strays too far. Flat to a slow grind down from today's close to the inauguration and one last euphoria defiant bounce then the market opens for 2009. Right back down to 8200 then long slow grinds with occasional stairsteps down. All the way down to 6800. It may go breathtakingly below that very briefly but 6800 will be the new gravity well. We'll go into fall low 7000s. Finish? Not a clue. Ask my assistant:

Monday, January 05, 2009

The Tale of Three Januaries

Jan '07 Fed Funds Rate 5.25%, 30yr conforming mortgage 6.1%, ∂ 0.85%
Jan '08 Fed Funds Rate 4.00%, 30yr conforming mortgage 5.9%, ∂ 1.90%
Jan '09 Fed Funds Rate 0.25%, 30yr conforming mortgage 5.1%, ∂ 4.85%

This is near criminal. The Fed collectively forced rates down for one reason alone; to stimulate lending. Talk about unintended consequences. The picture is of course Janus for whom January is named. Fortunately my exaustive search of the intertubz reveals there is another Janus worhy of note; Samantha:

By demand another example of January:

Sunday, January 04, 2009

Looking For The Bottom

WSJ has an opinion below. My opinion is above, some truly spectacular multiple bottoms.
House prices fell 23% from their July 2006 peak to October 2008, the latest data available, based on the S&P/Case-Shiller Home Price index, which tracks home values in 20 cities. Mr. Zandi expects an additional 10% drop to a bottom late this year.

Yet another 4th half of '08 recovery. Yawn.

Saturday, January 03, 2009

2008 Reflections

There's a story about a true believer facing a flood at his home. The fireman knocked on the door but he stayed put trusting his faith. A neighbor paddled up in a boat but he said no his faith would sustain him. On the roof with the water still rising he waves away the rescue helicopter trusting instead to his beliefs. He drowns. When he meets his maker in the great beyond he complains "Why didn't you warn me?" God replies; "Who do you think sent the fireman, neighbor and helicopter?" We already know one thing and one thing only but it is enough. When the bailouts stop working it will happen too fast to contain and we have been warned. Financial tricks work until they don't. They don't fail elegantly.

2008 was not the disaster, it was the warning.

Friday, January 02, 2009

The Sweetest Ride

Months Remaining: 10 months
Advertised Payment: $1,173.39 p/month
Actual Miles: 25,500 miles
Total Miles Allowed: 48,808
Miles Remaining: 23,308
Available Miles: 2,331 miles p/month
Leasing Company: Mercedes Benz Finan...
Vehicle Location: Camarillo, CA 93012

Ahhh yes. I love the smell of desperation in the new year.