The Market Ticker

Ok folks here's a flash update for 'ya.

Yes, this is a real no-bullshit bank failure. If you have more than $100,000 in here, you're fucked.

"After months of trying to keep itself afloat, Alpharetta-based NetBank was shut down by federal regulators Friday to become Georgia's largest failed bank ever. Meanwhile, its parent company filed for bankruptcy protection.
....
NetBank customers will be able to access their insured deposits through the Internet and for the time being continue to use http://www.netbank.com/ for their banking transactions, the FDIC said."

If you have more than the insured limits.... sorry, its gone.

By the way, the media is burying this.

Fuck that - we need more exposure for this, not less.

Don't have more than $100,000 in a bank.....

Well that was fun.

Last night The Dollar came back under heavy pressure, and then this morning... well.....



Any questions?

This is commonly called "bad".

Personal Income and Spending came in at up 0.3% on income, spending up 0.6%, no revisions to July. The deflator and PCE came in right inline. Nothing significant here, and its a bit surprising, all things considered. The markets didn't do much of anything on the data release.

The cheerleaders are out again this morning on CNBC.....

Rick Santelli, however, comes out with a buck in his hand! I love it. Crumples it on-screen and used a fiver - when called on that he said "A one is too small; you wouldn't even see it!" and "I'm in the comfort zone until I go shopping."

I love 'ya Rick..... not in that sort of way, but at least there is one honest man on CNBS....

Oh, and for those who say that we're going to get "multiple expansion"? Not according to a number of economists.....

"Profit in the U.S. may grow at the slowest rate in more than five years this quarter as the housing slump hurts results at companies from IndyMac Bancorp Inc. to Target Corp."

Imagine that! Gee, you mean that the $6.5 trillion that consumers have taken out of their houses to blow on frills like Plasma TVs and expensive vacations has a bad economic impact when that source of "play money" dries up?

Consumer Confidence came in at 83.4 which was unchanged - but below consensus (consensus was for an improvement.) So much for "things are looking up" eh?

Fed President Lockhart sees possible turbulence ahead but claims that "inflation expectations are anchored". Yeah, ok. There's that "expectations" word again instead of actual inflation. You don't buy food or energy, right Lockhart? And you don't care about the dollar going in the shitter, which of course is reflected in that nice 83 handle on oil either, right?

"Moral Hazard" isn't on the radar either..... got it.

Tell 'ya what - when the US economy collapses in the next few years due to these policies perhaps all the unemployed can come by your nice mansion (or is it just a regular "house") for some free food and lodging.... that'd be great no?

My view stands - Congress has the authority under The Constitution to manage the nation's money supply, and its long past the time when they ought to be exercising that authority.

Oh, and as for "why money markets aren't a great idea"? Try this one:

"Unlike bank accounts, money market funds aren't insured by the federal government. They almost never fail.

Unbeknownst to most investors, some of the largest money market funds today are putting part of their cash into one of the riskiest debt investments in the world: collateralized debt obligations backed by subprime mortgage loans."

What the fuck is that? Money markets are supposed to be safe places to park your money. But heh, when "animal spirits" get going, nothing is sacred any more, is it?

Oh, CNBC was saying "buy regional banks". Hope they weren't including this one:

"The U.S. Office of Thrift Supervision on Friday said it closed NetBank Inc (NTBK.PK: Quote, Profile , Research), an Internet bank with $2.5 billion in deposits, and appointed the Federal Deposit Insurance Corp as receiver."

Uhhhhhhh.... is that good? Got FDIC?

Mortgage insurers are reasonably safe because they charge good premiums for their risk? Are you sure?

"More American homeowners are missing mortgage payments, pushing defaults on privately insured home loans up 30 percent last month from year-earlier levels, according to a trade group."

Let me guess - that's good too.

Here's your technical!

Amusing day today....

Let's start with KB Homes. Awful.

"For the three months ended August 31, 2007, the Company reported a loss from continuing operations, net of an income tax benefit, of $478.6 million or $6.19 per diluted share due largely to pretax non-cash charges of $690.1 million related to inventory and joint venture impairments and the abandonment of land option contracts, and $107.9 million related to goodwill impairment."

Wow......

Oh, and the dollar. Ouch.



That's not good. In fact, its very bad. Nobody seems to think this is a big deal - wait until it shows up in everything you buy. We've been effectively cramming our inflation into China as our dollar has collapsed, while at the same time whining about how all our jobs are going over there. Now there's a bill in The US House that will slap a 20% tariff on everything coming from there unless they "float" their currency.

Oh boy, do these assclowns know what happens if they do drop their peg (and before people scream "there is no peg!" yes, I know its officially a "soft" basket mark, but the government has a strict trading band on the currency that prohibits it from floating - so quit trying to misdirect and misrepresent reality!)

Hint: Everything goes up immediately in price by 20, 30%.

To those who say "they can't screw us, they'll screw themselves" you better start paying attention to trends. What's the key that you're missing? China is now exporting as much to the EU as they are to us!

There is no way this ends well folks, and our government's unwillingness to defend its currency and the purchasing power of its citizens is going to result in very, very ugly effects on us - and soon.

August New Home Sales came in down 8.3%, more than expected, biggest drop in 37 years, and prices fell in the most in 4 decades! Wow - that sucks - severely! And guess what - its just starting!

"Sales of new one-family houses in August 2007 were at a seasonally adjusted annual rate of 795,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.3 percent (±12.4%)* below the revised July rate of 867,000 and is 21.2 percent (±9.0%) below the August 2006 estimate of 1,009,000."

Ouch.

The funny part of this was that Cramer was apparently on the Today show and basically said "don't buy a home today - you'll lose money. NAR, the key pumpers of all things real estate, went batshit and is basically "demanding a retraction." Cramer, on CNBC this morning, essentially told them to get fucked. Love it. Can we have another on-air meltdown? That'd be delicious.

Heh NAR, how about all those people who have gotten buttfucked in the last two years sue your fucking asses for defrauding them with knowingly false projections on the housing industry? We have the very builders of houses saying that the market sucks and is going to suck more, and you're pissed off that Cramer (who is a total tool) tells the truth?

And more on mortgage rates... which are going up, not down..... guess why? Falling dollar!

"The benchmark 30-year fixed-rate mortgage rose 17 basis points, to 6.49 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.37 discount and origination points. One year ago, the mortgage index was 6.29 percent; four weeks ago, it was 6.43 percent."

Nice Ben. As I noted yesterday, there's nothing like saying you're going to help someone and then fucking them straight up the ass.

Click here for your technical of the day - new format, tell us on the forum what you think of it!

The Bull and Bear Fight continues......

Durable Goods came in today very poor, down 4.9%. Ex-transportation, orders decreased 1.8%, and ex-defense they were down 5.9%. Looking inside the report, however, it shows that 07/06 numbers really weren't that awful, except in one place - computers - where they were very weak.

GM settled their strike with the UAW. Their stock will be up today, which is going to provide a significant lift to the DOW. It will be interesting to see if this provides any sort of general lift. Never mind that the headline "shifts health care costs to the UAW" is a total load of bullshit. Who do you think provides the money for the UAW? Uh, duh.

So basically "bad news = good news" - party like its 1999!

Eeeeehhhhhhh....how'd that end again?

But for today, we trade the tape we're given, right? Yep.

RIMM and Apple are both indicated up over $2 premarket. Yoo hoo - anyone paying attention to a thing called "price/earnings ratio"? Guess not - for now. Careful kids; that saw really is plugged in and getting it too close to your arm can have an undesirable outcome.

In the "stupid people" department we have "The Donald" who last night on CNBC actually said that we "need leadership" (political I assume) to go talk to OPEC and tell them that "oil prices are too high" and "every time the dollar goes down oil goes up."

Uh, Donald. Are you really that stupid or do you just play it on TV? If the former, when is the bankruptcy sale for the next "project"? If the latter, go walk around one of your projects - without a hardhat.

Oh, as for The Fed keeping cutting interest rates? Well, the market sure as hell thinks so. Plosser (one of the Fed Governors, but not a voting member this year) isn't quite so sure.

"Federal Reserve Bank of Philadelphia President Charles Plosser said last week's interest-rate cut could cause inflation to accelerate and that policy makers must be ready to reverse course if needed."

Ssshhh... don't tell the market!

Oh, and mortgage applications? Down. Why? Because fixed rates went up, just as I said, which drove down activity. So "Ben Dover" rammed the very people that the market claimed he was helping.

"Application volume dipped as interest rates on traditional fixed-rate mortgages rose. The average interest rate for a traditional, 30-year fixed-rate mortgage increased to 6.38 percent for the week ending Sept. 21 from 6.29 percent the prior week."

Boy that Rate Cut looks really smart now doesn't it? Save the homeowner eh? Yeah, ok. Make sure you post your address so all those folks who get foreclosed can squat on your land and help themselves to a few beers from your fridge.

Its the least you can do after you screwed 'em like this.

Oh, the Sallie Mae (SLM) buyout went up in smoke today. Wasn't it cute how the Bear Stearns rumor was put on the wire MINUTES BEFORE THE SLM NEWS WAS BROKEN? Gee, no manipulation of the stock market there, was there? Naw, you don't think so.... do you? Isn't it illegal to start false rumors about listed stocks? Gee, with Buffett saying how many times that CDOs and CLOs are "weapons of mass financial destruction", what do you think his odds are of wanting to buy one of the biggest issuers of that crap on the street?

Better question - is the SEC EVER going to arrest someone other than two old people in fucking Hong Kong for this shit? First the Discount Rate cut front-running, then the dozens of Buffett rumors (homebuilders, etc) and now this? Where are the police when CLEAR front-running and illegal market manipulation is taking place?

Fuck you pump monkeys and market manipulators. This is what stops are for and I shorted the futures on the rollover from this crap spike.

Thanks for the money you fools.

Throughput as in "down the throat and out the...." :)

Lennar. Oi.

"Losses for the quarter ended Aug. 31 totaled $513.9 million, or $3.25 per share, compared with a profit of $206.7 million, or $1.30 per share, in the 2006 period. Latest-quarter results included a charge of $3.33 per share related to valuation adjustments and writing off land option deposits, among other items."

Ouch.

And those who have polluted commercial paper? They're paying for it (GOOD, says I!)

"On Baffin Island in the Arctic Circle, Baffinland Iron Mines Corp. almost missed its window to ship provisions to workers before winter arrives. The delay came not from the weather, but from a sudden freeze in the market for short-term debt 2,000 miles south in Toronto."

Yeah, well, maybe you should talk to those banks and tell them you're tired of the bullshit financial engineering games?

Oh, and both Lowes and Target said their sales results are going to suck:

"Two retailers that have been strong performers in recent years said late yesterday that they are facing softer-than-expected sales, raising concerns about whether once-exuberant consumers are finally starting to snap their wallets shut."

No, you think? Gee, what do you think happens when the MEW-cum-ATM machine runs out of money? Is this really difficult to figure out? Talk about "reporting" the obvious....

The Case-Schiller Home Price Index showed declines in 16 of 20 markets with an aggregate of 3.9% y/o/u. Ouch. So much for the NAR pumpers who said "oh no prices won't go down." Horseshit!

"Home prices in 20 U.S. metropolitan areas fell the most on record in July, indicating the threat to consumer spending was rising even before credit markets seized up in August, a private survey showed today.

Values dropped 3.9 percent in the 12 months through July, steeper than the 3.4 percent slump in June, according to the S&P/Case-Shiller home-price index. The index declined in January for the first time since the group started the measure in 2001, and has receded every month since then."

I think those who bought into the pumping by the NAR ought to sue those fuckers. That'd be, oh, basically anyone who bought a house from March to now. Sue 'em for fraud and break their balls.

ICSC Chain Store Sales came in -1%, continuing a two week trend (last week was -1.1%). Wow, you mean that Chuckie really has had his head cut off and is running around with a burnt credit card in his hand trying to spend but is now starting to run out of blood in the circulatory system too? What a shock - NOT.

Redbook came in +0.5%. Huh? Hmmmm....

Oh, consumer confidence? It sucks. The conference board reported Consumer Confidence under 100, at 99.8. Previous month was revised downward as well. Guess what - below 100 means an expectation of contraction in the economy. Oops.

The Dollar? That move yesterday sure does look corrective now. Ouch. There was hope that perhaps it was not, but today that hope looks to be misplaced. An impulse below the 30-year lows is going to provoke one of two reactions, both quite violent - either a strong bout of "buy the dips" or a total shitstorm on the sell side. Which will come is nearly impossible to predict, but that one or the other will result is essentially assured. On an intraday basis we have now penetrated the previous level, going below 79.3, and it looks like we will soon head in the downward direction once more.

Truth is about to come to the forefront on the Dollar.

Existing Home Sales came in down 4.3%, with previous down 0.2%. That number sucks.

Bottom? Yeah right. Me thinks we got this situation instead



Never mind that - the cheerleaders are out in force today on CNBC. Apple, RIMM, the usual suspects. Ooook. You buy here, you're a total IDIOT. Mark my words! Recessions hit "momo" stocks the hardest of all; if you lived through the 2000 wreck you know this, and if not, you're going to get a really rough lesson in your portfolio!

Oh, let's talk about Apple for a bit.

They supposedly came out with a "dire warning" today about people unlocking their phone, the gist of which was a threat that their updater may be recoded to intentionally destroy an unlocked device.

First, such a thing is trivially easy for them to do if they want. They can validate the old code and if it fails checksum brick the NVRAM in such a way as to overwrite the boot loader (assuming that part of the NV space is writable)

However, such a thing, if they do so, is almost certainly bigtime illegal.

Remember guys and gals, you didn't "license" the iPhone - you purchased it. You own it. For Apple to intentionally destroy it because you modified it - a modification, by the way, that the US Copyright Office has ruled perfectly legal - would expose them to ruinous litigation.

Even better, if they discussed this with AT&T/Cingular (and I bet they did) you might be able to nail them under RICO. All you need is a predicate offense (and I'd say that the intentional destruction of the property of a few thousand or tens of thousands of people probably qualifies) and two more people involved in conspiring to do it.

So I, for one, hope they are so fucking arrogant that Cocksucker Jobs tries something like this. I only wish I was an attorney so I could go after 'em and ram a big fat dry one up his cornhole.

The truth? My money is on this being a bluff by a bunch of arrogant fuckheads. Heh Jobs - just in case you didn't figure it out the first time - FUCK YOU. Oh, and may the EU (and other forward-thinking nations) ram you over your alleged monopoly games with iTunes. Capiche? Good.

Oh, and if you ever needed a reason to sell Apple's stock? You've got one. Arrogance is a bad thing folks, and it never works out well when you're talking investments. I bet Apple thought they had a great idea when they allegedly backdated their options too right?

BTW, if you're curious about what current P/Es on these stocks look like:

AAPL: 43
RIMM: 76 (!)
AMZN: 128 (!!!!!)
GRMN: 40
GOOG: 46

Ooook.

Oh, the really stupid?

BIDU: 179 (!!!!!!!!!!!)

Yeah, ok.

I remember how this turns out.

Anyone remember BRCM? March of 2000 - $160. Then about a month later, it fell to about 80, and people said "buy buy buy!" They drove it to $180 in the summer of 2000.

In 2002 it was about $5 a share.

Is there a lesson here? Well, today its $40. Not bad if you bought it at $5, eh?

What if you bought it at $180?

Better think folks.

Now let's add one more thing to the mix. When was the last time that a recession - or even a "mid-cycle slowdown" - resulted in expansion of earnings multiples?

That's what I thought.

Here's your technical!