MJ Thriller to Californians !!!

7/2/09

Let's read the following, do not take it too serious if you are Californian. Actually, our Illinoisian are going to be next.

Dear Californians,

It sucks to be you today, though our weather here in NYC is awful so you might have it better on that front. Nevertheless, a lot of you who in some way are connected to the state are getting paid in IOUs. Some banks will accept them on a case-by-case basis, but good luck buying groceries with them, or paying your auto loan or even your rent.

The good news is that one (1) of you will get some cash today, courtesy of Clusterstock! We're offering to pay one (1) of you $500 (can be via PayPal) for $1,000 worth of bona fide, California state-issue IOUs, provided we can work out the transaction.*

We think $.50 on the dollar is a fair price, and we've love to buy more, but we don't want to be overwhelmed by you desperate Californians looking to unload your worthless paper for our valuable paper (you know, the kind we use in New York, the money capital of the world. It's green, in case you've forgotten. It doesn't tear easily and it's hard to counterfeit. In short, real money is pretty awesome, and if we were you, we'd be happy to get our hands on some)

So send us an email and we'll see what we can work out.

Take it as a joke to laugh for your holiday.

Besure read NY times, they have graphical form to tell you about 30 states are having their budget problem for next fiscal year.

Know more of Non Farm Payroll

7/2/09

Its tine for everyone’s favorite monthly data point, Non-Farm Payrolls.

For those of you who are relatively new to the site, here is a brief description of how our analysis has evolved over time.

• Weak Jobs Recovery: Following the 2001 Recession, the economic recovery, from a jobs perspective, was rather weak. Indeed, from 2002-07, we had the weakest employment recovery of any post-recession period since World War 2. This data point — widely ignored on Wall Street and MSM — was a warning sign that the recovery was abnormal. It is what sent us looking for what was driving the economy — and the answer was borrowed money.

• Survey Data: There are two employment surveys — Establishment and Household. Establishment works of employment tax data; Household is literally a Q&A survey. They sometimes vary dramatically, but when you control so they measure the same thing, they come pretty close to each other (most of the time).

• Birth Death Adjustment: A major modification to the NFP measure is the Birth Death adjustment. Changes to the BD were proposed in 2001, and implemented a few years later. This attempts to capture early improvements in employment at the start of a recovery was the goal. The trade off is it wildly overstates strength at the end of a cycle. For example, in 2007, approximately 75% of reported new jobs were due to this adjusatment. In 2008, the BD adjustment inexplicably showed lots of job creation in construction and finance.

• Measuring Unemployment: The main measure of Unemployment is the widely reported U3 Unemployment Rate — but my analysis of U3 has been that it significantly understates unemployment. Fortunately, a more complete measure of labor under-utilization is available – the U6 measure. They seem to run parallel, but U6 captures a lot more of the unemployed and under-employed workers than U3 does.

• Leading vs Lagging Indicators: Lastly, economists will tell you that Employment is a lagging indicator, meaning that it lags the economic cycle, getting worse even after the economy begins to improve. And that is mostly true. However, since we are investors by trade, we want o identifty aspects of Employment data that have the qualities of a leading indicator — i.e., they improve before the economy does. There are at least 2 worth paying attention to: Temporary Help, and Hours Worked. Both aspects improve or worsen prior to the a recovery or recession occurring.

My comment: Let's focus on last paragraph, the leading indicator analysis. "Hours Worked". Today it released average work hours are 33 weekly, the lowest record for the series since 1964. It tells me no recovery is in process. Also, how come today figure are way far off economist estimate, actual is lost 467,000 the estimate is 365,000. Damn, what a projection miss !!! Also, open your eye wide to see one of the sector is keep losing jobs which is government sector, it still lose 62,000 jobs for month of June. Come on, are we already passing the stimulus package 4 months ago and Mr. President said it will create 3 to 4 millions job for this and next years ??? Where is the money gone and where is the job being created from? Why our government still laying off 62,000 jobs for month of June. Why?? Why??? Why?? Do you know the answer?? It is so obviously that someone has eaten the money and not doing the job. Now, some folks start talking about the 2nd stimulus package. F*** them !!! I aint see any recovery. How about you?? It is a very good logical question you can enjoy for the Happy national long weekend to all.

Happy July 4th to all!!

Dumb White house economist prediction

7/1/09

Let's see what NY Times said:

In the weeks just before President Obama took office, his economic advisers made a mistake. They got a little carried away with hope.

To make the case for a big stimulus package, they released their economic forecast for the next few years. Without the stimulus, they saw the unemployment rate — then 7.2 percent — rising above 8 percent in 2009 and peaking at 9 percent next year. With the stimulus, the advisers said, unemployment would probably peak at 8 percent late this year.

We now know that this forecast was terribly optimistic. The jobless rate has already reached 9.4 percent. On Thursday, the Labor Department will announce the latest number, for June, and forecasters are expecting it to rise further. In concrete terms, the difference between the situation that the Obama advisers predicted and the one that has come to pass is about 2.5 million jobs. It’s as if every worker in the city of Los Angeles received an unexpected layoff notice.

There are two possible explanations that the administration was so wrong. And sorting through them matters a great deal, because they point in opposite policy directions.

The first explanation is that the economy has deteriorated because the stimulus package failed. Some critics say that stimulus just doesn’t work, while others argue that this particular package was too small or too badly constructed to make a difference.

The second answer is that the economy has deteriorated in spite of the stimulus. In other words, the patient is not as sick as he would have been without the medicine he received. But he is a lot sicker than doctors realized when they prescribed it.

To me, the evidence is fairly compelling that the second answer is the right one. The stimulus package does seem to have helped. But its impact has been minor — so far — compared with the harshness of the Great Recession.

Unfortunately, the administration’s rose-colored forecast has muddied this picture. So if at some point this year or next the White House decides that the economy needs more stimulus, skeptics will surely brandish that old forecast.

Worst of all, the economy really may need more help.

Now, look at my prediction at 1/1/09 for 2009 outlook:
The S&P 500 will re-test the 750 lows in the first half of 2009, and we will close below 700 by the end of 2009. This bear market will not end in 2009.

Crude oil will stay below $80/barrel for all of 2009.

Gold will break out above $1000/oz.

The VIX will hit over 80 or make new high to 100 for the first time ever.

Unemployment rate will hit over 10.0%. Total Unemployment (U-6) will hit 20%.

Housing prices will keep dropping without finding any bottom.

Commercial real estate values will drop 30-40%. Land development, office space, warehouses, shopping malls, hotels, and resorts will do the worst. Large multi-family properties will do the “best” because they will house all the folks who will lose their homes.

20% of retailers will file for Chapter 11 bankruptcy.

The bailout money will run out in first half of 2009 and the Fed/Treasury will request an additional package…and be denied. This debate will drag on for months and months.

Numerous local municipalities and/or states will go bankrupt. Many states will be unable to pay out full unemployment benefits.

Yes,I am still very bearish. I do not see how our Bear Market(the worst since great depression as I pointed out in early 2008) can last for only 2 years. The last tech bear market lasted for about 2 1/2 years. In addition, the last 9 bear markets after world war II that all did not involve a global credit crisis! So, there are sure more disappointments ahead the hollow secular bear market ever.

My comment: Some of my observation/predictions are correct. Some are still wait to see. For example, even I am not economist, I am still able seeing unemployment rate will higher than 10% 6 months ago. What are those white house economists thinking about??? What do you think? Folks. Are those economists make a good call?? I am laughing loud to them. For such very easy economic data(Unemployment) that they cannot even predict close in range, what do think they are all able to rescue our nation economy? We will hear new unemployment rate tomorrow for month of June. Now, we are sitting 9.4% already, that very far off from those experts prediction. I guess my 10% guess is still too optimisic. Now, I guess we can see 11% at the end of 2009 so easy. Good luck to all!!

AIG ok reverse spilt and say will repay all $$ !!!

6/30/09

“We believe there is an excellent chance that we can repay the government.”

-AIG Chief Executive Officer Edward Liddy

Why is that doubtful? Well, in 2006, they had revenues of $113 billion and profits of $14 billion — about 25% of her profits were due to AIG FP.

Now, with their reputation in tatters and their revenues cut in half, their “Enterprise Value” at a mere $91 billion, and a market cap at just over $3 billion, they are going to pay back $182.5 billion?

My comment: What do you think? Anyone with common sense know that it is impossible!!

Insiders are selling their ass off this fake rally !!!

6/23/09

Bloomberg is reporting Insiders Exit Shares at the Fastest Pace in Two Years

Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.

Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.

“If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.”

My comment and so is the other blogger: If insiders don't believe this rally, why should you?
Another hard evidence to show why this is another giant sucker rally as I said few months ago. Period. People, I am much much better than almost anyone you hear, listen and watch. Do not believe those "BS" this is new bull market!!

Green Shoot on housing??! What green shoot??

6/23/09

The NAR just report:

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April, but remained 3.6 percent below the 4.95 million-unit pace in May 2008.
...
Total housing inventory at the end of May fell 3.5 percent to 3.80 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in April.
...
Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April ...

Yun said the appraisal problem is serious. “Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he said. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”

My comment:On Yun's word, Professional appraisaer is doing their honest job nowadays. There is no problem from appraisal. It just means the damn house is still pricing too high compare to reality. So, housing price is still too high compare to current situation, bleak employment, too many distressed house around, many default is coming, lack of demand of new home building around,..... Folks, what do you think? I am laughing the expert Lawrence Yun at what he said.