THE BIG BIG BET

You Don't Have a Chance

2009-12-03T11:28:00.000-08:00

"Caus' if there's one thing I can't stand, it's standing next to my fellow man...."
About to Break, Third Eye Blind

Fresh off of eating stuffing, twice-baked potatoes, and assorted pies every meal for a week, I feel spry enough to offer up another entry. Between Thanksgiving and working on a series of essays about the joys of fatherhood (ironically as my daughters have croup again), I've been content to sit back and watch gold gather steam while the market continues to rise. This, in light of the Dubai crisis, anemic sales, and the doldrums of unemployment drying up credit faster than at any point in history.

If more collapse is waiting in the wings, we'll be the last to know, at least sudden collapse. Sixty billion dollars of debt really isn't that much to fuss about, given the monthly totals the U.S. is racking up. Given the daily demise of the dollar as a premeditated solution for keeping our goods viable. Given the grave this market has returned from. And the right to predict sudden collapse has become too expensive. Buying puts on the indices carry ridiculous premiums even at 20-25% OOM.

So, what are we left with? I still say metal and oil, and in the not-too-distant future, all commodities. But as The Mixx recently asked me when I pointed to the success of gold, why? Where is the money coming from? As Caroline Baum points out in her Bloomberg piece yesterday, it sure as hell doesn't look like new money.

"There is no sign of excess credit creation on U.S. bank balance sheets. From October 2008 through October 2009, bank credit fell 5.3 percent. That reflects an 8 percent decline in loans and leases and a 3.4 percent increase in securities. Within the securities category, Treasuries were the clear winner, with a 13 percent increase......When I hear folks like New York University Professor Nouriel Roubini talk about asset bubbles and “money chasing commodities,” I want to ask, what money? Where is all the money chasing stocks, commodities, high-yield bonds and emerging- market stocks coming from if it’s sitting in banks’ accounts at Federal Reserve banks?"

So it's sold-assets that are acquiring gold and silver, not the fresh flow of credit. And I see no reason for this paradigm to shift given the helium-high U.S. market.

http://www.bloomberg.com/apps/news?pid=20601039&sid=avARgMioihVQ

Just Wait

2009-11-16T07:02:00.000-08:00

With bubbles on everyone's mind from Markman to Fleckenstein to former Fed officials this past week, I can only recommend sitting on your pile until this thing blows up. The Fed has been trumpeting strong dollar policy while the greenback plunges to lows on a daily basis, bolstered by Fed minutes that read, "No way in hell are we going to raise rates anytime soon." Every day the market goes up buys these guys another day of hope that our service economy will magically return to 2006.

As Fleckenstein points out, whether it's Greenspan or the current oligarchy, the false belief that jumping from one bubble to another to prevent a severe economic crash has been disastrous for our country and how our financial system is allowed to operate. While your asthmatic child was waiting to receive their H1N1 vaccination, the boys at GS were loaded up so they could continue to make trades with stop losses at $200 million.....

Thanks to The Mixx for his call on 3Com more than a year ago as a company too cash rich to go under. Now with their tender offer from HP, they've risen from just over $1 to near $8.

How low can the dollar go before someone pulls the plug on our devaluation? I don't know, but with gold over $1,130 as I write, fear the sudden stop.

Thankfully for you, I have been remiss in posting my recent picks, although Monday night has treated us well. Steelers for an easy win last week and if the Ravens can't save their season against the once again Quinn-led Browns, they are truly dreadful.

What Do We Do Now?

2009-11-03T17:09:00.000-08:00

Sorry for the recent absence, had something ready to go but shelved it for a more appropriate time. What do we do? Nothing. Nothing than what I've already told you, gold and oil and avoid stocks that cost more than $5. Up 200 Thursday, down 200 Friday. Up and down 100 yesterday and back up again. Any stock picking at this point is pure speculation. But with gold near $1100 today, having bounced back very rapidly from a brief plunge to near $1000 again, it's far from done. Every time someone has tried to call a top in the gold market for the last 10 years they've been left for a fool by year's end. Itulip certainly thinks there's hundreds, if not thousands of dollars left to go. They also think that the dollar is being shorted against oil, not other currencies, as the most recent government incarnation for dollar destruction.

Shorting and going long look expensive to year's end. Could we crash in the next 2 months? Sure. Could we get a string of bogus Buffettisms pushing us up over that time too? Sure. Hang on tight to your cash, unless you'd like to look way long into some commodities, silver and copper included here.

Wish the crystal ball was less cloudy, but I remain unconvinced about this market in either direction near term. Long-term we will tank again, but unless we can put a 3-6 month range on it, our money will be lost.

Inside Information

2009-10-20T06:20:00.000-07:00

Would be good to have, wouldn't it? I mean, with Wall St. profits exceeding all expectations again, or still benefiting from the "not quite as bad as it could've been" reporting, the S&P will cross 1100 today and the Dow has exceeded 10K (again). As David Weidner points out in today's Marketwatch column (sometimes he gets it right), we continue to be the suckers in the great Wall St. Ponzi scheme, "what Wall Street calls the 'dumb money' never fail to live up to our reputation as suckers, chumps and easy marks. We keep putting our money in the market, diversifying and looking at the fundamentals of the underlying investments."

Look at the arrest of hedge fund manager Raj Rajaratnam, who will be going to jail for insider trading that netted him $20 million. He is worth $1.3 billion. So, for most people in this country, that we be the equivalent of going to jail for about $300. But this is the largest arrest for insider trading in U.S. history. C'mon!
It's interesting to see people like Weidner and Dylan Ratigan, so entrenched in the MSM, voicing their disgust recently over the current financial system. Disgusted by news such as Geithner's non-appointed trustees reaping million dollar consulting bonuses. No, we truly do not have a chance in this game.

But the bubble-blowing machine has its hamsters running at full speed. Oil hit $80/barrel yesterday, gold at almost $1070, and the dollar plummeting. Einhorn, one of our favorites here who predicted the Lehman collapse, is also waiting for the impending dollar collapse. Aside from hoarding gold, he loaded up long-term Japanese interest rate options with a 4-5 year window. So that's Itulip, Paulson, and Einhorn who are now waiting for the next collapse. I'll side with these guys.

Good thing I didn't post new picks for the weekend. Suffice it to say Donovan Mcnabb's championship game-like performance would have been a bad call.

http://www.marketwatch.com/story/einhorn-bets-on-major-currency-death-spiral-2009-10-19

http://www.marketwatch.com/story/taking-the-inside-path-to-wall-street-riches-2009-10-20

Gold and Golden

2009-10-13T12:26:00.000-07:00

My apologies on my lack of blogotivity lately, but I have been updating both my investments and picks, which, more importantly than my analysis of the current shenanigans we call "the market" and "our government," have been right on point.

Gold has just hit it's all-time high of $1064 and our calls rolled to 2011 on GLD are up 40% in just over 2 weeks. The gross mismatches and lack of parody have been our NFL friends this year as blowouts have become commonplace. Teasing the Colts with the list I gave you last week led to an 8-2 week, with even a few college games coming through. The Texans came back from 21 points just like SD the week before to give us nice teaser-covers.

I promise more in the immediate future, just caught right now between old job and new with obligations to both for a few more weeks. But in celebration of football season and our new friend at The BBB, "The Mixx," check out his blog in our new list to the right at:

http://molecularmixology.blogspot.com/

Til' next time, when The BBB should have a big announcement in the next few weeks!

Jobless Non-Recovery

2009-10-02T05:47:00.000-07:00

The stimulus is over. Job losses are back on the rise. And did anyone see car sales numbers for last month post clunker incentives? Ugly. Make no mistake about what this "recovery" has been about. Government infusions of capital. Without it every major industry would still be gasping for air. Even with it there are just too many holes in the dike to plug. The markets have had very little to do with economic reality for quite some time. We'll see if this week is an acknowledgement of that gap, or just a blip of consciousness prior to a coma relapse.

If the dam does burst, it will be interesting to note whether or not the gold rally unpegs to the market rally and resources pile into gold hoarding. We'll see if lack of bank reform coupled with new proposals to raise FHA down payment requirements will stir the ire of the jobless. It's great that 30-year mortgages are at all-time lows while nobody qualifies to get one except those being propped up by already delinquent FHA programs. Loan reserves are already at less than 2% of loans insured. Great. Combine that with a 128% increase in strategic defaults, homeowners just opting not to pay their mortgages as penalties become lax and the sheer inventory of foreclosures makes it virtually impossible to do anything about it. Think the housing crisis will get resolved anytime soon with the largest amount of ARM resets still to come next year?

If you have any doubts as to whether or not your government has any interest in your well being, look at the Vanity Fair article detailing the multiple scenarios in which GS officially took over the world, or was at least handed the rest of the banking industry on a platter. Someone had to remind Paulson that he used to run GS, and that the head of the Treasury couldn't set up a deal between his former firm and a distressed bank.

1-1 again last week, this is getting repetitive. Gonna stick with big losers and winners this week. Like the Bengals over the hapless Browns, Giants at KC and Colts against Seattle.

http://www.bloomberg.com/apps/news?pid=20601087&sid=apCiBvKN8DTU

http://www.vanityfair.com/online/daily/2009/09/andrew-ross-sorkin-too.html

Banana Anyone?

2009-09-23T05:13:00.000-07:00

"Because the end of inflation automatically triggers an immediate depression, there's always pressure on politicians to inflate too far. Since no one can identify the point of no return precisely, it's easy enough for those in power to convince themselves that the next dose of inflation won't be too much."

You Can Profit From a Monetary Crisis, Harry Browne 1974

Personally, I love bananas. Bananas in my cereal, just ripe bananas, grilled bananas, and of course, bananas and peanut butter. I've even stolen my children's Gerber bananas to dip a big spoonful of peanut butter in. But a banana republic I could do without. When our government agencies just do whatever the hell they want, that's what you got. I believe we've already discussed what the Fed and the Treasury have been up to, with no legal or Congressional backing for much of their money printing and acronym creating actions over the last year. And they're not alone.

The SEC is a sham. In her scathing Bloomberg article yesterday, Susan Antilla references the recent settlement with BAC for a whopping $33 million. "Such outcomes are possible only in the bizarre place known as SEC-land, where financial firms or employees get accused of breaking the rules but almost never have to admit it. Settlements get signed, skimpy nuisance fines get paid, and the accuser and the accused pat themselves on the back for a job well done. To round out the absurdity, some of those at the agency doing the accusing land jobs at firms they once attacked. This time, a judge has called the agency on the farce of bringing a case in which no names were named (let’s have some actual people pay these fines, shall we?) and shareholders, not management, were expected to pay fines for the alleged cover-up of $3.6 billion in bonuses to Merrill employees."

She goes on to reference a report from David Kotz, the Inspector General, that 'calls into question the agency’s ability to fulfill its basic functions,' which sounds to me like a pretty good reason to put it out of its misery."

How's about the FDA? Yesterday I received a forwarded email prefaced with "my friend's a doctor" (I'm loath to believe these as your friend may be a dentist, a podiatrist, a Ph.D.) stating there had been a Children's Tylenol recall. So I went to the website today, no mention of a recall anywhere. But when I called Johnson and Johnson, I was informed, oh yes, there's a recall, you just have to go to the Tylenolprofessional.com website. Really? A product that millions of people take on a daily basis in this country and you can't list the recall or are not required to list on your main website? That is scary.

The Business Insider put out a list this weekend of our "most" corrupt Congressmen. Reps such as Vern Buchanan (R-FL), a two-term member of Congress representing Florida’s 13th district, "who pressured his employees to make contributions to his campaign committee. Rep. Buchanan owns several car dealerships in Florida and after he began his congressional campaign in 2005, in one seven-day period, he raised $110,000 from employees of his numerous car dealerships. Several employees have since alleged that Rep. Buchanan pressured them to make contributions to his campaign committee." See the rest of the list here: http://www.businessinsider.com/the-most-corrupt-members-of-congress-2009-9#rep-vern-buchanan-r-fl-1

These are our leaders, we elected them. And with the market heading to ear-popping levels, they hope that we'll forget the damage they've wrought.

1-1 last week. The Packers got pounded. Will post new picks on BOD today or tomorrow.

Got into SPY Dec. 115s this week, looking to add way OOM GS calls as well. Couldn't get filled on Monday and paid for it yesterday. Don't know if GS can be stopped.

http://www.bloomberg.com/apps/news?pid=20601039&sid=a903JQKwJEiY

Feels Bubbly in Here

2009-09-17T05:11:00.000-07:00

The market has been going nuts. GE is up 17% this week. Remember Genworth, a stock that fell from over $30 to .60? Yeah, back up to almost $14. GS at 52-week highs. Daily back pats from Obama and Bernanke about the recession ending and a jobless recovery. Capital One, whose CEO said credit cards are a no growth business yesterday is back near $40. As Obama half-heartedly bangs for reform, we know the truth is that as stock prices go up, nobody, especially Wall St., cares.

Putting a time frame on this charade has been difficult. But gold has finally cracked $1k and I think will go much higher. Oil still hovers over $70. A WSJ article yesterday evaluated the impact of government intervention to date by saying, "Incoming data will reveal more in coming months, but the data available so far tell us that the government transfers and rebates have not stimulated consumption at all..." We lost $21 billion in consumer credit last month. Simon Property Group, our largest mall owner, said best case CRE prices would be an increase to 2004 levels.

But in the meantime, the market goes up on a daily basis. I have successfully hedged JPM with BAC 3x and will look to do it again today before close. Shorter-term, SPY calls appear to be a good hedge against any shorts you may have.

On the football front, USC disappointed me by not covering against a sluggish OSU team coached by "let's not lose until the last 2 minutes" Tressel. The Bengals, fresh off the worst loss of all-time, will get destroyed on the road by GB (-.8.5) and I don't expect the Colts to lose to a team that let Matt Ryan pick them apart last week (-2.5).

http://online.wsj.com/article/SB10001424052970204731804574385233867030644.html

Football is Back!

2009-09-05T12:00:00.000-07:00

Aaargh, with all of the pennant races essentially decided, my hometown Indians having given away their two best players for a box of crackerjacks, and memories of a great Super Bowl starting to dwindle, football is back. I will now list for you the greatest fantasy draft ever made, especially from the 5th position, and also remind you that I should have reminded you to bet against OSU as 17-pt. favorites against Navy. OSU never plays well in their first game and has even trailed teams like Ohio University at the half. I hope the Tiger Coach is watching as I advised his readers of the same, and look forward to USC faceplanting the Buckeyes next week and reminding everyone that the Big 10 stinks.

Rd. 1-Deangelo Williams
2-LT
3-Anquan Boldin
4-Kurt Warner
5-Pierre Thomas
6-Braylon Edwards
7-Ray Rice
8-Bernard Berrian
9-Antonio Bryant
10-Ahmad Bradshaw
11-12 Chargers D and somebody who will never play
13-Matt Hasselback
14-Owen Daniels
15-Kicker

The only rule of mine I broke was drafting a D before the 2nd to last round, but as everyone had already broken arms overreaching for TEs too early, I knew Daniels was available forever. How did I accumulate not only superstars at all positions, but backups who are good #1s on their teams? It all comes down to discipline. While others were busy drafting Willie Parker in the 1st round, Peyton Manning always too early, and defenses in the 8th round, I was busy accumulating an all-star team. Should be interesting, unless Warner comes down with a case of oldmanitis (just like you Anon) and ruins my season.

Florida did not cover as predicted. Even Urban Meyer won't run it up on a cupcake by 73 points. 1-0.

We've Suspended Our Suspension of Disbelief

2009-09-03T09:10:00.000-07:00

"According to the theory, suspension of disbelief is a quid pro quo: the audience tacitly agrees to provisionally suspend their judgment in exchange for the promise of entertainment."
Wickipedia

The last few months have certainly been entertaining. Stocks catapulting 50% off of their lows (this still leaves them down 30% from 2007 highs I remind you), GSEs comprising 30% of the trading volume with losers like AIG soaring 300% in a month, and talk of a jobless recovery spurring global optimism have certainly seemed at the far ends of reality. But with gold bumping its head on $1K again, abysmal retail sales even in a back-to-school month, Obama's ratings plummeting, and the S&P hopscotching over 1000 as well, investors don't seem quite as convinced all of a sudden.

Congrats to my current state, Florida, on having the highest muni-bond default rate in the country! With property values plunging and people leaving in higher numbers than they're coming in, revenue is down, way down. While I'll take the reduction in property tax, I'm waiting on an assessment to make up for all of the delinquent HOA members I've been carrying. But fear not. Your state may be next if you live in Ohio, Cali, Indiana, Michigan....

The rest of September is cloudy. When data points like flat ISM surveys and jobless claims hovering in the 600K range fail to spark a rally, perhaps reality, and even worse, fear of a second collapse may return. In the meantime, it's time to stay hedged in financials for the next few weeks and hope that you held onto/added some GLD or physical gold.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajaU9mVjI3cM

Bernanke Has Saved the World, Now What?

2009-08-25T08:28:00.001-07:00

"It's… almost peaceful. No need to believe in either side, or any side. There is no cause. There's only yourself. The belief is in your own precision."
Max Von Sydow's character, Joubert, from 3 Days of the Condor

My biggest mistake as an investor this year has been forgetting about "what if." In Michael Lewis' Liar's Poker, one of his early influences was a boss who was constantly asking this; what if a tsunami strikes Asia, what if a foreign currency blows up, what if we return to the gold standard (yeah, right!)? My guess is that this guy probably eventually blew himself up in a Black Swan event, but the question should be asked.

Rooted deeply in bearness and having killed the market doing so lulled me into a false sense of security. When Citi dropped under $1 and BAC under $3, my question was, "who's next," not, "how much longer can this last?". Believing strongly that world economic collapse is and was upon us, I did not prepare well at the time for the ridiculous rally that ensued. And as Bernanke gets reappointed and markets continue to rise on the scantiest of really good news, I realize that our 2 best trades this year have been calls on stress test banks and on the market after a tough June.

Have no fear. This market, this economy, are all a sham. Nothing has changed my opinion on that. Jobless rates are over 10% (gubmint, not Shadow Stats data) in 15 states. Twenty-percent of the entire trading volume was in Fannie and Freddie yesterday, and the Fed might actually have to tell us which banks were insolvent without big-time loans. And don't forget H1N1, your friend, the swine-flu. If the government report that came out yesterday turns out to be half right, the economy is sunk. 30-50% of the population getting sick and 30K-90K deaths? The sheer panic alone would cause most businesses to operate at diminished or useless capacity. And let me tell you as someone treating 20 cases/week, this thing feels under reported.

So Joubert was right. No need to feel like a bull or a bear. Just make good trades and hedge appropriately. I'm feeling flush after huge returns on SSO and DIA calls, with hedges on FAZ, Citi calls making a run, and longer-term calls on oil and gold. Inflation? S&P up/down? Oil at $50 or $100? Sure.

http://www.marketwatch.com/story/jobless-rate-hits-double-digits-in-14-states-dc-2009-08-21
http://www.bloomberg.com/apps/news?pid=20601087&sid=av_bCYnKeIUk

AIG is Going to Pay Us Back and Other Fairy Tales

2009-08-20T18:27:00.000-07:00

"Robert Benmosche, who took over as CEO earlier this month, told AIG workers he'll rebuild businesses and won't be rushed by the U.S. into dumping assets at distressed prices, Bloomberg reported Thursday, sourcing a recording of an Aug. 4 meeting for employees. "I don't liquidate things, I build them,'" Benmosche said, according to Bloomberg."

Wow, tough talk from a man sitting on a company propped up by $180 billion in taxpayer money. We wouldn't want AIG to be forced to liquidate anything under fair value. Ah, and speaking of fair value, there was a resurfacing of mark-to-market accounting talk this week. However, given the plunge to 12-year lows the last 2 times M2M was left in place, and the subsequent 6-month, 50% charge since it was lifted, I don't give it a significant chance of reappearing in its old form.

Jonathan Weil of Bloomberg wrote an article today detailing an accounting change that could effectively wipe clean the tangible assets of insurance companies. He was referring to "deferred acquisition costs." "Under a unanimous decision in May by the U.S. Financial Accounting Standards Board that has received little attention in the press... the board is scheduled to release a proposal during the fourth quarter to overhaul its rules for insurance contracts. If all goes according to plan, insurers no longer would be allowed to defer policy-acquisition costs and treat them as assets." Uh oh, what does this mean. "The impact of such a change would be huge. A few examples: As of June 30, Hartford Financial Services Group Inc. showed DAC of $11.8 billion, which represented 88 percent of its shareholder equity, or assets minus liabilities. By comparison, the company’s stock-market value is just $7.3 billion." He mentions one of my favorites again, Genworth, whose DACs are worth twice its book value.

However, our resident market insider informs me that yes, this rule will pass, there will be large one-time chargeoffs, then a return to profitability. I'm shocked anytime the FASB does something that might hurt the market, so let's wait and see what happens.

One thing that is not surprising is Congressman Alan Grayson's continued efforts to find our money. "Neil Barofsky, inspector general of the U.S. Treasury Department’s $700 billion Troubled Asset Relief Program, agreed in an Aug. 3 letter to audit the program after a request by U.S. Representative Alan Grayson. Barofsky will examine why the guarantees were given, how they were structured and whether the bank’s risk controls are adequate to prevent government losses. 'What kind of toxic assets did the Federal Reserve guarantee, and what off-balance-sheet liabilities have been pinned on us?” Grayson, a Florida Democrat who sits on the House Financial Services Committee, wrote yesterday in an e- mailed response to questions on the audit. “How much money have the taxpayers already lost? We need to know.'” Grayson is quickly becoming a hero of non-MSM sites for his constant hounding of our financial felons.

Enough blabbering, what's next? August expiration hits tomorrow and we'll see if the market runs a little further into fantasy land, shaking off news like negative consumer spending and a return to rising unemployment claims. The bounceback from Monday has put China and emerging market puts all the way to March back on the map as DIA and SPY remain expensive beyond 2-month windows. The concern with China is not it's 80% runup, it's how far will the government let it fall on the way down? They're not playing by our rules. If you're feeling lucky, however, Itulip is predicting the S&P crumbles back under 600 before year end. SPY 60s for .19 anyone?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aiWZXE5RKSCc
http://www.bloomberg.com/apps/news?pid=20601039&sid=a8itsmbfm9qc
http://www.marketwatch.com/story/bank-stocks-shrug-off-jobs-report-2009-08-20

Tick, Tick, Tick, It's Getting Louder

2009-08-14T14:57:00.000-07:00

Another interesting week that found our last blog right on point. DIA $97s doubled in value this week before imploding, making for a very nice trade. Regional banks were called out on Wednesday by Elizabeth Warren of TARP review fame as undercapitalized. “We haven’t really resolved this problem of illiquid assets on bank balance sheets and it’s more acute for the small banks,” Warren said. This caused an 11% drop in Zion in one day along with other smaller regionals.

A Bloomberg article today also exposed flailing regionals, stating more than 150 publicly traded banks have at least 5% non-performing loans. "'At a 3 percent level, I’d be concerned that there’s some underlying issue, and if they’re at 5 percent, chances are regulators have them classified as being in unsafe and unsound condition,” said Walter Mix, former commissioner of the California Department of Financial Institutions." As an example, Colonial Bank, which had 6.5% of its loans non-performing, was just shut down and enveloped by BB&T this afternoon.

Even Dick Bove said this week that the bank rally is "running on fumes," shocking coming from the man who told us Lehman was grossly undervalued at $10 (he must have meant 10 cents). David Tice, who runs the Prudent Bear Fund, said today that stocks are "grossly overvalued" and expects to break our March lows. D.R Horton and Genworth Financial were downgraded this week as analysts finally looked at their prices and said, "C'mon!"

But optimism persists. J.P. Morgan predicts a V-shaped recovery that shoots right through predictions of sluggish growth. However, the news today wasn't so rosy as consumer spending shrank instead of grew, and sentiment retreated as well. How quickly we forget that our economy is a giant Ponzi scheme and when people don't spend, our economy craters. I still think we could sputter out a few large days over the next few weeks or even month, but the ticking is getting louder. Colonial was the largest bank failure this year. There are plenty more to come. Until then, we'll keep our eyes on these smaller banks and overseas for opportunities.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEneAhol5ZHc

http://www.bloomberg.com/apps/news?pid=20601109&sid=aTTT9jivRIWE

How Long Can it Last or How Quickly We Forget

2009-08-09T06:35:00.000-07:00

Americans have short memories and even shorter attention spans. That's why in a space of 4 months we've seen comedy shows applauded for lampooning stockpickers replaced with a return to in-your-face/you're an idiot screaming from the MSM if you don't think the economy is roaring again. The disaster of LTCM was swept under by soaring internet stocks. The destruction of internet stocks replaced by a housing bubble. And while the collapse of the housing bubble is ever-lingering, our "newly" found source of hope in the form of infinite government spending has lifted stocks 50% in a very short time.

Chinese markets have rebounded 80% this year, with government pumping up bank Tier-1 ratios in an equally useless effort to increase loans to real economy users this year. Eric Janszen of Itulip has written that this is our second and last chance to short China, as he expects an implosion by their fiscal 4th quarter in both finance and real estate (the WSJ jumped in with a copycat article the day after, but actually recommended a few long picks).

Right on cue, regional banks got an upgrade the day after my last post, with our watch list banks rising between 11% and 26% in the last week. Citi rose over $4 for the first time since our stress test call in April, and is up almost 50% in the last week. So as the S&P crosses 1K and looks for 1050, what's changed since we last saw these levels?

Unemployment is much higher. Continuing benefits on hundreds of thousands of people are set to expire. Another $10 billion in consumer credit was lost last month (quite a bit higher than the $4 billion expected). State and local governments are bankrupt like no other time in our history. CRE is closer to imploding. And we still have all of 2010 and 2011 for ARMS to blow up.

So the race is on to see if the government can fool us into thinking the economy is better until it actually is, or, if as Paul Krugman just suggested, stimulus #2 is inevitable to keep this charade afloat. Until then, we'll keep an eye on the bubbling pot of regional financials, homebuilders, and emerging markets, and relish the opportunity to short them again. I'd be wary of shorting the market through August expiration though, and have even added DIA 97 calls as protection.

http://www.itulip.com/forums/showthread.php?p=114290#post114290

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGLyBh1Xb_5g

The Government is the New Economy

2009-08-01T10:59:00.000-07:00

Early GDP numbers came in, yes, better than expected yesterday, at only -1%. Of course, Q1 was revised downward to -6.4% and all of last year's GDP was revised downward to an anemic 1%. But green shoots are strong, and the stockpiling of inventories and more importantly, massive government spending to the tune of 20.9% of U.S. growth, kept GDP afloat and will push it into positive territory Q3.

So where are we really? With markets 40% off their March lows, it begs the question of where can it go from here? If 14K was based on corporate fraud, and 6,600 was based on fear, what does 9,300 tell us? Does the market really price information in 6 months ahead? How did that work for you in 1999 and 2007? Not so good.

We've never seen the government intercede in the way they have over the past year, pumping money into large banks (who have not yet lent that money to anybody). So, if Q3 is the pinnacle of influence as per GS and Itulip, and inventories don't float higher in Q3 as expected as Karl Denninger predicts (for an in-a-nutshell view of how the MSM treats anyone who doesn't push a recovery, watch this http://www.cnbc.com/id/15840232?video=1201848678&play=1), are we primed for collapse #2?

Yes. But over the next month be wary. I sold out of SSO yesterday with a 200% gain in 10 days, wary of a sudden and drastic retreat, having held my cards through the jobs number and GDP (scary couple of days). When July jobs are revealed on Friday, economists are looking for a meager loss of only 275K. This seems impossible, but anything near this number should shoot the market higher. But as regional banks and other laggards rise 300, 400% off their March lows, it's at least time to make a list for that day in August or September where we again pull the trigger.

In the meantime, anyone else appalled over the bonus list just revealed from TARP recipients?
BAC ($45 billion in TARP) doled out 28 bonuses over $3 million. Citibank 124. GS 212 with the average bonus over $160K, after they've borrowed up to $60 billion of our dollars. We really must be a bunch of suckers. At least Alan Grayson asked Bernanke this past week how handing the equivalent of $3K to every New Zealander helps our economy. Ben didn't like that question much.

Regional Banks on our watch list (some from my blog last year, more recently from a Markman article that will not qualify as too big to fail):

Zion $13.58
RF $4.42
Key $5.78
SNV $3.49

http://www.itulip.com/forums/showthread.php?p=112821#post112821

Indigestion

2009-07-28T13:15:00.000-07:00

The plethora of earnings reports and pseudo-information out the past few weeks has been hard to digest, all with the net effect of a large market rise. Earnings have managed to not trip on estimates lowered to the ground, as 76% of S&P reporters to date have beaten their projections. Ridiculously low projections (you didn't think analysts would err on the top-side this soon did you?) combined with huge savings coming in the form of layoffs are behind these beats, not sudden increases in sales to strapped consumers. As unemployment rises and inventories are replenished, do we not realize this is a one-trick pony? You can only cut so much of your workforce before you cease to function as a company.

But this logic doesn't seem to play as there was general excitement over MOM gains in home prices of 0.5%, the first such gain in over 2 years. Ok, but home prices are down 32% YOY; the fact that they are not accelerating at previous pace is because that pace cannot be maintained. Don't tell Wall St. though.

To no one's surprise, temporary short-selling bans have become a permanent fixture. However, disclosure of short positions by hedge funds was not extended. We've been awfully hard on these guys, haven't we? 2008 was rough for them, let's let them get back to leveraging their clients into oblivion.

To my surprise however, there has been some action on GS' and other large firms use of super fast computers to gauge market direction before anyone else has a chance to buy or sell. NY Senator Schumer has pushed the SEC to action, threatening legislation if they fail to force the availability of pricing simultaneously for all market participants. This didn't sit well with one of the CEOs of these platforms. "William O'Brien, chief executive of Direct Edge, made no apologies for the practice that fueled his market's rise and said that dark order types 'democratize access to dark liquidity.'" What?

Oh, and there's $165 billion in CRE loans coming due this year, much of which is already delinquent. Both Benji and Janet Yellen have said this week that this remains one of the largest threats to the banking system. Watch out for bailout #2, or does that not come until this one officially fails somewhere around Q1 of next year? Don't forget to watch Bernanke explain to locals on PBS why we gave AIG $185 billion but let local businesses fail en masse!

http://www.marketwatch.com/story/us-regulators-seen-moving-to-ban-dark-flash-orders-soon-2009-07-28

http://www.marketwatch.com/story/sec-makes-temporary-short-selling-rule-permanent-2009-07-27

http://bloomberg.com/apps/news?pid=20601087&sid=a7n1KdXsCEEY

Did We Stub Our Toe?

2009-07-21T19:24:00.000-07:00

"In a way, I feel sorry for him. It's not his fault."
"Whose fault is it, the bloodsucking, capitalistic beasts of Wall Street."
Excerpt from Eye in the Sky, Philip K. Dick, 1957

On the way home from the clinic this evening, I scrolled through the dial and settled on NPR, a habit that has been easy to break over the last year as the general tone has seemed all too often to coincide with the daily musings of the MSM. However, I was ensnared by the mention of Matt Taibbi, whom I recently referenced in light of his poignant GS bashing. He took the host through his findings, and was emboldened by GS' recent earnings bomb, which has brought about new skepticism over our bailout system. Rolling into his next interview, the host introduced us to Charles Ellis, "founder and now senior adviser of Greenwich Associates, an international strategy consulting firm he founded in 1972. His book, “The Partnership: The Making of Goldman Sachs” came out last October."

Needless to say, Mr. Ellis, who sounded like he was 100 years old, did not concur with Matt's assessment of GS as a blood-sucking vampire. He quickly asked to be excused from the interview if it was going to be a GS bashing session, and then made the analogy of comparing our economic woes to stubbing your toe in the middle of the night. You're looking for someone to blame, the furniture, the bathroom, etc., but the finger should be pointed at yourself.

In a way, Mr. Ellis is right. Americans need to take responsibility for their glutonous spending and the ramifications of using money they didn't have and could never expect to have. But Mr. Ellis' analogy stank with the smell of corporate greed and protectionism. Posting record profits 9 months after being backstopped from bankruptcy both through TARP and AIG kickbacks doesn't make it appear as if GS is playing by the rules. As Taibbi pointed out, their VAR (value-at-risk) models, the very same models which Taleb has criticized as being woefully inadequate for evaluating large events, allowed for the largest daily losses in GS history last quarter. Is this a sign that these guys have learned their lesson? Are they really a bank? C'mon!

http://www.onpointradio.org/2009/07/goldman-sachs

The Forest Through the Trees

2009-07-18T09:16:00.000-07:00

It's hard to see sometimes, especially when banks that needed backstops of over $100 billion continue to report billions of dollars in profits. I was hoping for one more market dump on Monday to get out of our FAZ calls with a small gain and reset after this bogus earnings season, but Meredith Whitney trumped me by turning GS bull on Monday morning. We knew the fix was in when she appeared on CNBC, something any bear has been loath to do. Wonder is she had any heads up from the inside as her estimates were by far the most accurate, and over $1/share higher than the average?

While the market was raging higher this week, we were presented with a golden goose in the form of CIT. But while I was busy putting on a JPM hedge that earned 10% in 2 days (late to this party as well), CIT was busy going bankrupt. Around 2:50 on Wednesday, shares were halted at $1.64. They opened again on Thursday at .40, only to hit .90 at one point yesterday. But $1 puts purchased on Wed. for .05 went to near .70 on Thursday, not bad for a days work if you had the courage. I was too entranced by the 250-point run up to put my money down.

Despite the market's rapid rise this week, only GS really rose after actual earnings. One-time gains from tax credits and huge loss reserves didn't seem to sooth most investors. Only GS' ridiculous gains from being the only game in town were considered legit, if not criminal. It was nice to see an op-ed by Krugman yesterday on the back of last week's Taibbi article condemning Goldman as a profit-machine benefitting not only from implicit government guarantees, but the demise of the American financial system. Even CNBC's on-air editor Charlie Gasparino (who was quickly pushed off-air) said that GS' ability to make money like this, given the money they sought from the govt., is obscene. He reminded us that he was there in September, and that GS was indeed one day away from going bankrupt with everybody else.

If there's one phrase I hate from the MSM stockpickers, it's "don't fight the tape." With that said, who knows what kind of catapult or trap-door the rest of earnings season holds? I've already made my short bets, will look to hedge next week with SSO or SPY out-of-the-money calls.

PPIP? PPPlease

2009-07-10T06:28:00.000-07:00

"It's pathetic that the real reporting has been left to a music magazine and some independent bloggers."
Matt Taibbi

Now, The BBB wasn't mentioned specifically, but I'm sure Matt had us in mind when interviewed post expose on GS in Rolling Stone entitled, "The Great American Bubble Machine." He basically blames GS for the creation and destruction of every bubble going back to the 30s and points to political influence all the way up to Obama. This story is becoming old news so I won't rehash more quotes, but interesting that GS was also involved in another big story this week, one of possible "secret formula" theft by a leaving employee.

"The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Mr. Facciponti said in the court, according to Bloomberg. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”

This is what GS' lawyer had to say concerning Sergey Aleynikov, who supposedly uploaded GS' proprietary formula for evaluating trades in microseconds to ensure huge profits. But doesn't this quote beg a simple question from the judge? If others could use this formula to manipulate the markets, isn't this what you are already doing, GS? Not much of a stretch I think, but it would be fascinating if someone else was able to use it to steer the market in the same way GS appears to in the last 20 minutes of daily trading. By the way, have we received an explanation as to why trading was extended 15 minutes durin a session last week ?

Now to the title. Remember when the bailout money was supposed to relieve the banks of all their toxic assets, then a week later it was decided no, that's no good, let's just give the money to the banks. Then remember this PPIP thing, where we were going to let private equity leverage loans at 10-1 with explicit caps on losses, to buy up to a trillion dollars in toxic assets and that this would save our financial system? Well, turns out PPIP isn't quite going that far. Try 4% of that original figure, $40 billion. $40 billion, does that help anything? Does anyone else feel like Geithner Paulsoned us with this doomsday scenario at taxpayer liability to go along with this BS?

Elizabeth Warren of the Congressional oversight committee reiterated today that banks are paying back warrants at 66% of face value and continue to push to pay even less. At least someone is pushing our interests, even if their advice goes unheeded.

And last, congratulations to Anon on his new baby boy!

http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine

http://www.nytimes.com/2009/07/07/business/07goldman.html

What's In a Number?

2009-07-03T05:06:00.000-07:00

First off, happy 4th of July everyone! I hope that everyone has a happy and safe weekend.
We've seen plenty of figures over the last week. Let's review some of these numbers and try to put them in the context of reality.
1. Americans lost 467K jobs in June according to our government. This was over 100K more than economists' estimates, which had been revised up just during the week. Barack glibly announced that while this was a bad number, he had just met with a bunch of big energy dudes who are making tons of money and who will provide jobs going forward. I'm sure that's a big relief for the half million Americans who just lost work.
Keep in mind that number doesn't reflect seasonal layoffs in retail where college-age kids will have no chance of getting a job and much more importantly, the impending job losses from the Chrysler and GM bankruptcies on both the plant and dealership fronts.
2. Speaking of automakers, let's dig into the sales figures for our largest companies. Ford's mere 10.9% decline in sales (YOY it turns out) was trumpeted by the MSM as good news and a reflection of Ford's growing market share. As Eric Janszen points out in his most recent Itulip article, sales numbers (GM -33%, TM -31%, Chrysler, -42% Honda -30%, Nissan -23%) are even worse than they appear:

"Automakers also have been plying record incentives in the form of cash or special financing to press customer traffic into dealerships, making it more difficult to determine the long-term demand for vehicles. Edmunds called the month the most expensive June on record, with the average U.S. incentive at $2,930 per vehicle sold, up 20 percent from a year earlier. Edmunds expects incentives to fall as production cuts in recent months pare inventories. Ford’s profit margin is -12.66% and Operating Margin is -5.49%. Hard to imagine how increasing incentives by 20% will improve on that. Input costs, such as payroll, are not down 20%."

So, Ford is getting $87 back for every $100 in car they sell. Yeah, that sounds like good business.

3. 125%, 80K, 5 million. These numbers represent the possible new percentage underwater Fannie and Freddie will be able to refinance loans, the number of loans they've been able to refinance at 105%, and the total number of people who were supposed to be helped by this program, respectively. In other words, the program to date has been a total failure with a little more than 1% of supposedly eligible homes being able to refinance. Even at 125% underwater, given the ever-rising rates and demand for at least 20% down, most homeowners will continue to be out of luck on the refinancing front. Perhaps that is why mortgage applications fell 19% this week.
4. A "slight" glitch in home sales in San Diego will have to be adjusted for the month of May. The WSJ reports that sales YOY will be revised down modestly from 89% to 6%. Hmm. Not quite as good. This is typical both of local level realtors and the NAR, who continue to front-run overly optimistic housing data when the truth is, the number of foreclosures banks are not revealing is tremendous, and if revealed, would implode the Case-Shiller index.
5. 5%. That's the new minimum balance on JPM credit cards and Citi will also be raising its minimums on 15 million customers. So when you see Americans "saving" at the highest levels in 60 years, be forewarned that this is simply the CC companies slashing available credit to already drowning consumers. If you can barely pay 2%, 5% is gonna be rough. Expect delinquencies to rise rapidly over the remainder of the year.

Sorry to be so pessimistic heading into our holiday weekend, but the only thing I feel sanguine about right now is having a few days off! Enjoy your 4th.

http://itulip.com/forums/showthread.php?t=10620

http://online.wsj.com/article/SB124638992043975185.html

China Gold and Brokedown Budgets

2009-06-27T11:55:00.000-07:00

While gold has fallen off of its recent high of almost $1K, it did rebound almost $30 in the last few trading days of the week. Perhaps it had something to do with this:

"Li Lianzhong, who is head of economics at the party's policy research office, said the U.S. dollar is poised for a fall, making gold and land better investments for China's $1.95 trillion in foreign exchange reserves, the report said. It quoted Li as saying Beijing should also focus on buying up energy and natural resources."

While the report was made by Marketwatch, The Economic Populist adds, "Now Mr. Liangzhong isn't just your average aparatchik in the Communist Party apparatus. He's the head of the party's economic think tank, and according to many like Jim Rogers, he has a lot of clout."

Foreign fears over our impending inflation and currency devaluation are certainly growing. The hard part is figuring out how and when a treasury dump will occur, spurring even more inflation.

Continuing on a theme from the most recent blog, most state budgets are up for vote next week for the impending fiscal year. Problem. Most states have a serious shortfall. Bigger problem. States can't run budget deficits. Huge problem. California already played its one-trick pony of no income tax refunds. CNN Money reports:

"In some states, the leaders aren't even talking. Pennsylvania's governor and Senate Republicans, who have to close a $3.2 billion gap for the current year, are not negotiating on their budgets. The governor's $28.4 billion budget seeks to raise the personal income tax rate by half-a-percentage point and draining the commonwealth's $750 million rainy day fund. Senate Republicans' $27.3 billion plan looks to cut spending on areas such as education and community revitalization."

So what does a state do when it's out of money? The choices aren't great. "Sometimes, however, the government faces a shutdown. When Tennessee officials failed to pass a budget on time in 2002, classes stopped at public universities, drivers licenses were not issued and road construction ceased. Pennsylvania's Rendell has already said state workers would have to stay on the job without being paid if the budget isn't approved. Services will start to be affected if the budget standoff continues beyond its typical week's delay."

And California? Ugggh. "Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression," Controller John Chiang said. "The state's $2.8 billion cash shortage in July grows to $6.5 billion in September, and after that we see a double-digit freefall."

Here in Florida, we have a unique summertime opportunity for the entire state to crash. As my Dad was kind enough to point out, the CAT, or catastrophe fund, is underfunded by $19 billion. Let's all hope for a mild hurricane season.

http://www.flains.org/content/view/2655/38/

http://money.cnn.com/2009/06/24/news/economy/Clock_ticking_on_state_budgets/index.htm

http://www.economicpopulist.org/content/china-fed-no-more-treasuries-we-want-land

Philadelphia Freedom

2009-06-24T09:43:00.000-07:00

"At the moment he could not see clearly enough ahead to know one way or the other. Something to save us, he thought; something to doom us. It-the equation of everything-could go either way."

Philip K. Dick, A Maze of Death

Sorry for the prolonged absence, just got back from a much needed mini-vacation to the City of Brotherly Love where my brothers and in-laws live. A quick trip to Atlantic City revealed the slowly dying carcass of a town that will lose doubly bad as it ramped up at the worst time in an effort to compete with Vegas. Soon to be passed (slots are already in place in Philly) legislation in both Pennsylvania and Delaware legalizing gambling is going to spell continued doom for AC. Free room comps during the week are common and even the Borgata (that buffet was good!) is offering $99 rooms during the summer. I entered my first Hold Em' tournament with my older brother and we both did reasonably well, finishing in the top 25 out of 104 players.

The quote above from Dick kind of sums up where we are. Treading in much murkier water than the government would have you believe, the markets are kind of floundering. Despite a 200-point plunge on Monday, the market is shooting up today even though continuing jobless claims are a grim reminder of how bad the real economy is (Sorry, Markman, have no idea why you thought they'd decrease by 40K and if the June number comes in at only 275K losses, than you must actually be working for the government).

Moody's says credit card charge-offs are now officially over 10%. In case you haven't seen the news lately, California is bankrupt. And I can't imagine that they're the only state bleeding money (I know Florida is, we have no revenue, no tourism, and no construction). It should be interesting to see what the government is forced to do when California is unable to cut spending any further......

Bankrate.com says 30-year mortgages are now up to 5.8%. New home sales slipped and shockingly, builders like Lennar continue to lose money. But don't take my word for it. "While there are buyers in the market, they lack confidence, and they're worried about their own jobs and the economy in general," said Douglas Yearley, regional president at luxury builder Toll Brothers Inc. "We're also in a vicious cycle when it comes to capital," Yearley said. "Banks have tightened their lending standards, which is limiting the number of buyers that are eligible for financing. This decreases the demand for homes, which causes home prices to further plummet."

http://www.marketwatch.com/story/builders-brace-for-more-foreclosures-arm-resets

Fed Overhaul

2009-06-18T10:36:00.000-07:00

"Hey, Timmy, Benji here."
"BB, what can I do for ya!"
"Timmy, I officially need your approval to write blank checks for the big boys in emergency situations. So what do ya say to half a tril' in ABC money?"
"No problem, Benny boy, I've got a big pile of rubber stamped permission slips right here."

So the charade continues. With promises about limits on leverage and new oversight on too big too fail companies, Obama intends to appease us, unemployed and 40% less wealthy. Notice the CEOS and managers responsible for these huge debacles will not be replaced and that there was no mention of caps on pay. Ultimately, Obama's plan would leave even more power in the hands of the Fed, enabling the oligarchs to consolidate power even further.

The day after my last post, we did see 2 consecutive markets with greater than 1% moves, fortunately to the downside. As new data rolls in, the persistent optimism over the slightest economic improvements seems to have waned as the reality of slightly better than horrible still isn't that good.

S&P downgraded 23 banks yesterday on a reality check and GS' chief economist thinks we're due for a pullback. Really? Wonder if GS has already placed their bets?

Martin Weiss pointed out in his article this week that the economy is in horrific shape, even with govt. stimulus which will only delay the death throes:

"The first quarter brought the greatest credit collapse of all time. Excluding public sector borrowing (by the Treasury, government agencies, states, and municipalities), private sector credit was reduced at a mindboggling pace of $1,851.2 billion per year!"

So where exactly will the spending and new business come from? Combine this with steep YOY declines in container data shipping into our largest port at Long Beach, and watch the green shoots wither come Q3.

http://www.moneyandmarkets.com/new-hard-evidence-of-continuing-debt-collapse-34202

1%

2009-06-14T07:23:00.000-07:00

In case you hadn't noticed, this market is going nowhere, literally. We've had over a week's worth of trading in which the Dow moved less than 1%, the longest streak in quite some time. During those days, the market had been up or down more than 100 points several times, only to see the last 15 minutes of the day sap or improve gains dramatically (electronic trading/hedge funds? yep.). Even with futures pointing to triple-digit moves, by the end of the day, we've been left with no answers. Here are some things from the past week that I think still need answers.

1. 30-year treasuries keep rising and mortgages hit 5.59% this week (without points, much higher). What happens when we go above 6% and the current and shadow inventory crush home prices again?
2. Is TARP a scam to build reserves in banks so they can buy treasuries at discounted rates (can they buy $1.5 trillion though)?
3. Lewis vs. Bernanke in battle of perjury. Ohio Rep. Dennis Kucinich already stated he thought Lewis perjured himself this week before Congress. But how will Bernanke and Paulson refute the email evidence when it's their turn to testify?
4. Will the G-8 minions succumb to more U.S. pressure to ignore huge holes in their banks' balance sheets, or will they heed Germany's hyper-inflation warning stemming from the U.S. printing press?
5. And, on an unrelated note, can someone explain to me why Boston's Dustin Pedroia and David Ortiz have combined to hit 5 HR this year in almost half a season? Oh wait, I think I got it....

Blood In, Blood Out

2009-06-10T07:34:00.000-07:00

Also known as "Bound By Honor," this is a fantastic epic depicting the struggles of a Chicano family in East L.A. torn apart by violence, drugs, and prison/gang ties. The movie stars a young Benjamin Bratt, but features a star cast who mostly play serious criminals like Delroy Lindo, Ving Rhames, and even Billy Bob. Of course, you can't have a prison movie without the ever present Danny Trejo (a real ex-con) there to shiv somebody if needed.

In reference to our current economic catastrophe, the "bloodmoney" we've pumped in has temporarily functioned as life support for our banks, but may be quickly pumped out due to the massive debt/GDP ratio we're establishing.

First, oil cracked $71 today and with summer driving season here, don't expect a collapse yet. Second, and maybe a much more ominous sign, Russia declared that they will dump U.S. treasuries for IMF bonds, a mere $10 billion worth. A drop in the bucket for now, but if China and Japan follow suit, we will be left holding an even larger toxic bag. Finally, mortgage applications continue to plummet at an accelerated pace. With 30-year rates rising to the mid 5% range, and let's be honest, nobody is actually getting a mortgage at that rate without paying points, and let's be honest, nobody can afford to pay points, so the average is actually sitting closer to 6%.

So again I ask, rising mortgage rates despite massive government intervention, a sharp rise in commodity prices, specifically oil, and fears over our inability to sell more debt to foreign countries being realized, doesn't this seem like last year?

Any chance Elizabeth Warren gets her way and we re-stress test the banks with the criteria on the table this time for all to see? Probably not, but would be nice. Also, should be interesting to see Obama's plan for corporate governance next week. Will this include further breach of current contract law as we've seen with the Chrysler sale where preferred bondholders just got screwed out of their turn? Any of the lawyers out there care to comment on this?

http://www.marketwatch.com/story/russia-to-reduce-us-treasury-holdings-reports

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZb6bu33Whng