Top of the Curve

dollar?

That, friends is Dollar Bill. Related to "DB" its interesting note from minyanville about the dollar white ties back to a post i had a few days ago about foreign inflows. The dollar has been gettin killed in both long and short terms...especially in last few days. Cheap dollar makes buying our securities and bonds more affortable. The two must be correlated to an extent...you would think that we draw in foreign inflows is exponenitally correlated to the dollars decline.

as a seperate note i bought some GSS today and am looking to buy GLD in next few days if it holds up.

posted by BKo @ 8:17 PM 0 comments

follow thru

well, despite the story going out that says GDP was really up only .9% the market rallied into the afternoon "on weaker oil". Oil was down today and rumors were around that mexico was buying puts...i havent found any story to back that rumor.

needless to say we got a sharp afternoon selloff to close basically flat. a lot of people are continuing to talk about the huge amount of yen open interst and now nikkei got hit pretty hard yesterday. well see if that spills over into the US.

ive yet to cover my shorts but any type of rally higher is going to make me fold. GS has come in but GM continues to amaze me. CAMH has been on fire and i think the stock is poised to really break out further with new management coming in.

posted by BKo @ 9:00 PM 0 comments

Interesting day

Well, friday proved to be pretty interesting. GDP was up, but less than expected. ANother interesting story was that the last GDP figure was miscalculated (specifically some auto numbers) meaning that it was too high and will be revised down. Im surprised I havent seen this story anywhere else.

Housing is still bad, and one thing that led some people to get buy some houses was prices were down 10%, and that is not including rebates, appliances etc builders are now including. Point being, housing prices are down more than that.

My investments now are hurting as im short GM, GS and SPY. Im also long SDS (which is a short SP instrument) and CAMH which is a OTC medical device company (and my only position that is currently profitable). Man, do I look like a loser.

Im going to start investigating investing in water - its a topic that is starting to heat up and a great long term investment.

Lastly, keep an eye on the election as if democrats win some control Pharma could get hit as well as some energy names (Excessive gains taxes. America at its best!)

posted by BKo @ 2:26 PM 0 comments

everything on the fed

if the fed has neutral of good things to say today then the market is going to continue ripping. i dont think there is any way rates are moved.on the other side i think if its bad the market is really goingto take a beating. certainly the one thing that favors a good stance is the election upcoming he isnt going to want to rock the boat. One side or the other has to submit (bear/bull). I might buy some cheap upside calls today to protect myself a bit and probably sell my downside puts, continuing to hold my SDS (inverse of SP etf).

good luck to us

posted by BKo @ 4:13 AM 0 comments

yesuuur

Well nice little trending day today ahead of the fed. Now I dont have a CFA or am much of an analyst but stuff like CFC kills me. The company missed numbers, warned and "tightened guidance". Then they say we are going to fire 2500 people and are going to have a Q4 buyback. How to pay for the buyback? Issue debt. SO Q4 earnings are going to be better becasue less shares outstanding and depending on what it costs to fire people . The company sucks, the industry sucks and the stock was UP over 2bucks today. Here is da chart.

I need to face something there is some massive buying out there. A lot of stories about China and other countries buying into US market which could explain the run but who the heck knows. I do know that volatility is dead, and the market hasnt had anyhting more that a -0.5% down day in the month of October which is historically a bad month. Lets not forget the election which while you may say "thats bull" how do you discount it? A hotly contested election gas prices diving and market ripping? I suppose you could claim those are somewhat correlated but thing about how strong the market was last year with oil at all time highs.

I want to buy some CFC puts here - ill see how the stock acts over the next day or so. Today had to be a squeeze. I may buy some upside SPY calls just to protect myself. I also am checking out some toy makers like HAS on some strong xmas sales which looks like we might get.

posted by BKo @ 5:17 PM 0 comments

my blogger was broken last night...

Fed on wed so i dont think this market will extend much more today. I think great short opportunity in housing stocks as they had a nice bounce but its time to go down. Ill write a longer update tonight...i included chart of unleaded gas and whats happened to it since goldman cut it from the CRB index (see posts below for more info). Other chart is of VIX which reminds me of a heart beating then flatlined...really pretty amazing.

posted by BKo @ 4:17 AM 4 comments

Goldilocked

Over brunch I had a pretty interesting conversation with someone who worked at a private equity firm. I didnt think they paid much attention to the economy or the market and just figuring out how much they could spend on a company and then how to pay for it by leveraging someone elses money.

Anyway

He was saying that the way he looks at it the economy is perfect. Market is strong, inflation contained, economy growing and people are out spending money. Here in new york there is tons of construction and hotels look packed. Just like goldilocks whos porridge (i had no idea thats how you spell pour-age) was juuuuust right. i pondered on this - and thought about my trading. The biggest mistake I have made shorting into his rally (and losing a decent chunck of change after having a great year) was that I wasnt trading based of what the market was thinking I was trading based off of what I was thinking. Housing? the market doesnt care. Financing? the market doesnt care. Its only two things that seem to be a big deal. 1)Inflation 2) Whats the fed going to do with rates?

The housing story I continue to believe will hurt the economy. But its not until after the election - thats maybe when it will shift into focus and well see if its doing any damage. Because right now it has a large bark but not much bite.

posted by BKo @ 9:02 PM 0 comments

Cheap Tax exemption

and just getting away from people. namibia anyone? i would prefer an island

Just bring a satellite link You can actually get one for under 150 grand...granted its 50miles off of nova scotia.

now, living in NyC i pay about 50% of my income in taxes. Its 40ish then 8% sales tax which easily taxes on another 8%. This all comes up as I was on my way to get some coffee this AM and was almost run over by a women yelling on her phone "Those [expletive] aint paid me the welfare dey owe me." I understand people hit hard times - everyone does. I also realize that I had a much different start on life than most. At the same time I know people who came from Columbia knowing zero english and with no money and are now managers at corporations like Travelers. I also know that if everyone is made equal then people with a mentality of "im mad because i didnt get my handout" are destined to be impoverished and I suspect so are their children.

My point is I think we have a broken system where we dont do enough to take care of our elderly, disabled, veterans and children and do too much to take care of people who dont wish to have a positive impact on society. Thats why communism wont ever work. I dont know how to fix it or if it can be fixed. Im just made I pay most of what I make in taxes to promote poor behavior and waste. Why cant I take half of those taxes I pay and dedicate them to an organization of my choice like education or wildlife programs? I would be willing to wager that no one would donate to welfare programs for people in their late 20's.

posted by BKo @ 7:31 AM 0 comments

No volatility

Well, triple witching comes and goes..vix now at 10.63 which is just dead. I think SP vol is something like a 7 which is just extra dead. Im not sure what to expect over the next few weeks with the election approaching - but this is a goldilocks economy and there is no fear of anything.

Big night for me last night so Im hittin the bed early tonight.I think the depression from being long a double inverse SP product is making me extra tired.

posted by BKo @ 6:39 PM 0 comments

one last exp note

chatter on my desk was that lots of dealers are short 1375 1385 calls in the SP. This creates a lot of pin risk as the dealers hedge these calls, selling if the market gets above the 1375 and buying if it dips below.

Something to watch out for and remember that triple withching has a lot of flows that has nothing to do with fundamentals. Although neither has the last 20% run in the SP.

posted by BKo @ 8:49 PM 0 comments

Homebuilders composition

Look at these composition of HGX index and XHB. Homebuilders - but not. A large part of these measures are fixtures, mortgages, and insurance. To foreclose on a home it generally takes 5 months on non payment. Then you can pay up for those 5 months or the bank tries to sell your crib. Sometimes the sell for less than the loaned to you, which if you were smart and didnt care about your credit means you could default on your loan then pay your boy to go pick it up cheaper at an auction. Check out the composition. If i didnt have 12 beers with my steak I would clean this up but whatever, you get my point.

Ticker,Name,% Weight,Shares,Last Price,

HGX,,in the Index,in the Index,,

ASD UN Equity,American Standard Cos Inc,6.107,151.314,42.94,fixtures

BZH UN Equity,Beazer Homes USA Inc,3.571,91.163,41.67,

CTX UN Equity,Centex Corp,4.366,90.084,51.56,

CHB UN Equity,Champion Enterprises Inc,2.777,380.156,7.77,

DHI UN Equity,DR Horton Inc,5.22,238.025,23.33,

HOV UN Equity,Hovnanian Enterprises Inc,5.916,203.43,30.94,

KBH UN Equity,KB Home,3.65,89.952,43.17,

LEN UN Equity,Lennar Corp,5.574,129.242,45.88,

MAS UN Equity,Masco Corp,7.906,302.539,27.8,fixtures

MDC UN Equity,MDC Holdings Inc,3.807,83.748,48.36,

MTH UN Equity,Meritage Homes Corp,0.846,19.414,46.38,

PMI UN Equity,PMI Group Inc/The,4.7,112.54,44.43,insurance

PHM UN Equity,Pulte Homes Inc,5.884,196.607,31.84,

RDN UN Equity,Radian Group Inc,3.994,69.092,61.5,insurance

RYL UN Equity,Ryland Group Inc,2.946,71.757,43.68,

SPF UN Equity,Standard-Pacific Corp,3.699,152.535,25.8,

TIN UN Equity,Temple-Inland Inc,4.987,136.168,38.96,building mats

TOL UN Equity,Toll Brothers Inc,6.162,226.514,28.94,

VMC UN Equity,Vulcan Materials Co,5.785,74.368,82.76,building mats

WY UN Equity,Weyerhaeuser Co,12.103,199.444,64.56,building mats

,,100,,,45.582% non home builder related





Fund Name:,S&P Homebuilders Select Industry Index,,,,

Ticker Symbol:,SPHOMSII,,,,

Holdings,As of 10/17/2006,,,,

Equity,100.00%,,,,



Ticker,Issue Name,Sector Classification,% of Total Assets,,

CHB,Champion Enterprises Inc,Consumer Discretionary,5.39,

SHW,Sherwin Williams Co,Consumer Discretionary,5.08,paint

SPF,Standard Pac Corp New,Consumer Discretionary,5.05,

MTH,Meritage Homes Corp,Consumer Discretionary,5.03,

MDC,M D C Hldgs Inc,Consumer Discretionary,5.01,

HOV,Hovnanian Enterprises Inc,Consumer Discretionary,4.96,

BZH,Beazer Homes Usa Inc,Consumer Discretionary,4.95,

LOW,Lowes Cos Inc,Consumer Discretionary,4.89,store

TOL,Toll Brothers Inc,Consumer Discretionary,4.85,

ETH,Ethan Allen Interiors Inc,Consumer Discretionary,4.82,store

PHM,Pulte Homes Inc,Consumer Discretionary,4.75,

MHK,Mohawk Inds Inc,Consumer Discretionary,4.72,rugs

LEG,Leggett & Platt Inc,Consumer Discretionary,4.71,fixtures

LEN,Lennar Corp,Consumer Discretionary,4.71,

RYL,Ryland Group Inc,Consumer Discretionary,4.64,

DHI,D R Horton Inc,Consumer Discretionary,4.54,

CTX,Centex Corp,Consumer Discretionary,4.53,

HD,Home Depot Inc,Consumer Discretionary,4.51,store

KBH,Kb Home,Consumer Discretionary,4.46,

NVR,Nvr Inc,Consumer Discretionary,4.42,

WCI,Wci Cmntys Inc,Consumer Discretionary,3.99,

,,,, 28.73% non home builder related

posted by BKo @ 8:39 PM 0 comments

no title

yes, i duped my last entry. that is the true sign of a schwag blogger. At any rate, I just got home from a nice dinner at Sparks Steakhouse here in new york. its famous, and expensive...but a great night out for anyone looking for a place. Very new york and great food and service.

Anyhow the market managed to stay up today and honestly i cant watch it any longer. especially with expiration coming too many other factors are at work. One thing I wanted to point out was the number of companies which reported tonight with incomplete earnings an account of options investiations. This is something which hurts everyone even if you dont have direct investment in the companies. I wish it was given more attention. The money that is made from people who do these things hurts investors - and its so widespread its unreal.

At any rate I covered my LUV puts a few days ago to limit my upside risk and they had bad earnings. the stock tanked and i missed out on some extra bucks. Im still long SDS and SPY puts which are hurting me but I still believe this market is going to turn down. Cracks are starting to show in the subprime lenders like LEND and NEW and even co's like WM. Rumors aroudn that Bank of America will offer customers with a large checking account mortgages with no points. MMMMM frothy....

posted by BKo @ 8:29 PM 0 comments

More Kim Jong Il

Another test (im sorry that puppet kills me)? Who gives a shight? Iraq is out of most peoples minds I think.

How about this?

posted by BKo @ 7:10 PM 0 comments

More Kim Jong Il

Another test (im sorry that puppet kills me)? Who gives a shight? Iraq is out of most peoples minds I think. In general Americans have a very short attention span and tend to only care about what happens directly to them and impacts this very second. And when the do start to care its already too late. Case and point: Katrina, housing, North Korea, Bush, Iraq, Iran, Afhgans, terrorism in general, investing bubbles and American Idol. I think Paris Hilton is more tlaked about then the upcoming election - I mean thats CNN material. Try something that would maybe be of interest to most people like the enormity of backdated options (read apple, UNH, etc) which in my opinion has only been breifly revealed. or,

How about this?

posted by BKo @ 6:54 PM 0 comments

More Plunge Protection

Alright so what is really more interesting than some good old conspiracy talk? NOTHING! Check out this old article from the Washington Post. Believe it or not it at least gets you thinking. Oh yeah, one last note before you read it. The author was killed in a strange accident. No, im not serious.

Washington Post Plunge Protection Team: Protecting America

Yeah, I made up the title too.

posted by BKo @ 6:49 PM 0 comments

Well?

Well...it was an interesting day today. Fire sale in the AM them some people came in and bought the dip. Interesting to me was the broker space where MER had giant earningss and the stock traded down. Good news -> stock down in quite a change from the Any News->stock up performance. The attached chart MER shows the ridiculous performance ofthe stock over the past few weeks and what it did when it blew out earnings. Sell the news? mabye. Probably no one expecting different after brokers have been out crushing it for a while. Lots of trades from lots of hedgies crappin the bed. That = lots o' commission.

It seems like the market is going to trend a bit sideways at least into earnings.1375/1385 in the SP is a major level for the derivs world so there is some pink risk into expiration friday and I think the market will shift to earnings over the next week or so. Then, the all mighty elections.

posted by BKo @ 6:19 PM 0 comments

anecdotal trader talk

So what for the last several weeks has been "cheap downside protection" is now "meltup protection. i.e. most ppl thought this market was goign to drop and now everyone seems scared its going to rip and they arent participating. Case and point check out the volume in IWM calls today...118k contracts in smallish prints with 78 strike.

posted by BKo @ 2:17 PM 0 comments

Housing works

so i decided to check out some housing employment stats. i just eyeballed the govt jobs report and tallied up jobs which i thought to be directly housing related (#'s are in 1000's. I find that 7.1mm jobs are housing related - and thats directly. That is about 5.3% of employment. Obviously in a housing tank not everyone will lose their job but i figured that might be offset by other jobs like deli workers, pavers, landscapers etc. Say its 15% layoffs...thats still a lot of jobs.

A B
1
2
3
4 ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb12.txt
5 Jul-06
6
7 Housing affected 7,160.90
8 05.30%
9
10
11 Total Nonfarm 135174
12 Constructino 7801
13 buildings 1802.1
14 residential 1004.7
15 non-res 797
16 heavy and civil 1047.2
17
18 specialty trade contractors 4952
19 residential spec 2412.8
20
21
22 Household and institutional furniture 371.6
23 Furniture and home furnishings stores 587.8
24 Household appliance stores 73.9
25 Home centers 679.4
26
27 Real estate credit 357.1
28 Mortgage and nonmortgage loan brokers 144.7
29
30
31 Real estate 1528.9
32 Offices of real estate agents and brokers 383.1
33 Offices of real estate appraisers 40.8
34 Other activities related to real estate 40.1

posted by BKo @ 2:12 PM 0 comments

housing article

great article on housing here.

posted by BKo @ 2:12 PM 0 comments

Downturn Theory data support

Part of what will support my thesis (basically tapped out consumer leads to recession) is lower auto sales. My thinking being big ticket items will be the first to show signs of slowing - first being houses then second being auto sales. Check out this link.



I understand the rotation from US big 3 to Toyota and honda etc. But the auto picture in general is lower sales, with Japanese getting a larger share of a shrinking market? Time will tell I suppose.

posted by BKo @ 9:39 AM 0 comments

What will housing do

Well, no one seems to know. I am bearish and thing that it will drag down the economony and we will see its effects shortly.

check out the chart on this site here. Its a good article as well. Im sure most people have seen that top chart its been around for a bit. Having seen an updated chart (have this mac and cant figure out how to rip it out of the pdf i have...) the SP has now extended up above the housing peak. In other words if you see the last SP peak on the chart we are right about there. Now the market could continue up and break the correlation - but I suspect not. Thats just a feeling.

As a side note - I covered some of my SP puts when the market was at 1366. I got smacked on that trade (and still am) and basically am covering in case the market continues to trade higher. Traders that I chat with are frusterated and no one seems to understand the strength in the market especially withso many unknowns. We now face performance anxiety where funds see the latest run up and havent participated so them must now chase the market. Its basically musical chairs and someone is going to get stuck with SP highs - unless its like 1995 where the market just kept going up.

posted by BKo @ 9:28 AM 0 comments

T boob pickens

Now I understand that Tboone is one of the richest men alive and I will probably never come close. Today he comes out and says oil will hit 70 before 50. Bold prediction you crotch after you said $100 oil during the summer. Why does he say its going higher? Because hes long a gazillion gallons of brent crude or whatever.

Point is this - Never believe what you hear and be a sceptic always. Its healthy and most time people are out pumping their position a la the prune faced oil schmuck.

posted by BKo @ 8:47 PM 0 comments

Shot fired?

Today I think we were going to find a nice down day (nice for me at least) off of some bad fed comments. Then a plane hit a building and the market dropped two or three handles, turned around and headed up when people new what was going on. So, basically more bad news shrugged off (dont forget DNA, legg mason, and alcoa all having terrible days).

I think one of the threats the economy faces is deflation but the fed would never utter that word. ESPECIALLY not before an election (conspiracy or not).

Second - housing. Fed seems to have no grasp on the size of the fallout (if there is one) and what the ramifications are.

Maybe, MAYBE MAYBE this is the first day of a nice decline although my gut tells me otherwise. regardless my PA remains short.

posted by BKo @ 8:14 PM 0 comments

Really quite fascinating

Just back from the Rangers game - had a few beers and ready to rant.

The housing market is the most intersting thing to me. Housing stocks have had a nice little bounce lately and I dont think that came at much of a shock. I personally (and surprisingly) cant wait to short them again. This also leads me to the bad news=but stocks point I made in earlier posts. DHI said YoY avg sales px was down 9.8% AND!!!! unit sales were down 25%. Thats MUCH lower sales at MUCH lower prices! Stock - wait for it - stock traded up!!!! over a buck! what the fu___! Oh I see...news not as bad as expected. Then, another great company KBH said they had some stock option issues and would have to restate. Well, thats good news. Stock up over a buck as well. Oh yeah and the JP analyst upped DHI to overweight. This was after he said buy the stock at 40 and changed that to a neutral at 24. What a dick.

Next topic - one that really feels nice. My personal account or "PA" as we say in the buiz...cmon thats a joke. Well its really called PA. Anyway, Im down like 25% in the last couple weeks waiting for the market to drop. Now, with my job I have a 30 day holding period but still - I am fighting the market and I know it. Of all my positions the only one in green is LUV puts, and I dont really know why its down. And I was thinking - yeah this friggin hurts. Not so much the money as being wrong. I know the market will probably flow up a bit here and given a shorter holding period I would try and trade that. Still, fundamentally I think things havent changed. This economy is built on a liquidity bubble. Housing, Private equity, everything. I mean 1.6 bn for You Tube? Seriously...I mean...I understand the number of visitors that site has but 1.6bn? But who am I to question - people around the desk said that was cheap. I dont know how or why I just no there wasnt much competition at that price.

Back to the fundamentals of (what I think) this market is based. And that is tons of cash lying around. I think thats going to change and what is propping the market up is a shift to quality. Out of emerging markets, energy and speculative bets and into large cap. If this is the case then this upward market will roll over. Of course, I have been thinking that since SP 1300.

posted by BKo @ 7:31 PM 0 comments

Pre Election Plunge protection

Man - that would be a great political slogan "PreElection plunge protection". HAHAHAH.

Anyway - great read here:
GS s for GAS

The picture is funny cause Snow is in it. C'mon, he was laughable. I feel like I could insert a Foley joke in here somewhere..

I know its some consipracy and most people laugh at the theorists but considering this unexplicable rally into Nov elections its quite interesting. But the Lew Rockwell site is possibly a bit far fetched I would put nothing past the government they can do some pretty amazing stuff. Plus, compare that article to something like:

Crazy talk

posted by BKo @ 8:01 PM 0 comments

Kim Il Dong

Well, if nukes cant bring down the S&P what will? Negative comments from Fed Pres Yellen? She is concerned that the housing slump is more of a snap...and shes also worried about what that is going to do to banks. That didnt drop it either.

I suppose when you enter a true bull market this is one of the defining points. That, being bad news makes the market rally.

Ive added some GS puts, im early though. STock is at all time highs and I am now entering a short. Thats actually so dumb its amusing...but im really playing for some healthy correction - or a massive market selloff. Still long some GM puts, as well as SPY puts. All of which are in my face. Dell is staging something of a comeback altough I am still down about $1.5 a share. Finally im looking at getting long some GSS at $2.6 a share. I own GG but am down pretty significantly. Still long the nat gas PVX but that is a dividend harbor Ill own that position for a very long time.

posted by BKo @ 7:50 PM 0 comments