November 2010

BRUSSELS (AP) — European Union nations agreed to give euro67.5 billion ($89.4 billion) in bailout loans to Ireland on Sunday to help it weather the cost of its massive banking crisis, and sketched out new rules for future emergencies in an effort to restore faith in the euro currency.

The rescue deal, approved by finance ministers at an emergency meeting in Brussels, means two of the eurozone’s 16 nations have now come to depend on foreign help and underscores Europe’s struggle to contain its spreading debt crisis. The fear is that with Greece and now Ireland shored up, speculative traders will target the bloc’s other weak fiscal links, particularly Portugal.

Bailout terms reached on a Sunday night for US markets, damned convenient as usual. I would expect markets to trade higher, at least initially on the removal of the uncertainity.

The big money are setting up for a fall. Corporate insiders are also continuing to sell into this rally. Will the dam break? I think definitely, it’s just the when that’s always the problem.

Again the Transports are leading the Industrials. They are however still moving in the same general direction. The Transports have also reached a resistance area.

If a true recovery is underway, we will need to see both averages break through this resistance area and continue to the final resistance area, and finally to new highs.

Feeling confident?

The shopping day that was supposed to signal the renaissance of the US consumer, and justify the massive overhiring by US retailers (not to mention the completely dislocated from reality surge in stock price for razor thin margin retailers like Amazon), is increasingly seeming to be a dud. WSJ reports, citing channel checker ShopperTrak, that “Black Friday sales rose only slightly from a year ago even though more shoppers visited stores, retail traffic monitor ShopperTrak said Saturday, setting the stage for another uncertain holiday season for retailers. Sales increased 0.3% to $10.7 billion, according to ShopperTrak, which installs monitoring devices in stores to gauge traffic. Traffic rose by 2.2%, ShopperTrak said.” For the observant ones out there, this is in nominal terms: adjusted for inflation there was actually a drop in end sales. Even so, the primary reason for the disappointment is that Black Friday actually started early on in the month, with most retailers offering comparable loss-leading deals such as those seen on the Friday after the national holiday early in November, reducing the actual purchasing power for the all important day. “The smaller than expected increase is due in part to discounts offered earlier in November as well as online-only promotions, ShopperTrak founder Bill Martin said.

Interesting. We’ll see Monday, how, if any, effect it has on the market. Especially with the Irish demonstrations against bailout money etc.

It’s a pop tune, but it’s catchy, and hearing it nearly 30yrs later, I did buy the original, it still sounds pretty good. It’s also a veritable who’s who of British pop from that era, which, looking back, was great fun!

“Do They Know It’s Christmas?” is a song written by Bob Geldof and Midge Ure in 1984 to raise money for relief of the 1984–1985 famine in Ethiopia. The original version was produced by Midge Ure and released by Band Aid on 29 November 1984.[1]

In late 1984, a BBC report by Michael Buerk was aired highlighting the famine that had hit the people of Ethiopia. Irish singer Bob Geldof saw the report and wanted to raise money. He called Midge Ure from Ultravox and together they quickly co-wrote the song, “Do They Know It’s Christmas?”.[1]

Geldof kept a November appointment with BBC Radio 1 DJ Richard Skinner to appear on his show, but instead of discussing his new album (the original reason for his booking), he used his airtime to publicise the idea for the charity single, so by the time the musicians were recruited there was intense media interest in the subject.

Geldof put together a group called Band Aid, consisting of leading Irish and British musicians who were among the most popular of the era. The 1984 original became the biggest selling single in UK singles chart history, selling a million copies in the first week alone. It stayed at Number 1 for five weeks, becoming Christmas number one, and sold more than 3.5 million copies domestically.[2] It remained the highest selling single in UK chart history until 1997, when Elton John’s “Candle in the Wind 1997” was released in tribute to the late Diana, Princess of Wales, which sold almost 5 million copies in Britain.[2]

The original Band Aid ensemble consisted of (in sleeve order):

Adam Clayton (U2)
Phil Collins (Genesis, solo)
Bob Geldof (The Boomtown Rats)
Steve Norman (Spandau Ballet)
Chris Cross (Ultravox)
John Taylor (Duran Duran)
Paul Young
Tony Hadley (Spandau Ballet)
Glenn Gregory (Heaven 17)
Simon Le Bon (Duran Duran)
Simon Crowe (The Boomtown Rats)
Keren Woodward (Bananarama)
Martin Kemp (Spandau Ballet)
Jody Watley (Shalamar)
Bono (U2)
Paul Weller (The Style Council)
James “J.T.” Taylor (Kool & the Gang)
George Michael (Wham!)
Midge Ure (Ultravox)
Martyn Ware (Heaven 17)
John Keeble (Spandau Ballet)
Gary Kemp (Spandau Ballet)
Roger Taylor (Duran Duran)
Sarah Dallin (Bananarama)
Siobhan Fahey (Bananarama)
Pete Briquette (The Boomtown Rats)
Francis Rossi (Status Quo)
Robert ‘Kool’ Bell (Kool & the Gang)
Dennis J. T. Thomas (Kool & the Gang)
Andy Taylor (Duran Duran)
Jon Moss (Culture Club)
Sting (The Police)
Rick Parfitt (Status Quo)
Nick Rhodes (Duran Duran)
Johnny Fingers (The Boomtown Rats)
David Bowie
Boy George (Culture Club)
Holly Johnson (Frankie Goes to Hollywood)
Paul McCartney
Stuart Adamson (Big Country)
Bruce Watson (Big Country)
Tony Butler (Big Country)
Mark Brzezicki (Big Country)

Prior to the collapse, there were few bigger bears than I. Kevin (my partner) constantly harangued me about it. That’s his quote above, and I admit to some level of guilt.

Understand why this was: The long hours of research put into identifying the variant perspective was a lonely path. There were no guarantees it would be correct. Worse still, it took a long time — years — to pay off professionally. I ate a lot of crow, and was mercilessly tortured by eejits over what I knew was a giant debacle in the making.

A fallacy of logical reasoning: I was right then, therefore I am right now. It is an appeal to authority, which is basically nonsense.

When the deluge came, I incorporated the collapse into my thinking. It changed the valuation calculus, the surprise factor, the psychology. I didn’t want to be one of those guys – the über bears who stayed negative regardless. This unfortunate crew missed the 1982 lows, the 1980s bull market, the tech boom, the 2003 post-dotcom-implosion rally, the commodity boom, the 2009 snapback.

Again, using historical hindsight analysis. An appeal to, I was clever then, I’m clever now.

After the flood, I started looking for the silver lining. We already had a massive crisis and collapse, so the worst of what came before was already reflected in equity prices and trader psychology.

I assume we are now taliking about the 2008/2009 market fall and [short-term?] bottom? Again hindsight analysis that consists not of any data, rather, hey I saw it, and I profited from it. If so, good, congratulations, where is the data that you based your analysis on, and how does it compare to the current climate?

Even after all this, these reflexive Bears refuse to flip. They will not admit the economy is getting better, albeit slowly. They insist the recession was a depression; they insist it never ended. These are the bears who cannot be killed. They will stay bearish, regardless of the data that all but insists otherwise.

Are we talking about bears on the economy, or the market? Are the two correlated? How, or not, as the case may be? If correlated, is one causative of the other? Which way? The questions are endless, as the above statement is simply worthless as analysis.

These are the Zombie Bears . . . they cannot be killed.

As I write this, the market is off 1.5%, and some of our long positions will soon hit our sell discipline (We will stop ourselves out). This is the nature of asset management: One needs to be flexible, intellectually nimble, open minded. One cannot marry a position, ignore data that goers against it, and just hope for the best.

How does risk management in a trading plan actually correlate to analysis of the economy/market? It simply limits your risk and exposure. Ever been stopped out, only to replace the trade later? I have many times. It essentially, as an analysis, means little to nothing.

Markets on occasion appear irrational. They operate on different time scales than humans do. We are stuck in the moment, they exist across longer arcs of time. So very often, we cannot adapt to their ways. We fight them . . . and we lose.

True. So what?

Meanwhile GDP was revised to 2.5% (more than previously calculated) on increased exports boosted domestic spending.

Bad news, bears The Recession is over .

Really? Based on a revised GDP. You are f**king joking right?

For one day at least, you could almost imagine the recession never happened. Millions of the nation’s shoppers braved rain and cold to crowd stores while others grabbed online bargains on what could be the busiest Black Friday ever.

Early signs pointed to bigger crowds at many stores including Best Buy, Sears, Macy’s and Toys R Us, some of which had earlier openings than past years or even round-the-clock hours. Minnesota’s Mall of America and mall operators Taubman Centers Inc. and Macerich Co. also reported more customers than last year.

But the most encouraging sign for retailing and for the economy was what Americans were throwing in their carts. Shoppers still clutched lists and the buying frenzy was focused on the deals on TVs and toys, but many were treating themselves while they bought gifts for others, adding items like boots, sumptuous sweaters, jewelry and even dresses for special occasions.

The takeaway from the above article is that things are looking good. Generally however for retail to do well, they require a sustained trend through Christmas with hopefully a reasonable rest of year.

Therefore, early days yet. At least however it has started off on the right foot. Of course, many were out for the bargains. Retailers don’t help their profit margins via deep discounts, they need to sell at their price point that generates a profit.

Low volume in the market today, no liquidity. Yet, Ireland continues to fester with the banks again sucking the taxpayer dry. Although Ireland seems to be finished as a news story, I still think there are going to be problems that could trigger a market meltdown worldwide, although one could reasonably argue that the probability is low.

This however raises an interesting problem: given that the markets have a higher probability of rising, the question becomes by how much? If the probability is lower of a fall, how much might they fall?

That’s the crux, a higher probability, with only a small reward is not as an attractive trade as a lower probability, but with a big payout potential.

Would Ireland, like Lehman, trigger a market meltdown? Not sure, but I think it just might, as the huge losers would again be the banking system, which threatens the liquidity and marketability, two critical issues to banking survival.

Which means again, that we head into weekends where the politicians etc try and fix all the problems, and gap markets higher, damaging short sellers. At the moment prices are down, but only very slightly, thus the likelihood grows that some soundbite fix can be announced over the weekend.

Black Friday officially kicks off the Christmas shopping season. Retailers, particularly of the Brick and mortar variety live or die on the Christmas shopping season. Black Friday gives the heads up on what trend might develop.

Markets closed for holiday.

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