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Friday, July 11, 2008

Bernanke allegedly says FNM/FRE can borrow at discount window

Uh didn't they parade a half a dozen people in front of the media talking about how these companies didn't need capital?

What changed?


The cast of the movie "August" is ringing the closing bell today. It's a movie about a guy struggling to keep his dot com afloat while the bubble is deflating and before 9/11... "right before the fall" is the tag line of the movie.


Keep your powder dry

I think there's going to be a great buying opportunity soon... after all the traders buying them for a bottom here turn around and sell them later. I have a bunch of stocks I'm bidding below the market in. Fantasy prices, if you will. I'll try to get together a list but this is going to be a long and frenetic day, I can tell already.

FNM chart

9.2 is theoretically the last stand here. If it breaks, it drops off a cliff like FRE did this morning.

PS: It broke while I was writing this.

The land of the formerly free and soon to be government owned

The NY Times runs an article discussing the possibility that the government would put Fannie and Freddie into a conservatorship to administer them.

Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers.

Wow, that is extremely shareholder unfriendly.

The market seems to have decided this article said "when", not "if", the government takes them over... and the equities have plunged pre-opening.

Thursday, July 10, 2008

Drop Dead Fred?

This is the only chart that matters today. Bernanke and Paulson either say something to save these stocks or their death spiral continues.

SOX chart

Important level.

"This time its different."

I've had a number of people point out to me that the market consensus polls show an historically high skew to the bull/bear numbers. Cramer had an article yesterday saying people should be buying because of it -- but only people who don't already own stocks. Fresh meat for the grinder.

I think people are bearish for some good reason here. Fannie Mae and Freddie Mac act like they're going out of business. General Motors and Ford act like they're going out of business. The airlines act like they're going out of business. The banks are going out of business.

The autos, the banks and the airlines have all flirted with mass disaster in the past... and historically the government has bailed them out and we all lived happily ever after. Never has the government had such a full plate. The Fed has talked of the moral hazard of making federal financing available to shore up balance sheets. I would also cite the moral hazard of running a half a trillion dollar war on faulty intelligence that will likely leave the federal coffers unable to handle so many bailouts at once.

I don't mean to be a bummer. I do see that there are many things wrong and hope that something could go right. I just don't see the scenario that turns them any time soon. I think a lot of people can dislike stocks and they can still go down. I would love to call a turn... but I'm not going to sit here and tell you that people are wrong to be bearish. Not yet, anyway.

I give you Michael Steinhardt (via Bloomberg TV), my former employer and the greatest economist I have ever had the pleasure to learn from:

`This Time It's Different'

``There is rarely a moment such as this where as a contrarian, one sees so many reasons technically, stock market- wise to be bullish. I can't imagine a circumstance where a market is more available, more ripe for a rally than this one,'' Steinhardt said. Still, ``this time it's different,'' he added.

General Motors Corp., Ford Motor Co., airlines, banks, mortgage lenders and brokerages, ``companies and industries that heretofore had been sacrosanct,'' are in jeopardy amid higher inflation and slowing economic growth, he said. GM, the biggest U.S. automaker, retreated 72 percent for the Dow Jones Industrial Average's biggest loss since the measure's record high in October.

``It's an extraordinary phenomenon where that which was the heartland of America is now so, so sick and not easily vulnerable to improvement,'' Steinhardt added.

'nuff said.

Wednesday, July 9, 2008

Mattson (MTSN) sheds some guidance

Mattson, a semicap supplying too many memory customers, cut guidance last night to 35mm from prior 40-42mm. Street was at 45mm. They cited ongoing cutbacks from memory manufacturers.

The second leg of the cutbacks is NAND. Memory remains a historically unsustainable percentage of semicap orders. NAND is starting to look like a horror show heading into the back half of the year with deteriorating contract and spot pricing, capacity ramps ongoing and retail pricing somewhere between bad and terrible.

Expect LRCX to remove the recovery in Q4 from their forecast when they report. You can kind of throw a dart to find a semicap with too much memory exposure but the heaviest are FORM, VSEA, MTSN, LRCX.

Monday, July 7, 2008

Blackberry subsidies should get here soon

According to this article, T-Mobile will be offering the clamshell "Kickstart" Blackberry for $49. The article refers to this as an unheralded smartphone price point. I'm not sure that's entirely accurate as this phone is a cross between a souped up RAZR and a Blackberry with its legs cut off. I'm not that enthusiastic about it.

What will make me enthusiastic is to see "free" Blackberries from non AT&T carriers. I think it's inevitable. The other carriers have to do something to keep their smartphone user additions from collapsing to the mighty iPhone.

Microsoft (MSFT) is the greatest chess player of all time

I never really knew this about them but wow, can they play those pawns.

The company is now saying they'd talk to a board ex-Yang and co. This will help Icahn's slate greatly in the upcoming board elections.

People will start to assume that Microsoft buying the company is a done deal. And Microsoft will likely get a board that will serve their needs and need their serves -- a motley crew of henchmen that have only one business plan -- sell to Microsoft.

This will be great for Microsoft in that they'll get to pick and choose which parts of Yahoo they want. The board will be stuck and subject to Microsoft's whims. The new board also will not likely be able to value the business properly.

This might be good for Yahoo stock but it's terrible for the company. They don't seem to see the checkmate looming in the next few moves.

Google (GOOG): Buy your own damn M&Ms

An interesting article on Google and their much revered daycare program. They jacked prices 75% on employees. Really smart parents openly wept when the price increases were announced. Seems like Google's losing some of that youthful exuberance and devil may care attitude.

I wanted to talk about this quote:

At a T.G.I.F. in June, the Google co-founder Sergey Brin said he had no sympathy for the parents, and that he was tired of “Googlers” who felt entitled to perks like “bottled water and M&Ms,” according to several people in the meeting. (A Google spokesman denies that Mr. Brin made that comment.)

I've heard rumors Google is clamping down on spending. I think that comment from Brin, heard by "several people" and denied by a spokesman, suggests nervousness. If it wasn't getting harder to hit targets, he wouldn't be thinking about nickel and dime things like that. When a company is doing well and perks like that make people happy, you leave it alone.

Maybe Brin's kind of a jerk. Maybe he's on a no m&m diet and it's made him a bitter man. Maybe he pragmatically realizes that Google is a pretty good place to work regardless of whether you have to bring your own bottle of water. It could be a lot of things. Currency was a big factor in Google's last upside surprise -- the core business started to flatten out somewhat. Some kind of stress is showing.

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