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Friday, March 13, 2009

Jim Cramer on The Daily Show

Jim Cramer went on The Daily Show to answer Jon Stewart's accusations that CNBC should have warned people and is guilty of harming investors by seeking to entertain instead of help them.

Generally, I love Jon Stewart. When he gets all preachy, accusatory and holier than thou it troubles me. Does he realize that something like 90% of young people 18-25 get their news from The Daily Show, a comedy show that seeks to entertain?

Sure, Cramer makes some bad stock picks here and there -- he makes a thousand picks a day. Some of them are going to be really bad! Statistically, even the greatest traders on Wall Street are wrong over 40% of the time.

Stewart definitely has quite a few gotchas for Cramer and if you like to see Cramer squirm, and I know you do, you'll enjoy this. At the same time, though, it is so misguided and stupid to blame Cramer for the credit bubble aftermath. He's really an entirely symptomatic symbol of an age of excess and not the source of the deep rooted consumerism, greed and waste that has led us here.

At any rate, in its entirety, I give you The Daily Show.

Think initiates RIMM with a sell, $30 target

Price pressure is the main thesis.  The smartphone category has become intensely competitive and carriers, being flooded with handset options from so many vendors, are demanding price concessions.  RIMM is entirely smartphones and smartphones are the only real growth category in cells.  Consequently, RIMM has the most share to lose as competition intensifies in the space.  Furthermore, Think drags out the layoffs will impact business bit.  RIMM is extremely skewed to enterprise linked devices – they have arguably the best back-end push delivery service.  They’re also very tied to financial verticals as blackberries and bankers are synonymous.  As employment and bankers has become antonymous, presumably they are deactivated.  This last part is somewhat implausible as unemployed bankers need a blackberry to plot their next ponzi scheme.

$30 is the price I get on the chart, too.  Neat.

Taiwan Semi orders to grow double digits - Digitimes

Ramping GPUs (NVDA), handsets (QCOM) and network ICs will lead pure play foundries to double digit orders for Q2, according to Digitimes.  End market demand remains suspect.

Taiwan Semi bottomed out in early February.  We’re getting some snap back to demand, though demand has fallen and will presumably not return to prior growth rates.  Very tricky to gauge but many data set oriented investors will buy stocks on positive revisions regardless of valuations.

Thursday, March 12, 2009

Speaking of risk…

The SEC and FASB seem to be talking about loosening mark to market restraints.

This is entirely misguided and probably will kill the bank rally.

Without mark to market, banks are going to be incredibly paranoid of one another’s books and counterparty risk increases manifold.  They can’t accurate gauge each other’s financial viability without a clear and consistent standard.  Expect to see yields rise as this becomes factored into the market.  It will also be good for gold.

Short XLF.

Foreclosures on the rise


  NEW YORK (Dow Jones)—Delays stalling the foreclosure process are prolonging the U.S. housing downturn, RealtyTrac said Thursday, as it reported a surprising jump in foreclosure filings.

  Slightly more than 290,000 properties - one in every 440 housing units – were slapped with a foreclosure filing in February, up nearly 30% from a year earlier. That total, a roughly 6% increase from January, was the third-highest monthly total - following those in August and December 2008 - since the foreclosure-listing service's report was launched in early 2005.

  The results, which come amid widespread foreclosure-prevention efforts, show filings spike after moratoriums expire. After a 45-day voluntary moratorium in Florida ended at the end of January, foreclosure activity increased 14% from a month earlier, RealtyTrac said. Many New York proceedings delayed by a 90-day extension appear to have hit the system in February, boosting foreclosure activity by 23%, the report said.

  "We're not making progress," said Rick Sharga, a senior vice president with Irvine, Calif.-based RealtyTrac. "We have seen artificial forces that have been basically muddying the waters."

  That could mean further increased foreclosure activity throughout 2009. More moratoriums are ending: J.P. Morgan Chase & Co.'s (JPM) ban on new filings is set to end Friday. Bank of America Corp. (BAC) says it is extending its program on a week-by-week basis as it assesses the potential eligibility of borrowers under the government's recently announced program addressing the housing crisis.

  Meanwhile, thousands of Alt-A and option-arm loans worth $60 billion to $70 billion are due to reset starting in the second quarter, Sharga said. This wave of resets comes as unemployment continues to mount.


The underlying economy is significantly weaker than it appears.  Government efforts to massage failing markets simply creates extended oversupply and delayed reporting of current problems.  What it really does is distort the free market and obscure investor’s ability to accurately assess risk.  It’s one of the many reasons money is flooding out of so many asset classes – risk goes up and prices go down as information becomes suspect.

Novellus (NVLS) still slow

Novellus, a semicap, had their mid-q update last night.  Bookings previously had been guided to down 25-40% at 76-90 mil, they reduced the range to 76-85 mil.  Everything else sounded essentially the same.

They said the spare parts business was better as some production capacity was being better utilized among customers.  Logic customers are spending selectively.  Perpetually optimistic CEO Rick Hill predicted some upturn in the second half relative to present business.  As Novellus is losing 50 cents a quarter at present run rates, they’re going to need some uptick just to stop losing.

No position Novellus.

Wednesday, March 11, 2009

Citi cuts #s SunPower

Someone noticed.  Price target 23 to 15.

SunPower (SPWRA) guides down and no one notices?

This from a Piper note that comes up under STP and not SPWRA for some reason:

SunPower Corp. (SPWRA - $25.56)
Clean Technology & Renewables
SunPower Cautious on Q1
At our Piper Jaffray conference on Feb 19, 2009, SunPower indicated that Q109
would likely not be as bad as Q108. However, on March 10th SPWR presented at a
competitor conference. In response to a question, SPWR stated that Q109 is likely
below Q108 levels due to 1) a slow California market, 2) seasonality in Germany,
and 3) impact from global credit crisis. The company at this point does not know if
Q209 will make up for Q109 weakness. Thus, SunPower is clearly lowering

In March of 2008 they reported 273.7 mil.  The street has 333.4 mil modeled for March of 2009.  It reads like they’re saying it’ll be 15-20% below expectations.

Disclosure:  I shorted a lot of SPWRA after reading the note.

Tuesday, March 10, 2009

The line in the sand?


Troubled by unresolved charts

If the market had gapped down this morning, I was going to buy.  Instead, we’re gapping higher, which is fine… but it means many of these charts that I thought would culminate in climactic lows still have unresolved business at lower prices.  That’s unfortunate for me because I will remain insecure that another bottom lingers below – it will also keep me mostly market neutral through this rally.  Oil and banks up is a potentially powerful combination, especially in an oversold market like this.  I will try to play the long side but with downside targets 10-20% below in most of the leadership stocks I watch, I can’t buy and hold them yet.

Texas Instruments (TXN) a little better; Taiwan Semi guides higher, too

Texan guides up about 50 mil relative to consensus and says sales have been up in January and February from December’s very depressed levels.  They cited the much cited China strength since the government approved national 3G licenses (Xilinx and Altera cited the same trend).

Taiwan Semi, the direct beneficiary of better semiconductor production in the industry, has moved their guidance a little higher also due to better customer orders than expected in January and February – of course, we’re talking down 41-44% instead of down 46-50%.  Make no mistake – business still sucks – its better than their previous projections, though, and that’s something.

Concern that short-term order blips higher are unsustainable are likely to remain but with the semi index down from 425 to 190 since last March, they probably have some room to move higher.

NAND ticks up on netbook strength; DRAM flat on murky supply resolution

As of Friday, NAND contract ticked up another 2-5% for the first half of March.  DRAM contract is stuck.

Taiwan has delayed decision on the multi-company merger of their ailing DRAM companies – higher spot and contract over the last couple of months has bought them some time.  As a result, its likely capex will remain muted due to lack of visibility of the future supply picture.  It also means prices are vulnerable to any one of these struggling companies dumping product on the spot market for cash.  In response to these concerns, Micron (MU) got hammered yesterday, dropping 11%.

Overall demand remains muted.  Netbooks are likely driving the strength in NAND – Sandisk (SNDK) sees little benefit from netbooks directly as their SSD drive efforts have fallen behind the industry.

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