The future

Remember when there was only one internet?
Now everyone knows what everyone else is doing all the time.
Now that there is a way that computers can automatically e-mail you about where people are, where they are going, and when they have gotten there.
For example, if you arrange to meet someone at a certain time-- for example, you e-mail them "hey, let's meet at 6 for dinner at Y bar," your computer will automatically put that into a central calendar that you can choose for anyone to access and it can link to a map so all your friends know where you are and when. It just makes communication richer so you don't have to talk about logistical things-- they are built into the system, like concrete in the roads.

So now you have a phone that goes everywhere with you and can double as a half-decent camera and radio/music machine. And it also has your calendar and access to the internet, and you have a social networking site that gets updated with the latest information about you, where all of your friends, family, co-workers, and acquaintences are on, and you can set it up so that the GPS in your phone updates your location live on the web, and record a video that instantly goes live if you want. And you can communicate with everyone at once if you want. So basically, everyone is a star to someone, or some group of people. You can produce a television show while you are walking down the street, and interview other people who are walking down it with you, and all the technology and know-how to do this is built right into your phone, the thing you carry all around with you anyway.

The Fed Will Not Lower Rates

The Economic Outlook--speech by Jeffrey Lacker of the Federal Reserve Bank of Richmond to the Charlotte Risk Management Association in Charlotte, North Carolina on Aug. 21, 2007 at 12:30pm.
Basically, he said don't look for the fed to cut the federal funds rate soon.
However, that may be just as believable as William Poole's comments that only a "calamity" would justify an interest rate cut, the day before the Fed cut the discount rate.

Countrywide Up on Rumor, Down on News?

Thrifts Hit by Housing Market Problems
The good news obscured by the headline:

Mortgage defaults are slamming the savings and loan industry, although thrifts should be able to weather the housing market downturn, federal regulators said Tuesday.

CFC is a thrift.
US regulator says watching Countrywide very closely

The Office of Thrift Supervision is very closely monitoring events at Countrywide Financial Corp and has had a consistent onsite examination presence at the California company since it converted to a thrift charter in March 2007, an OTS spokesman said on Monday.

Stocks to Watch: Capital One, Countrywide, KKR, Target, Viacom

Countrywide Financial's (CFC) stock fell 7.6% despite the company's attempts to reassure depositors that their funds were safe at the company's Countrywide Bank savings bank unit

My opinion? Countrywide will fall when Buffet says he's not buying.

Their timing couldn't be any better...

China Prepares to Dump US Dollars

CFC the next sacrificial lamb?

First Wells Fargo:
Wells Fargo to close non-prime mortgage unit

Now Capital One:
Capital One to Close Mortgage Unit

And
Countrywide announcing layoffs

As someone on Yahoo finance said, CFC now in Baghdad Bob mode

Flagged for future reference

JIM,
I'll say this 1 more time....the HYBRID system
is going to fail us and we will have a giant
crash...might not be this year or next but it
will happen. That and the new no downtick rule
is crazy.
I'm a trader and I see this happen daily in a
ton of different stocks and it will happen in
the overall market. What say you? They need to
do something about this and they need to, at a
minimum, have a backup plan that they don't tell
anyone else about....because they don't want to
look like clowns. We need specialists or a
different system....I can move CAT a point with
no volume if I wanted to. This is the only
thing scaring me about this selloff!!!!!!!
Asked by jnorine

I dont disagree with any of this. The difference is
that i am the only one in the nation willing to go on
national t.v. and say it and then no one backed me up.
Answered by Jim Cramer

Update on the NYSE's hybrid system

Fed cuts rates and saves the world

Here's a good write up of what just happened:

Five Things You Need to Know: What the Discount Rate Cut Really Means

LTCM II

John Lonski from Moody's Investors Service compares current situation to collapse of LTCM fund today on Bloomberg's final word.

The Sky Keeps Falling

More news stories as the market enters into an official correction (10% down).
Maybe a good time to buy Apple stock.

Why Mortgages Blew Up
UPDATE 1-Fitch revises further its CDO ratings methodology
FOCUS: Valuations In Spotlight As Funds Halt Redemptions
Business comment: Fundamentally, it's time to step back from the maelstrom
Asia property retains allure in stormy market
Banks refuse to mark CDOs to the market
`India to benefit as growth continues`
ETFs Tumble On Investor Worries
Sharp sell-offs on Wall Street

Richard Hoey, chief economist of Bank of New York - Mellon was on Bloomberg TV open exchange just now. He mentioned that the dollar is rising because hedge funds had been bearish on the dollar, and now have to unwind those leveraged trades to get more cash. The commentator mentioned that they just had Dr. Doom on (see below), who said that the only safe place to be right now is cash, and he also sees the dollar going up as he doesn't see how it could fall any further. Hoey also said that the dollar is the fulcrum [my word] of the global economy. In other words, it still acts as the central currency for trade, no matter how high or low it goes. The commentator also mentioned the unwinding of the Yen carry trade as an example of hedge fund liquidation. Time to look into ETFs that track the dollar.

Forbes article "ETFs Tumble On Investor Worries" recommends bying XLF, a financial sector index ETF that includes C, JPM, GS, MER. Trading at 10.7 times earnings. Maybe the bottom has been reached.

Chicken Little Cries Again

On why good assets get knocked down when markets go bad:
"There's no skill in buying mortgages...The skill was in the credit officer who could get the cheap line of credit," Frank Husic, CIO Husic Capital Management.

Managers sell good assets to raise cash. Tech may get hit by subprime fallout.

Other Articles:
Credit contagion
EDITORIAL - Global financial turbulence; local impact possible
Killer Derivatives, Zombie CDOs and Basel Too?!
Basis Fund Down 80%
'After the Greed, Fear Reigns'
Countrywide Falls, Merrill Cites Bankruptcy Prospect (WOW!)
Mitt Romney Hit by Mortgage Meltdown
Investment fund in Chicago hit by wave of withdrawals

I've been getting back into Alan Moore lately. Just bought all the Swamp Thing and Promethea graphic novels for about $10 a book (check eBay and Amazon Used books for great deals).

A bunch of mp3 Alan Moore interviews:
The Alan Moore Chain Reaction thingie
right-click this link to download mp3

Alan Moore on fanboy radio
right-click this link to download mp3

The Bomb Shelter
right-click this link to download mp3

I'm ready for my podcast interview with alan more in 3 parts.

I don't know how I missed it!
The What!? Superseven mashup album, featuring mashups by aggro1, dj zebra, go home productions, and dj bc. Just listening now-- great stuff!
Thanks to dj bc for the link, who's "Ain't No Misty Mountain" is track #11.

Panic avoided. We live to trade another day.
Stocks End Amazing Day Little Changed

More stock investment/trading ideas as quotes from some news stories.
Jun. 13

Finally, for the more aggressive among you, consider inverse bond funds like
Rydex Inverse Government Long Bond Fund
(RYJUX : 19.65, -0.16, -0.8% ) or
ProFunds Rising Rates Opportunity ProFund
(RRPIX : 20.26, -0.17, - 0.8% ).
These funds trade inversely to bond prices -- meaning they RISE in value when bond prices FALL. You can also target vulnerable sectors of the market. For instance, you could sell short the
SPDR S&P Homebuilders ETF
(XHB : 25.50, -1.53, -5.7% ).
Or, you could buy the
UltraShort Real Estate ProShares
(SRS : 112.00, +6.82, +6.5%).
The leveraged ETF is designed to rise 2% for every 1% decline in the Dow Jones U.S. Real Estate Index, a benchmark index of commercial REITs.

Stocks mentioned:
RYJUX RRPIX XHB SRS

Mar. 5

Larger capitalization exchange traded funds like the Diamonds Trust (amex: DIA - news - people ) and the Rydex Russell Top 50 (amex: XLG - news - people ) sustained the least damage, while the small cap iShares Russell 2000 Index (amex: IWM - news - people ) was down 2.12%.

The iShares MSCI Malaysia Index (amex: EWM - news - people ) was down 6.64%, iShares MSCI Australia Index (amex: EWA - news - people ) lost 5.81%, PowerShares Golden Dragon Halter USX China (amex: PGJ - news - people ) lost 4.3% and the iShares MSCI South Korea Index (amex: EWY - news - people ) was down 1.45%.

The big winners were of course the inverse ETFs that move opposite the markets, with the ProShares Ultrashort Real Estate ETF (amex: SRS - news - people ) up 7.39% for the day. SRS seeks daily moves that are 200% in the opposite direction of the underlying index. U.S. real estate tracking ETFs were hit very hard again.

At some point, prices will settle at levels sure to bring out the bargain hunters. Bargain hunters may want to focus on Thailand trading at 9.5 times earnings, Brazil at 11.9 times, South Korea at 10.9 times, Germany at 13 times, Brazil at 11.8 times and the Netherlands at 11.8 times earnings.

Stocks mentioned:
dia xlg iwm ewm ewa pgj ewy srs

NOTE: The inverse ultrashorts may not truly return 200% of the markets they cover. I've read that some of them-- the ultrashort S&P play offered by ProShares, did not offer a true 200% upside on a down day, but without a source I can't confirm that. If I find it I'll add it here. However, thestreet.com answers has a positive post about the SRS, at least in the short term, and it has gone up lately due to the poor performance in the housing sector. My one concern about these plays is that shares in ProShares ETFs are not real shares (read their prospectus), and they don't have a long enough track record for me to believe that they would make good on their promises if the company became insolvent for some reason or other. In my opinion, you can play them, but not with money you can't afford to lose.

Trading idea:
Buffett buying USG. Buy Jan 09 45 Call .vxeai 5.60

Yahoo:

Re: Under $39, it was abargain of lifetime
8-Aug-07 08:39 pm
If you folks did not buy under $39, you missed the boat big time. I was lucky , just lucky, to load the trucks with Sep 37.5 calls and Jan 08 $30 calls. Sold all 37.5 calls today. Holding $30 calls. When Jan 08 comes near, plan to exercise those calls and be a proud owner of USG. USG will stabalise. Buy more folks. I plan to do. Jerry

From thestreet.com answers and stockpickr.
Cramer favorites:
mo kft k cl pep aapl rimm crox

EMC ideas:

You have been big on EMC. What do you think
about the Aug 18.0 call at $0.55 at close today
(it dropped 30c today)

- Just out of the money
- Expiry next week
- VMWare next week too

Good calls. FWIW, I picked up Sept 16s and 18s when the
dow was down 300 as a complement to my long stock
position.

Aug expirations are cheaper and could work well for
next week's IPO, I just prefer having a little more
time in case of delays or whatever.

Good luck!

Pacific Capital Small Cap held stocks:
dsw hw brcd mstr www

Suck My Nasdaq comment ideas:
lrw (short at 22.2 stop at 23, bracket order trailing cover stop .40, trigger cover 21.1)
emc
mstr (take gains, buy back cheaper mon & ride to 85)
llnw (treasuries violations)
irti (rebound)

The Morning News

Financials hit hard on word of hedge-fund selling
U.S. Stocks Head for Sharply Lower Open
Countrywide Financial Corp. (CFC)
PowerShares QQQ (QQQQ)
Very Scary Things
NY Fed didn't intervene in forex market in 2nd qtr
Wall Street stunned by funds freeze
News & Views: Wall Street stunned by funds freeze
Hedge Funds Pluck Money From Air in $19 Billion Weather Gamble
Bernanke's Bind: No Easy Answers
Countrywide, Accredited Home Lenders, RadNet in focus
U.S. Stocks Head for Sharply Lower Open
Bloomberg news
Supply fears set wheat futures afire
DJ US Wheat Outlook: 6-8c Up On Tech Momentum, Tight Supplies
Markets to Watch 08/10/2007

No one likes a chicken little, even when the sky really is falling

So BNP Paribas SA, a French bank (actually, one of the largest banks in France), froze three funds that invested heavily in U.S. subprime CDOs (I'm guessing here. They said they could not value the subprime market). For those who don't know what they are, a CDO is a collateralized debt obligation consisting of a bundle of debts, in this case, subprime mortgages, which are themselves bundles of individual mortgages. What's causing the panic is that these bundles of bundles are essentially worthless because in the go-go days of 2005-2007, when people in California, Las Vegas, and Florida were lining up at realtors to buy a home with no money down in the hopes of flipping it for a substantial profit a week later, no one remembered that what goes up must come down, and that when it did come down, those holding the bags of hot potatoes would have to pay.

This, combined with the unwinding of the Yen carry-trade (a system of making money by borrowing funds from a country with a low interest rate and putting the money in higher interest vehicles in another) is causing a tightening of liquidity in the markets. Liquidity is a measure of how easy it is to buy and sell stocks for a profit, and convert it to cash. Liquidity is tightened when you can't sell for as much of a profit, because no one wants to sell for a loss, so you have to hold and wait for your positions to go up again, only, this takes time, and time is the enemy of liquidity.

So this economic environment is limiting the profits and sustainability of hedge funds and hedge fund profits. The Dow went down over 350 (almost 3%) today and the Nikkei is already down over 350 (2%).

Cramer had a fit, the Fed added a sentence to their statement that said they recognised that there is a credit problem, but they wouldn't change the rates, but followed the European Central Bank by adding money to the market. The Bank of Japan, not to be left out, just joined in.

Also, if that weren't the worst of it, Countrywide Financial (CFC), which was touted as being able to survive this row, has announced that the mortgage situation is "unprecedented." They were down 12% in the aftermarket. Lord only knows what will happen tomorrow.

Sources:
Dow Sinks 387 on Renewed Credit Concerns
Countrywide: Mortgage market 'unprecedented'
Japanese Stocks Drop on Concern Subprime Losses Will Spread
BNP Paribas Freezes Funds as Loan Losses Roil Markets (Update5)
Bank of Japan Adds Biggest Amount of Funds Since June (Update1)

Thanks to Alphatrends.blogspot.com for their Technical Analysis.



Stock market video technical analysis for Wednesday August 8, 2007 including; Nasdaq 100 Trust Shares (NASDAQ:QQQQ), S&P 500 Index (AMEX:SPY), Semiconductor HOLDRs (AMEX:SMH), iShares Russell 2000 Index (ETF) (Public, NYSE:IWM), Trend analysis for daytraders and swingtraders of stocks and options. Trading stocks involves risk; this information should not be viewed as trading recommendations.

I read somewhere that one of the hallmarks of the new economy is more bubbles. First we had the tech bubble, then the housing bubble, and now the credit bubble. Tony Dye, the former "Dr. Doom" (so called because he predicted the demise of the tech bubble, years before it happened), said:

"It is inevitable there will be more bubbles," says dot.com crash prophet Tony Dye.

"There is this whole industry that relies on a bull market. So they are going to try to create one."

"And politicians love it because everybody feels good and tax takings go up."

"Let's face it. Nobody is going to get a prize for preventing the bubble that would have happened in 2025."

Mr Dye earned his Dr Doom tag in the late 1990s, when he began predicting the market collapse, some four years before it arrived. He wiped about [pound]8.5bn off the funds he managed by sticking with his value-based management style, quitting the firm in March 2000, just two weeks before the bear market began. Within weeks, his funds rocketed from the bottom to the top of the performance league tables.

The erosion in the Contra Fund's value in recent months follows a repositioning of its portfolio in line with Mr Dye's belief that markets are once again heading for a downturn. However, equities have continued to perform very strongly since the correction last summer.

More:

>Dr. Doom Sees More Market Pain.

Here are some more reports, from The Guild Investment Management forum.:

• WHY THERE WILL BE MORE BUBBLES LIKE THE REAL ESTATE AND INTERNET BUBBLES AND HOW WE PLAN TO PROFIT FROM THEM. Posted Jan 23, 2006.
  
• IT’S ALL STILL HAPPENING: GOLD, US STOCKS, GLOBAL STOCKS, COMMODITIES AND A FEW CURRENCIES ARE SEEING INFLOWS. REAL ESTATE IS SEEING OUTFLOWS. Posted Dec 12, 2005.
  

Stock Notes
Week of 8/6-8/10/2007

The headline risk remains, he says, noting that more negative news or rumors like this week's from lenders Accredited Home Lenders (LEND - Cramer's Take - Stockpickr - Rating), American Home Mortgage (AHM - Cramer's Take - Stockpickr - Rating), Countrywide Financial (CFC - Cramer's Take - Stockpickr - Rating) or Beazer Homes (BZH - Cramer's Take - Stockpickr - Rating) could easily set off another round of woe.

Time to Short BSC, GS, JPM, MER, UBS, WM, BAC

Time to short the financials-- they've been riding high for too long on too much liquidity. Unfortunately, it's going to go down before it goes up. We are in a similar situation to when Bush the first was campaigning for office-- except the time frame has been lengthened. Instead of being a lame duck president for one year, Bush the second will be a lame duck for two, and even though the President doesn't determine the economy, the market doesn't know that. High volatility and frightening drops will keep coming until long into 2009, when a democratic win may bring back the market highs of the late 90s.

Hedge Funds Behind Late-Day Stock Moves

Will Citadel Fall?

micaiah2004 on the Beazer Homes (BZH) message board says that Citadel puts alot of liquidity into the market, but warns that it could fall as well. Nicholas Yulico writes in The Street that Citadel upped it's stake in BZH to 5.7%.

Sowood fund Assets Gobbled Up by Citadel

The assets of the Sowood fund, which recently lost over $3 billion
as reported in Reuters, was gobbled up by Citadel, which also grabbed 
Amaranth's assets. With hedge funds, it is a matter of time and liquidity before
they make or lose money. The article goes on to say that Ken Griffin,
the manager, can wait out the bad calls and ultimately make money
on the positions. If hedge fund managers weren't so impatient, they
would eventually make money on all their positions as long-term
investors. But not everyone is as patient as Warren Buffet.

Amaranth Accused of Manipulating Gas Prices

The Sydney Morning Herald reports that the Commodity Futures Trading Commission has filed in US Court for the Southern District of New York a civil enforcement action against Amaranth, accusing the former hedge fund of manipulating natural gas prices. The Amaranth fund bought futures contracts for natural gas in 2006, betting that prices would rise in the cold winter months. 
But the winter was not cold, prices fell, and the fund lost over $6 billion.
Also reported on Bloomberg.com.