A Playable Theme to Think About

I’ve previously mentioned that I usually like to form strong beliefs of current or imminent trends that can then be used as spring boards to more specific ideas.  For example, I’ve talked about the fact that I think green energy may die a slow death as the ability of government to subsidize them is on the wane.  Stronger than this, I view a beat down on the US dollar as a massive play long term with all sorts of different angles to be played.  Keep in mind on this one in particular, that contra trends sometimes make you second guess your beliefs.  The US dollar theme would be a great example as you see the dollar impact of every “new” Eurozone worry lately.  Again, I’d view the US dollar decline as a longer term play and vehicles chosen for this theme should be consistent in terms of time frame.  I’m not suggesting that it’s impossible to play this short term (both ways), I just think it’s a much easier call long term and there are many opportunities (both securities and non-securities related) to consider.

We’ve seen some very significant up moves in the dollar over the last few years.  We’re actually in the midst of one of those contra moves as we speak as a quick glance at the DXY (dollar index) chart below illustrates…pretty strong correlation with the ongoing September implosion of Greece:

I am currently putting some ideas together for what I view as a no brainer trend that’s in the process of changing our country.  You will completely understand it, but I wonder how many are taking positions to benefit.  I’ll have more specifics this weekend.

TD

Friday Morning Reads

Scary military perspective of the challenges Mexican gangs are bringing to the state of Texas.  It’s a long report, but you can immediately scroll to page 7 to begin the meat.  This link was originally found on Michael Panzer’s http://www.FinancialArmageddon.com.

“Texas Border Security: A Strategic Military Assessment,”

Quick summary of endowment fund returns through June 2011…surprisingly solid:

Endowment Fund Performance (cont.)

Sort of an interesting article on oil, with a few names to follow-up on your own:

How to Play It: Investors drill down on oil

This is Germany, but still very interesting looking forward:

Utilities Give Away Power as Sun Floods Grid

Global Inflation Anyone??…check out these headlines/articles.

Swiss firms fight for quality as costs rise

Japan’s core consumer price index rises 0.2%

Euro-zone Sept. annual inflation accelerates to 3%

India’s Food Inflation Accelerates, Maintaining Pressure on Interest Rates

Ken Griffin and Citadel Securities as told by Business Insider

Interesting article …hit the “click here to see the sad story of Citadel Securities” link within the article.

How Ken Griffin Went From Competing With Goldman Sachs To …

GOLD

Long reprint of  a timeless article that Forbes put out back in 1931…very good read.

The Great Gold Argument (Fortune Classics, 1931) – Fortune …

Need to know news snippet on gold:

The Chinese Mean To Control The Global Gold Market

Pain + Reflection=Progress (i.e. $6.5 billion)

I like reading articles on guys like Ray Dalio (see New Yorker article below) in order to learn of the many different ways successful traders/investors have risen to the top.  I’m going to start making this one of my regular posts…at least until I’m out of interesting subjects/articles.  I read these bio type pieces as much as I can and will tell you upfront that one of the things that sets these “guys” apart is their individuality.  I don’t always end the article thinking about what cool people they are.  Instead, I love how they’ve typically done and said things others have not and in doing so, have become extremely successful investors.

Robert Frost:  “I took the road less travelled by, and that has made all the difference.”

Ray Dalio’s Richest and Strangest Hedge Fund : The New Yorker

Fillin the Gap on the NASDAQ

NASDAQ closed at 2516 yesterday and has a gap that will be filled with a 2538 print today.  With this morning’s all clear sign on the Eurozone problems (ridiculously sarcastic), we may see this  gap filled quickly.  I don’t have time to go much further into this at the moment, but watch this play out and let’s see what happens.

I’m thinking about the potential for a reversal soon after filling the gap.  A play on SOXS, SDS or the underlying calls maybe worth considering.  This is ultra aggressive, not for everyone, not an investment recommendation…you get the point.

Check out the charts and watch.

TD

Bloomberg, JP Morgan and Apple

So yesterday I posted a link to a Bloomberg article discussing JP Morgan’s Hong Kong unit’s findings that Apple is cutting orders to vendors in the supply chain for its iPad tablet computer.  This is obviously a huge data point as Apple has been an absolute monster of late.  Turn the clock ahead 24 hours and we get a follow-up Bloomberg article (see actual headlines with links below) refuting yesterday’s JPM Morgan research.  It seems the “US team” differs with the “Hong Kong team” on their Apple findings.

If this smells a little funny to you, it should…it’s horse shit on a few fronts.  Doesn’t it seem like the “Hong Kong team” would be slightly better positioned to cover and extract data from companies by the name of Hon Hai Precision Industry?  Doesn’t it seem like the “US team” is probably closer to the JP Morgan investment banking unit’s “Apple team” and therefore influenced by it…..to NOT disseminate data negative to Apple?  Isn’t it odd that Bloomberg wouldn’t include this potential conflict or at least delve a little deeper into this flip-flop?

A member of JP Morgan’s “US team”, Mark Moskowitz’ first quote of today’s article:  “Apple is fine.”  When something is failing the smell test to this degree, I am sometimes led to the exact opposite.  This is clearly something to watch going forward…mark your calendar for this warning.  It may turn out to be nothing, but it’s a little odd.

Filter your media.  You’ve got to think about what you read.

Yesterday’s Bloomberg headline:

Apple Trims Orders for IPad Parts: JPMorgan

24 hours later, we have this ridiculous Bloomberg headline, refuting YESTERDAY’S assertions (again, actual headline):

JPMorgan Differs With JPMorgan on Apple IPad

Is Thor a Short?…Follow Up

Driving this weekend, I couldn’t help but notice a huuuuuge RV dealership….and I started thinking.  “Who is carrying that inventory?”  “Who/what is the market for an RV?”  “What are the underwriting standards for getting an RV loan right now?”  And more importantly:  “Are the underwriting standards about to get leaner or TIGHTER?”

After further research, I still like the fundamental idea of this potential trade.  Expensive consumer discretionary items seem like targets to me with respect to potential rollover candidates.  Within this realm, RV manufacturers look like a dream play.

Some of this has already played out as witnessed by a glance at a few of Thor’s major competitors.  Monaco Coach (700 dealerships, $1.32 billion in sales and 2,250 employees) filed for bankruptcy back in 2009 and Winnebago has fallen from $36/sh in 2007 to $7/sh today and has some scary operating trends.  By comparison, Thor looks a whole lot better…as did the last dinosaur.  I think Thor looks like a decent company operating in an industry that’s going to get crushed over the next year or 2.

Unfortunately, Thor is already heavily shorted with a 12.1 days to cover ratio.  What this means is that it would take over 12 days to cover all of the shorted shares given the average volume on this stock.  Quick example for those not familiar with days to cover:  If you have a stock with 2,000,000 shares currently shorted and said stock’s average daily volume is 1,000,000 shares, it would take 2 days to cover all of the shorts…days to cover would equal 2.  Again, Thor’s days to cover is relatively high at 12.  While high short interest is sort of a bearish indicator (many people expecting the subject stock to fall for some reason), it also sets up short squeeze potential.  Short squeeze’s can happen when a heavily shorted stock rises rapidly and the “shorts” all try to cover (which means buy) at once….ramping demand with no change in supply…prices can jump significantly and fast.  You can google this further and checkout http://www.shortsqueeze.com for actual data.  The free date on that site is delayed, while a $30.00/mo fee gets you info 3 days earlier.

That’s enough for me to sit this specific play out.  Although I don’t like how little volume their options carried (which isn’t enough to keep me away by itself) and I didn’t like the pricing of their options (which is enough to keep me away).

I still think Thor will run into to serious headwinds, but I’ll look elsewhere for my next trade.

TD

 

 

Monday Morning Reads

Wondering about recent move in precious metals?…wonder no more:

Case Closed: CME Hikes Gold, Silver, Copper Margins | ZeroHedge

Great news, politicians are feeling more free to bull shit the American people:

Taibbi: GOP Debaters Get Facts Wrong, Don’t Care

Singapore Dollar anyone?…read on:

Turmoil in Asia echoes 2008 

Just a short/cool story and a company worth watching:

EarthRisk Technologies Predicts Weather Weeks in Advance

What reputation????  As the cool kids text:  OMG, that is def stupid:

Solyndra Meltdown May Hit Goldman’s Reputation: William D. Cohan

Average (see headline below) is a pretty low bar when most other currencies are horrendous.  Seriously, I think I’m in pretty good shape when I’m forced to walk through a mall with my wife….being surrounded by fat people can do that to your perception.  Am I really in good shape?…probably not.  It seems like I hear this logic with respect to the US dollar a lot lately; be careful.

Euro Remains Above Average Amid Debt Concerns

This seems like a huge data point given Apple’s status as a market darling, but the article is short on detail.  I’d recommend watching how this story develops (or potentially dissipates).

Apple Cuts IPad Supply Chain Orders: JPMorgan

Huge implications here:

China, Driver of World Economy, May Be Slowing

A Greek Canary in the Coal Mine

It’s easy to think of Greece as a far away place, whose problems are interesting, but nonetheless irrelevant to your day.  Although the future destination of the middle class is obvious, have you seriously considered how you and your family (and your portfolio/assets as well as your day-to-day activities) will be affected by a massive demographic shift toward the poverty line?  I’m not suggesting that you focus on your own slide toward the poverty line, my thought is that the “have-nots” are growing in number…rapidly.  Historically, this has not been a good thing for anybody.

Hopefully D-day domestically is a long time from today and Obama and his band of merry men are able to “kick the can further down the road”.  On the other hand, I am a firm believer in hoping for the best, but planning for the worst.  Don’t read these articles as a semi interested third-party.  If the guy next to you on a 3 hour flight was hacking constantly, I think I know what most of you would be thinking:  “how do I get out of this seat?…the last thing I need is to be sick…does this guy have bird flu or what?…etc.”  Greece is the guy hacking all over and most of the other seats appear to be filled…interested now?

Worried Greeks Fear Collapse of Middle-Class Welfare State

OK, I admit, I don’t know a lot about  German Chancellor Angela Merkel.  Her suggestion that a “barrier” around the Greek implosion is so completely ridiculous, I think she’s worth a more watchful eye going forward.  If you think I’m being over dramatic, keep in mind this is the leader of the “pillar” of the Eurozone…”the”…not one of the.

‘Barrier’ Around Greece Needed: Merkel