Archive for November, 2009

Well just when I thought the tide was turning, I found out that a family member was sacked today.  The company evidently laid off 40 people today and may do more in the future.   I still have quite a few friends unemployed and some are beginning to run out of unemployment so I wonder what is coming next.

I ended up heading to a couple of stores during Black Friday to check out the situation.  I am in the market for a new LCD TV but I was in no way going to buy over the weekend.  My plan is to get the really good deals AFTER Christmas but if retailers get smart (or desperate) I might buy before x-mas.

I stopped off at Costco and saw moderate traffic and quite a few people were looking at LCD/Plasma TVs.  Most of the other aisles were fairly empty except for the food aisles.   Next stop was Target and I was moderately surprised that there weren’t many people there either.   I must also note that I went to these stores after noon and not in the wee hours of the morning so I’m not sure if I missed the big crowds or not.

My last stop for the day was a big electronics chain Fry’s and the parking lot was fairly packed but most people who were walking out didn’t carry many bags.  The TV section had plenty of people but most of the other aisles were empty.

I’m guessing that TVs are the big gift this year for people and I suspect that more entertainment hours will consist of RedBox DVD rentals or maybe video games than heading out to the theater or restaurants.    I’ve decided that AFTER Christmas I will return to a more modest posture with regards to spending money.   I’ve waited nearly two years to buy some items like that new LCD TV and I really don’t want to wait another year.   With my student loan money rolling in this August and a new batch of funds rolling in January at very low interest rates, I have plenty of cushion.    I also am overloaded with projects at work so I doubt there is any layoff in my future but anything can happen.

Sometimes things happen in the world that could be very attributable to incredible random coincidences and yet sometimes the events fit a very plausible conspiracy theory even if it is a bit far fetched.   So in the past few weeks I’ve been reading about some interesting happenings around the world and I’ll start with Martin Armstrong.

Martin Armstrong is a cycle theory man with a pretty good track record.   He is currently in prison and has been for a while but was recently moved to a maximum security prison after a few reporters were demanding some more interviews on his take on the current economic mess.   You can catch up on this conspiracy theory here and you can get a great background read here.

Next up is the peculiar timing of the death of the Bloomberg reporter who died recently of heart related illness.   What is so special about this reporter was that he was the one that sued the Fed for disclosure on its activities during the economic crisis.   Despite several orders from a Federal judge that the Fed needs to comply with disclosure, I don’t think a single document has been produced yet out of this case by the Fed which continues to appeal.

And lastly, there are a few stories about a recent delivery to Hong Kong of gold filled with tungsten instead of pure gold.   You can read about that theory here.

All of these stories and theories line up for something I read over at another site claiming that a collapse is coming in the Summer of 2010.   I guess we’ll need to wait and see.

Fellow reader “James” posted this comment on my blog post “The Collapse of Dubai” that I wrote about 6 weeks ago.

This article continues on the blogging trend of 2009: the Dubai bashing bandwagon.

Your post has done zero research. Neither did time magazine. 5,000 a day leaving? From where? Have you been in the Dubai airport lately?

Being in Dubai for a couple of days hardly qualifies as a visit. For example, starting a business is relatively easy and only in some circumstances do you need to be linked to a UAE national (no relationship to the royal family needed).

Yes, the situation in Dubai is bleak compared to 2008. But it’s in no danger of being buried by sand.

And the Debt-Repayment-Default heard around the world today is shaking world markets:

Dubai World, the government investment company burdened by $59 billion of liabilities, sought this week to delay repayment on much of its debt. The yen pared its advance after Japan’s Finance Minister Hirohisa Fujii said he may contact the U.S. and Europe to act on currencies, signaling concern that the yen’s ascent will hurt the economy by crimping exports.

All I can say to James is that I don’t need to spend months there to know what my eyes, ears, nose were telling me about Dubai.  It was in a stratospheric bubble that was bound to burst.    James called the situation bleak so I wonder what he considers the situation now?   DW wants six months to help start repaying the debt they owe but how is rolling billions of debt and interest payments really going to help?

If this panic spreads worldwide then the US Dollar is going to rally hard so it would be a good idea to be positioned accordingly.

Dubai may not be buried by sand but it is being buried by debt and there is no question of that now.

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I’ve been doing a great deal of shopping since I’m hosting Thanksgiving tomorrow at my house and today I visited three stores:  Whole Foods, Costco and a local grocery chain.  This is what I saw:

Costco – Moderate traffic but significantly lower than I’ve seen in years past although I did see a few people picking up many LCD TV screens most were shopping lightly.

Whole Foods – Oh my god, I never knew Whole Foods was so expensive.   I paid $33 for a turkey there but I wanted to taste the difference between an “organic” turkey and a regular turkey.   The place was pretty empty considering the location was at an intersection of a high volume of traffic.

My local grocery store – This place was PACKED and it’s where I generally shop for groceries and it’s also the place that has the most entertaining and colorful people.

I got home and began to think about it and I just don’t see how Whole Foods is going to survive at least without either reinventing itself or getting bought out.  I think a buy out from Costco might be a good thing if Costco were even interested.    Good luck Whole Foods but today’s conscious consumer can’t afford your wares, heck I can’t afford your wares and I get paid big bucks!

It seems like all revolutions start on college campuses and this time won’t be any different.  From California, it seems unbearable tuition hikes were the final straw…

The UC regents are expected to put the final seal today on a hefty 32 percent tuition increase as students resume the protests that shut down their board meeting three times Wednesday and required campus police in riot gear to maintain calm.

Students, furious at the increase that will bring their yearly fees above $10,000 for the first time, rushed the UCLA building where the regents were meeting, throwing food, sticks and vinegar-soaked red bandannas meant to look like blood.

UC police arrested 14 people for disrupting the meeting and resisting arrest.

Wednesday’s vote by the regents’ finance committee was also protested at UC Berkeley, where about 1,000 students, faculty and university workers filled Sproul Plaza for a noontime rally. About 300 protesters turned out at UC Santa Cruz. The full board is to vote today.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2009/11/19/MN9O1ALCKG.DTL#ixzz0XM5ip14U

So how far and fast is spreads from there is up for question but I won’t be surprised to see a grass roots movement spiral out of control.

If you haven’t been keeping up, almost every other story that comes out of Bloomberg or some other finance news agency has a quip about US Dollar bashing and whenever everyone moves to the left side of the ship, I like to move to the right side of the ship knowing that people will have to move back to balance the ship unless the whole thing just rolls over.

Click on the graphic below for a sharper image.    I took a look at all the options volume for UUP which is the US Dollar Index and there is quite a huge open interest and volume on UUP options near or at-the-money on these options.   It looks like someone out there is placing HUGE bets that the US will rally sometime now or March 2010 while June shows modest interest.

UUPCY

There have been many discussions that these are large firms hedging against a drop against the dollar or inversely hedging against the collapse of other currencies.  I think the latter is more likely.  I find it much more plausible that a major currency overseas will fall apart than the US dollar would in the immediate future.     China has so much over capacity that it may not be able to do much about its currency situation.  Brazil’s currency has appreciated greatly but that is mostly predicated on the price of oil which is being artificially sustained.

There was a great article on the Houston Chronicle this Sunday from Exxon’s CEO claiming that the price of oil and demand is out of sync and I agree wholeheartedly.

A “disconnection” exists between demand for crude oil and the current price, according to Exxon Mobil Corp. Chief Executive Officer Rex Tillerson.

Oil prices aren’t reflecting demand fundamentals, just as they didn’t when crude rose to a record above $147 a barrel in July 2008, Tillerson said Friday at an energy round table in Singapore as part of the Asia-Pacific Economic Cooperation meeting.

“There is clearly, and has been in my view for some time, somewhat of a disconnection in the fundamentals of supply and demand and the current day market price, and I can’t really explain that to you,” Tillerson said.

Tillerson said the price of oil would probably be around $55 a barrel if the dollar hadn’t depreciated against the euro during the last 18 months.

“You could say oil is about $20 to $25 a barrel higher simply it’s priced in dollars and there’s a weak dollar,” he said.

Personally, I’m anticipating a huge dollar rally and a huge drop in oil prices so I went out and bought 50 contracts on UUPCY (March 2010 $24) strikes on Friday in the attempt to speculate and profit from my prediction – it is a pure gamble.     I’m usually early to the party and I hope that isn’t the case this time but we’ll see what happens.

Well… haven’t been posting lately because I am swamped at work, school, family, and other obligations that I just don’t have enough time to write any posts.   It literally feels like every single hour of my day from 6:30 a.m. to 10:00 p.m. is accounted for leaving me very little free time to do anything.    I normally write posts on the weekend and have them post daily but even my weekends are gone.   Yeah, corporations are making money because they keep letting go of people and everyone left behind is picking up the slack!

Unfortunately, with the holidays coming up, I will have less time as I will be traveling and engaged in other activities.    I am seriously considering going on hiatus until the start of the new year so if you don’t read any more posts you know why…..

If you recall last year, there was a stampede at a Wal-mart during the big “Black Friday” event in which a person was tragically stampeded to death for the sake of shoppers buying cheap plastic crap from China.    I still can’t figure out the whole marketing genius of keeping/holding all of your sales potential for one damn day.  Often it isn’t even a whole damn day, it’s only a few hours of teaser items which no one is ever able to get unless you show up at 4:00 a.m. and wait for a few hours to be the first one in the store.

Personally, I don’t have any plans on fighting for parking spaces, fighting with crowds, fighting with cashiers or other customer service people to get attention if I need something.   I’d rather just order my stuff on Amazon or online and if I need to go to a store I’ll head over to Costco where the crowd is a bit more subdued.   According to FatWallet, it looks like Wal-mart is finally implementing some sensible rules to keep tragedy from reoccurring this year.

It’s beginning to feel like the Tale of Two Cities,

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

First, my flights were both full on the way up and down so I began to think that maybe the worst was over and the economy really is turning around even though we just hit 10% unemployment “officially.”   I went to grab my car and was amazed to see a huge overflow of rental cars stacked all over the parking garage.   The cars were so tightly packed in that I don’t know how they get them out of there.  Then I arrived at the hotel which had a parking lot with 4 cars out of a possible 200 spaces so I thought maybe things are worse than I thought.   I had dinner at the hotel my first day there and there were only 6 people at the bar and two eating dinner at the restaurant.    I had a long drive to the office and despite every major roadway under construction, the traffic wasn’t that bad even during peak times.

So my conclusions so far:  airlines have greatly cut back on capacity (hence the full flight); hotels are still struggling (hence the empty hotel);  many people are still unemployed (hence the light traffic).    The airport was fairly empty, I remember the occasional two hour waits at security to get through the airport.  I made a note that if things ever get busy again, TSA is going to be doing a horrible job at getting passengers through on time.     I also made a note to try to figure out why with 12 TSA agents, the lines still move as slow as molasses at the airports.   It’s total insanity.

On the way back, I sat next to a chatty person that was telling me that she had many of her friends still unemployed and only certain industries were stable.  Not surprisingly, this woman was working on health care related industry which seems to be a fairly stable industry.

And now for the irony, I and two planes full of people were clearly on business trips as nearly everyone on the plane had a laptop going while we were in the air.   So if you have a job, it’s the best of times, if you don’t it’s the worst  of times.  I saw a guy from a major office supply company read a memo on his email which talked about mandatory furloughs coming at the end of the year.   Evidently this company is requiring their employees to take a minimum of 5 days off with no pay and they could not substitute vacation time.    It is the winter of despair to have to lose money and be forced to take days off without pay, but it is the spring of hope that you haven’t just been fired outright.

There is talk about another stimulus so it is the age of foolishness yet businesses are starting to hoard cash and act prudently, it is the age of wisdom.  I don’t know where we go from here….