Fed rate cut in the mirror

Detroit is asking: Ford CEO Alan Mulally became the latest high-profile business executive to suggest that the Federal Reserve needs to cut interest rates, according to a report published Friday.

Detroit is near a deep, deep crisis. If the housing will hammer Detroit, probably Michigan will be like the Death Valley.....

Contrywide CEO Mozillo predicts recession

Angelo Mozillo, Countrywide Financial CEO, predicts a recession:

"I can't believe when you're having this level of delinquencies — [home] equity is gone, the tide has gone out — that this doesn't have material effect on the psyche of the American people and eventually on their wallets."

The doubt remains if the housing slump will contaminate the stock markets in a decisive way that originates an economical recession. The problem is no longer contained on the mortgage lenders but on the depreciated houses' prices that turn impossible for low income families to continue to meet their mortgage payments, put their homes to sell and few people and for few dollars wants to buy it.

Recession?

Think of this:

• Fed Rate: 5,25%.
• ECB: 4,0%. Near a new increase.
• Month after month, new starts in homebuilding decrease.
• Mortgages and foreclosures, rising.
• Investor confidence in Germany, at the lower level from the last 8 months.
• Nikkei performs poor, even with a 0,5% rate of BOJ.
• Volatility is high.
• Bank stocks are decreasing everywhere.
• Commercial paper reduced dramatically.
• What else do you need for a..............

The un-Greenspan

"Bernanke: the un-Greenspan" by Mark Eavis at Fortune.

Cleaning...

The "moral hazard" gets harder. In the US, acording to today's news, foreclosures is rising.

"Foreclosures rise in July

Meanwhile, there was more fuel for the mortgage fire this morning: The number of foreclosures jumped 9% in July from June to 179,599, data firm RealtyTrac said.
That number represents a 93% jump from July 2006."

The Bernanke uncertainty

After all the last week's turmoil, people are much more uncomfortable. We are like in a big nine meters sea, particularly if you look to the volatility: The Chicago Board Options Exchange Volatility Index stayed near the highest since 2003 after the Fed unexpectedly reduced the rate it charges banks for loans on Aug. 17 .

The Friday's comeback, probably was a technical rebound together with an emotional reaction to the FED's reduction. This confirms our vision: The Fed said it reduced the discount rate to 5.75 percent because risks to economic growth have risen ``appreciably.'' The statement was a departure from the previous week, when central bankers kept rates unchanged a ninth straight time and reiterated inflation was their ``predominant'' concern.

But after all, we will focus in these two main issues:

• Goldman Sachs Group Inc., whose hedge funds lost $3 billion in August after the S&P 500 declined 6.9 percent from a July 19 record, said in a letter to investors last week that a ``significant investment opportunity'' now exists.
• The Fed's actions have been less predictable for investors since Chairman Ben S. Bernanke took over in February 2006 after more than 18 years under Alan Greenspan's leadership.

Moral hazard versus bail out

That's the decision which is being balanced. The ideal move would be to let the market enforce the pedagogy of punishing the banks that made the foolishness of lending money to subprime borrowers. But reality prevails over ideals and the move had, and will continue to be - until crash do us part -, to cautiously bail the banks, and indirectly the hedge funds that should receive the "moral hazard".

The problem now is that the financial markets and the "real economy" are, completely and immediately, interconnected and the real economy suffers with its upturns and downturns. I don't ignore the lessons this crisis permits but, for the time being, the priority, for Bernanke and the bunch (and Bill the Butcher also...) is to sustain the market. I think Jim Cramer's alert was fundamental to ignite an answer from the FED.

Crash Comming?

Big volume

Credit crunch are not solved, even tough, this is a huge volume for the Nasdaq in August. Pay attention to some volatility.

Jimmy Cayne: fired!

Read this:

Chief Executive Jimmy Cayne and his one-time protege Warren Spector attended the National Bridge Championship in Nashville in July just as the credit markets were starting to implode, showing how much their priorties were out of whack.

This is unacceptable. This is the Lay and Skilling type of business. This is outrage.

The cherry in the cake: Spector, who was fired Sunday as the subprime meltdown engulfs the Wall Street bank, actually won his first national championship in the four-day competition which attracted about 5,000 people from 18 countries, according to Rick Beye, the tournament's director.

Who is Warren Spector?

Every crisis has a name.

Remember John Meriwether? The guy from Long Term Management Capital.

Remember Nick Leeson? The guy from Barings Bank.

Probably you will listen to this name: Warren Spector. Why? Because of this: The Wall Street bank’s board (Bear Stearns) is reported to be meeting on Monday to consider the future of Warren Spector, its co-president and head of capital markets. One analyst said that if Bear made no statement before the markets opened on Monday investors would fear there was “more bad news to come”.

Cramer: Bernanke, Wake Up

Mad Money host Jim Cramer makes a passionate plea to Federal Reserve Chairman Ben Bernanke to consider cutting interest rates and, in turn, help the market and the people who are losing their jobs on Wall Street.

Jim Cramer looks like very angry with Chairman Ben Bernanke. See the interview:

If you can't beat them....

This table is the answer to this:

After exasperating investors for most of the past 18 months, Yahoo Inc. Chairman Terry Semel finally found a way to please Wall Street by stepping aside as chief executive. To fill the void created by Semel's departure, Yahoo appointed company co-founder Jerry Yang as its new CEO and named Susan Decker as its president.

Is it gold at a higher level?

Gold: the ultimate heaven! Is it? For the Swiss Government, it is time to sell a bunch of gold: The Swiss National Bank said Thursday it will sell 276 US tons of gold reserves over the next two years.

The Asian factor

Greenspan, Bernanke, Paulson and all top-spins will not achieve a real estate turnaround for 2007. The bubble was so big, similar to the internet stocks, that the burst will be definitely also similar.

Look to this: Sales of previously owned homes probably will tumble 4.6 percent to 6.18 million and the U.S. median home price likely will fall 1.3 percent to $219,100.

No matter the influx of money to the US, the GDP will be lower for the year: The U.S. economy probably will expand at a 2 percent pace in 2007, compared with 3.3 percent last year.

Even tough, the world economy is in good shape. It is the first time, probably since the last 20 or 30 years, that a near-crisis in the US will not mean a world crisis. It is the Asian factor.

Take a break

US is in the middle of a real estate crisis. Prices of homes are decreasing. New starting homes are improving. But the picture is a little bit far from the end.

S&P - 500 is moving higher. It will be better to take a break. Otherwise, we will have a hardlanding!

Greenspan and the Chinese bubble

We all know that Alan Greenspan has made a big masterpiece in the international markets, in the last part of the 20th century.

Even, after leaving the Fed, any remark from Mr. Greenspan make some noise. But, as always: good noise.

Mr. Greenspan, right now, is telling us about China. In this case, what he has said, doesn't surprise us: former Federal Reserve Chairman Alan Greenspan warned a big correction is due in Chinese stocks.

We do not believe in trees rising to the skies. The bubble in Chinese stock market, will burst, right now, or 3 years from now.

Investors, with or without speculative behaviour will be burned. Just because of that, the warning from Mr. Greenspan it is very healthy.

TJX. Breakdown of the 50 SMA support?

In the chart of TJX (TJX Companies Inc) between points 1 and 5 we have a behaviour of higher lows and higher highs, but in point 6 the highs behaviour is violated with a high lower than the previous and in point 7 the lows behaviour is violated with the price of the stock falling slightly below the previous low. So we have a sign of a trend change.

The RSI crossed below the fifth line, also a sign of a trend change. A important point now is the 50 Simple Moving Average (SMA) and notice how the price closed almost equal to the value of the 50 SMA. If the price breakdown this support then the odds increase for a strong move down. A obvious stop loss for a short position is placed near the 28.8, i.e., the previous high.

LYO. A classic base and breakout pattern.

A consistent pattern in stock markets is a base followed by a breakout in big volume. In the chart of LYO (Lyondell Chemical) we identify a base of tree months and then a breakout of good quality. It´s possible that a pull back to the base occur in the short term, but the pattern is very powerful. In addiction, when we study a long position we like price/book numbers not very high, in this case is less than 3. For a more aggressive trader or investor, that enter the position faster not waiting for a pull back (a pull back that may never occur), a possible stop loss is near 32 usd.

KRY. Trading with the trend after a pull back?

In stock markets a fundamental rule is expressed frequently by the phrase "the trend is your friend". With KRY (Crystallex intl), since March, we have a series of higher highs and higher lows and we draw a nice bullish trend line using the higher highs, in accordance with the rules. We write nice because a lot of touches give more significance to the trend line.

Trading with the trend is better when we wait for a pull back to occur and here we have a pull back to the trend line and near the 20 day simple moving average, also a important support during an uptrend. The RSI remains bullish above fifty. For a long position a obvious stop loss is near the previous low (3.7 usd).

DNA. A very significant bearish trend line

In the chart of DNA (Genentech Inc) we draw a bearish trend line that is very significant.

A bearish trend line is based on lower highs and the significance depends on some factors as the number of times the price touches the line, the angle and the lenght. In this case the price touches five times a four months line with little inclination. Moreover, we have a breakout of a triangular formation and a price/book grater than 8 allowing some "space" for a down move. But in stock markets we deal with uncertainty and for a short position a possible stop loss is some cents above the bearish trend line.

Follow the leader

When you do not have a fundamental source of information, it will be better to follow the leaders.

When you see some steps from Buffett, Soros or Icahn, you can imagine what will be the next steps.

Look to this:

• Berkshire Hathaway, run by billionaire investor Warren Buffett, said in an SEC filing that it had almost doubled its stake in Dow stock Johnson & Johnson.
• Berkshire has also taken stakes in railroads Norfolk Southern and Union Pacific, as well as insurer Wellpoint.
• George Soros has more than doubled his holdings in Dow stock Microsoft.
• Carl Icahn's Icahn Management bought a large stake in Anadarko Petroleum.

All this news in a day, with an additional private equity business: Bausch & Lomb agreed to be taken private by Warburg Pincus for nearly $3.7 billion in cash and stock.

We are in May. Statistics show that, you have to sell in May!

S&P 500

200 points in the major index, in one single year, it is too much. Meaning roughly +15% return on investment. Too good to be true!

We think stock market will always be the best way to make money, nevertheless it is impossible to grow so quickly in one year, especially in a economy giving some clues of a slower pace.

Let's go to a sector analysis, because the ETF type of investment, based on S&P, or even in the Nasdaq, will be more volatile.

CMGI. Long position?

This year between February and March the price of CMGI rise almost 100% and in the end of March we have a perfect 0.382 fibonacci retracement. In April the price "slept" and oscillated between 2.05 and 2.28 usd. This month the high of the previous month was broken and we have a breakout of a one month base, although the range of the base isn´t very tight. The price/book for CMGI is only 2. Here, a good stop loss for a long position is based on fibonacci and at the end of the base, placed near 2.05 usd.

Motorola

One of the major icons of the American tech industry is thriving, particularly in mobile industry. Could Motorola make a new turnaround? Or could be Motorola another laggard in the American industry picture?

YHOO and JBLU. LET THE PROFITS RUN AND STOP THE LOSSES.

Let profits run and stop losses are two basic rules in investing and trading.However there is some variants that I like to follow. One that I classify as very good consist of close half the position when a big gain is achieved and there is some evidence for a reversal.

I use as objective number, for a big gain, a return of more than 10%. For JBLU, where we study a short position suggested with a price close to 11.5 usd,we have since January in the week chart a strong down move without any correction. For that reason the probability for a move against us increase. Additionally,we have almost 12% of return,so, with this strategy we close half the position.

Other example from our suggestions that favors the strategy presented here is YHOO. Since the price we study as a potential good entry for a long position the return achieved almost 15%, but last days some strong move occurred against us and at the moment I´m publishing my thought´s the bid price is at 28.18 usd corresponding to a loss less than 1%. if we had followed the strategy of closing half position with a big gain (more than 10%) and when we have evidence of a reversal, we still have a good result with YHOO. In this case the suggestion for a investor that remains with all the position is stop loss at a very short negative return (less than -1%). We stop with a almost null loss because the reason for the long position disappeared.

Dates of previous discussions in this blog:

JBLU 11.04.2007

YHOO 25.01.2007

Thank you for reading our thought´s and remember that they are only for illustrative/educational purposes and although our historical results are very good,no system or methodology has ever been developed that can guarantee freedom from losses.

CIEN. One month base followed by a breakout.

With CIEN (Ciena) we have a one month base followed by a breakout in good volume.

Between August and November of last year the price and MACD (12,26,9) formed a positive divergence and between November and March the price formed higher lows. In the fundamental side the price/book equals 3.19, allowing some upside movement.

We only thing twice because the long term trend is not very favorable, but considering the very good short term pattern, we favour a long position placing a stop loss close to 27.8 at the end of the base.

Gold - No comments

Toyota: new King in town

It is real. It is a milestone. It is something that seems like a new age:

• Toyota Motor Corp. became the world's top auto seller in the first three months of the year, passing rival General Motors Corp. for the first time, the Japanese automaker said Tuesday.

It is bad news for GM? Possibly, no. Wagoner was cutting fleet contracts, which contribute mainly to poor margins. But Toyota is telling to the world, that its long term strategy is paying off. Toyota long term strategy focus on quality and efficiency is paying off.

Let's see, if automakers will learn the same way Boeing did in the past. Boeing faced EADS (Airbus), and is again on top of the hill.

Again, automakers need new corporate leadership like Sloan or Iacocca.

Oil prices

The "io-io" business is very well. After the Iran hostage's crisis had been solved, the tide will move down.

But, some clues for the next months:

• In its weekly inventory report, the Energy Information Administration said oil and gas refineries ran at 90.4 percent capacity, up from 88.4 percent a week ago.
• Refineries had suffered a string of accidents and other unexpected shut downs in recent weeks, which along with strong gasoline demand and a draining of winter blends had pummeled gasoline stockpiles and helped push retail prices to nearly $3 a barrel.
• EIA said gasoline demand averaged 9.4 million barrels per day over the last four weeks, up 2.5 percent from the same period last year. The average rate of demand increase is about 1.5 percent.

Let's bet that we will have a hot summer!

Note: yellow colour is the oil company's index; blue colour is the Nymex daily.

Boston: return to heaven?

After several problems, Boston Scientific is returning from hell:

• Reshuffle the board governance.
• FDA warnings.
• Stents quality.

Can we take it for granted? Or the Guidant purchase still is the major obstacle?

Going deep....

IMF is telling us: The global economy should turn in an energetic performance this year, even though its biggest player, the United States, is expected to experience its weakest growth in five years.

This is wishful thinking! The real estate and mortgages issue in US, will spread in a major way. Even the IMF will assume that risk: Although there have been some "tentative signs of stabilization" in the troubled housing sector, the "housing correction still has a way to run," the IMF said. "A turnaround in residential construction is still several quarters away."

In a scenario like this, IMF speaks in a world economy growing at 4.9%. This is bullshit! Especially, if we look to the main driver's growth:

• The U. S. economy is expected to grow by 2.2 percent this year.
• In Europe, the IMF is projecting Germany to expand by 1.8 percent this year, an improvement from a previous projection of 1.3 percent growth.
• Britain should see economic growth of 2.9 percent this year.
• Japan, meanwhile, continues to recover from a decade-long stagnation. It is expected to post economic growth of 2.3 percent this year.

The emerging markets are doing well, but their weight is not so big in the world economy:

• China, is expected to log blistering growth of 10 percent this year.
• Russia is expected to see economic activity increase by 6.4 percent this year.
• India, which grew by 9.2 percent last year, will moderate to 8.4 percent this year.

How could it be possible, to grow 4.9% in 2007?

The io-io business

In a week, it is a question of US inventories: oil is up.

Next week, it is a question of a riot in Nigeria: oil is up.

In another week, it is a hurricane in Caribbean: oil is up.

Last week, Iranians put Brits back home: oil is down!

What a huge business, for traders. And for owners!

What about the consumers!

Today, we see this: Crude oil plunged $2.77 a barrel in New York, the biggest decline in three months, on speculation that an Energy Department report will show U.S. inventories jumped last week as refiners unexpectedly shut units.

Kirk is back

Billionaire investor Kirk Kerkorian's Tracinda Corp. on Thursday made a $4.5 billion cash offer for DaimlerChrysler AG's troubled U.S.-based Chrysler unit.

Kerkorian type of investor is very good, to clean the mess! No doubt, Chrysler will benefit from this approach. And, for us, we think Chrysler value is bigger than 4.5 billion dollars.

This is another ingredient to the rearrangement of the auto industry in America.

In another planet, we read this: Alan Mulally, who succeeded Bill Ford last year as chief executive of Ford Motor Co., received compensation valued at $39.1 million in his four months on the job in 2006, including an $18.5 million bonus related to his signing and awards he gave up when he left his previous employer Boeing Co., according to a regulatory filing Thursday.

This is not good for Ford. To earn 39.1 minus 18.5 million dollars in four months says that the Ford Board did not make its appropriate job!

JBLU. Will the price break the one month support?

The last month JBLU form a base after some move down. The last tree days we have some evidence for a breakdown. If the price breakdown the base we have some expectation for a strong move down. However be careful if the overall market moves higher.

Crossroads

We think the world economy is not in bad shape, but also seems like a plane trying to land! Soft-landing or hard-landing?

Some investors are viewing a recovery:

• BlackRock Inc., Fisher Investments Inc. and Schroders Plc, which manage about $1.4 trillion, say stocks are inexpensive relative to bonds.
• Profit of companies in the Standard & Poor's 500 Index, the benchmark for American equity, is growing faster than shares, and represents a yield of 6.53 percent compared with 4.65 percent for 10-year U.S. Treasury notes.
• The gap -- the widest since 1986, according to data compiled by Bloomberg -- is encouraging investors because earnings forecasts indicate the U.S. will keep growing, while bond yields show confidence that inflation will stay in check.

But:

• The U.S. economy is slowing. Mortgage defaults are rising.
• As many as 2.4 million Americans may lose their homes because of the collapse of subprime lenders and foreclosures.
• Economists at Morgan Stanley, Nomura Holdings Inc. and HSBC Holdings Plc reduced their first-quarter U.S. economic growth forecasts last week after a report on durable goods orders raised concern a decline in business spending was deepening. Morgan Stanley cut its estimate to 1.6 percent from 2 percent.

Investors does not like uncertainty. We do not like clouds on the horizon!

Are we near a new war?

In an economy, there are some sectors that benefits from war, like: equipment manufacturers, from planes to boots, from food to fuel!

Iranian - British fight because of waters, it is reminding us about some old memories:

• The kidnapping in mid-March of 15 British sailors, and the parading of them on Iranian television, was first played down by the British government, in an effort to encourage Iran to set them free without losing face. Now the situation is beginning to look more like the American-hostage incident in 1979, when over 60 Americans were held in their diplomatic mission in Tehran, Iran’s capital, by Islamic extremists.

We are near a possible war, after this remark: President George W. Bush said Iran's seizure of 15 British sailors and marines in the Persian Gulf is ``inexcusable'' and the U.S. stands behind the U.K. government in its attempts to resolve the standoff.

Stocks to watch, especially in a bear market: Lockeed-Martin, Boeing, Northrop, Exxon-Mobil, Chevron and gold!

But, we will continue to watch internet stocks and healthcare business.

Bear

"Financial stocks are not performing well and this is usually a bad indicator for the market". Marc Faber has said that. And when we have this kind of figures: A measure of financial shares has retreated 5.9 percent since Feb. 20. We are in a bear market.

Rising oil prices, real estate burst and "war on terror" never ending story, we will se S&P in a bad shape.

Recession, definitely

Master Greenspan has warned recently, about the incoming recession.

King Buffett has mentioned several times, some dirty pieces of the American economy: twin deficits, too much dependence on consumer spending, and a public budget unmanageable.

Right now, Bernanke says something that we think is not a doubt, it is real: Federal Reserve Chairman Ben Bernanke said Wednesday uncertainties surrounding the U.S. economic outlook have increased somewhat recently.

We prefer to listen to Mr. Greenspan and to Mr. Buffett.

Recession

The real estate turmoil continues: Sales of new homes continue their decline in February, as the government's latest reading of the strength of the battered real estate market came in much weaker than forecasts.

The real estate bubble will be removed during 2007, but in the meantime, volatility will be hurting stocks.

Lucent comeback

Bell Labs have suffered an enormous catastrophic blowing after 2000. Recently, Patricia Russo have made some work on cost cutting and provided the sale of Lucent to the French company Alcatel. Right now, Alcatel - Lucent is trying to come from the ashes.

This is good news: Verizon Wireless said it has awarded Alcatel-Lucent a three-year network expansion contract worth an expected $6 billion. Under the agreement, Alcatel-Lucent will supply a range of network equipment, software and services to support Verizon's network expansion.

Signs to buy

We have learned from Buffett that we start to buy, sound businesses, in tough times.

Definitely, we are in a rocky surface. Look to this: The biggest drop in home building in 15 years weighed on growth last quarter. And this: Residential construction declined in the fourth quarter at an annual rate of 19.1 percent, the most since 1991, after an 18.7 percent decrease the previous quarter, Commerce estimated last month. The drop subtracted 1.16 percentage points from GDP.

But: Purchases rose to an annual pace of 990,000, up 5.7 percent from January, according to the median estimate of economists surveyed by Bloomberg News ahead of a Commerce Department report tomorrow.

It is time to buy some selected stocks. In the opposite side of Buffett, we enjoy Internet stocks, because the net is the future. The challenge is to find the best and the next leaders.

Recession?

Master Greenspan has warned. Mortgages and real estate are the main sources of recession. But America is living also an innovation crisis. Motorola is in turmoil. Dell is stuck in the mud. Automakers are near bankruptcy. What is happening to America?

The White House is in a permanent crisis of credibility. Iraq and Afghanistan are on fire. The Defense Budget is unsustainable.

Will Obama be the new face of America? Or America is facing the decline of the empire?

FED: rethinking the rates?

Mortgages, real estate, twin deficits and "war on terror" budget, are damaging US economy.

Master Greenspan has warned, about a possible recession. Bernanke have dismissed the Greenspan thinking without clear evidence.

Now, the market is waiting for rate cuts: Options traders are starting to say the Federal Reserve may cut interest rates three times this year as the housing slump threatens the economy's growth.

We always believe in Market. After this, Bernanke will be in a turmoil: to tackle some inflation threat, or to put some gas on the economy.

Another accounting problem

This is a nightmare to the shareholders. We do not understand the systematic accounting problems facing Corporate America, after Enron, Adelphia, and among others, Worldcom.

This time is the GM juggernaut: General Motors warned investors Thursday that its internal controls over financial reporting are ineffective and could make it difficult for automaker to execute its business plan.

One word: unacceptable. SELL.

Fool's paranoia

The Motley Fool, by Seth Jayson, insisted today in their attack on Altair. Now, about shipping or not shipping 4 battery packs!?... It is not persecution anymore: it seems... paranoia!...

Disclaimer: I own shares of Altair Nanotechnologies.

Privaty Equity, again

The pace of activity around a possible sale of DaimlerChrysler AG'S Chrysler Group is accelerating, after several potential buyers met with management before presenting preliminary offers by the end of the month, The Wall Street Journal reported.

The news are not new. Daimler - Chrysler have decided to put Chrysler on sale. The news are the list of potential buyers: The interested private-equity firms include Cerberus Capital Management LLC and a group led by Blackstone Group and Centerbridge Partners LP.

The Fools, Altair and the... SEC

It's very hard for a company to keep advancing its operations and market evolution over a continued stream of fire as Altair Nanotechnologies is experiencing from The Motley Fool, Seth Jayson, Jack Uldrich and peers.

In the past weeks, Altair shares rose to a level consistent with its results and contracts. But, soon - here and here and here, three articles on three days?!... - The Motley Fool has attacked, as usually, to decrease Altair's momentum...

Now, the question has changed. It's not anymore "why?" or "for whom?" - A123 Systems? - , but "until when?". Until when will the SEC authorize this kind of systematic campaign over a company?...

Quousque tandem, Catilina, abutere patientia nostra?


Disclaimer: I own shares of Altair Nanotechnologies.

Boston: a revolution?

Boston Scientific shares decreased 3.4%, today.

But, today the market recuperated some strength. Then, why Boston decreased so much?

The reason: a significant change in Board Governance.

Take the revolution in Boston:

First: (Boston Scientific) will require its CEO to own at least 240,000 shares. Executive vice presidents must own a minimum of 75,000 shares and senior vice presidents must obtain at least 20,000 shares.

Second: Shares will be worth five times the base salary of the CEO, three times the executive vice presidents' salary and one times the base salary of senior vice presidents.

Third: Executives must reach stock ownership levels within five years from the date the guidelines were adopted or the date they became an executive officer -- whichever one is later.

Forth: The new standard mandates that any director nominee not elected by a majority of votes cast to submit a resignation letter after the shareholder vote. The company's governance committee will then either recommend or reject the letter.

Fifth: The board recommends phasing in annual elections of directors and shareholder approval of an amendment that require directors to be elected annually for a one-year term, instead of the current three-year terms.

This is a real revolution. But, we like this approach. The market is making a NO.

Master Greenspan

He said: the U.S. housing sector was experiencing an "inventory recession." However, he also said a bottom had been hit in the decline of U.S. home sales.

The "io-io" economy!

Gray days

1. We do not like the level of shares increasing and increasing.
2. We do not like this: the nation's second-largest homebuilder said a year-long housing slump is unlikely to end this year and the Federal Reserve cited slowing growth in several local economies.
3. We do not like this: Almost 1.7 billion shares changed hands on the Big Board, 8.9 percent more than the three-month average.

The Motley Fool cheating game over Altair

Altair goes up on news and The Fools strike back:

"The Motley Fool has written about Altair (Nasdaq: ALTI) for a number of years now, and most of the stories have tended to criticize various aspects of the company. In spite of some encouraging recent news, I would like to offer yet another reason for investors to be cautious about investing in Altair: a competitor that seems to hitting on all cylinders. The company is A123 Systems and, like Altair, it also develops lithium-ion battery technology." (bold is ours)

The Fools have lost its fake hair and now shows its nude baldness: The Fools are attacking Altair because they are on A123 Systems' side and are concerned about Altair be considered by the market and automakers the number one in electric batteries. So, when the IPO of A123 Systems occurs - and it will... - it can have better possibilities of success.

However, they keep asking: "Interested in other Foolishness about Altair?" Don't bother: we've seen your cheating game. I wonder until when will the market consent on this unfair attacks by a firm that behaves so unbiased.

Ford: to divest

Alan Mulally is trying to revamp the old guy: Ford Motor Co. is in exclusive talks with Prodrive, a motor racing company, over the potential sale of the U.S. carmaker's Aston Martin luxury car unit.

The American auto industry is in the middle of a major restructuring. Drive or die!

PHLX index vs DJIA index

PHLX GOLD AND SILVER SECTOR INDEX vs DOW JONES INDUSTRIAL AVERAGE INDEX

5 days

10 years

If we look at tree we can't see the forest.

That's why i believe in gold recover if U.S. Economy Slip Into Recession.

Red day for Gold

One more red day for the markets. One more red day for Gold and Gold stocks!

If we look at the 5 years Gold chart we can say that gold could fall to $600 an once in short time.

Probably, it will be next week. On the long term we expected to see gold recover.

Lessons from Omaha

Every year, The Oracle of Omaha, launch some stress on market watchers. This year, Warren Buffett main topic was "The 'investment income' account of our country—positive in every previous year since 1915—turned negative in 2006. Foreigners now earn more on their U.S. investments than we do on our investments abroad. In effect, we've used up our bank account and turned to our credit card".

The "twin deficits" is making America poorer, because America is living according to the credit card rules!

Two more issues from Berkshire Hathaway: 1) Buffett announced that Yahoo's chief financial officer, Susan Decker, will join Berkshire's board in May; 2) the U.S. dollar will continue its gradual weakening—and he continues to hold that position, basing his view on the country's large trade imbalances.

West versus East

According to the magazine Consumer Report, says MNSBC today:

"Japanese vehicle brands continue to rule the roost when it comes to car reliability, according to the latest annual survey from Consumer Reports.

Toyota and Honda’s brands scored top marks overall in the magazine’s “2007 Annual Car Reliability Survey,” which was compiled from survey responses from over 1.3 million magazine subscribers. The survey results will appear in the April issue of Consumer Reports magazine, which goes on sale March 6.

Toyota, Honda, Scion, Acura and Lexus took the top five places, in order, in the Consumer Reports list of the 36 most reliable car brands for 2007. Ford’s Mercury brand was the highest-placed U.S. nameplate, ranking 10th, while General Motors’ best-ranking brand was GMC, which came in at 14th on the list. Chrysler highest ranking was for its Dodge brand, which was placed 22nd on the list.

What’s more, for the second time in the 10-year history of the annual list, all of the magazine’s top car picks were Japanese brands. In addition, 55 of the 59 used car models recommended by the magazine were Japanese, again dominated by Toyota and Honda.

The snub by the closely watched consumer publication comes at a time of crisis for the Detroit-based automakers — GM, Ford and DaimlerChrysler AG’s Chrysler Group. All three U.S. automakers are shedding jobs and closing plants in an attempt to cope with a devastating loss of market share.

“Japanese models are still the most reliable — Toyota and Honda in particular,” said Rik Paul, automotive editor for Consumer Reports. “For years, their vehicles have consistently been the least problematic and the best in terms of reliability for years".

On average, the biggest increase in reported problems for cars comes when they are between 5 and 6 years old, which is when many owners think about selling their car. This is also the point where Toyota and Honda’s models excel in terms of reliability Paul said. The average 10-year-old Toyota or Honda has the same, or fewer, problems than a 4 or 5-year-old car from any of the U.S. automakers, or Volkswagen, he said.

“What we see is if a car starts out with problems in the first couple of years it will tend to stay problematic throughout its lifetime,” Paul said. “This is where Toyota and Honda really shine — they start out well and maintain their reliability, even through 10 years of use, and so a 9-year-old Lexus can have fewer problems than a 2006 Mercedes.”

When it comes to comparing new cars by nationality, one trend stood out: European automakers continue to lag Asian and North American manufacturers when it comes to reliability.

The big Japanese and the South Korean automakers have, on average, only 11 problems per 100 vehicles, the magazine said. U.S. automakers follow with 16 problems per 100, while European manufacturers have 19 problems per 100 cars.

In fact, European automakers have consistently fared poorly in recent years in Consumer Reports’ reliability surveys. Mercedes-Benz, in particular, has seen its reliability ranking decline sharply — this year, the German luxury brand placed last in the reliability list of 36 automobile brands, its reliability level 123 percent below the average for the whole industry, said Paul."

In this scenario of decadence of american and european automarkers, I maintain my confidence in the revolution of the electric car. Past week, Phoenix Motorcars president Dan Elliot was received, plus its vehicle with Altairnano batteries (35 Kw version, charged in 10 minutes, 130 miles per charge), begining full production in June, by president Bush, alongside with A123 Systems (charging in 5 hours and lasting 40 miles per charge...). The video can be seen here.


Disclaimer: I own shares of Altair, which has made an agreement to establish a position in Phoenix Motorcars.

Peter Spina opinion about Gold Stocks

Read more on The MarketWatch.

The day after

The market is a little bit dull, even with the positive signs from Bernanke: Federal Reserve Chairman Ben Bernanke told members of Congress Wednesday that U.S. financial markets appear to be "working well" and are functioning normally.

But this: New home sales saw their steepest plunge in 13 years in January.

And this: The gross domestic product, the broadest measure of the nation's economic activity, grew at an annual pace of 2.2 percent in the last three months of the year, according to the Commerce Department, down from the 3.5 percent rate the government estimated a month ago and still a bit better than the 2 percent growth rate seen in the third quarter.

Make us, a little bit worry!

Gold Stocks: Opportunity to Buy

Sometimes people make decisions without thinking about them.
Today the gold falls sharply as everything else.

But with a difference, I believe that gold and gold stocks will run again soon.

You may ask, why?

I give you the same answer:

1. Weak dollar
Experts are saying that US dollar will lose further ground in the face of the reducing growth and interest rate differential.

2. Threat of terrorism attacks
Terrorism's experts are saying it’s just a matter of when, not if, the US will be struck again.

3. Iran conflict
There is a speculation that Bush Administration has chosen Iran as its next target.


If U.S. Economy Slip Into Recession by End of Year, what do you prefer: a weak dollar in your pocket or gold?

That's your decision!

S&P: -3.44%

Imagine 3.44% less in major economy on Earth! It is too much.

Could this mean a near bear market? Or could this mean the next day rebound? If you compare 1.300 points one year ago, with +100 points today, the S&P is making 7.5% return.

In days like this, we want to be a small fly around Warren Buffett: who last year generated a 24 percent return for Berkshire Hathaway Inc. shareholders, may this week tell investors and followers to lower their sights for 2007.

Mini crash?

After the warning of Mr. Greenspan, about a possible future slowdown, Chinese investors had a bad day: Chinese stocks plunged nearly 9 percent Tuesday, erasing about $140 billion of value amid fears that authorities would crack down on speculation that drove shares to record highs.

Be cautious! Value investor behaviour will be the best in such times.

Dow: the next target?

Private Equity Companies will be the new threat to Management.

Take the new guy under attack: Dow Chemical Co. management would oppose any attempt by buyout firms to break up the chemical giant.

Look to this type of comments:
"we do not believe management is philosophically inclined to sell or break up the company."
"any unsolicited deal for Dow would likely be treated as very hostile by management."

Look to this chart:

Alan comeback

When you read this: "For example in the U.S., profit margins ... have begun to stabilize, which is an early sign we are in the later stages of a cycle". And you know that these words are from: Former U.S. Federal Reserve Chairman Alan Greenspan warned Monday that the American economy might slip into recession by year's end.

You need to be cautious. And, Alan made an additional warning: "The American budget deficit is clearly a very significant concern for all of us that are trying to evaluate both the American economy's immediate future and that of the rest of the world".

Nasdaq pattern seems a little bit exhausted!

Gold price at $700 an ounce soon

Iran says its program is purely peaceful.

The White House says the United States has no intention of going to war with Iran

That’s why gold is going up!

Now, Alan Greenspan Warns That U.S. Economy May Slip Into Recession by End of Year.

What’s coming next?

The flight of the Phoenix

Phoenix Motorcars is flying:

"Daniel J. Elliott, CEO of Phoenix Motorcars, met with President George W. Bush this past Friday to discuss the future of alternative fuel and its impact on improving environmental and energy performance. The one-hour meeting included a small group of alternative fuel entrepreneurs and scientists.
Elliott was among a select group of alternative fuel specialists who had a one-on-one meeting with the President to discuss Phoenix Motorcars' role in the electric vehicle industry. Following the meeting, President Bush had the opportunity to get an up-close look at Phoenix's sport utility truck and four other alternative fuel vehicles to evaluate overall performance.
"It was a pleasure meeting with the President and having the opportunity to speak on behalf of the electric vehicle industry," says Elliott. "Shifting to alternative fuel is a viable and crucial solution to protect America's economy and ecosystem, which in turn has global implications."
President Bush recently proposed a mandatory alternative fuels standard during a January 23, 2007 State of the Union Address asking Congress, scientists, farmers, industry leaders and entrepreneurs to increase the supply of alternative fuels and reduce gasoline usage in the United States by 20 percent in the next 10 years. The "Twenty in Ten" plan will also require the Federal Government to increase its energy efficiency, reduce greenhouse gas emissions and to purchase environmentally sound products."

Disclaimer: I own shares of Altair Nanotechnologies which is related to Phoenix Motorcars.

Private Equity attack

KKR and Texas Pacific Group will make the biggest deal in "private equity" business: Kohlberg Kravis Roberts & Co. and Texas Pacific Group are set to offer about $32 billion to buy Texas power company TXU Corp.

Finnally: the private equity firms could offer about $70 per share for TXU.

Are you one lucky guy?

Health care disease

The health care's costs are becoming unbearable by states and citizens:

"Health care is expected to account for $1 of every $5 spent in the United States in another decade.
That means a rise in out-of-pocket expenses, such as the copays for medicine, from about $850 this year to about $1,400 in 2016, a 5.3 percent annual increase."

It seems that the quest for the elixir of life is ruining countries and families. There is no known prescription or medicine adequate to a diagnosis already done. This race is also a symptom of moral degenerescence of a society unable to deal with death.

Bad moves

After loosing the Delta affair, Doug Parker have gained a day at the jail: US Airways CEO Doug Parker was sentenced to one day in prison Tuesday for driving under the influence of alcohol in Phoenix the night Delta Air Lines rejected a takeover bid from his company.

Economy in good shape

Management books reveals that consumers are the main trend of the market.

The University of Michigan's American Customer Satisfaction Index (ACSI) increased to an overall 74.9 score out of 100 in the fourth quarter of 2006, its highest level since the survey first started in 1994.

The winners from this survey are: Home Depot, Costco, Best Buy, Wachovia, Wells Fargo, J.P. Morgan Chase, Amazon, Barnes and Noble, Charles Schwab.

Even with "twin deficits" Corporate America is in good shape.

Auto industry: too much capacity and players

The auto industry is like a volcano, exploding large amounts of mud. The reason for this explosion is simple: too many players in auto industry, in US.

Probably, US is becoming the "world arena" for automakers: GM (with brands like Chevrolet, Saab, Daewoo or Opel), Ford (with Ford, Mazda, Land Rover or Jaguar), Daimler-Chrysler (with Mercedes, Dodge or Smart), Toyota (with Toyota, Lexus), Honda, Hyunday, Nissan, VW (VW, Audi, or Rools-Royce), etc.

DaimlerChrysler today said fourth-quarter net income fell 40 percent to 577 million euros ($757 million) from 966 million euros. Revenue dropped 1.9 percent to 40.7 billion euros. Analysts surveyed by Bloomberg expected net income of 726 million euros in the quarter.

No matter Zetsche will argue, Daimler will regain its previous name, Daimler-Benz.

Is gold on the march again?

MSN Money Senior Markets Editor

Get the answer listening Jim Jubak from the MSN Money.

"The gold is a hedge against rising financial risk"

Nasdaq: these days

When big investors head for the exits, the party's over for the smaller ones. One way to spot that trend is to pay close attention to distribution days--days when the market is down more than 0.2% on higher volume than the previous session.

We know things could be bad, if big guys will get out of stocks. If we look to the two figures, we don't see any similar pattern. Nevertheless, Nasdaq Composite is in a stagnation situation since November 2006, without decreasing volume. Is the emerging markets volume explaining everything?

Automakers restructuring

General Motors Corp., the world's largest automaker, is in discussions with DaimlerChrysler AG's Chrysler unit on an alliance to share the costs of designing and developing cars, people with knowledge of the talks said.

Smells like a merger! Three automakers will be two....

We don't believe in an engagement.

The automaker turmoil

The last to fall is Chrysler. Unexpetected? No. We do not understand the reason, guys like Iacocca or Alfred Sloan did not have actually, any inheritor, in the American auto industry.

DaimlerChrysler AG may sell or seek partners for its unprofitable Chrysler division, abandoning its vision of building a successful carmaker that sold luxury Mercedes-Benz sedans as well as Dodge pickup trucks.

For long time, the American auto industry lived in a kind of separated market, delighted with the dream idea of a one dollar a gallon of gasoline. Big cars wasting energy and lots of horsepower devastated the automakers.

What about now? The Asian guys will have even more power in the future, because actually, they are Japanese and Korean, but in the future they will be also Chinese and Indian.

We hope, next Administration will not have any protectionist idea!

U.S. Trade Deficit & Gold Stocks

U.S. Trade Deficit Hits Record High for Fifth Consecutive Year

It’s good news for gold stocks, bad news for US dollar.

GM and Ford: The corporate America challenged

If you look to the figures, they develop a similar pattern. Why? Because, they are facing same challenges. Industrial America is facing a tremendous challenge, in the era of globalisation: to be an active member in the major industry, or not....

We believe the inheritors of Sloan and Henry Ford will make the necessary turnaround. Otherwise, "corporate America" will be devastated in coming years. The Lou Gerstner story will fit like a glove in the American auto industry.

Finally, remember GM market value is only 21 billion and Ford is less than 16 billion.

I guess that's why they call it the... Fools!...

The Motley Fool again and again on Altair Nanotechnologies. Every time happens a spike at Altair's stock price or a consolidation tendency at its shares, there comes The Motley Fool with its systematic negative campaign against Altair. Something for the SEC to pay attention.

The spanyards have an old saying "(Y)o no creo en las brujas, pero que las hay, hay!..." (I don't believe in the witches, but that they exist, they do!...). In the broad investment business there are a lot of demons, ranging from contracts put by a competitor on some company's fate to short trading after panic news. These practices are illegal but they exist.

I cannot accuse The Motley Fool of illegal practices. But I can evaluate The Motley Fool's negative systematic campaign against Altair, an evidence of coincident wrongdoing.

Nevertheless, albeit the perplexity of the market about The Motley Fool's behavior its negative campaign against Altair continues. I guess that's why they call it the... Fools!...


Disclaimer: I own shares of Altair Nanotechnologies.

Telecom: a world of disruption

Vodafone takes the 4th mobile company in India, from Hutchinson Whampoa: Vodafone Group Plc has won the battle for a controlling stake in Hutchison Essar with a bid that values India's fourth-biggest mobile firm at around $19 billion.

We don't believe in this kind of battle. Why? Because, smells like ......the battle of old dinosaurs. Vodafone is trying to survive, in a jungle full of guys.

The rewards will go to the management, not to the shareholders (probably pension funds without enough nerve to say no to some fat management).

The winner is, again, Li Ka-shing, the leader of the conglomerate.