CRM - A SHORT FUSE?

EXPENSIVE SERVICES?
I was looking at some charts this afternoon and found this interesting one.  CRM is the symbol for Saleforce.com.  Yes, it is a software company and therefore it is wonderful!  I looked at adding their products to one of my businesses and found it to be nice looking, but nothing other than a glorified contact manager.  I highly recommend http://www.zohocrm.com/ as a substitute.  If you have less than 3 people in your office, guess what..... it is FREE.  Now of course I need it for basic services and I don't manage a pharmaceutical sales force or anything like that, but then again, do you need what you get for the price?

Compare that to the $2,500 a year I was quoted for the CRM services.

P/E IN THE STRATOSPHERE
Anyway, beyond just CRM has a PE of about 275 or so and seems to me it is a natural trade for a short based on the chart.  They are announcing earnings soon, so know that you are rolling the dice trading in front of that but here are the targets.
Based on the chart, a stop at $140.00 is advisable as anything above that shoots you into a new trend channel.

A target of $123 or $122.50 would be nice to place to cover.

Be careful!

GOATMUG

BUBBLE FACTORIES MAKE BUBBLES - FOMC PRESS CONFERENCE ANALYSIS

I wanted to provide a video feed of yesterday's historic post FOMC meeting press conference.  This was a brief review of the FOMC decision and a question and answer session where the FOMC Chairman Ben Bernanke addressed the nation via a few questions from reporters.  Unfortunately there was not a real opportunity for meaningful follow up questions nor any real journalists that would actually press the Chairman about the destruction that he is causing.  Anyway, here is the video.  Below I've captured a few highlights that I've summarized and also pulled out a few notes and quotes from the exchange.

Bernanke Video




The first 13 minutes or so are his summary of the FOMC press release.  I think it is worth the time it takes to watch it.

THE FED'S ROLE

• "As long as we have low resource utilization we will have a low Fed Funds rate."   
• GOATMUG TRANSLATION - (As long as the economy is sluggish and showing slack, our friends at the Fed will be more than happy to provide extra-ordinary measures to assist the economy).

THE FED'S PROJECTIONS (LONG-TERM)

• "The Fed has a long term outlook for growth for the US economy at 2.5% to 2.8% with a long term unemployment rate of 5.2% to 5.8%." 
• GOATMUG VIEW - Are you kidding me?  There is absolutely no way we will hit 5.8%!!!!

INFLATIONARY CRAZINESS

• (6:40) Inflation from commodity pricing has increased significantly recently, BUT measures of underlying core inflation has only risen moderately.  Inflation remains subdued and long term inflation expectations remain stable.  (7:13)As increasing commodity prices moderate, inflation should decline."  (9:13)  If inflation is not passed through to consumers and households then inflation will remain tame.
• GOATMUG THOUGHTS - I don't think there is enough space on blogspot for me to write about these amazing statements!  First of all, inflation from commodity prices have increased, but because we use a fake measure of core inflation that excludes energy and food, of course it has only risen moderately!  That too is about to change as we have seen annoucements from companies like Kimberly Clark and others that state they are raising prices.  Second, long term inflation expectations are not remaining stable unless of course you are looking at the bond market to suggest that things are great.  Many financial pros suggest that treasury rates have not exploded higher, therefore, inflation expectations remain in check.  I would counter that the FED is buying those treasuries and is obscuring the true price of those bonds.  Next, Bernanke says that commodity prices increases should moderate..... how?  Finally, if inflation is not passed through to consumers, inflation will stay low.  Well, since we are now seeing price increases flow through, don't you think that confounds the entire argument? 

After the briefing, Bernanke took a few questions from the stooges that were lined up.  Here are a few of those questions.

CRITICS SAY THAT FED POLICY HAS DRIVEN DOWN THE VALUE OF THE DOLLAR AND DECREASED THE AMERICAN STANDARD OF LIVING.  WHAT IS YOUR RESPONSE? (15:00)

• "First, the Federal Reserve believes in a strong dollar, just like Sec. of the Treasury Timothy Geithner.  Over the medium term we are trying to remain stable inflation.  We are also trying to get a stronger economy through maximum employment.  In our view if we do what is needed to achieve the dual mandate we will create fundamentals that support the dollar.  The dollar retains a high standing in the world.
• GOATMUG RANT - Really?  Yes, there was a safe haven effect that caused the US Dollar to spike in 2008 and in 2010.  However have you noticed that since May 2010, the dollar has gotten crushed.  I haven't seen any of the policies that you highlight as successes that have influenced the direction of the dollar in a positive way.  In fact, the creation of QEII has been absolutely connected to the decline of the value of the dollar and the increase in "asset values".

WHAT CAN THE FED DO ABOUT THE HIGH COST OF GASOLINE? (17:50)

• “There’s not much the Fed can do about gas prices. After all the Fed can’t create more oil. We don’t control emerging markets. What we can do is try to keep higher gas prices from passing into other prices, creating a broader inflation. Our view is that gas prices will not continue to rise at the recent pace.”
• GOATMUG DISCUSSION - Ok, remember that for once Bernanke says that the Fed can't do everything!  However, I think this is a subtle shift where Bernanke usually highlights how effective and powerful the Fed is at controlling everything in the financial world, but then suddenly becomes impotent when it comes to the price of actual hard assets.  I don't buy it.  This line of response essentially says that the emerging market economies are responsible for all the increased oil demand in the world and that this coupled with the unrest in the Middle East is causing gasoline prices to increase.  There is not one mention that it really is the relative cost of the gasoline that is killing people in the US due to the destruction of the US Dollar.  Not even a whiff of that here.  Finally, later we'll see that the Fed takes credit for the increases in asset prices, the problem is that we at the Goatmug Blog realized early in January that gasoline was an asset!  Therefore I suggested that it might be a worthwhile consideration to buy a whole bunch of UGA to get ahead of the crowd that might also see gasoline as an asset. (look to the very bottom of this long post).  So, indirectly and directly, we have Mr. Beranake to thank for our huge increase in asset prices!  Thank you FED!

HOW IS IT THAT ENDING OF QEII PROGRAM WON'T IMPACT THE ECONOMY?

• The ending of QE II won't harm the economy because we have telegraphed the end of the policy and the market expects it.  Second, it is not the pace of ongoing purchase, but the size of the portfolio.  The amount of securities we hold will remain approximately constant.  The amount of monetary easing should remain constant.  Early in our exit process, it is very likely an early step will be to stop reinvesting securities that will be maturing.  This is a tightening.  We would do this based on economic outlook. 
• GOATMUG REMARKS - So, what you are saying is that turning off QE won't impact the market. (What about what happened at the termination of QE 1?)  Secondly, although you won't buy more than the allotted $600 Billion in QEII and you say that you are terminating the program, you even suggest that you'll continue to buy securities as maturing ones roll off.  So, in other words, you are going to keep QE II going forever.  Ultimately when life support can be removed, you'll then start selling.  Hopefully the patient won't be dead when that happens.

IS IT IN THE FED'S POWER TO REDUCE UNEMPLOYMENT MORE QUICKLY?  29:00

• The Fed took extraordinary measures to stabilize the economy.  We have created new ways to to change monetary policy.  The Fed has a dual mandate.  The Fed needs to worry about inflation.  The cost of future inflation on employment could be high.
• GOATMUG RETORT - No, while the Fed talks about creating jobs as an indication that the economy is recovering, the FED doesn't have any ability to create jobs and the fact that it has taken this long for someone to realize it is just a sad commentary on how poor the main stream media is at actually providing quality analysis and a statement that Joe 6 Pack and Mom and Pop are doomed.  Notice the shift here.  The Fed's intent was to get asset prices higher to save the banks and now that they've done all they could, they want to exit stage left.  J6P thought he'd get a job out of it, but all he got was a foreclosure notice.

QEII HASN'T DONE MUCH TO HELP THE ECONOMY?  30:40

• "The second round of securities purchases was effective.  We saw this first in financial markets.  We saw this in increases in stock prices, decreased spreads in credit markets.  We saw the same responses as we saw in QE 1.  We did get very significant easing.  You would expect from decades of financial experience that it would lead to improving economic conditions.    We didn't say this was going to be a panacea.  We never said that it would solve the enourmous jobs problem.
• GOATMUG - So there it is.  The metric for the measurement of the impact of QE is if financial markets and asset prices (stocks) go higher.  This is no revelation for me as I've highlighted this stinking thinking for more than a year now, but it now seems that Bernanke has simply given up on the notion that alluding to a recovery in other parts of the economy matter (jobs, housing, manufacturing).  Clearly Bernanke has settled in to the thought process that simply stock price increases an indication of a job well done.  See, that was always the game.  The FED has always tried to ease to prop up the next bubble.  The only problem is that this bubble has been one that has been of great size (huge increase in asset prices over the last two years), and it has been so fast.  The last bubbles (housing and tech) took years to pull off and were like slow moving freight trains.  The resulting crash from this Fed bubble will be much more messy due to the size and speed at which it has been formed.  So, that is what is striking, I see Bernanke shrugging here and simply saying, "Well, we did what we could and stock prices rose, it's just too bad the jobs didn't materialize with it". 

WHY DON'T YOU DO MORE QE?

• "The problems are getting tougher due to inflation risk."
• GOATMUG - Bernanke is saying, "That's it, NO MAS!"  In other words, they are trapped and he knows it.  Of course he doesn't come flat out and state that he created all of this inflation.  Of course he doesn't say that housing is going to implode even more.  Of course he doesn't say that he can't do anything about jobs.  He simply is saying, we're done, we can't do anything extra other thank keeping asset purchases at the same level.  See, if Bernanke does the Son of QE (III) we will see commodities go even more nuts and the US dollar simply collapse.  Recall, I've always stated that the US Dollar destruction was purposeful and choreographed like a dance.  A collapse is not the best form of art, so this is where we could see a skillful move on the part of the Fed to hit stock markets with a few blows (corrections) and move the dollar higher.  You can't just have the dollar fall through the floor.  Once there is a reprieve, we could see some sort of emergency stimulate program put in place again.

FOMC NUGGETS
Let me wrap it up there. The press conference didn't tell us anything we didn't know, but give us a few hints as to the mindset of the Chairman.  This is important because what he says goes, the other Fed Governors are simply a distraction.  I'll just bullet point the key items.

*  Inflation is showing up, but somehow it will moderate.  (How?)
*  No more QE, except for the $600 Billion they have on and whatever else they decide to do later.  (A promise)
*  Jobs no longer are under control of the Fed, they can only indirectly create an environment where that happens. (Sorry)
*  Asset prices have increased, so that means the Fed did a good job.  (Bubble factories only know how to make bubbles).

*  The strong dollar is important to the FED.  (We believe in the Loch Ness Monster too).
*  The Fed didn't impact increasing gas prices (obviously it isn't an asset), that is the fault of emerging markets. (uh huh.)
*  The Fed is stuck.  They are at the end of the rope and they know that they are creating inflation.  (The dirge is playing).
It is telling to me that the Fed is winding things down.  The theme we've discussed all year is that stock markets could begin to fall in May which historically has been a very poor month.  Thanks for sticking with this post.  It is a bit weird in its structure, but I think that we can pull a few interesting tidbits from the remarks how the Chairman responded to the questions.


TRADING UPDATE
Since I mentioned it, I might as well make a comment about the on-going UGA trade.  Things have obviously gone very well in this trade since the original post on 1/17/2011 when UGA was trading at $40.00.  $14.00 in gains is nothing to sneeze at and I do think that it will continue to be a positive trade.  Having said that, it is nice never to give back hard fought gains.  Therefore I advocate putting a stop in around $53.00 (I'd do it 5 cents below) to ensure that you don't blow a great trade.  There was a gap up that took place around June of 2008 where UGA blew through $60, I have that as an upside target for this trade.  This is also a good way to trade this since I posted that article from FMXconnect.com where they suggest the best trade here is to sell on May 1 or May 15.  Either way, we can let the market just take us out around $53 or get us to the target. 

GOATMUG



THE FINAL WORD ON DEFLATION - MUST READ

DEFLATION OR INFLATION - THE FINAL WORD
Last evening I read one of the best pieces in the blogosphere on the financial direction of the economy and what to do about it.  If you haven't read anything from the blog FOFOA, you have been missing out.  I found his site about two years ago and have frequently checked his posts to ensure that I am reading one of the deepest thinkers out there is predicting.

This post is not for the casual reader, nor is it a post that you can skim and get the gist of.  It is one that you must pour over and over and steadily get through so that you savor each morsel.  You may wonder if I agree with everything.  The answer is, no, but overall I believe the direction is correct and that direction will be driven by the motivations outlined in this amazing post.

http://fofoa.blogspot.com/2011/04/deflation-or-hyperinflation.html

Interestingly, since I stayed up way too late reading it last night, I am dragging, but am more convinced than ever that the overall outlook that I've had for the economy for this year is absolutely correct and it reaffirms that my longer term outlook also is on a solid foundation.

A REBUTTAL OR A WHITE FLAG?
Finally, if you don't believe me, I found this post this morning from Rick Ackerman, a committed Deflationist.  He gushes about the FOFOA post and also suggests perhaps that he too is a HyperInflationist after all.  I think this is the compelling part of this article, is that it addresses all of the concerns that Deflationists have and even suggests that many of the symptoms of deflation really are actual results of hyperinflationary processes.  You must have your "I'll look at every asset in terms of relative value to gold (replace gold with hard assets like oil, silver, gas if you like.)" glasses on when reading the arguments.  If you do, you too will be convinced that FOFOA is right. 

http://www.zerohedge.com/article/finally-hyperinflation-argument-persuades

Now, I've read enough of FOFOA to know that he only advocates physical gold, this is where I differ with him.  No matter, I think his overall direction is in agreement with mine and his ability to plod through the analysis and description is amazing.  When I write articles half as long as his, I become bored with my own writing and can't ever tie the bow up as well as he does. 

If it takes you a few sittings, do it.  I think it would be worth your time.  On that note, I am off to buy my store of freeze dried food!

Finally, I am curious to see what Mish says about this.  Mish is a committed deflationist and is one of the resources I rely on to distill that perspective into clear points.  I would wager that we'll see a post on this in the coming days from him.  I'll link to it as soon as we see it.

GOATMUG

TIM GEITHNER, MAN OF FEW TRUTHFUL WORDS

http://www.bloomberg.com/news/2011-04-26/geithner-says-u-s-will-never-weaken-dollar-to-gain-an-advantage-in-trade.html

You have to love this story on Bloomberg that highlights Tim Geithner's commitment to a strong dollar policy.  Now that the dollar has broken long term support, you would expect the head of the US Treasury to come out and defend our currency right?  Wouldn't he detail the plan for stabilizing the fall and highlight that the US needs a stronger dollar to be successful as the leader of the world of global finance?

Perhaps you'd expect that, but this is what you got instead.

“Our policy has been and will always be, as long as at least I’m in this job, that a strong dollar is in our interest as a country,” Geithner said in remarks at the Council on Foreign Relations in New York. “We will never embrace a strategy of trying to weaken our currency to try to gain economic advantage.”

Hmmm.  Statements like this want to make me laugh.  Please play the clip below.
(Link) View more The Simpsons Quotes and Sound Clips and Nancy Cartwright Sound Clips

See, even if you believed for a moment that Mr. Geithner was actually telling the truth it would not matter much because while he is busy talking about how a strong dollar is in our best interest, you have several other parties that could care less.  Those three parties of course are the CONgress, the Fed, and those in the office of the President.  Since Congress and the President gleefully spend, spend, spend, and US Treasury and the Fed joyfully participate and facilitate their stupidity, we receive results that stand in stark contrast to the words of Timothy Geithner.

Our Executive and Legislative branches spend and our Fed and Treasury support "asset prices" through crushing the US Dollar.  Anyone see where much of the increase in the market indices gains come from?  Yes, since March 2009 the overall markets have rebounded significantly.  However, see where that performance started to flatten out last year?  That was when the latest version of QE was announced.  Suddenly the SP500 rallied another 100 points or so and the dollar got shelled for about 12% in declines.   

Geithner didn't disappoint though, he did tell us what this miracle strategy should look like. 
Geithner said today that the U.S. needs a “credible strategy” to reduce its budget deficits over time, without moving too quickly and choking off economic recovery.

“You have to commit to bring the budget deficit down to a level that will put our overall debt burden on a declining path as a share of the economy,” he said. The Obama administration wants to move onto that path by about 2015, he said.

Wait there are even more nuggets of brilliance!

Geithner also said Congress needs to act by June to raise the debt limit, saying it would be “irresponsible” and “unacceptable” not to act. “The idea that the United States would take the risk people start to believe we won’t pay our bills is a ridiculous proposition,” he said.

That's another one that has you scratching your head.  When you are running a deficit of $1 Trillion, or $2 Trillion dollars, does anyone believe that you are paying your bills?  No, I don't think anyone thinks we are paying our bills or actually have the ability to do so in the future.  I think we all know that this is going to end very, very badly.

I think this graphic of UGA (Gasoline) says it all.  UGA is up more than 100% since the March 09 lows too.
I can't wait for tomorrow's barrage of truthfulness from Ben Bernanke.

GOATMUG

GASOLINE TRADING UPDATE - SELL IN MAY?

Just wanted to drop a new post in here and touch base.  I am one day away from being back in the saddle and being able to make much more frequent posts.  I've been absolutely slammed with projects and the amazing moves in the market.  This post is important because I have a large position in gasoline on and this post would suggest that it would be appropriate to close the position on May 1st or May 15th of the coming month.  While this is about a month or so earlier than I had anticipated I am open to hearing reasons why I should exit and these guys have a great long term track record.  The posting is from FMXconnect.com and appeared on Zerohedge.

I did not post the entire article, you can click on the zerohedge link below and find it for yourself.  It continues to elaborate on other timing trades on the gas trade and on crude in general.

Funny, the sell in May theme is sounding it's alarm again.  If you recall in the 2011 Outlook I suggested that this clearly is a year to sell in May.

http://www.fmxconnect.com/ and http://www.zerohedge.com/article/guest-post-crude-oil-gasoline-seasonal-tendencies

Overview: Crude Oil and Gasoline Seasonal Tendencies

As we start this new year, a number of events are likely to occur along with the normal changes in the weather. January gasoline is typically the lowest in any year and, despite the common mythology, gasoline consumption does not normally fall steeply after Labor Day and then recover miraculously after Memorial Day.

We do see an element of driving disappear after Labor Day, as drivers in the 16 to 25 year-old age bracket tend to drive less, or at least more predictably. Family vacations are also over by that point, as a general rule. But, there are pockets of demand during foliage sighting season and Thanksgiving Weekend is always the best four-day driving period in any year in which July 4th does not fall on a Tuesday or Thursday.

There is usually good driving through the month of December into New Year’s Eve, but it traditionally falls off a cliff right after the champagne glasses touch to ring in a new year. People park their cars and drive to work and school and to appointments. But it is not until March or April that more discretionary driving normally returns.

Refineries know this and they typically plan maintenance turnarounds from January through April or early May. During this period, there is a definite tendency for gasoline inventories to be drawn down; even though demand starts the year at its lowest levels, the maintenance usually goes on long after demand has started to mount a comeback.

Market Reaction

The market reaction is not what most people might believe. Regardless of the overarching trend, prices have a long history of advancing from early March through the middle of May. Despite the fact that the so-called “Driving Season” starts with Memorial Day and peaks on Independence Day, most of the buying has come into the market long before the end of May.

Gasoline Seasonal Trade

We are now trading “RBOB,” but it is effectively “unleaded gasoline,” and we include its history in all its various incarnations, from leaded regular to unleaded to oxygenated to RBOB. The tendency for prices is to advance from early March. Following the loose guideline of buying in the first two weeks of March and selling sometime before May 15th, the seasonal tendency has worked in 25 out of 26 years - or 96.15% of the time. It is the strongest and most reliable seasonal tendency of any commodity futures contract.

Over the years, various specification changes seem to have helped. In 2003, prices rallied through March - in the leadup to the invasion of Iraq on March 19th of that year - and they then dropped into May. We advised against following this seasonal that year, as we saw prices advancing in January and February as it became clear that war with Iraq was coming.

Despite 2003, buying in March has yielded profits consistently. The buying part is a great deal easier than the selling part, but profits are there to be realized if one uses money management techniques and starts to take profits as soon as prices get overbought in May.

The following table shows whether one could have bought June gasoline futures on March 1st and then have been able to sell it at a profit at some point in the first two weeks of May. As one can see, there were profits available in May every year except 2003.

TABLE (http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Screen%20shot%202011-04-24%20at%204.30.24%20PM.png)

Have a blessed Easter, knowing in your heart and mind that Christ died for us to save us from our sin.  Without the shedding of His blood we would not be restored to the Father.  We did not deserve the sacrifice and it was not earned, it was given out of love.  His sacrifice was made out of obedience and submission to the Father that knew you and loved you before you were born.  I proclaim faithfully and with great joy, HE IS RISEN!  It is only through a relationship with Christ that Goatmug is alive today.  Thank you Jesus for your love and obedience. 

DRIVING JUST GOT MORE EXPENSIVE. WHEN WILL THE FED STOP?

TAKING A DRIVE, WHAT IS THE COST?
As I drove the kids to school today I noticed that once again fuel prices are high.  Unfortunately I have one of those cars that takes only the super premium 93 octane blend of gas, so I am always looking at the most expensive level of gas pricing when I drive around town.  This morning's damage in my neighborhood store was $4.11 for the super premium grade.  While I'm sensitive to the cost of filling up the car, I'm fortunate and blessed in that I make enough money where it doesn't harm me and it gives me something to complain about and blog about.  On the other hand, there are people that are getting brutalized daily by the effects of the speculative froth that is caused by loose monetary policy and it's famed QEII debacle.

Quickly I'll review, the Fed buys bonds from dealers and they in turn are using that money to park it in assets that are more likely to provide some type of return.  In addition, since hedge funds and other investors cannot find investments that will compensate them for the risk they are taking (try living on the interest created on a bond portfolio), they are forced into other securities and investments that at least attempt to reward you for the risks.  Thus, the Fed's aim has been wildly successful.  Market participants have shunned safe assets and been driven like a herd into risky assets like stocks and commodities.  And there you have it, investors are buying commodities because they can't get paid anywhere else.  Speculators have bought gold, silver, wheat, corn, cotton, oil, and gas.  Almost every commodity has been on fire.  Remember the summer of 2008 where investment banks had oil tankers filled to the brim sitting off the coast to speculate on the surging price of black gold?  Recall the $148 oil spike?  I'm not hearing the same stories of excess, but we are seeing a mass flood into these alternative assets to flee poor rates of return and a declining value of the dollar.

WHAT WILL BE THE IMPACT OF RISING GAS PRICES? -
http://www.foxnews.com/us/2011/04/11/drivers-start-cut-gas-prices-rise-1546568875/

I'm not sure how Americans will ultimately deal with rising gas prices, but over the last several weeks as prices have soared, drivers have been constraining their fill ups.  As the article notes, drivers bought 2.4 million gallons of gas less than last year at this time.  The average price for gas in the nation was $3.77, remember that the all-time high in July of 2008 was $4.11.

This article says that some folks have been walking more, riding public transportation, and simply not going places.  Other reasons that we've seen a reduction in the consumption of gas may be that Amerikans have bought more fuel efficient cars that require less gas.

CONFUSING DATA - DECLINING GAS CONSUMPTION BUT INCREASING CONSUMER SPENDING?
The foxnews article also keyed on one interesting point here that for me speaks to a larger macro-economic shift. 

"The decline is somewhat puzzling because Americans typically curb their driving only as a last resort, after sacrificing other forms of discretionary spending, like shopping for new clothes, or going to movies, concerts and restaurants.



But demand for gas is falling while other types of spending are on the rise. Retail sales rose 2 percent in March compared with a year earlier, surprising economists who were expecting no increase or even a decline."

So, consumers are curbing gas consumption, but someone is out there spending away.  What is the answer for the data?  I think it clearly shows that the divide between classes is growing AND we can only thank our friends at the FED for the disaster and attack on the poorest who can ill afford to handle the assault on their wallets.  To clarify, the poor working class folks are getting crushed since fuel is a significant portion of their pay checks.  On the other hand, the Fed strategy has been successful driving 401Ks and brokerage account values higher, so the wealthiest of individuals are back spending and engaged in business as usual (let's go out to dinner and a movie!).

Not buying it?  How about the quote here? -

"About two and a half days' worth of Whitney Shaw's pay each month goes just to fill up her 2001 Hyundai Accent. The administrative assistant is thinking about taking the bus for her daily commute, 50 miles each way between Branford, Conn., and Hartford.


"It's three hours of pay from work just to fill up my tank even once, so I'm definitely feeling it," Shaw said while filling up for $3.61 a gallon at a Valero station on the Berlin Turnpike."

Let's assume that it costs $75 to fill up and as Whitney Shaw describes, is 2.5 days of her monthly pay.  Assume also that she works 5 days a week or a total of 20 days a month.  Given all of that, Whitney is making $600 a month, clearly she isn't wealthy and obviously $75 is a large portion of her monthly take home pay, essentially 12.5% of her take home pay.  Perhaps just one year ago, the cost was $55 to fill up?  That is $20 a month less to spend on essentials, pay down debt, or splurge for a movie. 

$5.00 GAS?  IS THAT A POSSIBILITY?
I love the Foxnews article because it simply drops in that most analysts are looking for $4 gas, and some $5.  The way the quote is couched makes it seem like there is no chance that we'll be at $5.00 gas.  I think that $4.00 is absolutely figured in and that $5.00 is easily within reach.  What are the factors that prevent $5.00 gas from arriving?  Where are the forces that will make global demand for oil abate?  Is peace suddenly breaking out in the Middle East?  Probably most importantly, is the US Dollar getting stronger here?

In the article by CBS News - Gas Prices Climbing Toward $5 we get a mind blowing picture of the thought processes of folks that live in Chicago, the home of our President. 

Drivers Monday morning were practically numb to the price spikes.

"“What are you going to do?” said Shannon Thompson. “We’ve become so gas-dependent in this country. There are so many SUVs. I mean, I’ve had a hybrid. It worked great. Right now, I’m just going to deal with it.”


Prices at some gas stations outside the city were still below $4, a bargain compared to the $4.29-$4.40 range at some service stations downtown."

What drives me crazy here is the acceptance of the situation.  I can almost see them shrugging saying, that's the breaks!  "I guess we're stuck with high gas.  I bought a hybrid so that's all I can do!  Yeah OBAMA, just give him a chance!"

Are you kidding me, it's all about the policy?!   We have a Presidential administration that believes that our best course of action is to buy more oil from Brazil rather than exploit our own resources.  We have an environmental policy that holds us hostage to Middle Eastern despots, radicals, and UN pacifists, and we have a FED that is driven to destroy the US Dollar in the name of suspending market principles to save a bankrupt system.

For another perspective I've added an interview here with Stephen Schork, president of the Schork Group.  Stephen talks about the outlook for oil prices and mentions his thoughts on natural gas in the last few moments too.




TRADING UPDATE
So what's the point besides noting that gas is higher and no one has a clue that the Fed is the cause and there is no stopping it?  Well, since January 17th I've been suggesting that we need to buy gas and energy related stocks.

As we look at the trading view, we must examine oil first.  I've used USO here as a proxy for oil, but we all know there are tracking issues with that etf.  Having said that, it gives us a general idea of what we're up against, if you assume that all the fundamental items we discussed (Fed, global demand, summer driving season) are all still in play.

Based on the action here, there may be a drop in USO to the $41.14 area, but this area of previous resistance should be support.  USO has a lot of room to run with a target of $47 and $53.00 

Since USO looks pretty bullish here, that leads us to examine UGA which is the US gasoline etf.  If we are going to see oil move even higher, US gas prices too should inflate.

I've presented the 4 year weekly view of UGA and clearly we are at a point of resistance at $52, although I believe it will be minor.

The 3 Year UGA view is also good as it shows the area of support near $48.00.  I dropped the resistance line at the $52.00 area, but please note, it is there. 

As I review it, I believe that the target for UGA is still right at $64 or so, but I'd be out around $60.00 or by late June or early July (next earnings season in July may be a killer) whichever comes first.  The $60.00 target may not seem like that much from here, but if you'll recall we highlighted this target in January when UGA was trading at $39.50.

That is the update, please be careful and of course limit your driving cause it is going to cost you.

GOATMUG

UPDATE ON AAPL & RIMM. SHORT TERM REVERSAL LONGER TERM FAIL

Several days ago I made a case that AAPL might be in for a decline.  While that post certainly had a day-trading (go short) aspect to it, I really was making the case that longer term, there would be headwinds that would cause AAPL to slow its march higher and ultimately reverse.  APPLE RESTING OR "SHIFT" IN PLAY?

Please examine the chart below.  I've drawn an additional line or two to show where we might see some major support at $305.  Again, I am looking at the play from a longer term strategy view (I think these are the ones I'm best at).

Some Slopers are currently taking a shot on the long side of AAPL, and when you take a look at the daily chart here, you can see why they would go after it.  If I were playing that trade, I think I'd lighten up at $340 if I got there.  I think there could be a short term bounce, but ultimately a failure back at the $330 level and a fall to test my $305 level. 

So there you have it, a bounce here, and then over the next several weeks a drop through the $330.00 to visit $305.  As for my RIMM play.  I'm keeping that one short. 

GOATMUG

UNEASINESS - HOW ARE YOUR PREPARATIONS?

I'll admit that in waking today and following my normal routine I am troubled and uneasy.  Not uneasy in the sense that I'm fearful, uneasy that we are truly at an inflection point in our economy.  Having said that, we have also witnessed a disaster in Japan that is still going, we see war breaking out in the Middle East and a subtle transition of power that is happening unbelievably fast.  All the hurricanes in the Gulf of Mexico we've had in recent years should also put us on notice that those that are prepared have a chance.  Let your mind think through what would happen if your entire state had no power for 2 weeks.  What would you do?  How would you provide?  Are you ready?




I found this list several years ago and bookmarked it.  Unfortunately, I think I still only have about 25 of the items and they are not in a consolidated place to ensure that I could access them in an emergency.  This list is a good starting point and there are many others, but I do feel the deep urge to do this now.   I share this with you so that you might think about if you need to do the same and pray about how to approach this.


100 Items to Disappear First - http://www.thepowerhour.com/news/items_disappearfirst.htm

1. Generators (Good ones cost dearly. Gas storage, risky. Noisy...target of thieves; maintenance etc.)
2. Water Filters/Purifiers
3. Portable Toilets
4. Seasoned Firewood. Wood takes about 6 - 12 months to become dried, for home uses.
5. Lamp Oil, Wicks, Lamps (First Choice: Buy CLEAR oil. If scarce, stockpile ANY!)
6. Coleman Fuel. Impossible to stockpile too much.
7. Guns, Ammunition, Pepper Spray, Knives, Clubs, Bats & Slingshots.
8. Hand-can openers, & hand egg beaters, whisks.
9. Honey/Syrups/white, brown sugar
10. Rice - Beans - Wheat
11. Vegetable Oil (for cooking) Without it food burns/must be boiled etc.,)
12. Charcoal, Lighter Fluid (Will become scarce suddenly)
13. Water Containers (Urgent Item to obtain.) Any size. Small: HARD CLEAR PLASTIC ONLY - note - food grade if for drinking.
14. Mini Heater head (Propane) (Without this item, propane won't heat a room.)
15. Grain Grinder (Non-electric)
16. Propane Cylinders (Urgent: Definite shortages will occur.
17. Survival Guide Book.
18. Mantles: Aladdin, Coleman, etc. (Without this item, longer-term lighting is difficult.)
19. Baby Supplies: Diapers/formula. ointments/aspirin, etc.
20. Washboards, Mop Bucket w/wringer (for Laundry)
21. Cookstoves (Propane, Coleman & Kerosene)
22. Vitamins
23. Propane Cylinder Handle-Holder (Urgent: Small canister use is dangerous without this item)
24. Feminine Hygiene/Haircare/Skin products.
25. Thermal underwear (Tops & Bottoms)
26. Bow saws, axes and hatchets, Wedges (also, honing oil)
27. Aluminum Foil Reg. & Heavy Duty (Great Cooking and Barter Item)
28. Gasoline Containers (Plastic & Metal)
29. Garbage Bags (Impossible To Have Too Many).
30. Toilet Paper, Kleenex, Paper Towels
31. Milk - Powdered & Condensed (Shake Liquid every 3 to 4 months)
32. Garden Seeds (Non-Hybrid) (A MUST)
33. Clothes pins/line/hangers (A MUST)
34. Coleman's Pump Repair Kit
35. Tuna Fish (in oil)
36. Fire Extinguishers (or..large box of Baking Soda in every room)
37. First aid kits
38. Batteries (all sizes...buy furthest-out for Expiration Dates)
39. Garlic, spices & vinegar, baking supplies
40. Big Dogs (and plenty of dog food)
41. Flour, yeast & salt
42. Matches. {"Strike Anywhere" preferred.) Boxed, wooden matches will go first
43. Writing paper/pads/pencils, solar calculators
44. Insulated ice chests (good for keeping items from freezing in Wintertime.)
45. Workboots, belts, Levis & durable shirts
46. Flashlights/LIGHTSTICKS & torches, "No. 76 Dietz" Lanterns
47. Journals, Diaries & Scrapbooks (jot down ideas, feelings, experience; Historic Times)
48. Garbage cans Plastic (great for storage, water, transporting - if with wheels)
49. Men's Hygiene: Shampoo, Toothbrush/paste, Mouthwash/floss, nail clippers, etc
50. Cast iron cookware (sturdy, efficient)
51. Fishing supplies/tools
52. Mosquito coils/repellent, sprays/creams
53. Duct Tape
54. Tarps/stakes/twine/nails/rope/spikes
55. Candles
56. Laundry Detergent (liquid)
57. Backpacks, Duffel Bags
58. Garden tools & supplies
59. Scissors, fabrics & sewing supplies
60. Canned Fruits, Veggies, Soups, stews, etc.
61. Bleach (plain, NOT scented: 4 to 6% sodium hypochlorite)
62. Canning supplies, (Jars/lids/wax)
63. Knives & Sharpening tools: files, stones, steel
64. Bicycles...Tires/tubes/pumps/chains, etc
65. Sleeping Bags & blankets/pillows/mats
66. Carbon Monoxide Alarm (battery powered)
67. Board Games, Cards, Dice
68. d-con Rat poison, MOUSE PRUFE II, Roach Killer
69. Mousetraps, Ant traps & cockroach magnets
70. Paper plates/cups/utensils (stock up, folks)
71. Baby wipes, oils, waterless & Antibacterial soap (saves a lot of water)
72. Rain gear, rubberized boots, etc.
73. Shaving supplies (razors & creams, talc, after shave)
74. Hand pumps & siphons (for water and for fuels)
75. Soysauce, vinegar, bullions/gravy/soupbase
76. Reading glasses
77. Chocolate/Cocoa/Tang/Punch (water enhancers)
78. "Survival-in-a-Can"
79. Woolen clothing, scarves/ear-muffs/mittens
80. Boy Scout Handbook, / also Leaders Catalog
81. Roll-on Window Insulation Kit (MANCO)
82. Graham crackers, saltines, pretzels, Trail mix/Jerky
83. Popcorn, Peanut Butter, Nuts
84. Socks, Underwear, T-shirts, etc. (extras)
85. Lumber (all types)
86. Wagons & carts (for transport to and from)
87. Cots & Inflatable mattress's
88. Gloves: Work/warming/gardening, etc.
89. Lantern Hangers
90. Screen Patches, glue, nails, screws,, nuts & bolts
91. Teas
92. Coffee
93. Cigarettes
94. Wine/Liquors (for bribes, medicinal, etc,)
95. Paraffin wax
96. Glue, nails, nuts, bolts, screws, etc.
97. Chewing gum/candies
98. Atomizers (for cooling/bathing)
99. Hats & cotton neckerchiefs
100. Goats/chickens


From a Sarajevo War Survivor:
Experiencing horrible things that can happen in a war - death of parents and friends, hunger and malnutrition, endless freezing cold, fear, sniper attacks.

1. Stockpiling helps. but you never no how long trouble will last, so locate near renewable food sources.

2. Living near a well with a manual pump is like being in Eden.

3. After awhile, even gold can lose its luster. But there is no luxury in war quite like toilet paper. Its surplus value is greater than gold's.

4. If you had to go without one utility, lose electricity - it's the easiest to do without (unless you're in a very nice climate with no need for heat.)

5. Canned foods are awesome, especially if their contents are tasty without heating. One of the best things to stockpile is canned gravy - it makes a lot of the dry unappetizing things you find to eat in war somewhat edible. Only needs
enough heat to "warm", not to cook. It's cheap too, especially if you buy it in bulk.

6. Bring some books - escapist ones like romance or mysteries become more valuable as the war continues. Sure, it's great to have a lot of survival guides, but you'll figure most of that out on your own anyway - trust me, you'll have a lot of time on your hands.

7. The feeling that you're human can fade pretty fast. I can't tell you how many people I knew who would have traded a much needed meal for just a little bit of toothpaste, rouge, soap or cologne. Not much point in fighting if you have to lose your humanity. These things are morale-builders like nothing else.

8. Slow burning candles and matches, matches, matches

Be careful!

GOATMUG

SOMETIMES YOU NEED TO LET OTHERS SAY IT....

I ran across this blog entry from Peter Schiff.  I think he nails it in 11 minutes.  While this blog really is a collection of my thoughts and a tool to organize information into actionable strategies, I sometimes run into stuff that states exactly how I feel and what I'm thinking.  This is one of them.  I believe you can hear the frustration in Peter's voice and it resonates with me because the entire "government shutdown" charade is a complete joke.

Budget cuts amounting to $40 Billion are 1% of the travesty contained in our budget.  If we had ANYONE that was a real leader (and not a play one in some game called politics)  we'd start at 20% across the board cuts and end up with 15% in a "compromise".  What kind of message would it send the world if we cut $600 Billion from the budget this year?  That would get someone's attention.  To walk around and believe that government is so essential and helpful is just deception.  Does anyone remember how effective all that government was in preventing 9/11?  What about saving everyone in New Orleans in Hurricane Katrina?  How's all that government doing in Japan with all of their compliant citizens?  (God forbid anything like that happening in the USA, people would be killing each other in the first 2 hours.). 

There are several key roots to the problem that create this cancer called government. 

First, we have professional politicians.  Full time politicians have nothing to do but legislate FULL TIME.  We must change the system to require them to have real jobs and only work 1/2 a year.  This should apply to cities as well.  Is it any wonder that government encroaches on every facet of our lives?  With full time city council members working full time to enact laws, it is no wonder you need a permit to open a coin shop, to be an internet blogger (Philadelphia), or have a lemonade stand.

Second, we must have term limits of 2 terms maximum for Congress and the Senate.  Without this you end up having crooked, connected, and out of touch oligarchs that don't represent anyone other than lobbyists, much less the people and wishes of their districts.



Finally, Bill Gross came out on Friday stating that he wasn't just completely out of US Treasuries, he is actually short US Treasuries.  In response, futures are going nuts in all the inflation related assets.  Gold and Silver will go bonkers next week.  The Fed is trapped and it won't be long before the bond market finally snaps the trap shut.  Speculators have probably been laying these positions for some time, and all it has taken was a big boy to get in and finally talk their own book.  Since the Federal Reserve actually owns around 1.2 Trillion of bonds, the Fed is subject to interest rate risk and significant losses.  In the industry we measure the sensitivity of $ losses to an increase in interest rates by measuring something called the DV01 or Dollar Value of 1 basis point.  As of February the calculation of the DV01 was that if treasuries lose value and rates move up by 1bps, the the Fed would lose $1.7 billion!  Isn't that nice, if interest rates move up a mere 23 bps the Fed loses that $40 Billion in savings that was so hard to find.  If interest rates rise 3%, the Fed loses $500 Billion!  These are figures based on February's holdings, so we know that the figures are much worse.

It's hard not to be cynical.  These politicians are disgusting.

APRIL UPDATE - IS IT REALLY THAT GOOD?

TOTAL RAILS
Rails continue to be greater than last year.  This statistic confirms that things are better, but I'm remaining intent on seeing a move up in the rate of change of the tonnage rather than just a parallel shift higher.  If it remains where it is, we get to suggest that we're recovered, but not getting better.

RAILS / AUTOS -
Auto shipments continue to outpace last year, and interestingly the rate of increase in the data suggests that we may see an increase in sales too (an increasing push higher).  I reviewed Ford and GM's charts and there is nothing there that would make me want to gamble on a bet that this increase will translate to higher prices.

RAILS / SCRAP TONNAGE -
The freight shipping for scrap continues to be flat and equal to last year's performance.

CANADIAN PACIFIC -
I highlighted CP last month as a target for a short simply because in comparison to the rest of the rails, the tonnage versus last year is weak.  Canadian Pacific continues to under perform and if we would have made a trade on it, we would have been rewarded handsomely.  The trend remains intact this month and based on the stock charts, I am seeing continued weakness.  I will not post a chart of CP yet, but it is pretty close to signaling a long-term short signal on the weekly chart.  When I see this, I will post it.

SCRAP COMPOSITE INDEX -
The last month has ushered in a drop in scrap prices.  Perhaps this is a function of additional supply coming in driving prices lower? 

MOODY'S / MIT - REAL TRANSACTION DATA - http://web.mit.edu/cre/research/credl/rca.html
As of March 30th, 2011 the Moody's / MIT Transaction Index shows that prices slipped by another 1.25% in January for their total property index. 

For another perspective we can look at a recent article in the WSJ that describes a drop in occupancy rates in commercial space, namely in malls.  http://online.wsj.com/article/SB10001424052748704101604576246972728969548.html .   One might initially think that the big reits would be suffering, but the point of the article is that the suburban malls are getting hit fully by the never-ending recession that supposedly ended.  The truth is that while Mom and Pop haven't been able to return to the crazy life-style that happened before the crash and those malls that sold them stuff they never could afford are feeling the pinch.

HOME PRICE DATA - http://www.realtor.org/research/research/ehsdata

So you thought that foreclosure you bought was going to be your ticket to a lavish Robert Kiosaki life-style huh? 
Perhaps it may be, perhaps not.  But with the falling average home price you better hope that things turn around or that you can rent that thing out quick!  Once again we find that home prices continue to drop.  There are so many issues that are hurting the housing sector.  Here are just a few;

A)  Rising interest rates
B)  Tougher lending standards (can you say down payment anyone?)
C)  Lots of inventory including foreclosures on the market
D)  Lots of shadow inventory consisting of;
      1)  Foreclosures that banks have actually foreclosed on because there is no where for it to go
      2)  Homeowners that want to sell that haven't listed because it won't sell or they are waiting for higher prices.
      3)  Homes that people are paying mortgages on, but are underwater.... when prices continue to drop, they'll quit.
E)  That government shut down thing.  Because almost 1/3 of all mortgages receive a Federal Loan Guarantee, all those home transactions that might have been completed are now dead in the water if the shutdown is not averted in the next day.

CNN contributes the following uplifting story stating that a full 11.4% of all homes in the US are vacant!  Isn't it great that we have all those home builders adding more to the pot?
http://money.cnn.com/2011/03/28/real_estate/us_housing_vacancy_rates/index.htm

MONSTER EMPLOYMENT INDEX - http://about-monster.com/employment-index
The Monster Employment Index has been a pretty good indicator of jobs data and we see a big move up in the recent release of figures from Monster.com.  This index powered higher to 136 which is the highest reading since July of 2010.
Recall that this is an index of the number of job postings that employers put on their sites, essentially measuring online availability of jobs.

6 MONTH EURIBOR - http://www.homefinance.nl/english/international-interest-rates/libor/usdollar/libor-rates-1-week-usd.asp
Pimco's Andrew Balls wrote an interesting article calling the ECB strategy into question (just as I have for months). 
http://www.pimco.com/Pages/EuropesNotBackToNormalSoWhyIsTheECBHikingRates.aspx .   No matter what, the ECB raised rates by 25 basis points to 1.25%.  6 Month Euribor has been expecting this as we see it climbing significantly over the last couple of months.

6 MONTH US LIBOR   -
Funny though, look at the magic done here in the US!  Oddly enough our USD Libor hasn't moved a bit!  I wonder why?  Perhaps it is just a tsunami of electronic money.  Nothing can withstand something as powerful as a printing press.

COPPOCK TURN INDICATOR - (For entertainment purposes only)
As I've noted quite often over the last months, I'm about to drop the Coppock Indicator, but have kept it around for entertainment purposes only.  As I mentioned last month, the DJIA had to really drop and stay dropped to continue in it's bearish stance (which has been absolutely wrong).  We did get a pretty sizable dump, but the resilient markets didn't stay dumped.  Therefore, the Coppock has now turned bullish, signaling that all the kids can safely get back in the pool!  If we would have listened to the indicator we'd have missed out on about 2500 Dow points.

FCI - http://www.bloomberg.com/apps/quote?ticker=BFCIUS:IND
The Bloomberg Financial Conditions Index continues to recover.  We are now at levels which are equal to the highest points we've seen throughout this entire recovery.  While we saw a substantial drop, all has been made back.  Levels above 0 indicate that there is a recovery in the works and expansion is underway.  Below zero shows that we are in a contraction.

BDI - http://www.bloomberg.com/apps/quote?ticker=BDIY:IND
The Baltic Dry Goods Index is still in the basement.  Not much going on here.  Shippers like DRYS, FRO, GNK, and DSX all have very ugly looking charts.  Continued weakness here in these names could easily push these guys down to their 4th quarter 2008 lows (which were much lower than the March 2009 lows.)  GNK is already below those March levels.

USD - http://www.bloomberg.com/apps/quote?ticker=DXY:IND
Bucky is still pegged at the lower end of it's range and is still at a critical juncture.  With all of this dollar weakness are we really amazed to see oil, gas, grains, food, and metals lift off?

WRAP UP -

I've actually done a few things differently in this post than normal, so why stop there?  Tonight I will not actually leave you with specific trades or much more commentary about specific areas other than to say that this data just isn't that good.  We do have some improvement in jobs listings with Monster and also a move higher in the FCI.  Beyond those items we see flat rail shipping, a collapsing housing market, falling commercial real estate still, and a really nasty spot shipping market for bulk goods.  Is all of the recovery on the back of the falling dollar?  Perhaps.

If this is the case, it is not a wonder that commodities continue to perform well and the entire market too is being supported by the Fed's wealth effect.  For the first time in a long time I'm seeing opportunities for to genuinely short where the charts look pretty weak and their current position in the recovery since the early March drop is well below the highs.  Stocks need to regain that high point or are at risk for a reversal.

I'm discussed at great length that portfolio managers and other big money will not wait for the end of QE II to be repositioning money and anticipating that the liquidity infusion will end.  If that is the case, we could actually see a rotation from the high-flying stocks into more defensive names over the course of the next couple of weeks.  Those would be companies in health care, utilities, and would certainly be out of technology leaders.

I do have a number of stories ready to go in the next few days, so many that I actually inserted a few in the text here.  So much is going on in the world that I really do feel that we are at an inflection point.  Be Careful!

GOATMUG

INSIDE JOB - WATCH A REAL LIFE HORROR MOVIE - FREE

INSIDE JOB - HOW WALL STREET GOT YOUR MONEY
Are you still wondering about the 2007 and 2008 Financial Crisis and what exactly happened?  This acclaimed documentary has a great view of the causes of the collapse that threatened to shatter the ponzi scheme that governments and the financial industry have been running for years.  While I'll be the first to admit that not all of what they show is spot on (everyone has an angle and prejudice), I'll say that they nail a heck of a lot of it. 

I suggest that you hit full screen to get the most enjoyment of your viewing.

(I took down the embedded video because the source video was nailed by Sony for copyright infringement.) Here is another link to a blog I found that had the video still in tact. http://www.distressedvolatility.com/2011/04/watch-inside-job-full-video.html  )


It's odd to think that this is all past, that with the simple creation of the TARP fund, QE I, and QEII we are suddenly all fixed and ready to get back to life as usual.  Where are the losses?  Where are the handcuffs?  Nothing has changed, you just got scammed as a taxpayer.  "Each crisis has caused more damage while the industry has made more and more money".  I can't wait to see the next one, it should be on schedule in about 3 to 4 more years.
If you have about an hour and a half, you will agree that it is not a waste of time.  Be careful!

GOATMUG!

APPLE RESTING OR "SHIFT" IN PLAY?

APPLE IS A ONE DIRECTION STOCK
If there is one stock I never trade it would have to be Apple.  This beast is simply one that defies logic and somehow only trades in one direction.  Yes, admittedly I missed the bottom around $86 just a mere 2 years ago, so perhaps I am sore about that, but there are times when we must look around and examine trades that go against the grain.

ANDROID MOVING IN?
Please review the article in Business Insider which contends that there is a shift going on in the smart phone and smart gadget business where the Android operating system is dominating.
http://www.businessinsider.com/android-iphone-market-share-2011-4

Overall, the article is suggesting that the Android is becoming The Standard and now controls about 1/3 of the market share and it is gaining at the expense of the other players.

5 REASONS TO PAY ATTENTION AAPL LONGS

The post got me thinking about other things that Apple should be concerned about and I've compiled a list that just jumped out to me.

1)  AAPL is priced for perfection (despite it's recent $20 drop).

2)  The NASDAQ 100 is repositioning and is reducing the percentage that AAPL represents which will force all indexers to reduce their holdings of AAPL.  Right now, APPL represents about 20.5% of the index, it will be rebalanced to fill only 12.3%.  http://money.cnn.com/2011/04/05/markets/apple_nasdaq_rebalance/?section=money_latest

3)  Steve Job's health is still a factor

4)  Despite being a late technology adopter, Goatmug still owns only 1 Apple device (IPOD shuffle) and has no intention of buying a Iphone.  I am going to get an EVO in the coming weeks though.  I have heard the EVO SHIFT is decent so perhaps I'll go that direction too.

5)  Ipads look awesome, but I have no desire to sign another contract to hook me into more monthly costs for telecom services.  At this point my telecom and data costs are almost $400 a month, why add more?

Now don't get me wrong, I'm not calling for the death of Apple.  My kid likes them and loves to download new stuff all the time from their Itunes store.  However, this doesn't mean that they can't correct a bit.  Have a look at the chart.

Even a test down to the lower portion of the channel due to pressure from the rebalancing mandate could take the stock down another 10% to $305.00.  A stop at $358 would be a good place to keep you from blowing up if you were planning on shorting.

While I see this as a pretty good opportunity to go short, I probably won't have the guts to engage Apple here.  Just so you know, the ones I study and don't trade typically tend to be the homeruns.

Oh yes, I almost forgot.  While playing with fire is fun (shorting AAPL for instance) it might just be safer to short the other loser in this scenario.  Yes, RIMM, the maker of Blackberry.  As Android based phones catch the interest of business users like myself the clear loser will be RIMM.  Think about it, I not only ditch my Blackberry, but I also ditch the $10 connectivity fee they charge monthly.  (Yes, Sprint will get me somewhere else). 

As far as trading a short on RIMM goes, it is really at a critical place.  A move below $55 could me a drop to $44 with almost no pause.

Be Careful!

GOATMUG

TREND CHANGE IN THE WORKS? LOWER COST GOVERNMENT CHEESE?

WHERE'S MY CHEESE?
The monthly release of food stamps recipients didn't change it's trend one bit (still heading higher), but the proverbial rate of change certainly is slowing.  The January 2011 SNAP program data released last week indicates that we have over 44.18 Million folks receiving food stamps in our country, which includes some 20.7 million households.

GOOD NEWS?
If there is good news to be found in the report, we'll find it in two places.  First, the annualized cost for the program dipped below December's number so the annualized cost of the program is now pegged at $5.7 Billion dollars!  (Not much more than a few hundred Tomahawk missiles eh?)  More importantly though, the rate of growth of the number of people utilizing these benefits is actually slowing.  In January, the increase was a paltry +.24% or a monthly increase of 24 bps.  This is the slowest rate of increase since February of 2008!

Before we get all giddy, the print for January 2011 is still a 12.1% increase from last January, but heck, I'll gladly applaud any metric that shows that things ARE getting better and less people are drawing on benefits that provide only a subsistence living.  We need folks back to work as soon as possible and we need these SNAP figures to decrease.

FOOD INFLATION / DECLINING COST OF SNAP?
I'm not really sure how we pulled off an increase in participation in the program and a decrease in costs, but heck who am I to disbelieve any government data release?  Odd that the cost of the program would go down when we are seeing significant food cost inflation too?  As usual, government numbers confound me, I'm just here to report the errrr..... facts.

Be careful!

GOATMUG 

PRICE HIKE ON EVERY ISLE? INFLATION, WALMART, & THE FED

WAL-MART SIGNALS AN END TO EVERYDAY LOW PRICES?

USA Today featured an interview with Wal-Mart's CEO Bill Simon.





At 3:34 in the video the Mr. Simon discusses inflation and outlines where he sees it coming from.

DOES THE FED HAVE IT'S EYE ON INFLATION?
So we have Fed Governor Bullard suggesting that inflation may be a problem as outlined in the post from several days ago (MINISTRY OF DISINFORMATION - BULLARD SPEAKS) and now we have the interview with a leading retailer stating that prices of everything are about to go up. 

What next?  Well today we have an article in the WSJ highlighting more misdirection from the Fed in the following note;
DUDLEY - WHY WHAT HE SAID MATTERS.

In the WSJ article by Matt Phillips we note that the President of the Minneapolis Fed, Narayana Kocherlakota, said he expected “a big upward movement” in core inflation — inflation excluding volatile food and energy prices — from about 0.8% late last year to about 1.3% by year-end.

The market needed to snap to attention because this comment combined with Bullard's earlier speech in France started to indicate that the Fed may be signaling some sort of return to a less accommodative policy for interest rates and markets.  Now Kocherlakota isn't seen as an inflation hawk so this also adds to the importance of the statement.  But before we get too excited that the Fed might step off the accelerator of the car that is careening toward the edge of a cliff like Thelma and Louise, we had another statement that just seems to make you wonder what planet these guys live on.

JOBS DATA SAYS KEEP ON PRINTING!

Bill Dudley, President of the NY Fed (the only one that matters) stated today;

“Even if we were to generate growth of 300,000 jobs per month, we would still likely have considerable slack in the labor market at the end of 2012,” he said, adding “the unemployment rate is much too high.”

Dudley is a close ally to Bernanke and is seen to be steadfastly in his camp in terms of their view on interest rates.  So go ahead Bullard, Plosser, Hoenig, and Kocherlakota, spew out your logical double speak about how the Fed is actively watching for signs of overheating and inflation, the NY Fed and Bernanke are the only members that matter and we know they are committed to driving this convertible over the edge in a blaze of glory.

Thelma and Louise Final Scene -



Be Careful!

GOATMUG