Welcome back to The Investor's Coroner, your weekly attempt to make both sense and fun of the current global markets and inform you of the happenings in the international marketplace while simultaneously inserting jokes like a porn start trying to break a record.
It is a goal of The Investor's Coroner to help you understand just what's going on in this here economy. Or, barring that, maybe you'll learn why you're so poor, you Ramen Noodle sucking freak.
Recess Less Fun as an Adult
Okay, so there are these two indexes (indices?) that piped up yesterday and smacked the market around like it caught the motherfucker in bed with its wife. The first of these indicators is called the index of leading economic indicators (LEI), which is intended to predict future economic activity and is a composite of average workweek (manufacturing), initial unemployment claims, new orders for consumer goods, vendor performance, plant and equipment orders, building permits, change in unfilled durable orders, sensitive material prices, stock prices (s&p 500), real m2 ( a chunk of the money supply) and the index of consumer expectations. All you really need to know about all the stuff that compiles this composite (I compiled a composite this morning after breakfast, by the way) is that lots of smart, rich people think that everything in the LEI leads market expectations. And the LEI took a huge crap and experienced its fourth straight decline, which means, if we're not in a recession, then this is the first time the LEI experienced four succesive declines while we weren't in one, so we're in one. Get over it.
The other index is called the Philadelphia Federal Index, which measures growth in business by surveying participants who voluntarily answer questions regarding the direction of change in their overall business activities. The survey is a measure of regional manufacturing growth. It is considered to be a good gauge of general business conditions and it basically gave the finger to the market like the market cut that bitch off in traffic. Roided up road rage in the market place to be sure.
So anyway, we're in a recession.
Bernanke Tired of all the Bad News, Wishes he Still had Job at K-Mart
The federal reserve lowered estimates for growth, stated that inflation would worsen, economic activity would decelerate and future rate cuts would do little more than allow market stagnation preceding a possible correction. Federal Reserve Chairman Ben Bernanke stated that he was hopeful that the March cuts would stimulate economic growth but that he was also hopeful that Julia Roberts would cook him a T-Bone while naked and he didn't think that was happening either.
“The fuck can you do?” Bernanke shrugged as he spoke.
Economic History for Dat Ass
Okay, okay this is fucking awesome. I am downright giddy about this because this is economic history, this is economic collapse, this is why the stock market is so much more fun than the super market (well, this and the fact that all the supermarkets got rid of the car and horse rides out front of their stores?assholes).
First, a little background.
There are these things called municipal bonds. If you don't know what they are, go Google them. (The Coroner is long enough already.) Sometimes, not all municipal bonds will be purchased but that's cool. You see, these bonds have 99% success rates and are guaranteed by AAA rated insurance companies. That makes them safer than any contraceptive on the market, which is pretty fucking safe. So those that aren't sold to investors get put up for auction every month where they are all purchased by banks and investment holding companies. All of them, every month, without fail, get purchased.
Well anyway, if you read last week's Coroner, you saw that the bond insurers were in a lot of trouble and that Warren Buffet was trying to steal their business. After the banks declined his piracy, their collective stocks took a collective crap and, for the first time ever in market history, there were bonds left for sale at the monthly muni-auction. The banks weren't scared of the bonds themselves (A-rated municipal bonds are very safe) but they were worried about a lack of insurance capital from the companies insuring the bonds, so the cities issuing the bonds paid five to six times what they would have normally to get their bonds issued. That's a twenty percent gain to the buyer on a product that has a one percent chance of defaulting. Fuck me running, that is a steal.
And Oppenheimer Funds realized that and bought them all up for their first short term investment ever. They plan on selling the bonds to individual investors when the insurance problem resolves itself, which brings me to more awesomeness.
Everyone Fucking with Bond Insurers
After Buffet tried to buy out bond insurers FGIC, AMBAC and MBIA, which are in the process of losing their AAA rating, which would be like if Lindsey Lohan lost her tits (i.e., she'd be worthless), a guy named Bill Ackman, the head of a hedge fund firm, proposed a plan to save the companies. Only thing was that Ackman had been short-selling (betting against success to profit, basically) those particular stocks for the last four months. In other words, the dude who made a mint betting against the insurers offered a plan to save the insurers. This is a little bit like Adolf Hitler offering a plan to save the Jews. You couldn't make this shit up.
Anyway, in response to everyone fucking with them for creating one of the freakiest conundrums in recent economic history, FGIC agreed to get split into different companies to protect municipal bonds from being lumped in with those mortgage backed securities and creating total economic collapse. AMBAC and MBIA may follow suit. Then again, they may just tell their overseers to fuck off. Rumor has it they're in better positions than FGIC (hint: doggie).
Microsoft and Yahoo like Sex Rough
Microsoft's attempt to merge with Yahoo is going about as smoothly as would raping a ninja. Yahoo rejected Microsoft's offer, then Microsoft said it was a great offer and Yahoo should be happy that Microsoft even considered banging Yahoo. Microsoft was so pissed off that it decided to call for a proxy vote, which is basically when a company tells another company's shareholders that they'd be better off if the bigger company owned the shareholder's company. Anyway, proxy votes can take years to arrange so this is really just Microsoft's way of saying that it loves Yahoo and wants them to be together forever, whatever it takes. Dammit Yahoo, can't you tell Microsoft loves you. It doesn't mean to hurt you, baby. You're the one.
Oh yeah, and Google heard about this and got all pissed off because they thought world domination was imminent and this merger may threaten that. Google can be a little bitch sometimes. Personally, I think they should just make this a threesome but that would probably create the largest monopoly since the time God sold all the worlds' seeds to Monsanto.
I'm in Murders and Executions
Some data company named Reed Elsevier PLC purchased another data company named Choicepoint, which means that none of your information is safe. They know it all! Every damn detail! They're laughing maniacally right now. I can hear them. Oh, and if you knew that was coming, you would have made a mint because Choicepoint's stock went up almost fifty motherfucking percent in a down market. And um, yeah, I didn't see it coming either.
Butterfly Flaps its Wings, Your Stocks Take Dump
Due to rising inflation, a weak dollar and weak markets globally, commodities have been the only truly reliable market investment of the last six months. But none of this stuff happens in a vacuum, and as demand for commodities grows, demand for the machinery that aids in the retrieval of those commodities grow. Because of that, mining manufacture Bucyrus gained like Walter Peyton over the last two weeks, as did a few farming machinery manufacturers. See, it ain't all bad. Just mostly.
Fidel Castro Quits, Cuban Cigars still Tough to Get
Cuba has only one contribution to the market (because Cuba hates markets) and that is some kind of economic package that can be found in a Herzfeld Caribbean Basin Closed End Fund, which trades under the ticker symbol? (wait for it?) (wait for it?): CUBA. That's right. You really couldn't make this shit up.
Fidel's brother Raul is in charge now and so the Herzfeld Caribbean Basin gained about thirty percent in a couple of days. Meanwhile, I haven't had a Cuban cigar in seven years. Could someone please step up the efforts to end embargo? Haven't I suffered enough?
Invest in Your Rulers
Last week, I told you that I thought that financials might be good investments. You apparently agreed, assuming of course that you are a middle eastern country.
The country of Qatar bought up a shitload of Credit Suisse stock and plans on spending over 15 billion on bank stocks over the next year. Back in the day, he who had the gold made the rules, then the banks eliminated the gold so now he who has the banks makes the rules and foreign investors will soon have our banks. But don't worry, this isn't a takeover effort, just savvy investing. They'll sell our bank stocks back to us when the stocks are up and the dollar is stronger. Qatar was in the National Honors Society back in high school, after all. It's not stupid.
Toshiba Throws Up Hands, Gets Pissy and Leaves
I don't know exactly how this happened. But this week, every distributor and retailer of HDDVDs and Blu-Ray systems decided that Blu-Ray was the way to go. Microsoft and Toshiba lost out big time. Panasonic is sitting pretty because they were Blu-Ray all the way, baby.
Now, this one really confuses me. The talking heads compared this to the Beta versus VHS gimmick of the eighties, but that took like three years to unravel and when VHS won, it was solely because they didn't underestimate the demand and they flooded the market with more VCRs and a greater selection of movies than did slow-moving Beta-Max. I remember a lot of people thought Beta had a better product. But whatever. The decision between Blu-Ray and HDDVD wasn't really made by the consumers. First, most of the movie studios endorsed Blu-Ray, then most of the retailers followed suit. But no one knows why. Personally, I think retailers were just sweating the lack of sales and knew they had to pick one format or the other to bring more consumers in. But that smacks of evil.
Anyway, if you own an HDDVD player, you may want to put it on EBay. Sucker.
New Innovations Still not Better than New Orgasms
Apparently, there's now a device out there that can tell if coffee tastes good or bad. This is bad news for the world's professional coffee tasters, but there's only like fifty of them and I mean, seriously, a coffee taster? How the hell can I feel bad for you if you worked any amount of time tasting food for a living?
A new study shows that humans may be more receptive to vaccinations if they are tattooed onto their bodies. Which means that twenty or thirty years from now, we could see some kind of bizarre tattoo artist/nurse hybrid. Actually, typing that turned me on a little. Christ, I need help.
A Virginia Tech student invented a gravity powered floor lamp that can run for four hours at a time before someone needs to lift a weight from the bottom of the lamp and slide it up again to the top. The Virginia Tech student said he “Totally got the idea from gravity bongs, dude.”
Your Motivational Investment Quote of the Week
“We would accomplish many more things if we did not think of them as impossible.”
Aaaaaaa?C. Malesherbes
Labels: investing