Ben Bernanke: Is He the Kwisatz Haderach?

I will just open with the snow update. Another 8 inches on tap for Saturday and a large system capable of "substantial snowfall" on the way for Wednesday of next week. I am going to need extra beer. Oh yeah, nice to see Stratfor getting props all over the web today!

As always, get Friday Night requests in!

Can an Efficient Market get Scared of Baloney?
I do not want to spend much time on this, I have spilled pixels by the ton explaining psychology and markets built on quicksand. I saw this headline today:
Now A Congressional Committee Wants Meredith Whitney To Testify And "Come Clean"
Ever hear that song "Don't Rock the Boat"? Obviously Mrs. Whitney has not!

From what I have seen of Whitney's report on Muni bond defaults, it was lacking in real hardcore substance. After her 60 Minutes appearance a muni bond route ensued and people are mad that a 5 minute baloney piece was able to roil markets for big dollar withdrawals and stunted offerings. May I ask a simple question?

Is is more plausible that:
-The 10-20 normal, everyday people that are over age 60 and actually watch 60 Minutes are in control of a trillion dollars or more of capital to trigger a flight from muni bonds after the show?
or
-Talk and serious discussion of various over hauls in muni land were well on their way resulting in haircuts and Mrs. Whitney was an easy scapegoat?

I leave it to the reader to decide. In a deep, liquid market like muni bonds I would think one call from a media loving analyst would have next to zero impact on pricing. Unless that market does have structural issues and is built on ponzi debt schemes that is. No worries, I wrote before that muni debt is 100% safe due to The Bernank and I have even said they were a buy at these lower levels.

Ben Bernanke: Is He the Kwisatz Haderach?
After the speech given today by FED Head Ben Bernanke to the sharp minded Press Club, one can only wonder, is The Bernank the Kwisatz Haderach?:

Kwisatz Haderach is a term which refers to a prophesied messiah and superbeing in Frank Herbert's fictional Dune universe. The Sisterhood theorize that such a male would possess absolute prescience, seeing all possible futures thus being able to cause select threads of time to be realized through manipulation.

It must be!

The speech today was so brazen and so full of shit that I debated whether to even write about it. At some point things cross over into that Twilight Zone type of thing and today was the day it happened to me.

In summary, and I will paraphrase though I will not be far off from Bernanke's EXACT words:
1.) The stock market is way up
2.) Due to (1) everything is getting really good now
3.) Unemployment will remain high though, whoops!
4.) FED monetary policy shows no inflation anywhere in anything in the world except maybe...
5.) The commodity price rise is a healthy sign of growing world economies, but that has nada to do with FED policy anyways so who cares.

This passes for the US Federal Reserve head policy maker's view on things?

I submit this all with limited commentary. If Ben Bernanke sees no problem with how hot money flows are causing distortions in asset prices then he is simply lying. I have never really believed that The Bernank is stupid, he is most certainly not. The Bernank is simply pounding the drum on what he can, a higher stock market, while downplaying the failures of his work, unemployment and severe inflation in real necessities.

Unless he is the Kwisatz Haderach! Then maybe this all works out due to his vision! On cue, here we go (headline may change later but this I copied at 7:30pm EST):
Bernanke speech helps push stocks higher

Maybe I am not a believer. Maybe the miracle of a rising stock market where most real Americans have nothing it it can result in a robust economic system. How can this be! Only one way:

Only instead of rain on Arrakis, we have dollars from the sky finding their way into POMO-MOMO stocks! Genius!

Speaking of an Uptrending Market


My move on The Hershey Company (HSY) is working well. I entered on the Tuesday open at $46.79 and today's move brings HSY to $50 and change (almost +7%)! I had estimated a move to $50 and have moved up my stops to lock in gains. The action in HSY is still favorable, but you know how I roll; conservative and keep wins. If, and a big IF, HSY can break out over $51 on some volume it may run to $55 or more. It has been turned back many times and I respect that trend. Book it!

Have a good night.

Winter Wonderland or Fortress of Solitude?

Winter Wonderland or Fortress of Solitude?
The snow is all there is. It's everywhere. It has no where to go. It's piles lie in monuments to the efforts of man to move them. They laugh as they witness our feeble efforts to reshape the world that nature has brought down upon us. The snow uses each unique flake and trillions just like it to form an immovable mass of supreme dejection. Alas, my nemesis snow, I cry out my defeat! Spare me more pain! Please show me mercy so that I may live with some chance of hope.

All there is, seems all that was, is snow.

Ok, there is my feeble attempt at an ode to snow. In short this is getting out of hand. Oh yeah, more snow for Saturday!

Here are some pictures so you will know what I am up against.

If you have seen many of my cooking pictures you will know how my back deck looks without tons of snow. Here it is now:

I have been keeping it shoveled off due to weight concerns causing damage.

I had a ladder out so I could work on the roof awnings. Here it is in the snow while I took a break:

Easy to leave it someplace!

Here is the driveway to the street, just wide enough to get a car out:

Wow.

One from the front yard. You can just make out the orange markers we use to show the plow guy where to plow. It's not helping!:

See what I mean?

I turn 35 next month but one of my both greatest gifts and failings is that I am a huge kid at heart still! Faced with monster snow piles in the side yard I did what any kid would do. Break out the snow tube!:

The snow is super fluffy so tubing is not that effective. Still, starting down the hill:

I will not include the pictures where I got to the bottom and flipped right over due to deep fluffy snow! I really have to move to the equator.

Trading Stuff
On Monday I bought Hershey (HSY) due to an oversold condition and other factors. Earnings were this morning and they came in a little light. Not to worry, a mega bull market forgives all ills and the stock was up about 3% today. It was also up about 1% on Tuesday so I am sitting up 4% on this one for a couple days. I rolled up stops to preserve gains, but I am looking for $50 for an exit on this one. We shall see.

Have a good night.

Monday Screening

Storm tomorrow for a bout 6 inches of snow and then a huge storm all day Wednesday for another 15 inches of the white stuff. Just unreal.

Monday Screening
Monday is screening night! I am working in The PPT and the 12631 tonight. Not much looking too interesting, I will update later if I find anything that I am going to trade.

Market is ugly right here and long side bets are harder to find all of a sudden. Figures.

Update:
Not much turning up on my screens. Best looking ideas are HSY, AMRC, and BMY.

Update:
Going in long with HSY and AMRC. Smallish positions.

Have a good night.

The Anti-Centrifuge Conspiracy

Snow again for both Tuesday and Wednesday. Another 16 inches or so. No comment.

The Anti-Centrifuge Conspiracy
I have been thinking about something for a little while and now I want to share it with the readers. Are you sure you really want to know the truth? You cannot go back once you go forward.

I want to accuse the large conglomerate product makers, mega firms like Proctor and Gamble, of a worldwide centrifuge suppression conspiracy. There, now it's out there.

What am I talking about? From Wikipedia:

Centrifuge
A centrifuge is a piece of equipment, generally driven by an electric motor (some older models were spun by hand), that puts an object in rotation around a fixed axis, applying a force perpendicular to the axis. The centrifuge works using the sedimentation principle, where the centripetal acceleration causes more dense substances to separate out along the radial direction (the bottom of the tube). By the same token, lighter objects will tend to move to the top (of the tube; in the rotating picture, move to the centre).

It's all so clear to me now.

I of course use centrifuges all the time at work and thus I should have figured this all out before. What am I talking about?

You know that bottle of hand lotion that uses a pump to dispense the stuff? Or hand soap? Or anything somewhat viscous in a bottle? Yeah that stuff. Is it not strange that those bottles can still be HALF FULL yet you cannot get any more product out because it is not near the pick up for the pump? Then what? You have to BUY ANOTHER item, that's what! Volume sales indeed.

This goes on and on from toothpaste to body soap to motor oil in the bottles. There is tons of product left that you cannot get to!

A home centrifuge would allow you to spin down the product to concentrated areas so all of it could be used. Here is a centrifuge with a rotor and holders that could work:

Now these are kind of expensive, but that has to do with the fact that scientists buy them. If I buy aluminum foil through our Biotech supplier, it is like $20 for a box of Reynolds wrap! I can buy it at Walmart for $2. It's how the game is played.

I would think GE or Sears would have made a home model centrifuge by now to allow the full usage of the product that you paid for. As such, there are none because the power players obviously buy up any small company that tries this and closes the doors forever. Think of all the profit they stand to lose if you actually use the full amount of stuff you bought! Think of all that toothpaste alone!

There comes a time to speak truth to power.

A home centrifuge must be allowed to market. It will be good for the environment. It will result in less waste. You will be able to look your children in the eye and feel that you are doing the very best you can for them. All this and so much more.
Disclosure: Long assorted centrifuge device makers, but that is not a conflict as I see it.

Have a good night.

From 1971: The Fight of the Century

Maybe it was the Rocky music from last night, but I am on a boxing history kick!

EconomicDisconnect used to box (when I was young!) and when I work out I still prefer boxing training in my basement gym to any other type of work out. I hate MMA fighting, there is no real art to it. Before I get angry comments, I know there is and many people love it and I know how hard it is but it's nothing like the art and beauty of boxing.

From 1971: The Fight of the Century
Wikipedia usually has a great write up for most things but I found the entry for the first fight between Joe Frazier and Muhammad Ali a little weak. Here it is:
Fight of the Century

A better write up from East Side Boxing:
Fight of The Century: Still Nothing Close To It 33 (40 now) Years Later

Short version:
Muhammad Ali was controversial with his stance against the Vietnam War. He even refused military service. Ali had converted to the Muslim faith and changed his name from Cassius Clay. Ali had been stripped of his title over the long delay and his military service issues. Joe Frazier won a long tournament to win the title. Frazier was respected and admired for his quite workman-like style.

After a long layoff, Ali was set to fight Frazier. The whole world was watching. The immortal Don Dunphy has the call and here is the fight in 4 parts by the wonder that is YouTube.

Rounds 1-3

Ali started fast and won all 3 rounds on my card.

Rounds 4-7

Frazier comes alive a bit and the fight heats up. A left hook from Frazier with 37 seconds left in the 4th round would foreshadow later events.

Rounds 8-11

The meat of the fight. The pace picks up and it is clear Frazier is wearing Ali down. Ali had just won a gruelling fight against a very good fighter, Oscar Bonavena (KO 15) and it becomes clear Ali is running out of gas. Still, in round 9 Ali almost ended the fight. The last 30 seconds of round 9 would have stopped any other fighter, just unreal how Frazier stayed upright! Flip the table and Frazier was so close to stopping Ali in the 11th round, so close. Watch the last 1:08 of round 11 to see. Ali was out on his feet.

Rounds 12-15

Ali composes himself and wins round 14 big. But then the 15th starts and what a finish! While leading on all cards, Frazier summons a gargantuan left hook to begin round 15 and puts Ali flat! What a shot. This round cements the win for Frazier. I had it scored 9 rounds to 6, but one judge gave Frazier 11 of 15 rounds which was a bit much.

A few pictures of the fight:





What an amazing contest. 40 years later and I still spool these clips up late night and watch the fight.

Have a good night.

What Would Get Me Excited as a New Technology?

Having Thursday's off should be standard procedure. Today was so easy!

On Egypt
In a former life EconomicDisconnect was a serious student of things foreign policy and a heavy duty reader of strategic items. Sites like StratFor and The Strategy Page were regular looks. That died out over time. As such, I am unprepared to offer anything but my opinion on the crisis in Egypt, but I feel the moment is important enough to get something down.

We have no idea what is really causing this revolt. I am uneasy with how staunchly the US has always sided with the Mubarak regime and of course now our policy makers would have you think they are all for "freedom" or whatever. This (along with Tunisia) is linked directly to free money the word over that the US supplies. Consequences be damned, as long as it is someone else. I am watching with interest but also concern. You never, ever know what will come about after a real revolution.

Quick Market Take
No idea why everyone got all scared today, but I would not read into it much. I am excited as this will provide me with an actual down day to run my oversold screen. I don't think a serious correction is at hand unless things really get bad over the weekend. We shall see.

What Would Get Me Excited as a New Technology?
I have been skeptical about new age companies that are believed to make quadrillions in cash going forward for all time because most do not make sense to me longer term. I am not stuck in the stone age though, I can see new ideas that will actually matter.

While most are obsessed with finding the next big way to post pictures and talk to people (Facebook, Skype, etc) or a way to get 50% off useless crap one time (Groupon, etc) some are actually looking to break barriers and invent a new way forward.

I have spoken at length about Natural Products and their application for therapeutics. Linked molecules are also a novel idea whose time has come (WHEN Avila Therapeutics goes public you WILL WANT to be in that name!). But perhaps nature has tricks we have not even begun to take advantage of.

A write up over at Io9 should wet your appetite for what I am talking about:
Scientists Make Next Generation Computers with Gold and DNA
Stop, I know what you are thinking. This is the EconomicDisconnect Holy Grail! DNA and gold, he is biased! Read on Grasshopper:

Optical computing technology, a growing field in the tech sector, involves computers that send data using beams of light. In order to expand the capabilities of optical computing, engineers are required to find materials that manipulate light very precisely. Photonic crystals are one such helpful material. A photonic crystal can block very precise wavelengths of light, making it a great optical tool. But creating such a crystal is a challenge. Now scientists have tested a new method for making them, and they have done using the coolest materials possible: Gold and virus parts.

Tiny gold nanospheres and pieces of virus were hooked together using strands of DNA. The DNA pieces were created specifically for the experiment. Small spheres of gold attach to certain base pairs and form part of the lattice. Gold, while malleable for a metal, is relatively heavy and rigid for such a small structure. The lattice is made more bendable by its organic component, capsids, which are what make up the protein shells of viruses. These bits of virus 'skin' string together the tough gold spheres.

A mix of all of these components - DNA, capsids, and gold spheres - self-assembles into a lattice. The structure of that lattice can, with certain materials, be made into a photonic crystal. No one would have to build a crystal to use in optical computing, mixing together the right ingredients could make it build itself.

BOOM!
While science has looked for years into superconductors for quantum applications, here we have a new way to think about the next generation of computing. This could be big but obviously it will take time. And money. Money better spent than on the Facebook IPO.

Here is the research paper:
DNA-controlled assembly of a NaTl lattice structure from gold nanoparticles and protein nanoparticles
I have read the complete paper 3 times and this will work. I can actually do this kind of work and if an opportunity comes up for a job in this field my resume will be at the door on fire. It is beyond the scope of this blog to get too into this but be sure this is a great new idea that has me excited. See, I can do tech!

Friday Night Entertainment
After a hard week, you know you need some fun. Here it comes.

Robot News
It has been a while without a robot update, but maybe I was trying not to scare you. Here you go, a robot that can tie ties. Creepy.

Top Ten Catch Phrases
Another Io9 find, Top Ten Catch Phrases You Swore You'd Never Use (and when you used them).Sample:

"Hello. My name is Inigo Montoya. You killed my father. Prepare to die."
What it's from: Princess Bride
When you say it: Twenty minutes after you saw The Princess Bride. With a ruler in your hand, and your only pair of boots while your very-much-alive father shaves in the bathroom down the hall. Oh please, like you weren't all dying to say this one as soon as you heard it.

Nice.

Did You Know?
Time to play Did You Know?
-What the heck a capsid even is?
-Jupiter is thought to have acted as a solar system comet and asteroid picker upper (due to enormous gravity field) and may have allowed Earth to remain relatively unharmed by impacts? It is still going on. Thanks big guy!
-There is debate on just how Indian technology was able to fashion the Iron Pillar of Delhi?
-This is what chicken nuggets are?
-Amarillo Slim once won a bet he could hit a golf ball a mile distance?

Film Clips
Load your Netflix list with a couple of gems.

I have featured "Fat Man and Little Boy" before but here is another shot. My man Josh Brown was discussing Uranium this week and this put a scene in my head. While doing a criticality experiment on the Demon Core an accident happens that almost became the first atomic detonation quite a bit ahead of schedule:

Great film.

Dustin Hoffman is one of the finest actors of all time and this scene from "Tootsie" is a standout in my mind:

Too much.

Rock Blogging
Some tunes to send you off on a good note.

I have had the final song in Rocky I in my head all day so here it is, "Going the Distance":

2:20 -2:40 mark is pure AWESOME!

Loyal reader Gawains wanted some Black Sabbath, and you know that's just fine with me. Take a listen to "Wicked World":

Nice pick!

I have seen many 'Walk like an Egyptian" videos today! Why that one (Egypt obviously) when you can run "Hazy Shade of Winter" by The Bangles instead?:

ROCK ON ladies, especially Susanna!

Two left, I gotta run.

With all the problems Charlie Sheen is having, it put me in mind of the film Cadence, which I love. Great film and great singing. Check out this clip of a Church song:

Wow on the last 30 seconds.

Last call!

Closing with Dragonforce for all you Guitar Hero fans! "Through the Fire and the Flames" should get you all riled up:


Have a good night.

Market Currents

Another 10 inches of snow here. This is getting ridiculous. The snowbanks on the sides of the roads are about 6 feet tall. Massachusetts right now is 3 times over the usual snowfall for the period of December-end of January!

Forgot to add, get some requests in for Friday night!

Protect Yourself With Silver
Long time readers know I am a fan of the metals gold and especially silver. I wanted to take a minute and talk to you about a way to protect yourself day in and day out with the silver that you can carry with you without worry of theft. Are you ready for this? Ok, here it is:
Degree Silver Ion Deodorant
YES!!!!!!

Protect yourself with the unique antibacterial effects of free silver ions in this new stick just made for bullion buyers. I bought the arctic edge scent myself (far right of ad above), and it rocks! Not only do you feel you are protected from all things financial catastrophe, but your armpits actually feel like they have some real worth! Instant self confidence booster! With this I wake up in the morning and piss excellence! This stuff sells itself, but I would gladly endorse this product for Degree for a small fee. If I were Degree I would get this stuff on Kitco and Zero Hedge ads pronto!
Disclosure: No position in Degree, physical position in silver.

Difference of Opinion
I have to say up front I may be a 34 year old guy going on 65 when I am inundated with all the "this will change the world" type talk about various things. I just don't get it, or maybe I just don't use the stuff so it makes little impression on me. Herding behavior for the "next hot thing" is tangible it seems so there is always that. Take Facebook, a site where you can post pictures and talk to people in real time. Wow, blows me away. Nothing like it ever, just amazing. Think of the possibilities of such an application. Mindblowing indeud.

Another is the Groupon lovefest. Group buying coupons to generate sales. Ok, makes some sense. Network, get a deal, all are happy.

Leigh Drogen, one of the sharpest and dialed in to new trends guys I read, is a strong supporter of this business model (not just Groupon in particular) and he opines:

They’re all coming out of the woodwork now. From Priceline, to Travelzoo, OpenTable, and now even Facebook, the group buying revolution is on like donkeykong. Everyone wants a piece, and they will all get one. The list of Groupon clones is long and distinguished, there is even an aggregator of all these daily e-mails, Yipit.

Some of you luddites may confuse this for a fad.

This is a revolution in the way local businesses advertise and people consume. The buzz phrase is collaborative consumption, get used to hearing it. This is the underlying reason that this business model works. Sure, it’s nice to get served a discount to a nice restaurant, but this is so much more. I forward these things to my friends during the work day, we have an e-mail chain, and then we pick one and eat dinner together. It’s about social, it’s about doing things together, it’s about connecting people.

The valuations for these companies are sky high, as they should be. This is a new industry, one where many of these companies are cash flow positive from an extremely early age, have little overhead, and a huge chance to grow. No one has any clue in the world how big this industry is going to be, you can’t model it, impossible. What does all this add up to? High valuation multiples and huge price momentum.

Sounds good!
I thought Facebook connected us, but whatever. This does too, and with sales! In the comments I offered:

I will be up front, I do not get this kind of stuff but that does not mean it will not be huge. Thanks for the big picture look.
On a macro level, aren't these sites very deflationary? How does this impact bottom lines going forward? While Groupon may go sky high, by definition of the service they offer sellers will be pressed on pricing, no?

What makes a good blogger in my mind is interaction, connectedness with the readers and Mr. Drogen responded very quickly which I appreciate:

No, not deflationary. Think of the discount in terms of the cost of
customer acquisition. The businesses that should be using Groupon and the
like are the ones that want to acquire loyal customers for repeat business.
This is a way to get them in the door and hooked on your product or
service. It's all a customer acquisition play for the small business owner.

Fair enough.
Not wanting to take up anymore time over there I thought about this tonight for a post here.

I still do not get it. As a customer grabbing idea it makes sense, but then what? If your business has a clone (and almost all do), they will offer coupon buys too. On any given day someone will be, what happens to you?

Add to this the nature of such a thing. Once you get something 20, 30, or 40% off you are not going to pay full price unless they drag you kicking and screaming. Best Buy did this a long while ago and buried the competition on price. Now they cannot raise prices! I think this is long term deflationary, but not in anything useful as usual. As always it is important to keep in mind one's own bias; I don't use this stuff at all and fail to see the utility. Others use this type of stuff and think everyone in the world will too by next week. If I had to bet, I am probably wrong!
Added:
My friend Mark from the now often stolen phrase of "Illusion of Prosperity" offered this anecdote when I asked his take:

I am 100% entirely in your camp! Of course it is deflationary.
I can even off you some proof if you wish to share it.
My girlfriend signed me up for LivingSocial. Ack. I gave her a really hard time about it. She even used my personal email address! Now I get spammed with daily offers.
However, they recently offered me a $20 Amazon.com gift card for just $10. No joke!
How much more deflationary can it get? Spend $10 to get $20? And what exactly is in it for Amazon.com? Do they need to get the word out? Has nobody heard of Amazon.com yet? Good grief!

Thanks Mark!

Market Currents
A market going up forgives all ills and this one has for some time. Over the past couple of weeks there have been some misses on earnings and Amazon (AMZN) missed by a bit tonight. It was the snow that hurt the biggest ONLINE store, but whatever. We will leave all that aside for now and we should.

Tim Knight had a video recap up tonight and the intro really jumped out at me. He said (paraphrasing!) that IF the markets went down 10% there would howls and cries for the government to do something about it. I have to agree 100% with Tim. This is where we are now. The recovery is real remember.

How pervasive has this perpetual motion move up been? Amazing really. I am hoping very much for tomorrow to be flat to slightly down and more of that on Monday. Why? Because that would mean the market is oversold by the new normal standards. What good would that be? BTFD! Check this out.

Using the screen I set up looking for oversold (loose term) stocks that have some other parameters I look for, here are the returns over the past month IF I had bought when I screened them and held them to today. There were more that I screened out on other factors:
Screen on 1/7/11 and hold until 1/27/11
NFLX +18%
EW +8%
Screen on 1/24/11 and hold until 1/27/11
FICO +10%
TRCR +2%
ABCO +4%
AFSI +4%
PBTH +2%
Scary, yes? I am not cherry picking. These names I had in my trading notebook (yes, I write stuff down!) I posted most of them the 24th. The few losers were selected against by other criteria, namely sometimes a stock is oversold because it is going to zero (FLML).

So if we are flat or ever so slightly down for a couple days I am running this screen and doing some buying!

Going Long Rock Salt
First is was the GDP of the UK going negative. Then it was weak Amazon numbers, an online retailer. Then it was Monster.com, an online job search tool. The culprit in all cases? Snow! Bad weather is the murderer of growth dreams and the grim reaper of bottom line growth. Who knew?

Thanks to a poster over at the 12631 (gappingandyapping), we can all go long rock salt (via CMP):

You can use this as a hedge should online streaming media firms report misses due to snow slowing down the Internets. Wow, nice breakout.

Have a good night.