Friday, November 28, 2008

Some High Expectations for Obama: The Media Love Affair Edition

I did know that the media was in the tank for Obama in the runup to the election but they seem to be getting out of hand now with the Obama-mania.

Whew! Are journalists fostering the notion that Obama is invincible, the leader of what the New York Times dubbed "Generation O"?

Each writer, each publication, seems to reach for more eye-popping superlatives. "OBAMAISM -- It's a Kind of Religion," says New York magazine. "Those of us too young to have known JFK's Camelot are going to have our own giddy Camelot II to enrapture and entertain us," Kurt Andersen writes.
The New York Post has already christened it "BAM-A-LOT."

I guess I kind of like how Obama has cured the Bush-derangement disorder and the anti-American bias that goes along with it. The problem is that I'm afraid the media might be setting the bar so high that if he doesn't clear it it might be disastrous. I mean the hopes and dreams of so many people are tied up in a guy who is described as Lincoln, FDR, JFK and Ronald Reagan all at once.

So if he falters, is shown to be a crass politician, or badly bungles something like all Presidents eventually do (Lincoln got rid of Habeas Corpus, FDR tried to pack the Supreme Court, JFK had the Bay of Pigs, and Reagan had Iran/Contra) then the jaded backlash might damage his Presidency. Sometimes the worst enemies are the true-believers that think he has "sold-out" or somehow "betrayed them."

This is where I hope that the media stays in his corner for the duration just like they did for FDR. I mean the media pretty much hid the fact that FDR was in poor health at the end and could not walk-unaided because they knew that that information would hurt America. So maybe the media will gloss over any deficiencies Obama has and cut him some slack if he screws up. Maybe we will have less stories that damage America because they will damage the Obama Administration. Positive public perception is one of the key ingredients in a recovery.

Who Are the Mumbai Terrorists?

This is a great article on who could be behind the recent terror in Mumbai. It seems to be about 4 different Islamist groups that are loosely behind the troubles in Kashmir. This part is especially harrowing though:

None of the India-based operatives would most likely know one another, nor for the most part would even meet. Contact with the handler woould always be through a public call center to make it difficult to trace calls. If an operative were picked up by police, there would be no way for him to identify fellow plotters. "It assures total anonymity," Sahni told TIME last year. "The handler is in Bangladesh or Pakistan, and the people here don't know each other. It's the most significant tactical shift in the near past and is a model for international terrorism in the future."

These groups working as a team all from command and control facilities that are fairly anonymous could make ferreting out these terrorist cells pretty difficult. I think this Sahni guy needs to mention that these groups are probably using some anonymous Internet communication as well. That means they might be able to have up to the moment communication that is very hard to track.

The Obama Administration better use some of that technocat power that won them the election to keep tabs on these guys. I think this Indian model could work very well with any US based terrorist groups.

Wal-Mart Worker Dies for Savings

This is a pretty sad statement when it comes to consumers in the US.

Dozens of store employees trying to fight their way out to help the man were also getting trampled by the crowd, Fleming said. Witnesses said that even as the worker lay on the ground, shoppers streamed into the store, stepping over him.

Kimberly Cribbs, who witnessed the stampede, said shoppers were acting like "savages."

"When they were saying they had to leave, that an employee got killed, people were yelling 'I've been on line since yesterday morning,'" she said. "They kept shopping."

Yes, these scum actually stepped over a dying man and were angry they had to leave the store due to this mans death. So basically this employee died so people can get cheap flat screen TVs and DVD players. I hope they study the security camera footage and charge everyone that knocked the guy down and stomped on him with capital murder.

Wednesday, November 26, 2008

Obama's White House Changes: To be the "Green" House and Homework in the Lincoln Bedroom

Hmm, it seems this may be a Presidency for "Change" at least when it comes to the White House itself. The first daughters will not be waited on hand and foot and will have chores in the White House. I guess that means no maids to pick up their toys and put away their books. Also one of the girls will be doing her homework at Lincoln's Emancipation Proclamation desk.

Obama, who is known to be an avid reader of Lincoln history, said his daughter told him "I'm going to sit at that desk, because I'm thinking that will inspire big thoughts."

Maybe the Ghost of Lincoln will help her with her civics homework. This part will be an interesting change I think.

Obama will be sworn in on Jan. 20, and he said he wants to work quickly to make the White House "green."

The president-elect said he plans to sit down with the chief usher for the presidential mansion and do an evaluation of its energy efficiency.

I think he should put a big Solar Panel on the roof of the White House to show more adoption of the technology. Even if they use it to heat water I still think it would be a nice gesture to show Americans how easy it would be to adopt that technology. He can even spend the tax rebate check on something nice for the family.

I think getting rid of the t-ball field that Bush put in and putting in a nice vegetable and fruit garden would be an interesting touch as well. It would be a nod to sustainable living and organically grown produce. It would be cool for the President to say "I grew these squash myself" when a foreign dignitary or a Congressman visits.

Memristors May be a Boon for HP Stock in the Next few years

It seems that HP (HPQ) is working on a new type of transistor that can remember what resistance it was in even if the juice is turned off.

After rediscovering Chua's work, researchers at HP Labs built the first working memristor in May of this year. And last week, at the first ever Memristor and Memristor Systems Symposium, in Berkeley, CA, the same team showed how memristors can be integrated into functioning circuits. Their circuits require fewer transistors, allowing more components (and more computing power) to be packed into the same physical space while also using less power to function.

The idea is that if they can get these things to increase the computing power of HP chips as well as reducing the amount of electricity that they use it could be great for their bottom line. Also these memristor/transistor chips may be used in future HP computers. This should lead to costs savings since HPs supply chain will be vertically integrated.

HP might even become a big player in the semiconductor market even if they don't build the chips themselves (I'm not sure they would want to get into the serious manufacturing side of the business.) They might just farm out the manufacture of the chips to Taiwan Semi or someone like that on the Fab side.

This also provides some real high margin business on the licencing side of things. I can see Intel using some of these things in future netbook CPUs since they seem to seriously sip power and may lead to an instantly bootable machine. HP can also licence this technology to Flash memory makers who can use it to reduce their costs as well. I think this memristor breakthrough might provide a lucrative revenue stream for HP in the years ahead.

Obama Third Press Conference in as Many Days: Strikes an FDR tone

Well I guess him showing up with the "Office of the President-Elect" seal day after day is reassuring someone since the market is rallying quite nicely.

"Help is on the way," he proclaimed at his third news briefing on the economy this week. Fifty-five days away from taking office, he declared he would have an economic plan ready for action "starting day one."

Investors' improved spirits kept pace. The Dow Jones industrials were up about 200 points near the end of the trading day.

I guess that is the Obama jawbone effect. I do like his talk on the stimulus package since it is helping the stock of construction companies like Fluor (FLR) and Jacobs Engineering (JEC.) Also it would help Caterpillar (CAT) at a time when Chinese equipment spending seems to be slowing. I think these companies are cheap but will reap the lions share of the billions in government cashola to fix broken streets and upgrade our energy infrastructure.

Tuesday, November 25, 2008

The FED Starting to Nationalize Some Mortgages

I think some rappers need to take a page out of the FEDs book. They are just throwing massive piles of money around and seeing what happens.

Rolling out powerful new weapons against the financial meltdown, the Bush administration and the Federal Reserve pledged $800 billion Tuesday to blast through blockades on credit cards, auto loans, mortgages and other borrowing. Total bailout commitments, loans and pledges of backing neared a staggering $7 trillion.

Yeah that is trillion with a T. They also seem to be diamonds out of the trash when it comes to loans they are plucking from the corpse of Fannie and Freddie.

As for Tuesday's actions, the mortgage-backed securities the Fed will buy will be investment-grade assets — not the toxic mortgage-related assets that the administration initially had said the $700 billion financial rescue program would buy.

By focusing on investment-grade securities, the Fed will be able to help provide a functioning secondary market. It will pay the prices for these securities that are being set by the market. Had the Fed needed to buy bad assets, it would have had to develop a mechanism to properly price assets that weren't being traded.

So they are able to nationalize the good loans and leave the bad stuff on the books of the GSEs. They are also making a market in these securities and setting the price as well. I guess the "Lender of Last Resort" has just become the "Mortgage Bank of Last Resort." Now they can slowly destroy the bad debt at the GSEs and take over these foreclosed homes if they want. Perhaps they can then sell the houses or use them to house low income families or something.

Obama Keeps Gates at Defence

It seems that Obama is really trying to fashion a Lincoln-like government by keeping Gates on at Defence for at least a year or more.

Gates and retired Gen. James Jones would bring decades of experience to the administration of a 47-year-old commander in chief who campaigned on a pledge to redeploy combat troops in Iraq within 16 months while simultaneously ramping up the U.S. military presence in Afghanistan.

Obama is picking the right man for the job over and over again in his Cabinet. Even Joe Lieberman agrees.

"Everything that President-elect Obama has done since election night has been just about perfect, both in terms of a tone and also in terms of the strength of the names that have either been announced or are being discussed to fill his administration," Lieberman said during a visit to Hartford.

A Solar Investors Primer from Forbes

It seems that the Solar Industry has some interesting trends starting to develop in it. I'm convinced that solar will be the best growth industry going forward once things shake out a bit. Here are some key points from the article.

1.) Thin film versus crystalline silicon-based cells-based cells. Some companies are staking their money on one technology or the other. First Solar (FSLR) is the thin film leader while SunPower (SPWRA) leads in home and utility installation of crystalline silicon. Thin film takes up less materials to build and thus should be cheaper

2.) New solar technology called organic solar cells which are being developed by companies like Konarka. (which isn't publically traded)

These solar cells are made of carbon molecules that figure to be cheaper, more flexible, lighter and more customizable than silicon or thin-film. In some cases they might even be disposable.

They could be the game changing technology that could conceivably get the cost closer to parity with other forms of energy. If we have an office building made with windows that double as solar cells then this organic solar cell technology will be what they use. There might be a time when every window in your house will double as sun harvesting device.

3.) A new business model is being developed to securitize the solar power system into a fixed income security. This defrays the high upfront costs and spreads the project risk to multiple investors. I think they do this through securitizing the solar incentive tax credit but the article doesn't say.

4.) Solar companies are starting to become vertically integrated. They are basically making the solar cells, designing the setup, and then building the solar plants using this securitization model mentioned in 3. This would be quite lucrative if they can sell their electricity at a cost basis that can compete dollar for dollar with a coal/oil power plant.

Here government intervention from Obama will really be a boon. If he put caps on carbon that raises the costs for oil/coal plants ,or provides incentives for utilities to use solar generated energy, then these vertically integrated solar companies will really take off. In the meantime they can control costs and receive a steady income from selling the electricity into the grid at market rates. This could be the so-called "Solar Utility" model going forward.

Cisco to Shut Down for 5 Days

It seems that companies are cutting back on tech buying this quarter and into next year.

"In particular, this will help lower payroll and facility expenses," wrote Nikos Theodosopoulos, analyst with UBS, in a research note Tuesday. "We believe it is prudent for Cisco's management team to plan for cushion in the event of weaker than expected revenues."

That seems like a pretty extreme measure in order to lower their expenses. I guess capital spending on networking equipment is being deferred to quarters where the buyer can afford it. I mean most companies can get by with their old equipment for a few years long before they need to upgrade anything.

FED Now Buying Bad Debt

The FED is still spending like a drunken sailor.

Under the new mortgage program, the Fed will buy up to $100 billion of debt issued by government-sponsored mortgage enterprises Fannie Mae, Freddie Mac and the Federal Home Loan Banks. It will also buy up to $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae.

I must be nice to just print more money when you have a need for it. I guess this is just more US debt that China gets to hold.

Monday, November 24, 2008

Public Utility Spending Should Carry Solar

I like how public utilities may be what carries solar companies like Sunpower through the next few quarters.

"In our view, SunPower's track record for successfully developing and executing some of the world's largest photovoltaic projects gives it a major edge when competing for utility contracts," he said, adding that he reaffirms SunPower's rating of "Strong Buy."

Now we need Obama to offer some higher tax incentives that get utilities to switch over from oil power plants to natural gas and solar. I am envisioning a time when the worlds deserts blossom with millions of solar panels that go right into the power grid. I mean the sun is simply baking the sand there now and should be harnessed to power our electric cars.

Obama and Bush Work Together in Transition

It seems that Bush and Obama are really working together quite well now that the hand-over of power is assured. It seems that Bush made a decision on the Citigroup bailout Obama was informed soon afterward.

His statement took only two minutes, but it included this paean to his successor: "I talked to Obama about the decision we made. I told the American people, and I told the president-elect when I first met him, that anytime we were to make a big decision during this transition, he will be informed, as will his team."

About an hour and a half later, Obama unveiled his economic team at a Chicago news conference and mentioned that he'd spoken to Bush and Federal Reserve Chairman Ben Bernanke earlier Monday.

I really like the dignified hand-over of power from Bush to Obama. I'm pretty sure all of the keyboard keys will stay on the keyboards (not like the vandalism that occurred when Clinton handed over power to Bush) once Obama takes control in January. I like this new dignified, principled politics instead of the "Pit-Viper, kill-or-be-killed" Bush/Clinton derangement disorder politics of the last 16 years.

The USA is Now Long CitiGroup?

I guess it is one bad stock after another that the US government keeps buying in order to keep these sad companies afloat. They better break up Citi and unlock some of the value in that company.

ClusterStock's John Carney lays out terms of the $306 billion in loans:

  • The first $29 billion of losses from the portfolio will be absorbed by Citi entirely.
  • The Treasury Department will take 90% of the next $5 billion of losses, with Citi taking the rest.
  • The FDIC will step in and take 90% of the next $10 billion of losses while Citi absorbs the balance.
  • Losses beyond that will be taken by the Federal Reserve in the 90% government role. "Note that Citi is still supposed to take the remaining 10% at this stage but it's hard to believe that anyone really thinks Citi would be able to take any more losses once it had written down $40 billion more in this portfolio," Carney writes.

Automakers Plan Stunt at their next begging Session

I guess cheap theatrics will be replacing sound business plans when the Automakers shake their tin cups next month. I guess you can call it the "Million Poorly Made Car" March:

The Detroit area's auto industry, whose livelihood depends on the health of Chrysler LLC, Ford Motor Co. and General Motors Corp. spent the weekend e-mailing and discussing how to set up a giant car caravan to seek help from Congress.

I think the idea of them flying to the begging session in separate corporate jets shows how messed up these guys were. It made the car makers look like they are going to panhandle in a Rolls Royce. If even one of them showed up in a car made by their company then they would have looked a lot better then they had. Like if the GM CEO drove a Chevy Volt there then it would have looked like they were serious about electric cars. Instead they looked like clueless plutocrats.

Carbon Dioxide Found on Planet 65 Light Years Away

Great, now we have the gas that causes global warming on HD 189733b just like we have on earth. It is cool to find out all sorts of new things about these planets though.

"This is the first detection of carbon dioxide in the atmosphere of an extrasolar planet, which means that three of the Big Four biomarkers for habitable/inhabited worlds have now been seen: water, methane, and now carbon dioxide," explained Alan Boss, a planet-formation theorist at the Carnegie Institution of Washington who was not involved in the finding. "The only one that has not yet been detected is oxygen/ozone."

Friday, November 21, 2008

What GM needs to Do to Survive

This is a great rundown on what GM and Chrysler needs to do in order to save their miserable hides since Congress is not going to help them.

Lawmakers also rapped the automakers' high labor costs and particularly the jobs bank, in which laid-off workers get 95 percent of their pay plus benefits even though they aren't working.

The United Auto Workers said it has cut the jobs bank and placed time limits on it in new contracts signed with the companies last year. Still, more than 3,500 workers are getting paid for not working, and that number is sure to rise as the companies continue to cut jobs.

Yes only in the auto industry do you get paid to not work. Plus the number of these unpaid, unproductive workers will suddenly grow as they start to close plants to save money. Talk about a case-in-point on the power of unions in American industry. Plus I found this just mind boggling:

Initially the UAW said it already gave up a lot in the new contracts, agreeing to lower wages for new hires and to shift the companies' huge retiree health care costs to a union-administered trust.

That means GM is currently paying into a trust that their own Union runs? So they have no control over their own health care payouts? So in other words they need Union permission to cut the contributions into the trust, try to shrink its size, or even collect fees from running the thing.

I figured that they cut contributions into this trust as soon as they started to take those multi-billion dollar losses earlier in the year. I think GM needs to go into Chapter 11 simply to rewrite these contracts in order for them to compete with the Japanese. I'm pretty sure Toyota dosen't have the UAW running any part of their business.

Geithner for Treasury: Thank you Obama!

It seems that Obama is picking a real titan of global finance for Treasury.

President-elect Barack Obama intends to name Timothy Geithner, president of the New York Federal Reserve, as his treasury secretary to confront the nation's intense economic turmoil, senior Democratic officials said Friday. The stock market soared on the news.

The market cheered its encouragement to the tune of 494 points on the Dow. I think this might be one of Obama's best picks for any cabinet post. It is the most important one as well with the problems we are facing now. I think this guy could be one of the best guys at the helm of the bailout money and our economy going forward. He is a tried-and-true "world crisis warrior" as well helping in the South Korea and Brazil debt crisis's before he helped out with our crisis.

Also I am getting pretty tired of the long, slow dance that Hillary is doing to get the State job. Just announce the damn thing and get it over with. Either that or give the job to someone else. He can't mess around getting his team into place. He needs to hit the ground running as fast as possible.

Unlike Geithner's reported selection, the Clinton saga was proving to be one of the longest-running and more public of the secrecy-shrouded search for an Obama Cabinet.

A week ago, the New York senator flew unannounced to Chicago to meet with the president-elect. That gave way to days of negotiations in which her husband, former President Bill Clinton, agreed to disclose the names of donors to his library and charitable foundation in anticipation of the close scrutiny her nomination would be sure to face.

Thursday, November 20, 2008

GE Facing some Hard Times

I was wondering if GE at $12.84 was a good buy and I came across this article and took some pause. It seems that their GE Capital arm might pull the rest of their fairly profitable businesses underwater.

GE is a bank disguised as an industrial conglomerate. GE Capital is a division of GE, which truly dominates the results of this company. GE Capital has three subdivisions (GE Commercial Finance, GE Money, and GE Consumer Finance). In 2003, GE Capital generated $5.9 billion of GE’s $17 billion of profits, or 35%. By 2007, GE Capital was generating $12.2 billion of their $29 billion of profits, or 42%. Being a bank during the boom years of 2004 to 2007 did wonders for GE’s bottom line. Being a bank now is a rocky path to destruction.

This part seems pretty scary too judging from the amount of insane debt that they have on their books.

GE has $43 billion of long-term debt maturing by June 30, 2009, with another $38 billion due by December 31, 2009. The terms for refinancing this debt will be much worse than the previous terms.

Will they be able to pay the new interest expenses on this debt? Also what happens if they get put on the Credit Watch list by Moody's or one of those other ratings agencies? If GE should lose their AAA credit rating then they are a dead duck. I wonder what the debt covenants and capital requirements due to a ratings cut is on that debt?

Wednesday, November 19, 2008

Japanese Schoolgirl Signed to Major League Contract

Women are breaking the glass ceiling everywhere. First Sarah Palin now Eri Yoshida was signed by the Kobe 9 Cruise of an independent Japanese baseball league.

Yoshida, a right-hander who is 5 feet and 114 pounds, throws a sidearm knuckleball and wants to emulate Boston Red Sox knuckleballer Tim Wakefield.

Yoshida threw a hitless inning against male batters during a tryout this month and was among 33 players picked in the draft.

A sidearm knuckleball sounds like a pretty scary pitch to hit as well. This is a perfect pitch for a 5 foot tall, 16 year girl because you don't need to overpower anyone with a knuckler. She can throw it at like 40 miles per hour and guys will fall out of their shoes swinging at it. If she can pick up a slider or a fastball (or any kind of consistent change of pace pitch) then she would be a scary reliever. She's cute as a bugs ear too.

These Automakers have some Stones!

You have to hand it to these automakers when they are begging for money.

In sometimes contentious testimony, Wagoner was pressed on when GM would run out of money if the loans weren't extended.

He said he couldn't say precisely, but that the company now was burning through "$5 billion each month."

Still, with the $25 billion emergency package, "We think we have a good shot to make it through this," Wagoner said. He said he anticipated that, if the package is approved, GM would qualify for about $10 billion to $12 billion of the money.

They are burning through $5 billion per month? Then that means this bailout will only keep them afloat until May of next year. So they have about a quarter and a half to turn things around or they will be back in Congress with their begging bowl out by Memorial Day. I think GM needs to go into Chapter 11 and hopefully emerge stronger and more able to compete like UAL did. Union concessions is the only thing that will save them now but no one seems to be talking about that.

Tuesday, November 18, 2008

The Author of Liars Poker On the Economic Crisis

Now this is some very good journalism on how this economic mess started and some of the people that were involved and actually made money from it. I hope this Michael Lewis guy writes more books because this was an outstanding article. This part is especially prescient:

No investment bank owned by its employees would have levered itself 35 to 1 or bought and held $50 billion in mezzanine C.D.O.’s. I doubt any partnership would have sought to game the rating agencies or leap into bed with loan sharks or even allow mezzanine C.D.O.’s to be sold to its customers. The hoped-for short-term gain would not have justified the long-term hit.

Any business owner that leveraged his company 35 to 1 would be seen as a lunatic and would have his credit lines pulled. These investment banks did this as a way to inflate their massive bonus structures. Too bad they did it with other people's money.

Monday, November 17, 2008

The Youth Vote Won it for Obama

I have damned the youth vote for years. But I finally got a chance to look at the election numbers and how things were broken down and I think the youth may have strait up won the election for Obama.

Between 22 and 24 million young Americans ages 18–29 voted, resulting in an estimated youth voter turnout (the percentage of eligible voters who actually cast a vote) of between 49.3 and 54.5 percent, according to an exit poll analysis released Nov. 4 by CIRCLE, a nonpartisan research center at Tufts University. This is an increase of 1 to 6 percentage points over the estimated youth turnout in 2004, and an increase of between 8 and 13 percentage points over the turnout in the 2000 election. The all-time highest youth turnout was 55.4 percent in 1972, the first year that 18-year-olds could vote in a presidential election.

And 66% of that turnout was for Obama. That means that 14.52 million young voters picked Obama over McCain. Obama won the popular vote by 7.2 million. So you can say that all the Text messaging the VP candidate, the YouTube debates, and college outreach by the Obama campaign swayed this fickle of all voters his way.

It will be very interesting to see what this "what have you done for me lately" generation does when Obama fails to deliver his change message due to the bad economy. Hopefully they can stay with him through this difficult period because this generation has just elected their first President.

Yang is Out at Yahoo

At last it might even be safe to own the stock again.

Yahoo Inc. co-founder Jerry Yang is stepping down as chief executive, ending a rocky reign marked by his refusal to sell the Internet company to Microsoft Corp. for $47.5 billion -- more than triple Yahoo's current market value.

Too bad there is currently a slowdown in online advertising spending but I think MSFT may come sniffing around the carcass now that they have an "Under New Management" sign up. Too bad they will probably get quite a discount on their new offer. You can forget $31 a share but maybe they could get $15-20 a share.

Car Company Bailout May Not be a Sure Thing

It seems that the government might not be so quick to bailout these poorly run businesses after all.

Behind the logjam is a troubling reality for the car companies: Bailout fatigue has set in at the White House and on Capitol Hill, where many in both parties have spent the past few weeks being berated by constituents for agreeing to the $700 billion Wall Street rescue.

I still think any bailout needs to come with an automatic renegotiation of UAW contracts so salaries can be set at competitive rates with Japanese automakers. Anything else will just result in another bailout when the automakers blow this $25 billion in a couple of quarters.

Gadget Users Hardly Use Tech Support

I was kind of surprised by the numbers from this recent survey.

However, for all the talk about online communities, the Pew survey showed only about 2 percent of people solved their technology problem online.

About 38 percent of respondents called customer service, 28 percent fixed the problem themselves and 15 percent got help from friends or relatives.

The rest — about 15 percent — gave up.

15% is a pretty high percentage that just threw the thing in a box and forgot about the problem. I would be willing to bet you that those people might never use a product from a company that they gave up on again.

I can also tell you that the 38% that called customer service probably dreaded the experience. I think the outsourcing of tech help has gone a long way toward making these numbers so low. Most gadget owners figure that they could fix the problem themselves or get a tech savvy person to do it rather then talk to some guy named "James" from Mumbai.

Friday, November 14, 2008

GMs Collapse May Cost $200 Billion?

Great, now we have systemic risk from a company that has nothing to due with the credit crisis and everything to do with being poorly run. Their income statement is an absolute joke. What kind of company has a Cost of Revenue that is $5 billion higher then the actual Revenue? That means it costs more to build the cars and trucks then they get from selling them. It is like paying $2.22 to make a lemonade and getting $2.00 for each cup. However the devastation that GMs bankruptcy would cause is scary as well.

The projected expense of $100 billion to $200 billion covers funds for existing programs, such as unemployment insurance, and new measures that would be needed to revive economic growth after millions of auto-related job losses.

Such a sum would be an eightfold increase over the $25 billion bailout package that will be debated in Congress next week to help prop up Detroit-based GM, Ford Motor Co. and Chrysler LLC amid the industry's worst sales year since 1991.

Plus the US Government would be on the hook for GMs outrageous pension plan. The government would suddenly be forced to pay for an extra $11 billion dollars so that retired UAW members can get a pension.

One of the biggest fears in Washington is how a bankruptcy filing by one or all of the auto makers would affect the federal agency that insures the retirement savings of almost 44 million Americans. The Pension Benefit Guaranty Corp. ended 2007 with a $14 billion deficit, though that shortfall was expected to shrink to about $11 billion. Were GM to place its pension burden on PBGC, it would more than double the agency's current shortfall.

I think any GM bailout needs to come with strings attached like the removal of the CEO and upper management. The bailout must also force GM to renegotiate their labor contracts so that they can get that Cost of Revenue number down to something manageable.

Anything else would just keep the company going for another 3 quarters or so and if Revenue doesn't improve in that time (it might not due to a multi-quarter recession) they will simply ask for another $25 billion next year or they will go bankrupt then instead.

Consumer Spending Way Down

It seems that Americans just aren't buying things as fast as they used to. Hopefully they are saving that money that will not go to buying a new car or some crappy thing or another. The raw numbers look pretty dreary if you are selling autos (-9.3%,) auto parts (-7.5%,) gasoline (-10.2%,) or sporting goods, hobby, books & music (-6.8%.)

About the only thing looking good are nonstore retailers which is +3.4% from August. You can chalk this up to consumers buying stuff with free shipping and a 30% discount from places Amazon. I think they may be the only non-discount retailer that will be doing okay this Christmas. I mean people will still buy gifts but it will be a DVD from Amazon with a 30% discount instead of a big screen TV from Best Buy.

Obama Brings White House into the Internet Age

No matter what your opinion on Obama you have to agree that he might have the most wired Presidency of all time.

In addition to regularly videotaping the radio address, officials at the transition office say the Obama White House will also conduct online Q&As and video interviews. The goal, officials say, is to put a face on government. In the following weeks, for example, senior members of the transition team, various policy experts and choices for the Cabinet, among others, will record videos for

Thursday, November 13, 2008

Hillary to Head State Department?

It seems that this is her reward for not standing in the way of an Obama Presidency.

Sen. Hillary Clinton emerged on Thursday as a candidate to be U.S. secretary of state for Barack Obama, months after he defeated her in an intense contest for the Democratic presidential nomination.

I have to say that she has the foreign policy bonifides and I can see her staring down the table at Russian Foreign Minister Lavrov or Iranian Foreign Minister Mottaki and giving them all they can get. She will also be up at 3 AM wondering where Bill is so she can answer that crisis call.

Video Games Still Recession Proof

It seems that the wider economy still hasn't dented the market for video games according to October sales. It goes to show you that gamers know that paying $60 for hours and hours of entertainment is good value in a down economy.

According to data from the NPD Group late Thursday, U.S. sales of video game software totaled just under $700 million for the month - up 35% from the same period last year.

Analysts were expecting sales growth between 20%-25% for the month. The numbers were a pleasant surprise after a disappointing month in September, which suffered in part from tough comparisons to the previous year's release of the mega-blockbuster "Halo 3." Analysts were also worried that a dramatic slowdown in the national economy would finally begin to be felt in the sector, which had been on track to set a new record for the year.

Wednesday, November 12, 2008

Yahoo at $10: Time for CEO Yang to Leave

Well it looks like instead of getting $31 a share from MSFT Jerry Yang decided to hold out for $10.34 per share instead.

If Yahoo shares drop below $10 a share (remember the halcyon days only a few months ago, when the $20-a-share Rubicon was scary?), it creates a very ironic situation.

That being that the company is a true bargain for a buyer interested in scooping up one of the Internet’s still most-trafficked properties, except that not many have the wherewithal in this financial meltdown to pay up.

The problem is that Microsoft will *never* come back to the table with Yang as CEO. MSFT looked like fools having to wine and dine the company and even raised their offer and then Yahoo still rebuffed them. MSFT seemed embarrassed by the whole ordeal and might rather see Yahoo go belly up instead of buying them out.

The thing is, Yang could have sold for 3x what the stock is currently worth and would have actually done right by shareholders. Instead due to his deep, irrational hatred of MSFT he cost his shareholders and employees billions of dollars and -$21 a share loss. I think the Board needs to remove him and get a real turn around expert to either shop them around again, sell off search, or reposition the company for growth. If not we might see things get even worse for Yahoo as ad spending starts to sour in 2009.

Oil Prices at 21 month low at $56.16

As I suspected all that talk of an "oil superboom" or whatever Morgan Stanley predicted back in June has just been thrown right out the window.

"The extent of the retreat in demand has caught many people by surprise," said John Kingston, director of oil at Platts, the energy information arm of McGraw-Hill Cos. "Demand destruction is due to higher [gas] prices, which have caused U.S. drivers to change habits."

I think the slowing world economy and the Chinese going back to normal consumption after the Olympics has put supply and demand back into equilibrium again. Also the stronger dollar and hedge fund selling were all part of this drop as well. It is interesting to note if we will see big trucks and SUV sales start to creep up now that gas is affordable again?

Hedge Funds Lose $100 billion in October

I wonder if some of these investors that paid some of these guys 2% management fee and 20% performance fees are regretting their decisions? I mean $100 billion loss in one month sounds pretty bad for money that is supposedly "hedged." Also this deleveraging and redemption from Hedge funds tanked the overall market in October.

Hedge fund selling has been widely cited as one of the reasons for the increase in volatility in equity and bond markets during October. The Dow Jones industrial average fell 14% during the month, while the Standard & Poor's 500 index declined 17%.

It is also the reason that we will see everything knocked down right up until this Friday when quite a few funds have a deadline set for redemptions for the rest of the year. I have a feeling that there may be a slight Santa Claus rally as these funds purchase some of the winners back that they were forced to sell to satisfy redemptions. I mean there are some quality stocks out there that are selling for values at just a little higher then their cash hoards.

Iran Now Has Europe Under its Missile Cloud

I swear if Iran gets the bomb on Obama's watch his Presidency is going to be a miserable failure in terms of world security.

The Sajjil is a solid fuel high-speed missile with a range of about 1,200 miles, Defense Minister Mostafa Mohammed Najjar said on state television. At that range, it could easily strike Iran's arch-foe Israel and go as far as southeastern Europe.

Think of how scary this thing will be if it is tipped with a nuclear payload.

Now the Government Wants to Go Long the Auto Industry?

It seems that the Dems are cooking up a plan for the Federal Government to now own stock in the US auto industry.

Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.

At least the banks have okay balance sheets and have decent cashflows from fees and deposits. They can easily afford to pay the dividend on that premium stock that the government now owns. The US auto industry however is in simply in the crapper and are just looking for a place to die. You know they will be back at the federal loan window when this batch of money runs out. This industry is being smashed by Japanese competitors, have billions in debt on their books, and actually sell a product that no one currently wants.

This investment is the ultimate example of throwing good money after bad. The problem with the auto industry is that the UAW has guaranteed pensions and high wages for their members and it is killing these companies. It now costs billions of extra dollars just to build the exact same thing that a competitor does. I mean there really isn't much difference between a Chevy Cobalt and a Toyota Camry other than the price. So there there is no reason to buy a Cobalt in the first place if it costs a few thousand more.

What these companies may need to do is go bankrupt so that they can renegotiate these wage and pension plans and sell some of their US plants off to the Japanese. They should also reduce the ridiculous amounts of car models they currently make. GM has like 5 different Camry clones on their website and all of their cars look squat and boring other then the Cadillacs. A leaner and meaner GM and Ford coming out of bankruptcy would be much better prepared to take on the Japanese and compete on price and quality without having a wage and pension anchor tied around their neck.

Monday, November 10, 2008

Obama's White House Visit

I love this scene of peaceful handover of power. That is why no matter what a President does it will only take a few years and his time in the White House is over. There is no President for life like Putin or Castro. If you don't like the guy in this office then just wait a few years and you can vote him and his party out.

Starbucks Profit Slumps; Offers Decent Expectations

It seems that closing stores has hit Starbucks right in the bottom line to the tune of a 97% drop in profits since last year. However this data seems pretty positive though:

Revenue rose 3 percent to $2.52 billion from $2.44 billion. Same-store sales dropped 8 percent in the U.S.

Starbucks expects adjusted profit between 71 cents and 90 cents per share depending on sales. Analysts see 87 cents per share.

Circuit City Files for Bankruptcy

I guess they could not sell the company before they were forced to pull the plug.

The company said it decided to file for bankruptcy protection because it was facing pressure from vendors who threatened to withhold products during the holiday period. The company also said it cut 700 more jobs at its headquarters, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers.

They now have the chance to reorganize and perhaps come out of bankruptcy that much stronger. My money is more on Best Buy dominating the electronics sales industry.

Earring Found under Jerusalem Parking Lot

It must really be interesting to know that under every parking lot you could find a treasure like this. It would be cool to get some genetic information off of those pearls so we can tell what part of the world they came from. You would be able to trace ancient gem trade patterns that way.

Friday, November 07, 2008

Dan Inouye to Head Senate Appropriations Committee

It looks like Hawaii will get that slice of pork that normally flowed into Byrd's West Virginia.

Sen. Daniel Inouye (D-Hawaii), who is 84, will take over for Byrd on the powerful panel, which oversees hundreds of billions of dollars annually in federal spending. Byrd will officially hand off the gavel on Jan. 6, 2009.

With Dan on Appropriations and our billion dollar Rail system just passed the construction industry in Hawaii will be in tall cotton for years to come.

Gun Sales Boom With an Obama Win

It seems that quite a few people are thinking that Obama will start to ban guns now that he is the President-elect.

Franklin Gun Shop outside Nashville, Tenn., sold more than 70 guns on Tuesday, making it the biggest sales day since the shop opened eight years ago. Guns & Gear in Cheyenne, Wyo., also set a one-day sales record on Tuesday, only to break that mark on Wednesday.

I have to agree that if you wanted to get an assault weapon or even a semi-automatic rifle you might want to buy it sooner rather then later. They will almost certainly be banned when the economy starts to improve and Obama can move to other less pressing issues. It could be an interesting trend to watch in terms of stocks like Ruger and Smith and Wesson.

Red Chinese Hack White House Email

I think it is time to fire their cybersecurity guy because this is just unacceptable.

The Financial Times reports some people it describes as "US government cyber experts" suspect the raids were sponsored by the Chinese regime.

"We are getting very targeted Chinese attacks so it stretches credulity that these are not directed by government-related organisations," an unnamed source opined.

Each attack cracked the unclassified network's defences for a short time. The classified network remained secure, we're assured by the FT's whispers.

Foreign governments also hacked the McCain and Obama campaigns as well. I will be willing to bet even money that these hackers are actually our allies like Israel, Saudi Arabia, and Britain trying to game Obama before he takes office.

The FT's revelations came just days after Newsweek reported that both the Obama and McCain campaigns had been hacked from overseas, with large amounts of data downloaded, apparently in an attempt to track the candidates' evolving policy positions. This could of course potentially help the unnamed foreign entities in future negotiations.

Fat Americans Miss Giant SUVs and Trucks

It seems that one of the reasons why some Americans bought giant gas-guzzlers is so they can fit their massive bellies behind the steering wheel. They also needed to stow all of their worthless crap as well.

Perhaps the biggest draw for large vehicles: comfort. Having wide, soft seats to accommodate the ever-growing American physique and space to stash briefcases, totes and handbags has changed from a luxury feature to one drivers take for granted. And as people spend more time in their vehicles, they have come to crave the sense of safety, privacy and insulation that come with larger vehicles.

Thursday, November 06, 2008

More Obama Potential Appointees

It seems that he is trying to be a "post-partisan" candidate after all.

Names of people said to be under consideration by the transition team spread through the rumor mill. Some Democrats say retired Marine Gen. James Jones was being discussed as secretary of state. Also, former Secretary of State Colin Powell, a Republican who endorsed Obama, was said to be interested in becoming education secretary.

Obama has indicated he'd like a bipartisan Cabinet, and Republicans who are potential candidates include Nebraska Sen. Chuck Hagel and Indiana Sen. Richard Lugar.

If he keeps Gates as his Defence Secretary then he can brag that he has a bipartisan administration if he actually includes these guys as well. Gen. Jones also seems like a hard-charging Vietnam Vet. who won the Silver and Bronze Stars. He is just the kind of guy that could look Putin or Lavrov square in the eye and make them blink. If this stuff happens then I will believe the hype that Obama doesn't want Red States vs. Blue States but the United States.

The Lack of Small Town Voters is Part of What Sunk McCain

It seems that one of the mistakes that McCain made is to rely on small town voters while American demographics are skewing toward suburbs and exurbs.

Lang said Republicans relied on an outdated playbook that wasn't effective with growing groups of voters.

``Republicans picked a rural vice presidential candidate who talked about moose hunting. How many Americans go moose hunting?'' Lang asked. ``They won small towns, but the problem is not enough people live in small towns. America's new small towns are called suburbs.''

I think the Hoover Institute and other conservative think tanks need to take a good look at how America is changing to be less rural and more suburban in the next few years. Also minorities may soon become majorities in many parts of the US. They need to draw a brand new map of the US and see how people are living in time for 2012.

Yen Getting Stronger

It seems like it is about time to take a trip to the US if you were a Japanese citizen.

The currency's 14 percent gain against the dollar this year and 30 percent advance versus the euro prompted Japan's government to announce last month it may buy or sell currencies to influence exchange rates, as the world's second-largest economy stumbled. Gross domestic product shrank by an annualized 3 percent in the second quarter as exports dropped 2.5 percent, according to government data.

I think you might see quite a few Japanese in Europe if the yen carry trade start to unwind itself. Too bad Japanese exports and automakers are really going to feel some pain in the next few months. It could be about time to dust off the PowerShares DB US Dollar Index Bullish (UUP) as the dollar strengthens for a while.

Lieberman Should Join GOP

I think if the Dems punish him for supporting his friend then I think he should go ahead and become a moderate Republican already. He is still fairly popular in Connecticut.

Democratic leaders have a few options when it comes to dealing with Lieberman. Many party aides say that the most likely scenario would involve stripping Lieberman of his Homeland Security and Government Affairs gavel. He could keep seniority on his current committees and perhaps be given a subcommittee chairmanship.

Wednesday, November 05, 2008

What the Republicans Should Do Next

Even though there is some hope for Republicans going forward I think it is time for a little soul searching in the party. The Necon GOP needs to die and a new party needs to rise. Here is what they need to do:

1. Craft the party message into something other then a massive federal government and guns, gays, and God. I think it is time to bring back the idea that Republicans are the party of small government and fiscal responsibility. The legacies of the Bush Administration are huge federal bloat, tons of debt, wasteful spending, and the government in control of mortgages, banks, and insurance companies. The GOP needs to return to its roots as the party that you can trust to spend your tax dollars wisely while shying away from massive federal programs. The Reagan GOP needs to trump the Neocon GOP.

2. Make yourselves into reformers of corruption and waste. I think the idea that McCain would clean house in Washington resonated with many Americans. Too bad he had to clean up the mess that his party helped make. The GOP should purge every last bit of corruption from their party and work to not let it happen again. You need a spotless house in order to show the American people that you can be trusted to lead again.

3. Pick your fights wisely. Be as bipartisan and open to listening to anything that the Dems propose and save your powder for the big things. So do not fight something that many Americans believe in like raising the minimum wage, immigration reform, or closing Guantanamo Bay. Do not automatically assume that every Dem win is a GOP loss. Work together as much as possible to craft bipartisan legislation and be ready to fight like hell over big things like the Supreme Court Justices and Socialized Medicine.

4. Do not blame this loss on McCain being too old, the media being for Obama, ACORN, or some other scapegoat. Just know that the American people chose the other guy and then dust yourself off. Then have respect for the Dem ground-game, technological superiority, money advantage, and tight message control and use their ideas in 2010 and 2012 to win back the majority. Study every nuance of why the people chose Obama over McCain. Then put those think tanks to work dissecting how to correct every mistake that was made going forward.

5. Inject more minorities and women into your party. America is slowly becoming a multiracial and multicultural nation that doesn't take well to rich, white guys running things. Sign on for bipartisan immigration reform and start to funnel more conservative Latinos and blacks into positions of power in your party. Push people like Bobby Jindal, Sarah Palin, and Condi Rice into leadership roles. Maybe give the Log Cabin Republicans a stronger voice. Do not automatically cede minorities or these young first-time voters to the Dems. Make sure you earn their vote next time. The GOP can't rely on rural voters or the South to win any more elections for them. It is time to understand that America is changing and the GOP will be out of power a long, long time if they don't come to grips with that fact.

Classy Concession Speech by John McCain

This is a great American any way you slice it. It is time for him to take his place as an elder statesmen in the Senate. A sort of maverick Teddy Kennedy. The end was especially good:

Tonight -- tonight, more than any night, I hold in my heart nothing but love for this country and for all its citizens, whether they supported me or Senator Obama -- whether they supported me or Senator Obama.

I wish Godspeed to the man who was my former opponent and will be my president. And I call on all Americans, as I have often in this campaign, to not despair of our present difficulties, but to believe, always, in the promise and greatness of America, because nothing is inevitable here.

Americans never quit. We never surrender.


We never hide from history. We make history.

Thank you, and God bless you, and God bless America. Thank you all very much.

Obama's Potential Picks for Treasury: He Better Pick Geithner

I think this pick will be the most important of all of his advisers since the economy is the issue that will define his Presidency. A bad choice or a yes-man here will be direct path into the next Great Depression. However I am heartened by this article.

Timothy Geithner, president of New York's Federal Reserve Bank, and Larry Summers, the former treasury secretary in the Clinton administration, are believed to be the leading contenders.

I have read several articles on Geithner and I have come to the conclusion that he is one of the best qualified men in the country to lead us out of the recession and help us grow once we get there. Hopefully he can be a counterpoint to some of the insane deficit spending ideas that Obama has cooked up as well. He also has some powerful friends that he can turn to for any help he needs as well.

His informal group of advisers includes E. Gerald Corrigan, a managing director of Goldman Sachs and a former New York Fed president; Treasury Secretary Henry M. Paulson Jr.; John Thain, the CEO of Merrill Lynch; Paul A. Volcker, the former Fed chairman; and Peter G. Peterson, the former U.S. secretary of commerce.

Another Positive About Obama: He Wants a College Football Playoff

Lets hope he actually signs an executive order doing away with the BCS cashola monopoly bowl system that keeps freezing out good teams.

Asked what one thing he would change in sports, Obama said:

“I think it is about time that we had playoffs in college football. I’m fed up with these computer rankings and this and that and the other. Get eight teams — the top eight teams right at the end. You got a playoff. Decide on a national champion.”

A College Football December Madness endorsed by the President Elect of the US. Finally, change I can agree with.

The World is Happy About an Obama Win

Just as I suspected the world is applauding Obama and it is even changing their view about Americans.

People across Africa stayed up all night or woke before dawn to watch U.S. history being made, while the president of Kenya — where Obama's father was born — declared a public holiday.

This actually opens a very real opportunity for the US to start to take a stronger hand in the affairs of Africa. The Chinese have been slowing moving into Africa and there seems to be genocide going on every decade or so. With their love for Obama maybe the US will be able to help people in Darfur and maybe start to strengthen countries like Kenya. Africa could be the next Emerging Market in an Obama presidency.

Tuesday, November 04, 2008

Mark My Words Obama Will Win the Presidency: The Bright Side for America

I was thinking a few weeks ago that John McCain has no chance of winning with the economy in as bad a shape as it is in. The election suddenly felt the same as when H.W. Bush ran against Clinton. When people have their eyes on their pocketbooks and their 401Ks they will blame the guy in power and boot his party out. When McCain said "the economy is fundamentally strong" (which it actually is) and then we nationalized the biggest insurance company in the US, bought stock in the 8 largest banks, and then a quarter of peoples IRAs got wiped out I thought the election was over. Obama had it in the bag.

So I had to come to the realization that an Obama Presidency will be a given and started looking for some silver lining in the clouds of tax raising, income redistribution, and potential Marxist thinking that we will have to endure for the next four years. Here is what I came up with.

First President Obama supports Stem Cell research. This was one of the main things that I hated about Bush. I think Stem Cells are going to be the next vast uncharted sea of medical breakthroughs going forward. We might even get the cure for cancer from these things. However the Bushies irrational hatred for Stem Cells put a moratorium on all of this and may have pushed back medical technology for years. Obama will put Stem cell research right back into the country that has the best universities and researchers in the world.

I also think Obama's technocrat leanings may be a great boon for science in general in the coming years as well. He may actually get a Green Marshall Plan passed that should have happened years ago. Green Tech will be yet another thing that America has the potential to lead the world in. It will also make sure that America never has to use the main product of a country whose leaders hate us. I just hope that Obama's Energy Secretary will back a French and Japanese style nuclear program that reprocesses the spent fuel. Nuclear power is the great answer to the Global Warming question and France and Japan has known this since the 70s.

Obama may also be able to improve our standing in the world. His large crowds and rock star European Tour may be just what we need to repair our reputation. I think the world is weary of Bush and Obama actually offers a new direction that the rest of the world likes. Also Africa may finally get some much needed hands-on attention since Obama's relatives actually live there. I do know that no one in London or Paris will be burning Obama in effigy any time in his 4 years in office.

Another thing that will be nice to see of an Obama Presidency is that the main stream media will finally support the President for the first time in what seems like 50 years. I mean the media played the role of Kingmaker and even People magazine and Entertainment Tonight threw their lot in with Obama. They even threw Hillary under the bus in order to put Obama on top. I mean they created their Moses so they won't tear him down unless he betrays them. I think there may even be a return to the FDR or JFK Press Rooms that actually supported their President and his decisions.

Also you will see a more optimistic tone to just about everything going forward. You will see stories on how Americans are losing weight eating at soup kitchens. You will see NBC News saying "don't worry about your house price since you won't be moving for 10 years or so. That means you can get to know your neighbors and love your neighborhood!" You know that bad news about the economy will hurt Obama and make it difficult for him to impose his rafts of new spending. So we will see lots of daylight and almost no emphasis on the darkness.

Finally, Obama will put to rest all of those insane Truthers and America Haters that reside on the Far Left. I mean the election (and thus the entire government) can't be rigged because their guy won despite Diebold, Karl Rove, attempted Swift Boating, the Hockey Mom, and the Vast Right Wing Conspiracy. Obama won despite the most "evil President in American History!!!" blowing up the World Trade Center to keep Americans scared or for whatever stupid reason the Truthers came up with. Obama will have won despite being African American in a nation full of racists and bigots.

You can't hate a country who's leader you have supported for almost 2 years and agrees with all of your "progressive" hopes and dreams. You can't believe that the country is "headed in the wrong direction" when the head of that country is they guy you hand picked. It will be nice to see all of the darkness of the Bush Derangement Disorder finally clear from some of the crazed Leftists. It will be nice to see the Dems finally start rooting for our country to succeed so that they can justify their faith in Obamassiah. There will be no more secret hopes that America will suffer defeats just so "Bush will look bad." It will be time for the Left to come in from the cold and support our country again. After all they picked its leader.

Fireworks in Iran's Parliament

Obama may have to sit down without preconditions with some other guy rather than Ahmadinejad.

Iran's parliament impeached a Cabinet minister on Tuesday after he admitted having a fake degree from Oxford University, in a vote widely seen as a defeat for hard-line President Mahmoud Ahmadinejad. The dismissal of Interior Minister Ali Kordan was the first high-profile confrontation between the new parliament and Ahmadinejad.

It did take massive chuzpa by Ali Kordan whipped out his Oxford Degree and it had tons of spelling and grammar mistakes. You would think that Oxford would get the language used in their degrees right. This part seemed pretty funny as well:

Legislators also were offended last week after a government official tried to pay legislators not to vote for Kordan's impeachment. The attempt promoted one hard-line lawmaker to slap the official, Mohammad Abbasi, in the face.

The scandal forced Ahmadinejad to dismiss Abbasi, but some lawmakers have suggested that the payment would not have been attempted without orders from higher up.

I just like the idea of some hard-line theocrat bitch-slapping one of Ahmadinejad's goons who was trying to bribe him with petrodollars. I think Ali Larijani (Ahmadinejad's rival for power) and Obama might be planning a little get-together in the next few years. Could Obama pull a Nixon and be the first US President to visit Iran? I can see it happening.

Monday, November 03, 2008

Cramer's Stockpicks for an Obama Win

It seems that Cramer is picking certain industries that will be pro-Obama. Basically he would be long Renewables, Fertilizer, Biotechs, and Healthcare. He would be short Drillers, Coal, and Big Oil. I have been looking into Biotech for a while because I think Obama or McCain will open up the Stem Cell spigot and reduce their costs of doing business.

He said solar maker First Solar (FSLR Quote - Cramer on FSLR - Stock Picks) would be his first choice, along with Chesapeake Energy (CHK Quote - Cramer on CHK - Stock Picks) on the hopes of higher natural gas adoption.

Cramer said he'd stay away from the coal stocks under Obama and look into fertilizer plays like Potash (POT Quote - Cramer on POT - Stock Picks), Agrium (AGU Quote - Cramer on AGU - Stock Picks) and Mosaic (MOS Quote - Cramer on MOS - Stock Picks).

He also gave the nod to biotechs Celgene (CELG Quote - Cramer on CELG - Stock Picks) and Gilead Sciences (GILD Quote - Cramer on GILD - Stock Picks), both of which he also owns for his Action Alerts PLUS portfolio.

Finally, Cramer likes health care under Obama, including Humana (HUM Quote - Cramer on HUM - Stock Picks), and even the banking and housing stocks as well.

Apple to Cut IPhone Production by 40%?

This is not good news for the companies that are making the IPhone innards.

Craig Berger, an analyst with Friedman Billings Ramsey, said Cupertino-based Apple (NASDAQ:AAPL) could cut back production by up to 40 percent in the fourth quarter compared with the previous quarter.

His assumption is based on channel checks I assume. The stock hardly moved today so perhaps Berger is more of an outlier then the median. A 40% drop in IPhones sold would be quite a blow to the company as IPod sales seem to be slowing.

iPhones shipped during the quarter reached 6,892,000, which Apple notes is several times the 1,119,000 delivered in 2007.

That would mean that a 40% cut in IPhone production would drop this number by 2,756,800 phones at about $200-$300 profit per phone. So if this analyst is correct then Apple will be out $551 million to $827 million in their bottom line this coming quarter. You would think that information would torpedo the stock but it was down only $0.63 today. I think there may be some pullback in production but 40% seems like way too much to me.