Borders -- Bears & B-holes

Immigration frustration

Since the 1800's the US the Southern US Border has been created by a series of nation building land grabs. The land of the free got 828,000 square miles bigger back in 1803 when Thomas Jefferson convinced the French that in return for $60Million Francs, or in that time $11M US Dollars, he would make the Louisiana Purchase, or (French: Vente de la Louisiane "Sale of Louisiana") There was also a cancellation of about $3Mil in French Debt so thanks to the Louisiana Purchase and Napolean Bonaparte the US now included all or part of 14 current U.S. states and two Canadian provinces.

5/27/2010 - Bull in a China Shop

We have all heard the term “He’s like a bull in a china shop.” The mere mention of the phrase gives rise to a great mental picture of a giant bovine thrashing around unharnessed in a showroom full of Swarovski Crystal, Glasses, Plates, Vases, you name it, the mind can imagine the unharnessed destruction a single bull could do if set free in a room full of crystal. The end results would be devastating.

5/26/2010 - Women, Cheese & Dead Cats

There are some new sheriffs in town and their names are not Reggie Hammond. Since the beginnings of mankind and markets the male species has been anointed as the alpha and omega, when it comes to material decisions and upper management. Women’s advancement lagged for millenniums. But recently as the Unemployment Crisis continues to rock our domestic consumption and economy, the truth seems to be coming out in the wash. The statistics tell the true tale that with Unemployment at 9.9%, and the functional representation of UE, at 19%, when faced with cutting staff, employers are time and again cutting men. Whoaa, what’s up with dat? Why are our boys getting the ax?

5/25/2010 - PONZI - PIGS & PROSCIUTTO DI PARMA

Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi, wow now theres a mouthful. Yes friends the originator of the Ponzi scheme was born in Parma Italy, in 1882. He probably had no idea that the simplistic scheme would be used to bail out the EuroZone. Ponzi in his lifetime engaged in an array of schemes that relied on a similar simple premise, find some suckers, show them a form of trade or a supposed arbitrage that cant lose and promise them exorbitant short term returns.
The scheme without fail relies on one key aspect; you need new suckers to keep coming into the scheme to pay the unrealistic returns to the suckers who were duped in first. When Ponzi immigrated from Italy and wound up in Boston promising investors to double their money, by purchasing postal coupons from countries with weak currency, and redeeming them in US Dollars. It sounded like a simple trade, and Bostoners bought in in droves. Problem was there were no coupons purchased, Ponzi simply used funds from new investors to pay earlier ones and shaved off some luxurious living expenses for himself. The name Ponzi, soon become shorthand, for the con formerly known as "Robbing Peter to pay Paul"


Prosciutto di Parma
When I sat to write todays note it was unbeknownst to me that such a heinous schemester, as Ponzi, had immigrated to our shores from a place so near and dear to my heart. Parma my friends may not sound that familiar to you, but no degree of ponzi like chicanery could diminish the esteemed place Parma holds in my heart. For those of you who don’t immediately recognize the star power of Parma, let me help you. Parma is the birthplace of Prosciutto di Parma. Yes Paesonos that prosciutto. And being I am going to use this opportunity to say the name of one of my favorite meats repeatedly, lets get this straight once and for all. The proper pronunciation is Pra-jute. Period.
No pri-zute, Not Pro-shooto. Drop the o. Now say it with me one time…. Pra-Jute. Say it just like that in your favorite Italian restaurant and Enzo the waiter will think youre a star.
Tomorrows pronunciation lesson the often mangled, Mozzarella.
Back to Parma, nothing Charles Ponzi could do would ever destroy my utter gastro affection for Parma. For those of you wondering what is this magic meat, Prosciutto di Parma?? Its that luscious thinly sliced meat draped over the melon when you first sit down at a your cousins fancy wedding. Mmmm Prosciutto and Melon you gotta love that thought first thing in the morning.

Okay JT, decent info on Ponzi, and interesting segue to the dry aged ham imported from Italy. Chock full o Italian heritage in today's note, but why am I reading this when I want to know about the markets and short sellers behaviors to trade these markets? WHY WHY WHY?
I'm glad you asked, well a finely prepared Prosciutto is a the result of a long closely monitored process. IT begins with the leg of a pig, or a kinda regular ham, then its aged and rubbed and put through a curing process before it is reintroduced to your taste buds as a tasty Pra-jute.

PIIGS Ponzis and Prosciutto
Prosciutto is ham, which originally comes from PIIGS(Portugal-Italy-Ireland-Greece-Spain). This whole mess started rather blandly, it all started out with some regular plain old (ham) debt. The eurozone members all played the same ole game, Overspend, overpay the populous, create government jobs funded by sovereign debt, let the hams pile up and when we need more money to pay for our slovenly lazy behavior and unsustainable policies we issue more debt and sell it to the other hams around us. The problem is when the other hams don’t have anymore meat on their bone to shave off and purchase their neighboring hams debt, the problem starts to age. Or Fester. EURO BANKS with aging problems IRE-STD-RBS-ING
Now with Prosciutto the aging process is important. The aging process where the meat is rubbed with salt and sometimes garlic and possibly even sugar makes the meat more of a delicacy. The aging of the debt problem however, is different. No matter the spices, and other items rubbed on these hams to mask the odor, the aging of Euro debt will not create the same delicious results. And now its Cure time--- to cure a ham and lock in those delicious seasonings and flavors the ham is covered in pig fat, and hung out to dry for at least 12-18 months. Oh man I'm hungry.
The Euro PIIGS have tried to cure this plain ole debt issue by bringing in US Financial institutions to rub pig fat all over their problems and cover em up. To no avail. When Greece wanted to get accepted into the EU, and the Euro, they brought in Goldman Sachs to ‘cure’ a little problem they had with their ham. Side Bar: as a result of a bunch of ham handed synthetic products created by GS,and other US Institutions the US Financials have as much downside as any of the PIIGs, only right now everyone is looking at the PIIGS. Shorts are seeing GS-JPM-BAC-C- among others, in major financial jeopardy of trading considerably lower. The Problem: Their Debt to Gross Domestic Prosciutto … ummm Product ratio was too high to meet the “rigorous austerity requirements” (sarcasm included) mandated for Euro membership. The Cure: Greek Finance ministers paid GS to ‘cure’ the prob, by creating synthetic instrument to mask the debt. A healthy dose of PIIG fat was rubbed all over this ham, and wala this PIIGS ham was on its way to becoming a delicacy. Only now no ones eating it.

Heres the “rub”
Goldman isn’t in the business of making deli meats, and the aging and attempted curing have caused this ham to become not a delicacy but a deadly dose of rotting PIIG meat. This PIIGS are now coming home to roost, and the antipasto isn't looking too good. So what happened to Parma Ponzi, the reason these PIIG problems and the Parma, prosciutto and Ponzi have given me the writing tactic of a symphony of P’s this morning is that the PIIGS seem to be relying on the scheme of the original Prince of Parma Ponzi to try to extricate this rotting PIIG meat problem, and the Curing process is getting as ugly as the practices that go on in the slaughterhouses that deliver these pig legs to Parma in the first place.

The Earth is Flat After All
The EU and IMF have yet to disclose which member states are contributing to the Bailout. Spains banks are burning, Greece Citizens are rioting against work, and any day the home of the beloved Parma, Italy will start to look to the other PIIGS for the $450Billion they need to meet their maturing Sovereign debt obligations. The PIIGS are basically turning to the other PIIGS to cure their aging problems so the rotting PIIG meat hangin in there meat lockers can magically be turned to a delicacy. Ponzi would be proud. The Peter to pay Paul scheme is coming to his home town.
The EU members are 2 distinct groups, they are either PIIGS or holders of PIIG debt. So to repay them selves they need fresh meat, umm fresh dough. They need new investors just like in Ponzis scheme to pay off the earlier investors themselves. Problem is the Globe may be flat after all, Flat Broke that is. No one on this planet has the loot to cure the PIIG Problems and printing Euros is not the solution.

The Pigs are out of the Pen
The Proscitto is out of the fat, and its looking like a rotten smelly mess. The meat is bad, the cure didn’t work, and now there are a bunch of rotten hams laying all over Europe with gnats, flies, and maggots multiplying daily. There can be no remedy without a recognition that the solution is as tainted as the process that got the PIIGS to here, and the markets aren’t buying this rancid meat.
The Prosciutto di Parma Ponzi is on and the Eurozone can only look 2 places for fresh new investors, US and Asia. Last time I looked China was covering their bubbles in a tightly wrapped Kimono so I doubt they have any loose romnimbys (Chinese money) laying around for the PIIGS. And here on the homefront. we are broke as a joke, and those supposed Green Shoots that rose colored glass wearing optimists were seeing last year have turned out to be nothing more than weeds growing unchecked in the front yards of the ever increasing glut of foreclosed homes in America.

DON’T BE FOOLED
The one piece of positive news we keep hearing this week is April existng homes sales were up and woweee kazowee up big. Real big!!! The US government program that gave first time home buyers an $8000 credit to stimulate sales ended on April 30, and the reason we saw a big pretty number in April was buyers rushed to close on houses before the Govt plan expired. Watch todays Cse Schiller be down and more than expected and then watch unemployment and exsiting homes tank over the next few months and things will only get worse. I said last week that other than the Expiration Friday this week would be a blood letting, and the fear of some rotting PIIGS and how that rotten rancid meat will communicate its diseased symptoms to its neighbors is starting to become a very clear and present reality. The market must go lower to find a value zone.
There is no disinfectant better than Sunlight, and when the EuroPIIGS finally put their aged and poorly cured meat on the table then we can start to devise a plan for recovery.

Wheres my Shorts
Ok you made your way through the PIIGGy word play, and maybe just maybe youre hungry, and possibly starting to understand the scheme being perpetrated on global investors. But what to do??
To me the macro play is short DIA—SPY, these are easy plays I have publicly professed my thoughts that the DOW should be 9000, and then 7500 in short order and 950 is my intermediate target on the S&P with 650 to 700 as the next real value level.
Single Stocks…. Yesterdays top plays… S – RIG—RIMM--

Patty di Parma
At the 2008 International Securities Lending conference, I sat at the bar (surprise surprise) in Hotel du Cap in Monte Carlo looking up the coast of the Riviera, while single handedly devouring the plate of Pra-Jute put out for everyone to snack on, I commented to my trusted comrade Patty Curry, that the meat was excellent. He pointed out the window up the coast and reminded me, “whats wrong with you of course its fresh, its Prosciutto di Parma, Parma is like… right there.”

5/24/2010 - It's not Easy Being green

To quote a sage market veteran….Kermit the frog, it was not easy but the markets bulls battled the bears and finally got a Green Close on Friday.
Okay Okay, last week, it looked like things could have gotten a lot uglier, and quick if the bears beat the options expiration buying Bulls and closed the Markets in the Red going into the Weekend. To me that woulda been a doozy for this morning. Fortunately some Bulls Blew off their Friday tee times, and stayed around to bust the bears streak. I for one did not.

http://www.bellavistacc.com/default.aspx?p=.NETCEEditorPFSTC&NoNav=1&ID=1471625

Many thanks to Big Jack, and Frankie the Fishman for hosting the day.
Rather than watch the Bears get routed I hit the greens myself, but it wasn’t pretty. My 94 was as ugly, but not as ugly as the beaten the bulls put on the bears to close the week.

The results were a Green close, but one green day does not a recovery make. Short signals say that Fridays up close was strictly expiration based, and there are still no fundamental reasons for a positive outlook. I stick with my 9000 outlook, and going into a vaction weekend the dynamics could set up just right for a Summer Selloff. Don’t just be nimble….Be Quick.

A big fat Greek Nothin’
No good Greek news, no dispelling of the China bubble, nada, nyet, zip, zero, zot nuttin at all in the way of positive news came out this weekend, to carry the rally into this week.
One thing still stoking fear from the short analytics front is the lingering question:…Is the UK about to be exposed as a new victim. The Friday activity reports say you’d be wise to keep that thought on the radar as the Bears seems to be sniffing around (HBC).
RBS also has some interest from the Bear side as the recently announced spending cuts provide a mere drop in the deficit bucket for the struggling Brits, and let us not forget BCS.
US Financials also continue to be favorites of the Bears, with MBI—C--- ABK at the forefront. SECTOR WATCH has the XLF – and KRE (Regional bank Sector ETF) on the short radar.

Bank Bears Prefer Preferreds
Another play seems to be in the Financial Preferreds. Figuring out why it’s more interesting to play the financials short from the preferred side is above my pay grade but I must report that every US financial is getting a glimpse from the Bears on the Preferreds.
Also a ton of Realty plays are surfacing as targeted areas, I will do some more snooping and get back with some good data on the realty stocks and public REITS. WRI—DRE--


Bulls-Bears and Matadors
After months of the Bears getting soundly beaten there has been a two week downturn where the Bears have seemingly got the best of the bull. Not that I’m happy about it.
And even though the Bear represents the short side, when I first hatched the idea to start an electronic platform to help short sellers avoid breaking the law, I wanted a reference to reflect that our customers were against the Bull. I did however want to avoid the cliché of the Bear. There were already plenty of Bear terms out there, Bear Hunter--Bear Raider-- Bear Bear Bear. I thought it through and felt like we were creating a product that not only fought the proverbial market bull, but the Bull$hit that often is associated with Short Selling. Who better to represent that ideology than the MATADOR. http://www.locatestock.com He fights the bull, For 6 years the Matador slaying a bull has stood as the our company Logo, and the platform that supports over 8000 legal short sellers every day is called just that the "MATADOR. Until my friend Jerry told me recently, unbeknownst to me, in some circles I am apparently referred to mockingly as the Matador. I have been called many things,(insert your own thoughts here) but til recently Matador wasn’t one. Being in Stock Loan, and being from Staten Island I have frequently been referred to as the “Loan Shark”, and being I always seem to point out the negatives existing in the markets and single stocks, I have been referred to periodically as the Devils Advocate, and even more recently some of my market commentary has got me fan (loosely used) emails, referring to me as the Devils Advocate minus the Advocate part. A market 9000 call will do that for ya.


In your mouth
Sometimes friends, even in my world the Bulls gotta win, and sometimes he wins big. Friday for example the bull beat the Bear, here in the US Markets. Then Saturday to make matters worse, the bull beat the Matador over in Spain. As ugly as it may be for the bears when the bull beats them in the markets, it doesn’t quite compare to when the bull beats the Matador. But fret not my friends, while Matador Julio Aparicio may have taken the song “put it in your mouth” a little too far, he did get a mouthful of Bull, but he lived. The Matador is expected to make a full recovery.
Juan lives to fight another day, but it surely could have been worse...



Compare the two, and I think you’d agree, if you had to choose, never before has such a convincing case been made for an oral!

Greece is the Word…
Sometimes I get so caught up in this economics stuff, I don’t take a moment to consider that it’s not really so important. Often when I need a reality check my wife is the perfect place to turn. So to reality central I take you… This weekend, I literally read every piece of financial information published to try to really understand what factors are at work in this Global Crisis. WSJ—Fortune—Forbes—TIME—Newsweek—Barrons—you name it I read it as this crisis is getting quite scary and I want to be as informed as possible. In taking a break from drowning myself in the boredom of financial reporting, my wife says to me “why are you doing so much reading this weekend?” “I know you usually pile up the newspapers like the Post and the Journal, but this weekend it’s a lot more what’s up?” So I say well its Greece, this thing is really getting Scary, I wanna be as informed as possible on Greece because it affects a lot of other things. Her reply…..”The Movie? “ http://www.livevideo.com/video/1BB7762461CA4946B6F0B2657B6ACE66/grease-we-go-together.aspx
Nuff said.

A Regular riot
The thing regular Joe Americana doesn’t even realize is the Greeks aren’t rallying and rioting because they are mad at their government for creating unsustainable levels of deficit spending. They aren’t rioting because the Great Papandreou hired GS to create a synthetic transaction to artificially lower the Greek debt to GDP ratio and trick the EU into letting them into the EURO. They aren’t rallying because they have to borrow billions to pay their bills and not sink the Euro Zone. They are rioting because they don’t want austerity measures.. They don’t want to work past 50, they don’t want to lose 14 pay checks for 12 months work, and they seemingly don’t want to consider working harder as a solution, period.
And this is not just a Greek thing, we will see it play out again and again as the European nations who last year were blasting US Banking system and US policy are now faced with something that is just not within the realm of reality to them. WORK
This is why shorts stay focused on the fact that the Global crisis is just beginning, the Eurozone wants to be bailed out, but they don’t want to have their services cut or work more hours.
One of these days, its gonna become abundantly clear that this European mentality of minimal work, with the expectation of handouts to support future generations of global bailouts is not Contained in Greece, and the rest of the PIIGS have the exact same mindset. To quote the philosophical Ralph Kramden, the reality of that is gonna hit us right in the kisser, http://www.youtube.com/watch?v=IV1zul2aCM8&feature=related

JT Sr.
My father, John A Tabacco, Sr., was a hard working, third generation Irish-Italian, retired NYPD cop, who spoke not a word of Italian. Much to the chagrin of my brother and I, he did however know one single Italian phrase, which he used daily to haunt and taunt my brother and I.
Each day at 645 am in an effort to get my brother Derek and I out of bed, to go to our Summer job of sweeping up at his construction sites, he would incessantly repeat this phrase until we got out of bed. OVER AND OVER, Che dorme non pesce. (pronounced Key Dormay nona besh). I think of it often when times get tough. So should Greece. He Who Sleeps Gets no Fish!

Hey Greece you are supposedly the birthplace of civilization, why don’t ya set an example for everyone else in Europe, and GET TO WORK.

JT

5/21/2010 - Breakin the Chains

A good friend, and Ace Sales trader at Cantor, called me yesterday to Congratulate me on my recent calls. He jokingly said JT you been righter than right, and one of these days somebodies gonna throw a boatload of cash at ya to trade these short ideas" he then said "gotta run going to see Alice n Chains". Never mind that at first I thought who goes to see Alice in Chains! But then after reconciling who I was talking to, I thought about his compliment, and Alice and Chains, and started thinking about the Man in the Box, as I began hummin the intro,http://popup.lala.com/popup/504684646424657155 to myself myself. The thought occurred to me that for the last 18 months I have felt like a man in a box. As every fundamental broke down in the markets and every metric said short this market, the Government Sponsored Rally continued. No matter who I told or what I said no one wanted to hear that there was still more trouble out there for US and Global Banking. In the box talking to myself, about things that were right out in the open. I felt like I was boxed in many times surrounded by pundits on every network laughing at my predictions that the Financials were not sound. I tried everything to make the point, but everyone was on the Joan Rivers Rally and only rosy predictions of green shoots, and new normals were given any credence.
Joan Rivers Rally....?? WTF is that JT? I said on FNC that there were so many artificial parts to the market, that it should be called the Joan Rivers Rally. The rally and the woman have a lot in common, tons of work to prop up, pin up, and shine up, a deteriorating entity. Despite tons of work and money trying to make things look better to the naked eye,
the facts are still there right in front of your face for all to see. Its nothing but a facade, and if you look a little closer the results are actually hideous. Now people are seeing it and I feel more like a jack in the box, finally poppin out of the box. The calls are happening, the facts are comin out and the markets may be finding their way to some healthy levels.
Email your Mother....
I got a ton of reaction to my recent CNBC spots mostly positive, people telling me hearing my regular man point of view is refreshing. Many emails were complimenting the way our analytic give a new point of view. But of course there's always a few J-O's. Some close minded numb skulls have found it necessary to write me to reflect that I'm an a-hole, actually a M-F'ing A-hole. They are crushing me for being anti American, saying I'm enjoying stocks going down, and I should die. Somehow even though I was clear I don't even trade single stocks, I'm profiting from stocks going down. Some of the terms used to describe my presentation are highly stereotypical, and offensive but hey keep em coming. I appreciate all feedback. I would suggest that you dont use those same fingers when tapping out an email to your mom.
Just to set the record straight watch the shows, and read my disclaimers. Oh that's right unlike the other commentators I have no disclosures or disclaimers, WHY?? Because I don't buy or sell single stocks or etf's or futures. I am not happy when markets go down, nor do I relish american financial companies getting slammed. But for the most part short sellers have been the first alert system for investors on almost every market catastrophe. And I'm not hoping to be right, the fact that short sellers are establishing a position in a stock or a sector means there's been significant research and there's a disconnect between value and market price. I'd rather tell people that this is happening from an objective point of view and let them decipher the info, than just pot shot stocks and hope they go down. In my experience the shorts have unlimited exposure when they are wrong so they do the most research, and they are usually right. So take the info from our analytics and understand how its derived. Its raw its real and for the most part its reflective of some real good fundamental research.

EXPIRATION EXPRESS
A down day on an Expiration Friday is a very ominous sign. This market is looking worse by the hour, but the rally is creating opportunites to add to established positions. Any uptrend is bringing in shorts to add to positions in my view. There is no real consolidation point til like 9200. Both my DOW 9000, and S&P 950 calls are within reach, and a red day into the close could spell a bloody Monday. There is some extra buying today because of expiration so with that gone Monday things could get ugly quick next week. We have been way higher than our 60 day average on volume the last couple of weeks, but yesterday the volume of stocks requested was up 40% over Wednesday.
Also End of Day will tell alot, and overnight shorts will give a real good look at short sentiment for the weekend. If they take significant positions home for the weekend that will be a heavy indicator that Monday and next week will remain under pressure.
BIDU -- VALE -- C BAC MBI MS JPM
Are big names today. XLF is a big play betting against macro financials. The shorts are on financials like piranha. Its a frenzy to add to positions. Not to drive it down just to get in on the trade before it gets to a value level.
There is a big play to the downside in this stock IOC, I think I alerted some readers to this a couple weeks back but I'm hearing this stock could be $25.
Going Down
Depending on todays behavior 7500 could be the next level to the downside. That's the type of negative sentiment I think is being reflected by our volume-breadth and trend analytics. Happy trading, enjoy the weekend. Sorry todays note was a bit late, I wrote the whole thing off my BlackBerry intermittently between phone calls and family matters.
Bella Vista 1pm Tee Time.
Mondays note will come pre-open so you can assess and weekend analytics prior to your first trade.

JT

5/20/2010 - GREEK TRAGEDY- PIIGS, TEA BAGGERS & FAT FINGERS

There are so many reasons to be short today I couldn’t come up with a focused story line, but know this. 9000 DOW is near. And single stocks must trade down to get back to reality. Its all EUROZONE, all the time. The Global markets continue to hinge on a tiny island. No not Staten Island. Actually a bunch of tiny little islands 1400 of them to be specific, in the Mediterranean.
Why then does such a tiny spec of land, a flea on the butt of a PIIG, have such a pronounced and significant effect on Global Market Behavior? When a problem is on an island it sounds like it’s easily contained.
Next time you’re lucky enough to head to that other tiny Island of Staten, look off to your left as you cross the Verrazano and you will see 2 islands there Swinburne and Hoffman Islands. They were artificially created to quarantine immigrants who came to the US with Contagious diseases. Simple take all the lepers and build them an island and we stem the spread of disease. http://en.wikipedia.org/wiki/Swinburne_Island
For you sports freaks, Think Revis Island. http://sports.espn.go.com/fantasy/football/ffl/story?id=4707319 A Defensive Coordinator puts DR, out on an island, with the other teams top threat and you contain the problem. LOCKDOWN -- PROBLEM SOLVED. Problem is the EU and IMF combined are not Darrelle Revis, and the contagion is already off the island.
The bigger problem is Greece isn’t just some little island. As I pointed out yesterday on Fast Money http://www.cnbc.com/id/37234521 (video at 9:30 in) the Euro Zone contagion is what has the fate and stability of the global banking system hanging in the balance, the problems of Greece are flowing through every vein, artery and organ of the Euro Zone.
Whys is Greece so important you ask, well let’s starting with the basics, since just about the beginning of time as we know it Greece has been a leader of Global Civilization. http://www.ancientgreece.com/s/History/
Simple little things we can thank Greece for in the development of civilization are:
Oh Greek alphabet, which basically underpins all other languages, and Greece is responsible for our Mathematic principles, Greece was also the original home of the Gods, so think about how they feel when they hear that Greece is insolvent, they are after all Gods. The aforementioned Gods, led by a strapping young fellow named Zeus, founded the first known competitive sporting events, ie the Olympics. Some time around the bronze age, they got around to figuring out a class system, which led to a form of governing their quickly growing empire. He who had the Bronze made the rules and WA-LA representative democracy was born. I often mix up my ages, copper, bronze-neolithic- oh hell, don’t hold me too tightly to the history-onics I’m getting you there as best I can for a guy who took 5 years to get out of St. Johns University.

Easy as ABC—1-2-3
So with the ABC’s and 123’s out of the way, and an educated populous, a system for governing them, a spirited sporting event calendar to pass the free time, they still needed some entertainment. Zeus and his Posse had no ZeusTube or Greece-Book to amuse themselves, so they came up with this whole drama idea. And jeez Louise how us men hate the Gods for this invention. Yea some entertainment. Women have embraced this invention like no other constituency, much to the chagrin of us men. For the most part we men are not typically entertained by said “Drama”. But somehow these supposed Gods who came down to Mount Olympus and bla bla, thought this whole Drama thing was good. No fallible being would create such a blight on man, this creation seems to call into question the fallibility of these so called Greek Gods. Drama can not have its origins in the heavens. But I digress.

When Greek was Great
When the Reign of the Greats like Alexander and the other leaders to follow him were at their peak, the Greek empire stretched from the Mountainsides of Italy to Turkey through the Hindu Kush as far as Egypt and all the way to Pakistan. But upon the death of the last of Great Greek Rulers, there was then as there are now, Greeks fighting in the streets.. Way back when Good ole Alex the Great croaked in 323 BC, different factions of Greeks struggled for power aligning behind Alexander’s Generals. The factional fighting and regional rioting back then lasted for almost a hundred years, so these few weeks of rock throwing outside the Greek Parliament, is childs play compared to the Hellenistic Period.

Wheres Phillip when you need him?
The man who finally ended the unrest was Phillip V, of Macedon . And for a hot minute Phillip looked like he could be the man to right the Greek ship, he righted the ship and united all Greece for the first time in centuries. He controlled all Greece but Athens. And a fine fellow he appeared to be, but his alliance with the Carthaginians led to his overthrow, when Rome defeated Carthage somewhere are 200 BC. Fighting Phil was finished, he was deserted by his allies, and his ship was sunk. What was left of his fleet was surrendered to Titus of Rome, leading to the rise of the Roman Empire.

OK JT, why the Greek lesson, this morning??
The reason I think its important is because to understand the reasons that Contagion is real realists must confront the reality that from the beginning of mankind the tentacles of Greece reach deep into the bowels of the EuroZone. The TRAGEDY of it all is Greece started the flow of trade and origination of trade routes. The credit products that supported early mercantile trade are institutionally and historically intertwined between Greece and the EuroZone. Greeces fingerprints are all over the foundational banking relationships of the EuroZone, and trying to convince the Global Community that this can be contained is a true COMEDY. Other Eurozone banks that are in danger include ING, with 15B in exposure to the Greeks, and Banco Santander (STD) of Spain with 24B of exposure. The short sellers are still sold on the fact that this greek tragedy will infect others.

Souvlakis for Everyone
I was speaking to a short seller yesterday about the National Bank of Greece (NBG), as the stock has come off almost 50% in a short period and they have the backstop of the EU and IMF. Shorts were still on it, but was it possibly a BUY?
And the line of the week to me was when he said “JT I’d rather buy shares in the Souvlaki Cart outside my building right now, than a Greek Bank.” He pointed out that NBG earnings are down 40% in a year, and with a rioting and poor populous who will deposit money in their banks.

NOT TO GET TOO TECHNICAL…..
To us this market goes way lower and soon. Forget not my friends that we are seeing tremendous downside action in an expiration week. Typically markets are up this week, so we are done in a typical uptrend area. I’m no technician, but in regular St. Johns speak this means that when the Expiration action goes away Monday could be reckoning day.

PORNO FOR PYROS
As Global markets fears are on fire based on a group of countries now commonly referred to as a bunch of PIIGS, US Markets are reacting accordingly while both of our political parties are getting Tea Bagged, and gyrations are blamed on the dreaded Fat Finger. Ewww With all these salacious terms my business news cast sounds more like a Porn Promo. Call me crazy but I hear terms like a pack of PIIGS, getting tea bagged and gyrations from getting fat fingered, and I’m thinking there must be a HAPPY ENDING. Yet the Greeks got $1Trillion in bailout bucks, or the equivalent of $100,000 per citizen and still they aint happy?? Somethings wrong.

Their Slip is Showing…..
While everybody’s lookin at Greece, China seems to be wriggling uncomfortably with a set of expectations that just cant be met. The country responsible for tyranny, communism, destruction of human rights and elimination of individual expression has a housing crisis on its hands, but lucky for them the local news teams cant report it. There a great piece in Foreign Policy detailing how housing prices have run up 80% compared to wages. And whole cities of new homes are empty.. http://www.foreignpolicy.com/articles/2010/05/13/bubble_bubble_china_in_trouble?obref=obinsite

Scary Signs from Big Red. The Metals are reflecting the growing specter of China Housing bubble bursting, the clearest. A change in spot ore pricing from an annual benchmark to a monthly is a saving grace in the short run, but the DRY SHIPPERS [DRYS][EGLE][DSX] all look like big downside plays here. The Dry Shippers have run up and are highly reliant on Iron ore and Metals needing to be delivered to China to build houses and building and all that good stuff.
Also BASE METAL Miners [VALE] [RIO] have serious problems if China begins to admit that housing prices are declining. http://www.thestreet.com/story/10761744/3/fast-money-recap-banks-safe.html WATCH OUT.

TOP SHORTS TODAY
-- RIMM—MBI—DB—XLF
Oldie but a Goodie --- Citi continues to be a stock Short Sellers are willing to pay for to get a good Locate, this tells me Citi still has room to go lower

NKOTB---- For the First time ever we see Shorts Interest in XRT the S&P Sector Spdr for Retail. With many retailers relying on Emerging Markets for sales growth the Retailers may be under some pressure Q2-3.


JT

5/19/2010 - A Greece-y Bear Stew

What a Stew is Brewing…..Busted Banks, Bailouts, throw in some PIIGS and a useless Euro, stir it all up in a kettle full of geo-political unrest, a dash of wrenching regulatory reform and the Bears say its all set up for a ripe gluttonous cassoulet of overvalued opportunities.

To spice the stew, add a heaping dose of novice leadership in US, Germany and UK, and the Sous Chefs are tending to cauldron of catastrophe waiting to boil over. The Bears are circling the banquet table awaiting the party to end to feast on the spoils. Soon humanity will realize that the near Ponzi Scheme promises of bankrupt countries bailing out other bankrupt countries is as empty as the Greek Treasury Kettle, and let the Bear barrage begin.

The “Flash-Crash” will prove to have been no flash in the pan, and the recent dip should serve as a warning, as to how fragile and thin our markets truly are. The recent 1000 point dip is like when the sea starts to pull back before the tsunami. The warnings are there, in fact they are everywhere, but pundits keep coating it in sugar by categorizing the worst of news as the new normal. A bankrupt Globe is not normal, a US Government owning banks, auto companies and mortgage companies, and the health care system among others is not normal borrowing from the pillar of communism to spend like a drunken sailor is not normal. Last year many of the Euro nations were taking pot shots at the US questioning our banking system, our regulatory policy bla bla bla, and while I was then and remain now opposed to bailouts I suggested we get to the inevitable pass the Recovery Act, and then lets see what the Eurozone has hidden under their kimono. I talked about this in detail with Neil Cavuto in 2008, http://www.youtube.com/watch?v=Z7VGvJkhzBs Now their kimonos are open and it aint pretty.

Prudent Bears look at our markets recent upward behavior and think it is nothing short of ab-normal. Somehow when the shit hits the fan the evil short sellers will be the ones who did it,
Yet they are seeing things the most clearly. This market is Chock Full O’ Overvalued situations. Big names that short sellers are seeking are in Financials and Solars… C-BAC-HBAN-MS-GS, MBI There are some good banks out there, problem is they are mostly Canadian.
I pointed this out yesterday on Fast Money http://www.cnbc.com/id/37196097/ , and then sure enough Cramer comes on right after me on Mad Money and clips my call http://www.cnbc.com/id/37191470?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

What caused the crisis? SIMPLE Bad Banks, Excessive Leverage, and the same type of Free Money stew that they are now serving to Greece. The U.S. is $1 Trillion, into the bailout and still U.S. banks are spoiled. U.S. Banks got govt bailouts, they diluted shareholders to raise more cash and yet the U.S Banking system all still teeters on the brink of insolvency. Even with a Rich Uncle Sam lending at 0 and paying 3% on Treasury carry trade the U.S. banks still can’t muster any organic profits. The bulk of the banks profits the last couple of quarters are from underwritings, (no not IPO’s there’s none of them, these underwritings are US Treasury underwritings) The U.S. Treasury needs to issue paper to lend the money to the banks at 0, so they pay the banks an Investment banking fee to issue the above mentioned notes so they can lend money to them at 0. The banks then get fees, which look like profits to issue the paper they need us to lend to them. WOW, Craziness.

Just to recap
• Taxpayers bail out the banks, with TARP.
• 1Trillion $ bailout created $3000 of debt for ever man woman and child in America.
• Just to put things into prospective, my 4 year old son Johnny has a negative net worth thanks to a Public Policy of Nationalizing Risk, and Privatizing profits. I didn’t achieve that goal til my teens.
• U.S. Citizens still owe the 3k, but the banks are giving out bonuses?? [ASIDE:] T-A-R-P Troubled Asset Rescue Plan, now there’s a misnomer.
• The Troubled Asset Rescue Plan never rescued a single bank or financial institution.
• The Cash that was supposed to take Troubled Assets off banks balance sheets never rescued few toxic assets. Less than 0.03% of the $750 billion authorized by Congress to buy toxic assets actually bought Mortgage backed securities from banks. Instead the banks take the cash 99.97% and pick up a 3% vig ($22.5 billion) on taxpayer cash while our kids will foot the bill one way or another.

So banks still sit with massively toxic balance sheets, profiting mainly from govt securities issuance, and prop trading. And oh yes prop trading, that’s right the Thursday vote on FIN REG may bounce the banks out of the prop trading business too. Another crushing blow to banks that could derail the bailout express. And Hmmm didn’t the treasury do some Stress Tests last year, to determine how much capital banks needed to stay solvent?And wasn’t a key metric unemployment? The Administration promised the TARP would stem unemployment at 8%, and the banks wouldn’t need more cash unless, (a) the mortgage defaults did not stabilize, and (b) the worst case scenario where banks would need to be re tested for stress was a 10% unemployment. Well folks welcome to the new normal. The new home tax credit is gone, housing will dip again, forclosures are on the rise, new buyers are scarce, and Unemployment is a hair from 10%.

Our banks are in a slow quiet burn, yet we are footing 17% of the IMF bailout to Greece.
Wait we are borrowing from China to lend to the banks at 0 so they can lend back to the Treasury at 3, and then borrowing some more to give to IMF to give to Greece? And the Greeks are rioting? We should be rioting! Greeks are pissed? The US will contribute $51Billion U$D to the IMF Bailout of Greece, that’s a per capita handout of $5000 for Greeces 11million citizens. And they are lighting things on fire? They lit themselves on fire years ago by hiring Goldman to create an off balance sheet product to trick the EU into believing their debt to GDP ratio was lower than it was. And now they are blaming US banks? This too is the new normal.

Our kids are 3 grand in hock already, we are borrowing from China to hand every Greek a $5000 handout and this is the new normal? Perhaps in Harvard, but not the America were I was raised. Selling the market is the only sensible move if you just embrace the fundamentals. Many Greek workers only need to work til they are 50 years old, (beauticians-steam bath workers and wind instrument musicians all qualify for early retirement) Bull Fighters in Greece must work til 55, but the flutist in the Athens Symphony gets to retire at 50? NORMAL? Workers they get 6 weeks vacation, cannot be fired and get paid 14 months pay for 12 months work and we are bailing them out. My Grandfather may he rest in peace Angelo Archipoli would say you get in debt you don’t borrow from somebody else to pay it off, you work. IF only Good Old Angelos parents had rendezvoused one island over in Mykonos instead of Sicily, maybe I could qualify for one of those cushy Greek citizen employment packages. How can we seriously believe in the new normal if a key tenet is pay Soviergn Debts of nations who are unwilling to work past 50, while here on the shorefront US Policy wonks try to raise our retirement age to save Social Security?
Thanks to an unsustainable monetary policy we are all in more debt today than when Obama and Single Party Rule took over, and now we are facing an extended retirement age to insure that a bunch of Greeks can live a comfortable life and retire at 50, on our Dime. Something about that just aint normal.

Other Shorts Surprises today --- NBG – IRE—
THE HIGH FIVE (top shorts) FSLR- SPWRA-CSIQ-VALE
Take a Gamble – Shorts are betting against Vegas as WYNN and LVS are hitting the Short Radar.

If you’re long IFLG you should be getting paid a nice price from your PRIME its Hard to Borrow

BMO – RBC, look like the strength in the banking Sector. DO NOT SHORT!!!!

M&A Could one of these Canadian Heavyweights enter the Prime Space with a Mini Prime Acquisition? Stay Tuned.

JT

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