Late Stick Save That Failed...We Are in Trouble

Yes, the market tanked today and tried to stage a dramatic recovery late in the day.  It was sharp and it was breathtaking and put some doubt in this trader's mind about the impending break down of the major head and shoulders pattern in the S&P.  In short, that attempt failed.  But like many trading days before us, this event was forestalled by immense and possibly fraudulent rumors of Ambak bailouts to FED cutting intermeeting interest rates.  CNBC got into the act by doing their good citizen duties by aiding and abetting in the "pump".  Well today, the forces that be, could not over come the obvious, and for which I have been ranting about for months: WE ARE IN A RECESSION AND IT WILL BE WORSE THAN ANYONE CAN EVER IMAGINE!

Today's jobless numbers cast no doubt in anyone's mind that we are in a recession and all the warnings that came previously about this and promptly ignored by the main stream media, the market pumpers, and the financial community is now in fact a REALITY.

Already there are talks of depression and doom and gloom.  Why not?  It is sensational and this sells stories and TV ratings.  It's funny how CNBC (CNBS) all of a sudden features bearish stories and commentators.  Yet, one could argue that this might be the sign that the end is near for this bear market as people are turning increasingly bearish.  Yes, that's true but not in this case.  There are more than comfortable amount of "experts" out there that are pounding the table for the investors to buy the "dips" that bottom is near.  Until this noise and farce goes away and then maybe I will consider getting more bullish.  

We defended the all important 1300 level on the S&P 500 Index today.  Much concerted effort was made to finish above this level but alas it failed.  So we are in the precipice of a major market meltdown.  Market crashes do not happen near market tops.  They happen when the market is weary and beaten down.  I think we are near that event.  I have called for a market crash and technically we got one, albeit in a slow drawn out fashion.  But when one considers the magnitude of this credit crisis unrivaled since the 1930's, you can imagine without much effort that no matter how much stocks are down, they do not represent a good value right now.  I see further declines in stocks, especially credit sensitive techs.  We will continue to see multiple contractions to the likes not seen for a while.  

We are in trouble.  FED, Treasury, and Politicians are walking around with thumbs up their asses.  They look scared and they act as if they know not what to do.  I don't blame them.  But unless banks are forced to mark to market their secret junk they are hiding, this will not end.  The ludicrous cries for rate cuts will not do any good as evidenced by the current strings of rate cuts.  It is that we must restore trust back into credit markets.  We will not achieve this unless the government and the regulatory agencies stand up to the plate and say enough is enough.  Time is definitely running out.  If for a minute the FED or others have any back bone, they must make the tough choice to force the crooks in the financial community to come clean.  

Did anyone catch Angelo Mozillo's testimony today?  I almost puked.  Did anyone listen to Cramer's ludicrous rant today?  Thank God Erin cut him off.  Yes, we are in trouble because the powers that be won't do the simple thing to fix this problem.  Restore TRUST.

See you next week when the market is poised for a pounding.  Yes we might rally but that will be sold into and will be weak and short lived.  

All Things Google

There is much debate as to whether or not Google is finally a value stock in the main stream media. Google share price has certainly taken a hit since last October high of $749 to the current $448. Does this make Google a compelling value?

In short, no.

In the context of a bull market, given Google's growth rate and relative valuation when considering its peers, it does seem cheap. But we are not in a bull market anymore. We are in a beginning stages of a vicious bear market. In a bear market, multiple contraction occurrs and no matter how great the earnings or growth prospects are, share prices will suffer. Some may argue that the Google's share prices are at a signficant discount from that of four months ago. True. Google's prices have been discounted by 40% from its peak in October 2007.

What people don't take into consideration is that we are mired in a credit crisis unrivaled since the 1930's and a real specter of a full blown deep recession at best and a depression at worst. I know that the main stream media continues to wax optimism and continue to jaw bone about how there may not be a recession, "just a slow down" in the economy. You can believe what you want but look around you and there are ample evidence that the contrary is happening. But that is another topic for another time, and if you want to be educated, go check out the tickerforum.

Google derives 90% of its revenue and profits from targeted search ad revenue. With the downfall of lending industry related to mortgages and overall slow down in the economy (which is true), there is significant possiblity of real slow down in the search revenue in Google. Additionally, if you haven't noticed, the insiders have been selling their shares at an alarming rate. In an article by Nicolas Brulliard on WSJ Stock Sales at Google Send Shivers states that red lights are going off at this internet juggernaught.

Just today, after the market closed the following transactions were reported:
Dir Doerr sold 32,650 shares
VP Brown 583
VP Rosenberg 315
CFO Reyes 158

I know that Google insiders have been selling for years but the intensity and frequency is increasing. Time to try to correlate this with the recent price weakness. It may show that the insiders are not as fervent about the prospects of the economy and the company itself.

Additionally, today there was reports of EU approving the Google Double Click deal by March 11, 2008. I wonder in a time when companies should hoard cash for the upcoming economic slow down, if this buy out makes much sense. Only time will tell. It is certain that the market has voiced their opinion. I do not think the Google share prices will recover any time soon.

The stock continues to be a major whipping boy in the market. Doug Kass has cautioned that a $6 billion stock repurchase will be soon announced at Google. Does this make sense in light of increasing competition and a major acquisition of You Tube which has yet to monetize its content and the Double Click? Time will tell but for now, I believe Google has further down side to come. If you don't believe me, why not check out what happened to Cisco during the dot com melt down.

Reflections on Manipulation

Now, I am all for free journalism. It is what keeps information flow honest.  But when that freedom is blatantly abused and manipulated that destroys the very foundation of free speech and the freedom of the press.  Yet this is what goes on daily at CNBC.  It is no longer a medium of free and honest information but propaganda and sheer fraud.  

There is no doubt that CNBC is the de facto standard source for financial information for the American investment community.  Yet it has morphed into something more sinister.  It is a medium of rumor mongering and cheer leading.  The fact that they have the capacity to influence the markets the way they do, and not for honest purposes mind you, it has become the place for desperate hedge funds or companies to drop "rumors".  Last time I checked, CNBC is a financial news organization.  Doesn't rumors and speculations belong in the tabloids?  Is that what CNBC has become?  Should they change their name to CNBS?

Today, you could feel the desperation in the air as the markets broke through key support levels on the S&P 500 Index, a widely known level of 1320 was convincingly broken today, only to reverse late in the day.

Why?

It all started with what seemed to be a well coordinated onslaught of propaganda.  First, Charlie Gasparino (I would like to refer to him as "Gasbagarino" because that is what he is) appears and makes the entire market believe that the Ambak deal is imminent, "within hours".  That was at mid day, by that time, the market was clearly in full swoon with the Dow down more than 200 points for the day.  It seemed to have limited effect as the markets began to melt down further.  Then the news of Cisco Chairman John Chambers affirming 12 to 17% growth, further tried to prop up the markets.  Then another rumor was floated that the FED was cutting 50 bps imminently which started to infuse some hope into the markets and the indices began recovering from its lowest points.  Then at 3:20 EST, GASBAGARINO came out with an urgent breaking news update that while AMBAK bail out did not come to fruition, it should be completed within days and that the banks involved will work on this throughout the night to get the deal done.  By this time, Nasdaq was in positive territory and majority of stocks shook off the early losses and turned them into gains.

Where are the cops?

If I tried to do this, I would have the FBI breaking down my home door within hours.  

What gives CNBC the power to do this?  Are they immune to morality?  I don't know.  All I do know is that Charlie Gasparino has been at this for over 1 month.  Please consult my last blog regarding my rant on Charlie Gasparino.

Market cycles are inevitable part of investing.  By doing the "stick save" today, not only did the market not get the cleansing it requires for an honest leg up, it has perpetuated the vicious cycle of range bound volatile market.  Unless this stops, we can expect a slow bleed of the market place where only short term day traders like myself prospers.  

SEC where are you?  What about FBI?  I think there is enough evidence here.

Friday's job report will be interesting.  I wonder how many time old Charlie G will come out that time?

Hey Charlie You Gas Bag!

Charlie "gasbagarino" Gasparino,

How does it feel to be the butt of jokes on Wall Street? I know you're trying to make a name for yourself by getting ahead of the story so that you can be known as the CNBC editor who "BROKE" the AMBAK bailout. Perhaps you're looking towards the future and see some book deals? Lectures? Maria "Barfaromo" Bartiromo's spot? Sigh...

You used to be respectable and even hard nosed. Now you have become just a former half shell of yourself. Does your mother call you these days? Do you like yourself when you look into the mirror? Is this what you had in mind when you decided to be a reporter on Wall Street?

What? You don't know what I'm talking about?

How about this? You have been pounding the table about AMBAK in one way shape or form since the middle of January. You have been all over the place regarding this. One day, you're bearish and the other days, well, you just have to wonder how much you're being paid by AMBAK or by the hedge funds who continually try to pump the stock market by you spreading the "non news" for their own short term financial gains. Isn't this the sort of thing that you detest about Wall Street when you decided to become a reporter on Wall Street? So, what happened?

Now the deal may not work? They're hitting a snag? Of course it won't work, you know that. You are the instrument of Wall Street's games. You are a minion. You lack credibility now and, yes, you are the butt of jokes on the Wall Street. But, hey, I'm not your mother. You just go ahead in the path that you deem is the quickest route to success in your career. I suspect that you will be going around in circles for a while. While you're at it, look at what happened to Henry Blodget. Makes you think doesn't it? Different times, different pump, same results.

Now go home. Stare at yourself in the mirror and say "What have I gotten myself into?" And maybe, just maybe, if you have any integrity or back bone left, report the truth. Report facts.

I'm not a reporter and the fact is: No amount of bailout can retain AAA rating for a company wo is essentially bankrupt. Doesn't the prospect of splitting the company up into two parts tell you everything that you need to know? Of course you do. But you choose to err on the side of the darkness.

Have a good day. Next week's gonna suck for you.