BAGAKOAA; 14 May 2012 Look Who's Coming To Dinner

Post 647

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May/2012
After a great weekend, we started this week out on a great day. Man Child sprang from bed and was ready to hit the road right on time. I got to visit Brugger's Bagel after a couple of week's absence yet they still remembered my meal and handed me my order without having to stand in line. I even had a few moments to continue reading the saga of the North American Indians in the book "The First Frontier" which I mentioned here on several occasions.
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But the highlight of my morning was driving Jack to school, and to the bagel shop, and too the office in my car and it had no morning dew, no clouds of pollen stuck to it, no pine needles under the wiper blades and no bird gunkers (Ok you didn't think I was going to let the day go by without talking about some kind of animal feces) stuck on my car. I pulled out of the garage this morning and felt like Batman. It is nice to have a clean car everyday.

 

Once arrived, I had a few day's mail to wonder through and gobs of e-mails to plunder through. I had a nice lunch with the other lady in my life, Ellen who makes sure I stay busy and keep me sane. It was a wonderful day.

 

Devin left for the airport today to pick up her mother. So much for having a great week. (Just kidding!) Devin is taking her mom to see Devin's aunt (her father's sister) who is not doing well. Dorothy will be with us several days and it is always fun to have dinner with her as she is not picky. She just does not like ANYTHING. But she is not picky, just ask her and she will tell you that she is not picky. Tonight we had grilled sandwiches and soup. A simple meal and we all enjoyed it. Then we sat around watching the semi-finals to DWTS. Katherine Jenkins blew out her back on the last move of her second dance and you could see her go into shock. So sad, but she even makes pain look good. Did you see Christie Brinkley in the audience? She has had so much word done to her face it looks like you could bounce quarter off it. So sad, she has such natural beauty, just go with it girl.

 

They picked up our dumpster today so the only remnants of construction in our neighborhood are the two porta potties down at the end of the street. They will be finishing the front entrance way tomorrow (I think) and then we can have those removed. Those Porta Potties have been a life saver for the crews working on everyone's house and have provided a lot of amusement for the juvenile delinquents in the neighborhood over the last 18 months. Apparently if you are about 15 and male (I am assuming) tipping over portable toilets is a great thrill. Over 18 months or so we have had to pay to have them righted and cleaned up on three occasions. (I tried it once myself, but it is a nasty job with all that tidy bowl blue stuff flying around the inside of a porta potty.

 

Jack is finally cracking down on his driver training on line studies. Devin and I can't wait for him to get his license so he can expand his Sherpa duties. He moved Devin's Cadilac and the F 250 this weekend and he was quite proficient at each. He moves very slowly, but we are OK with that. Funny, Kristin was a very slow and careful driver? Interesting.

 

All of this reminds of a story (I just heard 54 people say the word "crap"!). When I was in high school I used to jog every morning with my father at the track at Edison High School. We would get on the track at about 5:30 and be home before 6:30. I was 15 and he had gotten his first of many Cadillacs. It was a 1972 Coup deVille similar to the one pictured here.

 

 

Anyway we had finished our run and the school was about a quarter mile from the house so he threw me the keys and told me to drive home. Except for pulling my mom's Ford Maverick in and out of the garage, I had never really driven before. Dad gave me a couple of suggestions (mirror, seat, etc.) and never said another word. I pulled out of the parking lot, made to the corner of Magnolia and Atlanta, turned right, went half a block to Beachwood Lane and turned left and drove right into the driveway. This drivin stuff was easy.

 

Dad looked at me with the almost proud smile on his face and he said, "What color was the light when you turned on to Atlanta?" I realized I did not even look at the stop light. I admitted I did not look. He smiled and said, "That's Ok, it was green." Later in the week at a dinner with friend's he could not resist telling people what his &*&(%^$ half wit kid did. But I had known for many years that was his term of endearment for me. So much so I have trained Siri on my iPhone to call me that name. I will ask her what my name is and she will answer "%**&@ half wit is what you told me." But I digress, and so did the market.

 

 

We thought the market could take the expected bad economic data out of Europe with a grain of salt. This was more like a 125 pound bag of salt. Last week the market was handling what ever Europe and China might throw at him. No news out of the US could not prop up Mr. Market so he dropped under the weight of the icky Euronews. It looks like lots of money is flying towards the buck as the dollar was strong today, the 10 year was at 1.77% at one time and most commodities (at least the ones we care about) continued to fall. The VIX is creeping up a bit, but we have along way to go before we can even see a profit on our January 2013 calls. We need about 25 on the VXX which equates to about 26-27 on the actual VIX itself. If we pop a thirty before the end of summer we will be in fat city.

 

Because of the 10% bump in the VIX, I wanted to repeat what we said about the economic data coming our tomorrow:

 

"Tuesday

 

You will see a weaker than expected GDP report out of Europe and a good GDP number out of Germany. Japan will show continued improvement on machine orders as their supply chain management problems heal. Canada will have some good manufacturing sales numbers as well.

 

Here in the states we will see CPI numbers and most of the players thing we will see prices stay flat or even decrease. Any significant jump could spook Mr. Market. A jump could drop the market and boost commodities. My guess are flat numbers.

 

We will also see retails sales numbers and they are expected to be down after a blowout month last month mostly attributed to auto sales and fuels sales. Fuel is down and auto incentives have cooled. Look for the expected drop.

 

Then and this one could be important, the Empire State Manufacturing report is expected to jump up, or should we say back up. After falling from 20ish to 6.4 ish, the expectation is back to about 10. If that does not happen and a few other bad stars align, it could get ugly. We think it will break 11."

 

This is important as it could be a game changer. If the world is heading towards the dollar as a safe haven, things are getting goosey. That means the world is ignoring our uncertain debt crisis. Will the lame duck congress finally produce a budget? Will it be any significant step towards reining our ballooning debt? We think not, but money keep flocking to the US. It kinda feels like what the Indians used to do to buffalos in the plains of the west. They would cull a herd of enough buffalo to provide food and clothing for the their tribe and run the buffalo off a cliff and go down the valley and harvest what they needed. In our case we will just end up with a bunch of dead or injured bucks.  

 

Despite the down market, we added to our ACET positions on the weakness. We also sold some calls against our AAPL positions and XOM positions. If the prices linger in this area for a few weeks or go down, we will have a nice little self executed dividend. If it goes up we get out with a little profit or a break even.

 

Tonight we ran some more screens for the Auer Fund Strategy and ran them through the Buffet Eval sheet. We will keep crunching numbers every night this week to see what we can add to our watch list.

 

Food for thought, if you were paying attention to us, telling you about how China was trying to slow down their economy throughout most of 2010 and 2011 by increasing their banking systems reserve requirements (making the reserve level at the banks means the banks can't loan as much money which has the same effect as raising interest rates) then if you look into the slowing economic data coming out of China and say, "Hey it worked they slowed their economy." You will also want to note that the central bank just lowered reserve requirements on Friday. Their first of what will be several reserve requirement reductions. (Lowering the reserve requirements will increase liquidity and spur their economy along.) If it matters, China tightened the reserve requirements 11 times in 2009-2011.       

Salve Lucrum 

 

 

 

 

 

 

 

Brian Ireland
 
Since 5/2/2012
BAGAKOAA;

I am not a professional investment advisor. Anybody reading my blog and investing accordingly must be out of their minds. I have made more money than I have lost. There are many more qualified people than I to actually tell you how to invest your money.

BAGAKOAA=Boys And Girls And Kids Of All Ages

Salve Lucrum=Latin for Hurrah for Profit.

2012 Year Ending

Dow 13,073

S&P 500 1,358

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