Mish Mash Monday

• Posted by Leigh Drogen
• on October 19th, 2009

I’m going rapid fire tonight due to the sheer volume of stuff on my mind, try and keep up please.

Apple blew the numbers out of the park again, what’s new.  Look, the iPhone is the be all end all of mobile right now, it just is.  Does it have every single feature that you would want in a phone, hell no, I can think of one hundred million and one things I would add to the iPhone to make it better.  At the end of the day though, I don’t want any other phone, $AAPL just has me by the balls.  What’s going to happen to my music, my apps, my videos, all of the crap I have saved on there.  Are there other phones which do one of these things better, maybe.  Do I want to take the chance that it will do everything else worse, not a chance.  People like sure things, and right now the iPhone is a sure thing.  I have no doubt that in the future other companies will produce mobile gadgets that will unseat the iPhone, but right now it ain’t happinnen.

Note to Palm and Motorola, you suck.  Sucking isn’t as bad as blowing like Nokia though, which is so bad that it can’t even muster a attempt at taking on Apple.  The Palm Pre and the yet to be released Motorola Droid are just attempts by desperate companies to gain enough attention from the even worse Nokia in hopes that they will get bought out.  This whole farce is being put on with smoke and mirrors while Apple grows its top line in the worst recession /depression since the 1920′s.  Advertising and buzz can only get you so far, at some point you have to actually sell shit, something $PALM is failing miserably at.  All three of these companies are at the top of my hit list to short when the market turns (don’t hold your breath for that to happen any time soon).

Where is $RIMM left in this game?  In no man’s land really.  RIMM has tapped out the business market and its valuation is dependent on the ability to break into the retail market in a meaningful way.  I had a crackberry, before I had an iPhone, enough said.  @howardlindzon is right, RIMM will get bought by someone like Microsoft who can add value to the platform, RIMM is just out of ideas.  Either that or Jim Balsillie is spending too much time trying to pry the Phoenix Coyotes from the desert.

Speaking of other companies going nowhere fast, Dry Ships hasn’t participated in this move in equities.  I was long $DRYS a month or so ago when I believed the momentum was there to push it along.  When I saw it wasn’t I GTFO.  Could it still rally, sure.  But the action here is telling us that even in a world where everything goes up due to the wave of liquidity that has been unleashed, the global economy is at a standstill.  I check the satellite image of the Singapore harbor once a week, the boats are all still there.

Let’s get all the negative stuff out of the way shall we.  Earnings this afternoon from Zions Bancorp just sucked.  -1.41 a share vs. the estimate of -1.24.  Provisions for bad loans more than tripled this quarter.  No secret here, this bank is fucked and that fact isn’t changing any time soon.  They are so loaded up with toxic crap that it’s turning their branches brown.  I was at a dinner last night with some of the StockTwits crew and more notable members of the community.  We got onto the conversation of the large money center and investment banks versus the smaller regional banks.  Jim Gobetz (@aiki14) and I both agree that there will soon be a great pairs trade to put on going long the large banks and short the regionals.

The idea here is that the government isn’t going to let the large banks fail, NO MATTER WHAT.  They made this choice in February.  The basis of their decision comes from the education of one Ben Bernanke.  In his study of the great depression, he learned that a major cause of large bank failures was the government’s insistence on large banks eating smaller toxic banks.  This practice corrupted the balance sheets of the larger more stable banks and eventually led to their downfall.  The government did force large banks to merge last winter, BAC and MER, WFC and WB, along with others.  They did this due to the systemic risk that the failure of these large institution posed.  The smaller regional banks do not fall under the same category in Bernanke’s book though.  Will Zions fail, maybe, maybe not.  The important thing is how investors perceive their backing by the government, because as we know with all financial institutions these days, it’s all about the government.  The fed will do everything it can to keep these banks from dumping their toxic commercial real estate crap on the market further harming the wall street banks.  How far they are willing to go is the real question, base your trades therein.  BB&T ($BBT) is right up there with $ZION on my list of shorts when the market turns

Speaking of real estate, my father is a real estate attorney here in New York.  He has been bored to tears for the past year and a half, literally no work to do.  He was going into the office maybe three days a week, if that.  He was lucky that his law firm has a very family oriented culture, they take care of you in tough times, you repay them in the fat years by working your ass off.  I remember not seeing my father a whole lot in the fat years when he worked round the clock.  He is one of the lucky ones for sure.  Anyway, he told me about 2 weeks ago that all of the sudden his desk was flooded with deals, refinancing and property sales.  He said it went from 0 to 150 miles an hour in a few days like some kind of gate had just been lifted.  People aren’t building anything, you can be sure of that, but maybe the large residential and commercial market is finally getting liquid again.  Personally I don’t think this is anything more than desperate sellers lowering the ask to get deals done, it’s been how many years since you were able to sell a large piece of property?  Maybe the sellers see a sliver of a window in the market to get deals done before the winter sets back in, literally and figuratively.  Who knows though, take that bit of info as you wish.

Ok, on to the brighter side.  Copper is surging, the rounding top in $HG_F and $JJC is broken.  I had been very bearish (but not short) on copper for quite some time over the past two months.  That bearishness ended last week, and the bullishness started today as JJC broke out surpassing 40$.  As a trader, one of the most important things is the ability to change gears from bearish to bullish.  I was bearish on crude until a few weeks ago, and then got long with a double weighted position.  If copper is turned back at the yearly highs, the question becomes, are we seeing a rectangular consolidation pattern that could last another two months and result in a reversal?  Watch closely.

The Chinese equity market has been in a consolidation period for the past three months, if it can push past these highs convincingly we could see another monster run.

The agriculture sector lit the world on fire today as well.  Agrium $AGU made a huge move breaking out in a large way.  My favorite agg play $CF broke out as well.  I was whipped out of this name a few weeks back.  These things can really go on a tear now, especially given that I have no position.

Enough for tonight.

By the way, the Toronto Maple Leafs are a fucking disgrace to hockey and Canada.  Brian Burke better get his shit together up there quickly or we may see some rioting.  His only saving grace is that Les Habitants are almost as bad.

Oh yea, and my Rangers are leading the league in everything.

No hockey game for me this week as we get some rest, I could use it with my leg still being quite stiff.

Have a good evening.

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