All joking aside, foundries aka “the place where wafers are magically turned into semiconductors” are seeing factory utilization rates spike, which could indicate a sustainable bottom for the semis. Of course, there is always the chance of a 2001-esque headfake. However, given the extraordinarily low levels of inventory, it is possible that orders will stabilize and start to increase into 2010.
Some of the more bullish forecasts call for a spike, in the range of 10-15%, in semi sales for 2010. Just to put that in perspective, sales for semis dropped by 30% in ’08 and are heading for another 20% drop in ’09.
Nonetheless, two of the biggest foundries, [[TSM]] and [[UMC]], say sales have increased in March, thanks to “substantial new orders.”
At the present, factory utilization rates stand at approximately 70%. During boom times, it is not uncommon for utilization rates to go north of 95%. So, with that in mind, the industry is not exactly breaking out.
Investors are bidding up shares, in anticipation of a bottom. If they are correct, they will make a fortune, since the semis are still very cheap, by historical measures. However, if this is nothing more than a blip on the way to hell, investors of semi stocks will have their balls handed to them on a fucking filthy wafer.
How does one profit from this Godly news?
Well, for one, you need to go up the food chain and start with the foundries themselves, [[TSM]], [[UMC]] and maybe soon to be bankrupt [[CHRT]], for a bounce.
Then, you go long the companies who test and package the wafers, such as [[AMKR]], [[TQNT]], [[SPIL]], [[TER]], [[ASX]], [[ATE]], [[KLIC]], [[UCTT]] and [[RTEC]].
Granted, the majority of the above companies are garbagio; but, they can run with great vigor if the cycle is heading for an upcycle. Back in 2003, I played [[AMKR]] from $2-ish up to $20-ish.
In addition, there is evidence of end user demand strength at [[RFMD]] and [[SWKS]]. And, handset makers, like [[RIMM]] and [[AAPL]], are weathering the depression like true gentlemen, sipping on fine brandy, while the ship sinks.
Finally, another stock to keep an eye on is [[OVTI]]. These are the guys who invented the camera for handheld devices, then watched in horror as Japanese and Korean players ate away at their margins and market share. At any rate, they just landed an iPhone contract. Considering the stock is saddled with a monstrous short position, the shares can run higher, if properly prodded.
NOTE: Gartner research does not think we are near a bottom for the semis. However, they do recognize the stabilization of orders at the foundries and “record low inventories.” In a note of caution, unemployment amongst engineers has risen from 2.8% in ’08 to 4.1% in ’09. As you probably don’t know, due to laziness and/or ineptitude, engineers help create jobs. Their employment statistics are viewed as forward looking indicators for the economy.
NOTE II: A foreign name worth perusing or nibbling at is Sonix Technology, maker of PC cam controllers. As reported by the company, they are enjoying a brisk pick up in sales, thanks in large part to the notebook market.
UPDATE: I sold out of my [[TQNT]] position, north of $3.30.
UPDATE II: I sold out of [[TLAB]] and half of my [[CIEN]] @ $4.50 and $8.22, respectively.
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Beautiful pic…exactly what I was thinking in my minds eye..and “poof, there it is”
Super Fly.
Name this billionaire Ponzi suspect:
“I always lived very frugally. I flew around on a private jet. I had a boat. But I always lived very frugally. I’m not a high-fallutin guy.”
Wow..a true headliner
Austrailia cut rates, none was expected…need to give a little umph to Asia’s commodity bitch….Yeah, China’s BTFO
This bullshit about new short seller rules will not stop companies from losing money or from having bad management and their stock will still suck. Citi did not go down to $1 just because of the shorts. They are insolvent!!!
The first thing that the government does during a declining market is to go after the short sellers.
well listen up Mr. Obama and Tiny Tim, when the market is crashing the only people with the balls to buy during such a decline is the short seller. They buy to take profits. Every rally, every single rally is led by short covering. Shorts create rallies when there is none.
Marie’s makes an excellent honey mustard. Personally I invest in a $3 jar every couple of weeks. Find it in your grocer’s refrigerated vedgie section.
I think the government is buying equities.
No way the common man is behind this ridiculous recessionary run-up.
Call me a conspiracy theorist…but I blame it on Geitner & Company.
Misery loves company! hahaha. An element of truth in there Mr. JGinty. Our first guy still isn’t sleeping more than 3 hours in a stretch and he’s 8 months old.
And we’re in Calgary btw.
Cheers, and goodnight.
Mars.
Hey when is this toxic asset sale supposed to begin? Will the banks ever sell the assets to the government now that the mark to market rules have been changed? I think not.
Now that the rules have changed the banks’ balance sheets will be a thing of magic.
I wonder how they are going to value assets with defaults coming down the line from commercial RE. Will they build some super model fucking time machine that can look into the future and predict the return of tenants?
I am with Mayo. The banks are fucked. If the government would have let some of them go months ago we would have saved tons of money and would probably be in the late innings of fixing the problem.
Fly,
Good stuff. Thanks. Anecdotally, it seems job postings for tech positions are up over the last 2-3 weeks. I’ve been hunting since November, and the pickings have been very slim (5 recruiters and postings looking to fill 1 position). The last couple of weeks there have been a few more postings. Still everyone I talk to have hiring freezes in effect at their firms.
First hand experience in the tech field…it all sucks. Everybody is either firing or on a freeze, or both. Maybe towards the end of the year is what I keep hearing (being hoped) for the turnaround…
Re: 3/4-full foundries.
We’ve depleted so much inventory over the last few months that they simply have no choice other than to start making all that shit again. But like The Fly says, in the ‘good times’ we have usually have problems with too little space in the fabs and we have to prioritize products/production lines. Running them at 70% is not exactly good business.
Futures weakening…
Hmm, futures down 10.9 at 6:55 AM ET. Healthy retracement? Start of a slow downward slip into the last reverse shoulder of this bear? Or resumption of the death spiral?
With all the accumulation during the last major market dip, I’m tempted to rule out the total resumption of the death spriral.
Is this IBC rootbeer the official drink of this site?
http://www.stupidvideos.com/video/all/IBC_Monkey_Man/#27117
From JigSaw about the Retailers: “Earnings for BBBY is Tuesday and if it tanks after earnings are released it will probally pull all the retailers along with it. JCP, KSS, TGT, WMT all look overextended as well.” – Jigsaw
Look at the retailer charts .. they are overbought. Short Retailers today for a swing trade … nearly a guarantee winner. Also, futures this Tueday AM (6:30 am CT) are down … Asia and Europe opened Down … Short something and Retailers look the most rewarding.
Very nice post. Some good ideas here. Thanks.
ISIL is indicating CHL is gaining subscribers due to govt effrots to boost cell phone usage. good base on it too. long CHL
now that assclown imbecile Cramer has declared all clear and load up on bank stocks, etc..It is only a matter of hours before this mkt shits the shower…probably coincides with reinstatement of the uptick rule..to truly mindfuck all the retards. Shorting retail, and buying more FAZ -SRS- FXP. Good luck to me, may Cramer get side swiped by a Turkish cab driver.
I agree. Cramer’s track record of being wrong all the time is worth betting on.
I am on the floor chanting for futures to magically reverse this am…so i can short the shit out of this markets sagging Tits..!
Ha! Things are fucking great. Local currencies popping up, just like the great depression.
http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm
Nice post..
i will issue my own local currency…so my fucking cheap neighbor will stop grabbing beers out of the garage refridge…fucking twit
Mars — 8 months old and still only sleeping 3 hours a night?
Suggestion: Cut down on the Baby Starbux, after 8:30 pm.
And we’re in Calgary btw.
FWIW — that’s my choice for the 51st state (Alberta?).
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Cash- Your neighbor sounds like mine (his first name starts with “F”).
Great Post Fly!
JR
Yes, that was a good post (although I missed the general insults and didn’t like “all joking aside”).
Shouldn’t this be good for equipment makers like AMAT,KLAC,LRCX,etc?
Eventually. But you will see the stocks that I posted above move first, since they service the foundries.
Good Morning Vietnam……..
on other news, the 4 short selling rules on the table right now in the works are to me “timely” at best. I believe the government really sees a major down slide coming and wants to put in place ways to keep it from happening so fast…..but as we see it, the rules will do nothing….we have seen that banning short seeling alltogether did nothing, the bank stocks during that month period in 2008 did nothing to stop the bank stocks from still going down. the bid, the ask and the “dump” price all merge together to make a transaction…..
but to me it is a sure sign, just for the fact that they have it on the table “now” when “they” are telling us all is fine in the economy, that “they” see trouble ahead and know they have been lying to us about how rosy the future is going to be…..if the future is rosy like they say who would short anything? and why have such a fast track to getting something pased on short selling?
well, I’ll tell you why….they know they lie and they know the shitith will soon hit the fanith again.
and make no mistake about it, although I don’t watch that shit channel anymore, bet you money CNBC will try to paint lipstick on all the bad earnings pigs coming out starting today.
carry on.
I live in YYC but travel a lot. Haven’t been ther since Nov.
Fly,
Nation post.
dear fly,
glad to see you r back
http://www.youtube.com/watch?v=uf7y1t6tNao
Averaging into DUG is finally starting to payoff
MSFT is the only thing holding this market from getting really pounded
the artist is one of the more clever miscreants on ibc it seems
I watch cnbc all day and now believe that the whole casue of this here crisis is an accounting error and skf.
buy buy buy
From your buddy Cramer.
“Mad Money w/Jim Cramer
Dow’s Down, Cramer is Thrilled
In Cramer’s opinion, any bull market with legs will have shallow pullbacks like the one we experienced Monday”
Interesting news item on GM from yesterday on Monday’s biggest gaining and declining stocks.
“General Motors rose 8.1%. The carmaker’s new Chief Executive Fritz Henderson is not ruling out the possibility of bankruptcy, the Financial Times reported Saturday.”
Is it just me, or is there a logic fault between those two pieces of information ?
that thar acountint that dun screwwed up the decimal spot on thar bankers tax returns needs ta be fired
it agreejus
yee haw
What this market needs is more volume. Although historically the VIX is above normal, I think that it needs to go higher and more volume has to come in to bring in the big money. The big money is not buying here. IMO they are waiting for the fools to keep stepping in before they drop the hammer. If you think the big money is buying then show me the big orders and volume. It does not exist.
Do you remember when Ireland was booming. I have a few friends that work for MSFT and they were going to Ireland often and said things were booming. Well no more
the first national economy to be downgraded by Standard & Poor’s credit rating agency – Ireland. The deterioration in public finances was blamed, on the Irish downgrade, and the rating agency went further in giving a negative outlook, meaning Ireland’s falling tax revenues could result in worsening agency downgrades. Falling from it’s eight-year “AAA” rating to “AA+” doesn’t seem that dramatic, but this will make it more difficult for the Irish to borrow and the cost of insuring their debt against default has increased sharply on the now infamous credit-default swaps market
T MOE, the Irish will have to get the potato’s back out it seems….
very good post, want more like this
Done for the AM.
Thanks SMH (and HCBK a little).
Re: Jakegint’s “FWIW — that’s my choice for the 51st state (Alberta?).” Oooohhh, I KNOW you didn’t just say that, eh. But here: take their oil/natty at below cost anyway. They also have some beautiful newly formed lake front properties up North I hear, and because tailings ponds are about the only thing that don’t freeze in the winter, you can swim all year ’round! Though, health Canada doesn’t recommend it, but will treat you for free anyway.
yi bastaaaards downgradin me?
I’ll fight all of yi!
very good post, want more like this
Posts like this every day (and sometimes, hour) on the PPT, Mssr. Piker.
😉
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