How stupid can the Europeans be? They barely escaped the complete destruction of their economy, several times, over the past few years. Testing their fate, like a collection of idiots on a mantle, they bail out Cyprus–but add in the absurd condition that depositors are to take a hit. It’s cartoonishly funny.
This is the very definition of penny-wise, pound foolish that only a German could concoct. What did they think would happen, post Spaniard, Italian crises?
This is going to be walked-back, which is why futures are not down 300 right now. Cyprus may be meaningless, fodder for the Greeks and Turks. But it’s the precedent that matters here. As a member of the EU, the depositors must be afforded protection. This isn’t complicated.
Back in the Great Depression days people lost of their money because there wasn’t any depositor insurance. When the panic struck and everyone rushed to take their money out at once, the banks failed.
Why did the banks fail?
Answer: because the core business model of a bank is pyramid scheme. Why in the world would you perpetuate a bank run, just to save a few dollars on a small bailout? Are they trying to take a big, brave stand on moral hazard? Who are they kidding?
It’s a little late for that.
The pyramid scheme must continue and will. Both Italian and Spanish 10 yr bonds yields are little changed and Europe is barely down 1%. This is a non-event, because the suckers in Europe are going to walk-back this absurd 9.99% (No Herman Caine) levy.
In the event this isn’t walked back, just sell stocks and go on vacation for a few months–because it’s gonna cause a pan-european bank run.
When we reach the very top of the market, no one will know. We’ll all be high off the o2, moving around sideways, like a crab, doing the money dance. Today has all the hallmarks of a topping formation, all the way down to weak miners, even though the raw commodities are higher.
I am up another 1% today, putting me at 22% for 2013. Those who know me understand that I do this on an annual basis, get real, real hot, so hot that I blow up–spectacularly–later on down the road. HOWEVER, to borrow a whimsically joyous phrase from thousands of great men in the past “this time will be different.”
That’s right, my friends from interland. “The Fly” will not pick up that hand grenade (CALL) that is without a pin and put it in his pocket. I’ve been a little proactive this year, taking on short positions when I usually throw it all into the oven, turn the dial up to 510 degrees, and hope that it doesn’t burn.
I am making money in all sorts of bizarre (BV) ways and feel that I am at a cross roads (CRDS). I was once down almost 15% in WNC, now I am up 1.2%. At the moment, USG is an underperformer, but I have faith in the wall board, especially since I am going to be needed a great deal of it soon.
My largest position is RAS and that has been a rock.
Leverage to the upside stands at 110%, AFTER my shorts, so I am fairly exposed here. Nonetheless, I will be in sell mode soon enough, the closer we get to tax day (4/15). Because of my gains, I can afford to take on some risk now and be patient with losers, even average down.
I’m just going with the trend here, the never-ending loop of history that keeps the economy going.
Set aside the fact that the EPA is hell bent on bankrupting the sovereign state of W Virginia and consider the following.
The bear case for coal has been the destruction of natural gas prices. Well, since I believe natty has bottomed, it’s fair to assume, as a result, so has coal. They’re intertwined, see?
The last I checked, US utilities were comprised of 58% coal powered plants. That number is down over the past 5 years because natural gas has been a cheaper alternative. With the price spiking here, there is a trade to be had in the natural gas and coal space.
For now, my top picks are in coal, due to the beaten down nature of the sector. It’s so hated right now, more than a Tea Partier hates US debt being owned by persons from the orient.
Top picks are ANR, ACI, BTU and JRCC as a high spec play. Although, according to their debt, JRCC is going to zero.
Reports Q1 (Feb) earnings of $0.08 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of $0.03; revenues rose 0.3% year/year to $3.59 bln vs the $3.63 bln consensus.Key metrics for the first quarter 2013 compared to the prior year were as follows: On a constant dollar basis, net revenue yields (net revenue per available lower berth day or “ALBD”) decreased 2.3% for 1Q 2013, which was in line with the company’s December guidance, down 2 to 3%. Gross revenue yields decreased 3.4% in current dollars. Net cruise costs excluding fuel per ALBD decreased 3.1% in constant dollars, which was better than December guidance, down 1.5 to 2.5% primarily due to the timing of certain expenses. Gross cruise costs including fuel per ALBD in current dollars decreased 5.5%. Fuel prices decreased 4% to $677 per metric ton for 1Q 2013 from $707 per metric ton in 1Q 2012 and were in line with the December guidance of $674 per metric ton. Fuel consumption per ALBD decreased 5% in 1Q 2013 compared to the prior year. The company repurchased 2.3 million shares valued at $87 million during fiscal 2013.Co issues downside guidance for Q2, sees EPS of $0.04-0.08, excluding non-recurring items, vs. $0.30 Capital IQ Consensus Estimate.
Second quarter constant dollar net revenue yields are expected to be down slightly compared to the prior year. Net cruise costs excluding fuel per ALBD for the second quarter are expected to be up 9.5 to 10.5% on a constant dollar basis compared to the prior year due primarily to the timing of certain expenses and repair costs related to the ship incident.
Co issues downside guidance for FY13, lowers EPS to EPS of $1.80-2.10, excluding non-recurring items, from $2.2.-2.40 vs. $2.37 Capital IQ Consensus Estimate.
At this time, cumulative advance bookings for 2013 are behind the prior year at prices in line with the prior year levels. Since January, booking volumes for the remainder of the year, including Costa, are running significantly higher than last year at slightly higher prices.
“Booking volumes during our seasonally strong wave period have remained solid with pricing comparisons improving in recent weeks. However, economic uncertainty in Europe continues to hinder yield growth…
Despite considerable attention surrounding the Carnival Triumph, we had been encouraged to see booking volumes for Carnival Cruise Lines recover significantly in recent weeks. Attractive pricing promotions, combined with strong support from the travel agent community and consumers who recognize the company’s well-established reputation and quality product offering, were driving the strong booking volumes.”
The co now expects full year net revenue yields, on a constant dollar basis to be in line with the prior year compared to up 1 to 2% in the December guidance. The change in net yields is due to the economic uncertainty in Europe and pricing promotions for the Carnival brand combined with less than expected growth in onboard revenue across the group. The company also expects net revenue yields on a current dollar basis to be flat for the full year. The company expects net cruise costs excluding fuel per ALBD for 2013 to be up 2.5 to 3.5% on a constant dollar basis compared to up 1 to 2% in the December guidance. The change in cost guidance is due to the impact of repair costs, as previously announced, as well as, expenses related to the enhancement of vessels in the remainder of the fleet as a result of the ship incident.
There I was, yet again, drinking brown acid with a little milk and honey mixed into it, watching the old portfolio rise, rather appreciate, in value–disrupted! when I started to hear something odd in my dining room.
What the hell could it be, god damn it!
Remember, I just finished renovating my house, after buying it in July. I’m a big advocate of moulding, always interested in making things look better, become more attractive to any prospective buyers. After all, there’s a reason why my house sold in one week.
I called a plumber. He stepped into the guest bathroom and declared “it’s a gasket, all is well.” He fixed it, then collected his $125–like the savage that he is, then wheeled off.
At the same time VHC started to collapse, the sound in my dining room grew louder. I said to myself “Fly, what could this be? Could I be hexed again by the Gods, testing me through arduous home renovations?”
I summoned the plumber back for a second time.
I complained of the sound and he chalked it up to “it’s the wind from the attic, traveling down the pipes, into here.” Then, like a gorilla with a wrench, he said, “no, it’s the heat. The heat is making that noise.” I dismissed his excuses with as much scorn as a fanatical muslim in bible class, asking him to “please refrain from partaking in ridiculous commentary.”
I said to him “the sound, my good sir, is pervasive and means there is a leak in the ceiling, chap.”
He took out his blade and sliced through the ceiling. Like cutting through a juicy grapefruit at a wrong angle, the water squirted in his face, drenching his worker blouse with cold water. Apparently there was a pinhole leak in the ceiling, caused by acidic water (yummy), of the municipal variety.
After further inspection, we found 6 pinhole leaks, which probably means the entirety of the cold water, horizontal, copper piping in my money pit needs to be replaced.
Let me reiterate: I’ve been informed that my water is laden with acid and will eat my pipes like pacman eats ghosts.
No, I shall NOT replace it with plastic crap. I will install a higher grade copper and have the water treated at the main.
So don’t feel bad, sad faced shareholders of VHC, “The Fly” got his comeuppance today too, with a direct hit upon his treasured coffered ceilings, which will lead to a complete and utter disruption of his way of life for the foreseeable future.
Back to my cup of brown acid. It’s rather delicious, actually.
When I sold VHC I did it because I was done relying on the caprices of judge and jury. I had a moment to think about what I was doing and decided it was time to liquidate my entire position. I started to sell in late February and completed my final sale on 3/5. At its peak, VHC comprised 30% of my assets.
But keep in mind, I’m not a guru, just a space alien magician (SAM) trying to make his way–here on Earth. The gurus are guys like Bill Ackman, long JCP into the teeth of catastrophe. Bill’s other “big bets” include risky stocks like PG and TGT, a real genius that guy is.
I don’t know what will happen to VHC tomorrow or the next day. For those of you who are still long, I am pouring out some of my 40 ounce of malted liquor onto my persian rug, right now, in your honor.
This too shall pass and you will learn from this experience to never trust a sure thing ever again. I am guilty of being swayed into the trap of euphoria too. At one point I felt this stock was on a bee line to $100. But the way the stock traded, spoke volumes, much more than the news itself. It was frustrating to own it and most of the time it traded by appointment.
Perhaps this is a blessing in disguise. Maybe this is a buying opportunity of a lifetime. I am sure James Cramer will give it another “boo-ya” on CNBC this evening.
The important takeaway from all this is asset allocation. If this was just a 5 or 10% position, it would hurt, but not be catastrophic.
Regards,
Lord Fly, Commander of the Stock Exchange, King of Kings, President of Atlantis.
