Solar Stocks headed North? Great link....

http://seekingalpha.com/article/128304-want-solar-panels-china-will-pick-up-the-tab?source=email

Great Article on China subsidizing the installation/financing of solar panels. I am going to keep abreast on this story as all the details aren't spelled out. Given the credit crunch going on right now in the world, this is a VERY important announcement and, frankly, a gamechanger for some companies.

China is the #1 manufacturer of solar panels so they do have a HUGE vested interest. Chinese banks also funded quite a bit of the industries growth over the last few years and, from what I have read, some companies aren't generating free cash flow at this time (ie. they are dead if volumes start to decline as their debtloads will kill them). Troubled companies would be stuck with too much capacity, already thin margins due to industry overcapacity and their banks would get negatively impacted in the future.

This is also a way to help keep their exports up while enabling U.S. companies to effectively gain access to credit (because the payback period would be quicker) and save $$$ themselves. This has an impact on our trade deficit with China, an important thing to keep in mind when we hear politicians and their TV ramblings :)

Basically the payback period on solar installations is going to be 1.5 to 2 years now at current electric prices if the math he did is correct.

Keep this in the back of your mind as solar stock prices, from what the article says, appear to be heading north. Due your DD on this one...

Dan

Pending Pain for the Economy and Stock Market?

Boy, this kind of reporting gets old (negative news AGAIN) but I do NOT find it being reported enough by the general business media (CNBC, Fox Business News). The people they bring on, in general, have views/opinions are TOO optimistic and keep luring people into leaving their $$$ in the stock market right now.

1) Apparently there is a TON more pain that is going to hit European banks here soon as Eastern Europe pains negatively impacts their banks. Most North American/Japanese banks aren't big players in these countries.


2) John Mauldin, president of Millennium Wave Advisors, thinks the markets will hit a new low this summer, and then potentially flip/flop a bunch for years to follow. I agree with his thoughts re: "another leg down" as I think the markets should be trading around 665-680 based on multiples to forecasted S&P500 EPS and historical pricing behavior during bear markets. If this happens, can you imagine the impact to 401k plans, pension funds (that will be SUBSTANTIALLY underfunded), etc.

Hope everyone finds this info. valuable.

Dan Ross
http://www.DanRoss.info

Retail to the Rescue?

Retail to the rescue?

I wouldn't believe this opinion for a split second. Markets don't go straight down. They go down down further than they rebound. They go down more than up due to information being slow to come out. Markets don't go straight down because people see signs of a positive rebound and get greedy.

Well, I am playing the trend and this trend is down.

The economy has weakened, consumers and businesses aren't spending (remember, they are trying to PAY BACK their debts from previous years) and besides, the free credit of yesteryears is no longer available. I think 4-5% in some guaranteed investment works for me. Heck, I think the best investment is people investing in themselves to develop some new skills that enable them to add value in their organization or on their own. That way, if anything happens, people have something to fall back on or perhaps a new career path.



Dan Ross

Coming Retail Iceburg (More Commercial Real Estate Problems)

I've been mentioning this for quite awhile folks......Everyone reading the blog and looking at my "commercial real estate" tags can view prior comments.

Basically retail consultant Howard Davidowitz,of Davidowitz & Associates, is saying that as Americans save and spend less, due to the financial crisis, it's clear there's too much retail space. Just visit Web site deadmalls.com and track retail's growing body count. Most concerning to Davidowitz are Luxury Retailers and "private equity retailers" (formerly publicly traded and then taken private via use of debt by private equity companies).

Among the brandname stores Davidowitz says are in trouble:

Nordstrom
Neiman Marcus
Tiffany
Jeweler Zale Corp.
Saks
J.C. Penney
Sears


Until I can get some revised blogs up I thought I would keep people abreast of my thoughts so I'll keep the content coming here! I see it taking about a month for things to get done.

I hope everyone enjoys the video below. Boy, this guy is PESSIMISTIC!



Dan Ross

Jim Cramer on Nationalizing Companies - His Take

I like his take. I think he puts things into proper perspective...



Dan Ross

2009 Investment Predictions - Great videos/article

Another person concerned about the fall of the U.S. dollar this year and deleveraging. Todd Harrison, Jim Cramer's former partner/trader, is a bright guy folks. He was VERY right in 2008!



In this follow up video, Harrison talks about S&P 500 levels at 600. Here are Harrison's 10 investment themes for 2009.



Folks, my thoughts mirror Harrison's so that is why I just included the videos :) Many of the things he writes about or talks about are things I have written about in the last few months, like underfunded pension funds.
http://betterbizbooks.blogspot.com/2008/11/next-trouble-spot-underfunded-pension.html

Here is his article on his top investment themes for 2009
http://www.minyanville.com/articles/TXN-hpq-yen-spx-dis-CAL/index/a/20540

Dan Ross
http://www.DanRoss.info

Solar Buildings Become Reality?

Check out the link below:
http://www.xprn.com/pr/09/01/09010411-1.html

Suntech (NYSE: STP) has built in solar panels into their front facade of their new HQ. The array, which can generate up to 1 MegaWatt, is plugged into the local electrical grid. The company claims to be the world's largest photovoltaic (PV) module manufacturer and I think they are today.

Just something to think about as the green revolution starts to take hold in the next few years. Architechts will have the capacity to build buildings that will generate MORE power than they use as technological advances in solar power will enable this to occur. Obviously having such a large solar exposure helps. This probably wouldn't be as beneficial in NY, NY :)




Dan Ross
http://www.DanRoss.info/

Unemployment passes 7%, next stop 8% +

Wow, these guys are starting to bring up 9%-10% unemployment now.




I posted my thoughts on 9%-10% unemployment months ago here. People just did NOT understand how bad it was out there in the business world and now they are starting to see the negative stuff slice through the economy.

http://betterbizbooks.blogspot.com/2008/11/unemployment-zoomed-past-10-million65.html

I still think we have quite a few more people that need to get on the bandwagon that unemployment is a LAGGING indicator.

I'll say it again til I am blue in the face....
This economic cycle and downturn is being caused by something NOT SEEN IN 80 years! This is a CREDIT CRUNCH / devaluation cycle and it will take quite a bit of time to work through the system. It can happen quickly or slowly. That is the choice of politicians and policy makers. Either way, I think it will be painful for many Americans. I hate writing it but I think that is the way it plays out.

Here is a link to my post on what happens when we have to deleverage
http://betterbizbooks.blogspot.com/2008/11/what-happens-with-deleveraging.html

Dan Ross
http://www.danross.info/

Inflation coming back - Impact to the markets?

Another bearish call on the U.S. dollar

As we print $$$ to finance our deficits (because we likely won't be able to sell all of the bonds we need to finance our national debt/deficits) it will cause the U.S. dollar to fall in value.

The problem with this is that it will commodies like corn, oil, etc to rise in price since they are priced in U.S. dollars. The major commodity markets of the world are based here in the U.S. and have been priced in $$$ for years :)

A falling dollar will, in turn, keep interest rates from declining more.

I was optimistic re: lower rates this year, due to continued weakness in the U.S. economy as we try to deleverage the system. We hit the 4.5% interest rates I thought we would hit in the market (I know folks that got rates as low as 4 3/8% and 4.5% with 1 point down on 30 year fixed notes) but I think that might be the bottom.

With the dollar collapsing interest rates will get FORCED upwards by the market, thereby eliminating the refinancing market in mortgages that is EXTREMELY strong right now. I hope it doesn't happen but that is what my gut is saying will happen.

What are your thoughts on the market? Let me know in the comment section.



Dan Ross
http://www.DanRoss.info

A few CEOs and their thoughts on the recession

Interesting article posted at:

http://finance.yahoo.com/career-work/article/106252/The-Recession:-What-Top-CEOs-Are-Thinking

A few comments that really rang a bell with me.

1) Robert Nardelli, CEO of Chrysler, said he could see unemployment at 10% +. Based on his record as a CEO I don't really know how valuable his information/thoughts are. The guy had a VERY unsuccessful tenure at Home Depot after leaving GE and now ran into one of the worst economic climates in modern day history. Chrysler is toast in my opinion, whether or not they get some bailout or not.....

2) Lewis Hay, FPL Group (utility business) said " Probably 25% of our customers are past due. Normally, it's more like 15%. Another issue is access to capital. We had plans to invest more than $7 billion this year, and we've already cut back to about $5 billion. With such a shortage of access to capital, how are we going to get all these alternative energy projects going?" <--bold for emphasis as it is rather intriguing....I think pure play businesses have a chance at getting financing more than diversified companies. It depends on whether it is debt or equity financing though. Debt financing would be more likely with diversified energy companies since there would be more collateral and equity investments would be more likely with "pure play" alternative energy companies because they would provide more upside in the long-term (higher risk/reward).

3) When asked "How long or severe do you think the recession will be?" most said mid 2010 and one CEO commented that, "The key is inflation. If inflation stays under control and confidence returns, we'll come back early. If inflation starts to roar in mid-2009 and thereafter, we have a problem. It might start to look like the mid-1970s."

I think that is one smart CEO re: concern about inflation. While we are experiencing deflation right now there is increasingly a higher probability that the U.S. dollar will fall vs. other currencies and spike inflation since the U.S. government is printing ALOT of them. If this happens we see higher commodity prices again.

Dan Ross

Severe Market Recession in 2009?

Folks, this guy has been right EVERY step of the way. He screamed "WOLF" 2 years ago and has been right all the way down.

I agree with Roubini re: too much global supply. Demand will fall, which should cause deflationary risks. That is how oil goes from $140 to $44 in 6 months :) Having said that, I think, at some point, that certain commodities will become INFLATIONARY again as supplies get cut off and the U.S. dollar falls. Oil is the most likely to experience a notable REBOUND. It might take until 2010 or 2011 for oil prices to increase at hockey stick prices again (back to $100 +) because all of the oil producing countries need the revenue to finance projects through 2010 at a minimum. Most countries won't cut their spending quick enough so they will need to continue pumping oil at low prices to finance their spending deficits.

Given Middle East deficits, who buys U.S. assets? The asian economies is the answer....which is why I think U.S. stock prices continue to languish for awhile.

"Worst recession in 50 years" per the video below.

Dan Ross

Dow Jones bottom in? Cramer seems to think so....

I've quoted and tended to agree with Jim Cramer from MadMoney (CNBC show) for quite some time now re: this market downturn.

I have to disagree with him though re: this downturn being done. Until I see the S&P 500 not get pummelled by the pending convergence of the moving averages in the weekly charts (bottom chart) I won't buy into it. We should have a pretty good idea re: support for the S&P 500 by the end of December when the 10 day moving average and the price levels get close to each other.

The daily charts seem to indicate that support is being formed and that we are establishing a base of support. I would tend to agree with Cramer re: market redemptions potentially being at a peak now but I am NOT sold re: future profit taking occurring. I think people are investing ALOT less in the market today and have re-adjusted their allocations into equities. I don't think the upside is there anymore and I think A TON of leverage has been removed by the investment banks / banks that should limit the upside in the short-term. Just my 2 cents.

http://link.brightcove.com/services/link/bcpid1243645856/bctid3908038001







I could see the market going lower as unemployment soars, spending STOPS altogether and consumers TRY to re-build their balance sheets.

Here is recent news that I've read:

Today alone 20k job layoffs were announced. AT&T was 12k of the 20k alone.
http://biz.yahoo.com/ap/081205/financial_meltdown.html



http://news.yahoo.com/s/nm/20081201/bs_nm/us_finance_research_oppenheimer

http://www.cfo.com/article.cfm/12668072/4/c_12671474?f=MagazineMonthly120108

Auto sales are off 30% + in November.....I don't see these numbers improving ANYTIME soon....If the government approves a bailout the U.S. auto companies will CHEW through that $25 to $34 billion so fast you will be STUNNED. With sales off 30% + they need to go into Chapter 11 and re-structure FAST. Cut factories, cut lines of cars that aren't selling, layoff workers, re-negotiate contracts, etc. Did you know that there is more health care costs in a GM car than steel costs? True fact I recall from my days as a research analyst....

http://news.yahoo.com/s/ap/20081202/ap_on_bi_ge/auto_sales;_ylt=AmmzGDW65LZvc0aLKh.yF_OyBhIF
Abercrombie and Fitch's announced today that comp. store sales were down 28% year-over-year (Y-Y). Kohls was off 17%, JCPenney off 10%, Macys off 10%, etc. It is a bloodbath out there right now in retail land. Only DEEP discounts are getting customers to the counter. Profits will be HORENDOUS this year and I expect malls to start seeing vacancy rates RISE big time early next year as some retailers close down unprofitable locations or go belly up altogether. Oh, and I hate saying this but I expect alot of retail layoffs in early 2009. Retailers will get through the Christmas selling season and then trim, trim, trim.....

The ONLY company that was up in retail sales year-over-year was WALMART (up 8% from what I recall) as buyers looked for deep discounts at the stores. Heck, Target and Costco, who compete against Walmart and Sams Club, were both off nearly 10% in their comp. store sales.

http://news.yahoo.com/s/ap/20081204/ap_on_bi_ge/retail_sales;_ylt=Aju4RfuKxJlz0bDSrQpMHgCs0NUE

Interesting view of Aeropostale in the video below. Abercrombie and Fitch isn't discounting this season and their comp. store sales were off 28% Y-Y!


Enough depressing news for now....

Dan Ross
http://www.betterbizbooks.com/

Web 2.0 & Investing - Next Internet Bubble Humor :)

Something funny to chew on this week :)



Dan Ross
http://www.betterbizbooks.com/

Market Review - November 23rd, 2008

My post here pretty much summed up the way the market has been this year
http://betterbizbooks.blogspot.com/2008/11/it-is-official-2nd-worst-performance-of.html

But, focusing on this weeks movement I think the following:

1) S&P 660-700 was a price range I was starting to hear a few weeks ago but I was hearing too much "fair value" when the S&P 500 price levels hit 800, which told me that we had ALOT of downside risk remaining. Given that S&P500 EPS estimates are 15%-20% too high, in my opinion, shaving 15%-20% off of S&P500 price levels gets us to 640-680 on the S&P 500. That is my target range for when the market MIGHT get near a bottom. Frankly, at this point it is a guesstimate but one I'd put ALOT more credence in then most Wall Street Pundits these days.

2) Anyone see the way the financials performed this week? I commented about it but, after that, it just got WORSE and WORSE and WORSE....

http://betterbizbooks.blogspot.com/2008/11/s-500-and-bank-stocks.html

Here is a two week chart of the 2 largest banks in the U.S. and Citigroup. You can see how we had some major declines in major financial stocks this past week. Given that the financials have LED this decline they gets me a bit spooked re: the near-term future.



3) I had to book a trip to Vegas for January of 2009 (bachelor party so, twist my arm, I had to go :) ). I'll update everyone re: what I see when I get back but this is what I noticed from afar.

- Airfares are TOO EXPENSIVE. Gas has come down NOTABLY but airlines continue to charge LUDICROUS fares and their times STINK. I am going American one way and Southwest another to drop the cost to $300 from Dallas. Oh, and my free miles couldn't find a flight worth a crap to use them on

- I got a room for $70 a night vs. $150 published on major websites. This is Thurs/Fri/Sat. The longer I waited the more the rooms in Vegas kept coming down.....

4) Any financial review/post not commenting on the auto companies would be crazy. Without MAJOR re-structuring the U.S. auto industry doesn't deserve any $$$. It would be throwing good $$$ after bad $$$.

Dan Ross
http://www.BetterBizBooks.com

Ever hear of a "Minsky Moment" - Here is what it is...

Source: http://en.wikipedia.org/wiki/Minsky_moment

A Minsky moment is the point in a credit cycle or business cycle when investors have cash flow problems due to spiraling debt they have incurred in order to finance speculative investments. At this point, a major selloff begins due to the fact that no counterparty can be found to bid at the high asking prices previously quoted, leading to a sudden and precipitous collapse in market clearing prices and a sharp decline in market liquidity. Anyone thinking subprime mortgages/CDOs/ABS as well? (collateral debt obligations and asset backed securities = CDO & ABS). The Minsky moment comes after a long period of prosperity and increasing values of investments, which has encouraged increasing amounts of speculation using borrowed money.

A Minsky moment is a phenomenon named after economist Hyman Minsky, which describes what happens when an economy simply can't afford its debt anymore.

To put this into current, economic terms:
Lower home and stock prices leads to less consumer spending.
Less consumer spending leads to smaller trade deficits.
Smaller trade deficits lead to less foreign capital inflows.
Less foreign capital inflows lead to higher interest rates. Japan didn't need foreign capital in the 1990s.
Higher interest rates cause property and stock values to plunge.
Plunging values leads to less consumer spending.
Less consumer spending ... haven't we been here before?
Repeat cycle until broke.

Dan Ross
http://www.BetterBizBooks.com

It is official - 2nd worst performance of S&P 500 in HISTORY

From yahoo Tech Ticker

http://finance.yahoo.com/tech-ticker

Heading into Friday's session, in which an early rally effort quickly faded, the S&P was down 49% year-to-date and on track for its worst year ever. Down 43% year to date, the Dow is heading for its second worst year in history, the WSJ reports, trailing only the 53% decline in 1931.

Heading into Friday's session:

• 115 S&P stocks were trading under $10
• 41 were trading under $5
• 204 were trading with a market cap of less than $4 billion

These are not the only criteria in the index, but S&P 500 companies typically have market caps above $4 billion and stock prices above $5. Furthermore, many institutional fund managers are prohibited from owning stocks that trade below $10 or $5, depending on the firm.

Dan Ross
http://www.BetterBizBooks.com

S&P 500 and the Bank Stocks

If we look at Bank of America (BAC) vs. JP Morgan Chase (JPM) and the S&P 500 JPM is clearly leading in performance over the last 6 months. Below I show some YTD comparisons with Citigroup. Citigroup is the worst performing stock in that respect.

So my question here is "Why is JPM outperforming BAC so much, ESPECIALLY in the last few weeks. Their stock is only off 15% but BAC is off nearly 25%. Is the market saying something?" Why does the analyst at Institutional Risk Analytics think JPM and Citigroup need to go back to the Feds and not BAC? The charts/market seem to indicate a different scenario.



http://finance.yahoo.com/echarts?s=BAC#chart1:symbol=bac;range=ytd;compare=jpm+c+^gspc;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Dan Ross
http://www.BetterBizBooks.com

Citigroup & JP Morgan Need to Raise MORE $$$??

So I have posted earlier on my blog re: Citigroup and my thoughts that they were in dire straights. The reason that The government gave four banks $25 billion was so that no one would shoot Citigroup after they were the only ones getting $$$. They would stand out from everyone else.

Now this guy from Institutional Risk Analytics is saying JPM will need more $$$?

Both $$$ mentioned are very scary. Guess I'll keep on building cash for awhile! My Jan-09 target for cash building is now moving to March-09.

Dan Ross
http://www.betterbizbooks.com/

Citigroup (C) & Robert Roubin / Obama

So what is interesting here is this:

1) Roubin was an advisor/banker at Citigroup and Board Member. He is an an economic advisor to Barack Obama and possible Treasury Secretary. He had that role with Bill Clinton. Should a guy that clearly was asleep at the wheel re: risk management and enriched himself the entire time get such a role? I don't think so.....

2) Citigroup is really the reason that the banks got $25 billion each (Citigroup, Wells, JPM, Bank of America) in loans from Paulson via their "closed door" meeting that was highlighted in a 60 minutes video link I posted about a month ago. Ken Lewis of Bank of America is interviewed.

Citigroup is 60%-70% international. If they go under the "counter party" risks (ie. exposure of other worldwide banks/nations) would go THROUGH the roof and take down the entire global financial system.

If you look at their losses they have some of the highest amongst all banks in writedowns associated with mortgages - I am sure they will eventually be passed by Wachovia.

Additionally, look at their exposure to consumer credit. Henry Blodget estimated it at $500 billion in exposure. A 10% writeoff is $50 billion!

Just something to keep an eye on.



Dan Ross
http://www.BetterBizBooks.com

This is NOT another Great Depression

So I spend too much time each night looking at datapoints/articles, etc. I am always looking for interesting facts/figures that I find intriguing that might give me an edge in investing. Additionally, I like to be KNOWLEDGEABLE about a wide array of topics. Kind of MichaelAngelo type except without ANY artistic capabilities :)

I am not an economic forecaster but here is why, despite NO comparable datapoints since 1929, this will NOT be another great depression.

* The level of government intervention in the current financial crisis is completely unprecedented. Last time this happened the government INCREASED taxes, the Federal Reserve did nothing and banks were ALREADY belly up. Oversight of the stock market was NON-EXISTENT.

* There is a coordinated multinational approach to this economic history like none in modern or prior history that I can find. At least not on this scale, in value terms or percentage terms. Please let me know if you find anything comparable.

So, there you have it folks. I don't have solutions but I do have some observations. I'll post some interesting, "pick me upper" quotes for everyone this weekend. How about that? Hopefully by then everyone hasn't put a shotgun to their head due to depression about reading this blog ;)

Dan Ross
http://www.BetterBizBooks.com