Saturday, November 15, 2008
The Difference Between Rally and Fally: A Closer Look at the PPT, A "Short" List of Retailers, Mr. Kucinich
You know it! I know it! They know it!!!
Over the last year, the government has become "over-involved" in market manipulation. We have come to accept little "fudges" on GDP, unemployment, etc. That was always done for the good of the market. After the 1987 Crash, Ronald Regan issued Executive Order 12631. The Working Group a.k.a. Plunge Protection Team (PPT)consists of:
1. The Secretary of the Treasury, or his designee (as Chairman of the Working Group)
2. The Chairman of the Board of Governors of the Federal Reserve System, or his
3. The Chairman of the Securities and 4.Exchange Commission, or his designee.
4. The Chairman of the Commodity Futures Trading Commission, or her designee.
So the next time you sit in wondered-amazement as to how the market could rally over 500 points like it did on Thursday, consider government manipulation. Rallies starting for no reason or for reasons that are already known. Rallies starting after chart support is broken with the market becoming vulnerable to a much bigger drop.
Rallies taking place at politically convenient times, can all be linked to the PPT. It is becoming more evident that the United States government in some cases is not on only the Lender of Last Resort, but also the TRADER of LAST RESORT. I wonder if the PPT can be linked to the $2 Trillion Dollars that is unaccounted for from the Federal Reserve. (3) This does not include the over $2 Trillion dollars that it will eventually cost the United States Treasury in this bailout. As UBS Analyst David Havens put it "You're in for the dime, you're in for the dollar." (4)
A "Short" List of Troubled Retailers...
I hope readers can appreciate a bit of humor. However, if you are in the fluff retail business this is not funny. One report suggests that retail is worried about survival, that they may not even hire seasonal workers. While it may be too late to nail a few of these "dandies" with put options, I would ask that readers consider commercial real estate as a the current play against the retail industry. I currently hold puts on VNO, SPG, and RYL. (5)
Linens ‘N’ Things – closing 120 of 589 stores. Filed for chapter 11 bankruptcy protection in May.
Disney Stores – closing 98
Foot Locker – closing 140 of the 3,785 stores in addition to the 274 stores it closed last year.
Wilson’s Leather – closing 160 stores.
Home Depot – closing 15 stores.
Ann Taylor – closing 117 stores.
PacSun ‘Demo’ Stores – closing 154 stores in addition to the 74 stores it closed last May.
Lonestar Steakhouse – closing 27 locations.
Zales – closing 105 stores. Will have 2,145 locations open.
Pier 1 Imports – closing 25 stores. Closed 79 in 2007.
Friedman’s Jewelers – closing 120. Closing stores and laying off employees as it goes through bankruptcy proceedings.
Dell – closing 140 stores.
84 Lumber – closing 140 stores. Directly impacting by the nation’s housing market. Closed 12 stores in December.
Sharper Image – closing 90 stores. Filed for bankruptcy protection.
Pep Boys – closed 31 stores in November.
Ethan Allen – closing 12 of 300+ stores.
Rite Aid – closing 28 stores.
Sprint/Nextel Corp – closing 125 stores.
Movie Gallery – closing 400 of 3,500 stores.
Saks – closing 1 store.
CompUSA – 103 stores will be shut down or sold.
Kirkland’s – closing 30 to 130 stores.
Fashion Bug, Lane Bryant and Catherine’s – closing 150 stores.
Market moves down... Comparison...
Mr. Kucinich v. Mr. Kashkari...
Dennis Kucinich is a cult-hero of epic proportions on the West Side of Cleveland. His brash and pointed aproach to politics has gained his stature as a champion of the down-trodden. Yesterday, Dennis Kucinich had his chance to tweak the nose of Neel Kashkari (Asst. Treasury) on the PNC buyout of NCC. Kashkari's Capitol Hill testimony to the House subcommittee claimed that NCC never had a chance of securing Federal TARP funds due to its weakened state. According to Kashkari "he claimed that "Congressman, we only review applications that regulators submit with their recommendations." According to Kucinich, "National City Bank was pushed off a cliff." Do not be suprised if the House Banking and Finance Committee will redress this issue before it is all said and done! (6)
6. Cleveland Plain Dealer, Saturday November 15, 2008
Posted by at 12:31 AM