Tuesday, December 9, 2008

Wal-Mart's Wisdom... Sin City Silence... Commercial Real Estate Re-Visited...

Cash is king... just ask Wal-Mart. The retailing giant made an announcement today that they are holding on to cash, and putting share buy-backs on hold. While investors have been rewarded a whopping 18% for holding Wal-Mart for the last year, even the master of retail sees the significance of putting additional share buy-backs on hold. Currently, Wal-Mart has $5 billion allocated toward additional buybacks. Could it be that the cash-rich retail giant for-sees big problems for the American consumer? Could Wal-Mart set another troubling trend for Wall Street bulls? This could well be the green light to short the !@#$@% out of any retailer that has seen a bump... the all-around play could be XLY. I was looking for an additional "feel good" run for shorting this one again... I will look to buy on any tick to the upside...6/15s are an idea. I have also considered some specialty retailers like TIF.

Some people call in discretionary consumer spending. Others call is play money... Whatever you want to call it money is not getting spent in places like Las Vegas. With convention bookings down by more than 18%, Las Vegas in no longer the impervious desert recession-proof oasis that it used to be. The Gaming conventions that meet in Sin City this week will find little solace in the current economic climate. After all, gaming in the United States could well be coming to a whimpering end. "This is as bad as it has ever been from a consumer-confidence standpoint," said Jim Murren, president and chief operating officer of MGM Mirage. "We have had a few recessions here in the past, but none as severe as the one we are in right now." While we have seen a covering rally for stocks of late, rest assured... Casino and gaming equipment makers are in for the beating of their lives. Cheap credit rates... and infrastructure projects will do nothing to help these places out. And 80% of the stimulus checks that Obama and friends will pass out as already been spent! I have seen WYNN taking a severe beating only to rally back. I believe this is another entry to to add additional contracts to my 3/30s put position. MCRI which has a projected earnings growth rate of 16% will see a reversal that could well lead them to negative growth. Unlike Las Vegas, MCRI has exposure in Reno... and NO ONE goes to Reno for gambling. Furthermore, MCRI's recent rally can be directly attributed to a covering rally. There will be no good news to come out of Las Vegas a.k.a. the epicenter of the foreclosure crisis. As one cab driver said, "It is worse than after 9/11."

VNO and SPG are back on the board. In a gravity defying move both have risen to the point that they are in the safe range to short once again. I have really given up asking the basic question as to "why" these stocks rise... I just know that they are rising for no legitimate reason, and when the market comes to its senses, these dandies are goners! The SRS play is another consideration...


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