The Insider Report

  By STACY MEICHTRY and JONATHAN CHENG ROME—Uncertainty in financial markets deepened as Italy’s borrowing costs soared to euro-era highs and Prime Minister Mario Monti said European leaders understood an Italian collapse would mean “the end of the euro.” Europe’s troubles weighed on markets world-wide: Stocks in the U.S. had their worst Thanksgiving week since 1942, the year the U.S. officially set the holiday at its current date. The Dow Jones Industrial Average has shed 7.6% the past two weeks. The common currency showed its own signs of strain, ending the week down 2.1%, its lowest level in almost two … Read more

Insiders, C-level officers,directors, and 10% owners of companies, in short the people that know the business the best, has picked up noticeably as the markets have come down.  But it’s not anywhere near the level of August sell off activity.

I think we were premature closing out our euro short.  There really isn’t viable outcome of the European common currency anymore.  It’s possible that the IMF will bail out Europe and that is probably the right thing to do but there will have to be considerably more pain.  There is no way Germany is going to bail out its neighbors so it will be left up to the U.S, China,and Japan offering the Germans a face-saving way to pitch in through the IMF. So we are reinstituting our short position. We started Friday and are adding to it with EUO and … Read more

PUT OPTIONS ON JGB is Kyle Bass’s favorite trade.   UPDATE: IMF Warns Japan Debt Could “Quickly Become Unsustainable” — IMF warns that Japan’s debt could “quickly become unsustainable” if JGB yields rise — Says market concerns could trigger sudden spike in risk premiums — Yield spike could trigger Japanese withdrawal of liquidity from global capital markets (Adds more details from report, background throughout.) By Takashi Nakamichi Of DOW JONES NEWSWIRES TOKYO (Dow Jones)–The International Monetary Fund warned in a new report that market concerns over fiscal sustainability could trigger a “sudden spike” in Japanese government bond yields that could … Read more

The closest parallel to what’s unraveling now is the 1998 Asian currency crisis, culminating in Russian default and the collapse of Long Term Capital.  This is probably a multiple of 3-10 x worse than this as it could end with the collapse of the euro currency, several sovereign defaults.  It’s really hard to play anything here from the long side.  We have spent the last several days lightening up on perfectly healthy companies with high dividend yields and increasing our short exposure. You would think that gold would act as a buffer against the massive amount of money printing ahead … Read more

As usual, most of our posts are with a theme on how to profit from them or to stimulate the investment mind.  One of Gary Shlling’s ideas from The Age of Deveraging is to short emerging equities.  This could be a further catalyst.  It’s not easy to short emerging markets and the ETFs that attempt to do it explicitly say they don’t even attempt to correlate for more than a day.  That’s discouraging but the ProShares Short MSCI Emerging Markets ETF has returned 28.78% through 2011 third quarter versus -22.46% for its underlying index which isn’t too terrible considering that’s … Read more

.By BINYAMIN APPELBAUM and ANNIE LOWREY The latest Congressional failure to agree on a plan for balancing the government’s books could yield a surprising result: a sharp reduction in annual federal deficits, larger than anything contemplated by the special panel that reached its fruitless finale on Monday. But the absence of an agreement also threatens to significantly slow growth in an already ailing economy by raising taxes on almost everyone while reducing government spending on almost everything. via For Deficit Panel, Failure Cuts Two Ways – NYTimes.com.

The real issue is the total collapse of the global financial system based on a run of all the banks in Europe that leads to a gumming up of the global financial engine and a complete and utter demolition of the machine.  Throw thermo-nuclear war on top of that and you have  the perfect portfolio positioning for readers of Zero Hedge.  I have to say, I’m not a fan of horror movies, but horror blogs have certainly piqued my interest.  My vote for scariest blog of the year is ZERO HEDGE.  I guess that’s the point of the name, there … Read more

For this of you who don’t know who Kyle Bass is.  He is the new John Paulson.  Where Paulson screwed up this year thinking that our financial system would recover and bought heavily into the banking sector, Kyle Bass has adamantly maintained we are all going to hell in a hand basket sooner than later.     Kyle Bass Destroys The Ponzi-Prone Debt Sustainability Arguments Of The Status Quo…And Why Germany Cant Save The WorldSubmitted by Tyler Durden on 11/20/2011 16:08 -0500Germany Japan Kyle BassAnother noteworthy Kyle Bass moment as he discusses debt sustainability among major global sovereign nations. Simply … Read more

Reeling In the Yields By KAREN HUBE | MORE ARTICLES BY AUTHOR Despite rock-bottom interest rates, you can still earn investment income of 7%-plus per year. How to keep money flowing during retirement. Not so long ago, you could build a reliable portfolio of income-producing investments with just a few simple steps: Buy some Treasuries, some corporate bonds and some munis, and then watch the money roll in. That kind of investing is a long-lost luxury. Yields on core bond holdings have been slim for three years in a row. And while 10-year Treasury yields, at 2%, are higher than they were … Read more

At least that’s Merrill Lynch’s recently published outlook.  I happen to agree with it.  There are a few names here we own, our largest positions, and some insider buying as well.  Merrill Lynch writes Combines growth, yield and quality, three of our key theme-dividend growth potential in addition to high dividend yield. Under-owned by fund mangers Health Care is the preferred defensive sector (We have a full weighting nearly 8% in MRK but have sold some call per our tweet) Only sector with no expected deceleration in earning growth in 2012 Risks: commodity inflation, strong profits recovery.   Our favorite … Read more

The Dow Jones Credit Suisse Hedge Fund Indexes Performance data for Oct 2011 has been updated. Please visit our site at http://www.hedgeindex.com for further details.    Dow Jones Credit Suisse Core Index Performance Index / Sub Strategies Value** Oct 11 YTD 1 Year Annl* Std Dev* Sharpe* Dow Jones Credit Suisse Core Hedge Fund Index 93.87 1.85% -6.13% -4.28% 6.65% 6.80% 0.70     Convertible Arbitrage 93.35 -0.52% -6.65% -6.05% 3.32% 11.54% 0.13     Emerging Markets 98.85 1.73% -1.15% 1.06% 9.90% 10.87% 0.74     Event Driven 88.99 2.66% -11.01% -8.62% 4.84% 8.37% 0.36     Fixed Income Arbitrage 100.01 0.18% 0.01% -1.89% 7.78% 8.78% … Read more

I’m not sure what to make of this headline so judge it for yourself.   I wrote about insider buying picking up dramatically in August/September.  I said the two other signs I’d look for were stock buybacks and takeovers.  Stock buybacks apparently have picked up but I’m suspicious since companies can easily announce a buyback but not actually do it.  If you really want to buy back your stock, just tender for it and get it done! U.S. companies are buying back the most stock in four years, taking advantage of record-high cash levels and low interest rates to purchase … Read more

I thought this article was revealing.  As they say, as goes California, so goes the nation. There are a lot of actionable ideas here, from shorting restaurants to credit card companies.   Californians Cut Spending Published: Monday, 14 Nov 2011 | 10:20 PM ET Text Size By: Jane Wells   Californians have been cutting spending, according to a new report, in stark contrast to the state government, which continues to spend more than it takes in. The latest figures show state revenues last month were $811 million below projections. Nearly a billion dollars in just one month. Fiscal year to … Read more

Investors Dread-Letter Day: 11/23Mystery Surrounding Budget Supercommittee Keeps Markets in Limbo as Deadline Nears By BRENDAN CONWAYAssociated PressThe co-heads of the so-called deficit-reduction supercommittee, Rep. Jeb Hensarling R., Texas and Sen. Patty Murray D., Wash., have investors on edge as the panels progress on a deal by Thanksgiving remains shrouded in mystery.Call it Wall Streets other geopolitical driver, one played out not in Athens or Rome, but close to home in Washington. WSJs Janet Hook reports on yet another week ending without a deal from the congressional deficit supercommittee. Plus, what is likelihood that the deficit negotiations will come down … Read more

In Paris, Keeping a Watchful Eye on Rome’s Finances By NELSON D. SCHWARTZ and LIZ ALDERMAN Published: November 13, 2011   While Italy has replaced Greece as the focus of anxiety amid Europe’s worsening debt crisis, investors are increasingly concerned about the outlook for France, whose banks are among the world’s biggest and are closely linked with their counterparts in the United States. via France Keeps a Watchful Eye on Italy’s Troubled Finances – NYTimes.com.

Schedule for Week of Nov 13th by CalculatedRisk on 11/12/2011 01:15:00 PM Earlier: • Summary for Week Ending Nov 11th Two key housing reports will be released this week: November homebuilder confidence on Wednesday, and October housing starts on Thursday. For manufacturing, the November NY Fed (Empire state) survey will be released on Tuesday, the November Philly Fed survey on Thursday, and the September Industrial Production and Capacity Utilization report on Wednesday. via Calculated Risk: Schedule for Week of Nov 13th.

Jefferson County, Alabama, Votes to Declare Biggest Municipal Bankruptcy – Bloomberg Jefferson now must show a federal judge that it can’t pay its bills and then draw up a plan for meeting obligations, which the court may reduce. Unlike corporate cases, creditors can’t try to seize or sell off county assets, and the court can’t appoint a trustee to run the county.Municipalities have more leverage with creditors under Chapter 9 of the U.S. Bankruptcy Code than corporations have when reorganizing debt in Chapter 11 protection, said Marc Levinson, a lawyer who represented Vallejo, California, when that city went bankrupt. A … Read more

The yield on 10-year Italian government bonds rose above 7%, the level at which other European countries — including Greece, Portugal and Ireland — have sought international bailouts. The bond yields — which represent the level of risk of lending Italy money — surged as high as 7.48%, marking its highest since the euro was launched in 1999. Ireland’s actually rose above 8%, while Portugal’s breached 9%. And yields for Greek bonds touched the 10% mark. Obviously the U.S. has a similar problem as the PIIGS.  The best way to understand this problem and the fix for this problem is to look … Read more

Jefferson County, Alabama to file for largest municipal bankruptcy This is probably more of a one off municipal bankruptcy but its sure to grab some headlines if Italy gives it a chance.   James O’Toole @CNNMoney November 9, 2011: 7:25 PM ET Downtown Birmingham, in Jefferson County, Alabama. NEW YORK (CNNMoney) — Alabama’s Jefferson County is set to file for the largest municipal bankruptcy in U.S. history after commissioners failed to approve a settlement on the county’s billions in debts. Plagued by budget woes, Jefferson County had narrowly avoided filing for bankruptcy in September after reaching a deal with creditors … Read more

This Is The Moment Rick Perry’s Presidential Chances Flash Crashed Submitted by Tyler Durden on 11/09/2011 21:51 -0500 CDS Intrade 1 minute 40 seconds into this clip is where Rick Perry’s presidential chances flash crash. Literally. As the attached InTrade chart shows, the Perry presidential contract imploded from a prevailing level of about 9 by 60% to 3 in the span of milliseconds, and has since dead cat bounced to about a 50% decline. Who would have thought that the vacuum tubes have now taken over presidential odds as well? As for Perry’s presidential chances, this being America, where the … Read more

by  STEVEN ERLANGER Published: November 9, 2011— Since the start of the euro crisis two years ago, the big fear has been contagion, that market unease about the high debt and slow growth in Europe’s southern rim would infect the core. On Wednesday, contagion arrived with brute force. via Euro Fears Spread to Italy In a Widening Debt Crisis – NYTimes.com.

We slipped a bit in the month of September but still maintain a respectable place amongst the best performing long-short equity fund managers in the world.

Barclays Says Italy Is Finished: “Mathematically Beyond Point Of No Return” Submitted by Tyler Durden on 11/08/2011 20:13 -0500 Barclays European Central Bank Eurozone Italy Rate of Change Euphoria may have returned briefly courtesy of yet another promise for a resignation that will likely not be effectuated for weeks or months, if at all, and already someone has done the math on what the events in the past several days reveal for Italy. That someone is Barcalys, the math is not pretty, and the conclusion is that “Italy is now mathematically beyond point of no return.” Summary from Barclays Capital … Read more

For Markets in Europe, the Focus of Fear Moves to ItalyBy GRAHAM BOWLEYPublished: November 6, 2011 European efforts to solve a growing sovereign debt crisis have failed to quell market unease on the Continent, and the skepticism over Greece points to continued volatility this week.Multimedia Interactive FeatureTracking Europes Debt Crisis Interactive FeatureEuropean Debt Crisis Timeline GraphicMarket Gauges FlashingRelatedGreek Leaders Reach Deal to Form a New Government November 7, 2011Normal Life on Pause, and a Sense of Simmering Rage November 7, 2011Among fresh warning signs, Italy’s cost of borrowing has jumped to the highest rate since the country adopted the euro. … Read more

The rationale for this ETF portfolio is as follows: It delivers a 4.7% average yield and has returned 4.88% YTD just on the market appreciation alone. ETF Portfolio Delivers Income With Diversification Beta Yield YTD MkT % Vanguard Utilities (VPU) 0.5 3.76% 9.51% Deutsche Bank AG ELEMENTS Dogs (DOD) 1.09 4.62% 0.27% iShares iBoxx $ Investment Grad(LQD) 1.94 4.60% 6.82% JP Morgan Alerian ETN (AMJ) 0.7 5.30% 0.15% PowerShares Emerging Mkts Sovereign Debt (PCY) 2.51 5.69% 2.30% iShares Barclays TIPS Bond (TIP) 1.42 4.24% 10.23% Average 0.79 4.70% 4.88% Vanguard Utilities (VPU). Low management cost diversified basket of utilities. Utilities … Read more

Itron, Inc. provides products and services for the energy and water markets worldwide. It produces standard electricity, natural gas, and water meters for residential, commercial, industrial, and transmission and distribution customers. The company also offers advanced and smart electronic, gas, and water meters, as well as communication modules.     This is a checklist I use to quickly come to a conclusion on a stock.  I score a stock, each line getting a 1, 0, or -1.  A stock  that scored 1 on each line would be a perfect 10.  Buy it!Some of these items are quite subjective.  For example … Read more