Sunday, December 7, 2014

Table scraps... Worth it?

I just finished watching quite a blow-out in the B1G conference championship, with Ohio State punishing the Badgers of Wisconsin 59-0. If TCU were a stock, I would be looking for a borrow and anxiously waiting for a chance to mash the "Sell" button. Full disclosure: I am a massive buckeye fan.

With that out of the way, some reads:


Last week, the S&P 500 finished at 2,075 - another all-time high. The Dow and S&P are both trading at roughly 15x and 17x next year's expected earnings. I will join the large conservative crowd and say that these valuations seem "fair." There are probably not a lot of returns to be had in the index ETFs from here, and I have taken my foot off the gas on the long side.

Where do we go from here? That is really anyone's guess. But I have decidedly changed tact, as I am only looking at out-of-favor, beaten up names on the long side that offer a large margin of safety in terms of valuation. One of them being MagicJack Vocaltec (Nasdaq: CALL). I have a SeekingAlpha write-up set to be published tomorrow (link will follow) that precludes me from going into too much detail (they now own my content), but that should give you an idea of what I am looking for.

In my last note, I mentioned the small spread between high-yield bonds and USTs. I began to dive into emerging market debt and the US carry trade - and I must say that I found myself lost. There is still a ton of capital tied up in carry trade, but it is not clear whether or not the recent strength in the dollar will cause an unwinding. One thing that is for sure, investors are beginning to dump high-yield in search of safety, and that could lead to trouble for some of the EM countries out there.


This is a chart representing the performance of JNK (Barclays High Yield Bond ETF) vs. that of TLT (Barclays 20-yr. Treasury ETF). The contrast is fairly stark, and I believe it represents the risk appetite among investors right now. I think it is fairly likely that a test and break of JNK's recent October lows is in the making.

And with investors flocking to ultra-safe US treasuries, I think that gives us some clues as to the overall mood of prospective risk-takers: not much meat left on the bone.

I do not see any major sell-off happening before Christmas, but the probabilities of 2015 being another strong year for domestic equities look to be shifting.

Heads or tails?





Monday, November 17, 2014

The rise of the USD

I hope your weekend was enviable (mine left something to be desired). Here are some reads to get you ready for the week ahead.

Last week equity markets in the US took some much-needed R&R. The S&P 500 ended the week at 2,039, adding 8 handles over the previous Friday's close. Light trading was all but certain with Veteran's Day on Tuesday (US bond markets were closed) and not much in the way of economic releases.

I would like to touch on a major theme - perhaps the biggest theme right now: the enormous upside price action in the US Dollar. While the Euro's slide against the 'ole greenback has been fairly steady and persistent for much of the year (Mario Draghi has been reluctant to recognize that the EU is headed for stag/deflation), the Japanese Yen was recently crushed after enormous stimulus measures were announced by Shinzo Abe on October 31st.

There have been massive moves in several major currency pairs, and this trend is likely to continue. From the UK Telegraph:

David Bloom, currency chief at HSBC, said a “seismic change” is under way and may lead to a 20pc surge in the dollar over a 12-month span. The mega-rally of 1980 to 1985 as the Volcker Fed tightened the screws saw a 90pc rise before the leading powers intervened at the Plaza Accord to cap the rise.
“We are only at the early stages of a dollar bull run. The current rally is unlike any we have seen before. The greatest danger for markets and forecasters is that they fail to adjust their behaviour to fully reflect a very different world,” he said.

…Hans Redeker, from Morgan Stanley, said the dollar rally is almost unstoppable at this stage given the roaring US recovery, and the stark contrast between a hawkish Fed and the prospect of monetary stimulus for years to come in Europe.

“We think this will be a four to five-year bull-market in the dollar. The whole exchange system is seeking a new equilibrium,” he said. “We think the euro will reach $1.12 to the dollar by next year and will be even weaker than the yen in the race to the bottom.”

The USD is the other side of a global carry-trade that is estimated to be somewhere in the neighborhood of between $3-5Trillion (yes, that's trillion, with a "t"). Basically, foreign countries (think emerging markets) will borrow in USD and then lend in their domestic currencies. Therefore, a cheap dollar acts as cheap credit for foreign borrows to finance investment and consumption. If this trade begins to unwind (which is likely what we are seeing the beginning of), it is the equivalent of tightening credit conditions for foreign borrowers.

This is especially concerning when you consider already-weak emerging market balance sheets and a woefully stagnant Eurozone.

In the wake of the dollar's strength commodities have been crushed (oil, gold, cotton, et al). Lower commodity prices mean tougher times for commodity-exporting countries, and discourages investment as projects lose their economic rationality.

I say all of that to say this: there is a major shorting opportunity to be had in countries whose economies are highly dependent on commodity exports and who have borrowed large quantities of dollars.

I am currently working on a comprehensive list of potentially vulnerable countries (besides the obvious Australia). The piece I wrote last week about debt spreads will be included in this; however, it just became a much bigger project than I had originally foreseen.

I humbly ask for a couple of days to put something worth reading together.

Tuesday, November 11, 2014

Absence makes the heart grow fonder...

Ladies and Gentlemen,

It has been several months since my last post. Not fulfilling the duties and responsibilities bestowed upon you as a U.S. Marine is frowned upon, as it were - so I was required to table much of my writing for some time.

But I am at it again. Before continuing, some reads:



Well, folks, Tom Sosnoff (perma-ultra-crazy-short) must be losing his mind. After a fairly quiet and uneventful summer in the markets - one that saw the S&P 500 and the DJIA continue to notch all-time highs - the bears got their sell-off. And then they got crushed. After hitting a high of 201.82 in mid-September, the SPY shed 10% (intra-day low) in less than a month.

Instead of a relief rally and further selling, major US indices have reversed course in jaw-dropping fashion, only to post new, new all-time highs just last week. I was unable to trade during the mayhem (thanks to Asian-Pacific island hopping that ended in an unlikely tragedy), but did offer some advice to a participant: buy this dip with both hands.

US equities are the "safe-haven" stocks of the world at the moment. Japan is pouring gasoline in the radiator, Europeans are broke (still, and spectacularly) and emerging markets are still under pressure. The S&P 500 is trading ~16x FY14 earnings, and that is just not bubble territory. Long-term bargains might be hard to find, but we are still a ways off from irrational exuberance.

One interesting note, however: bond yields (and spreads) are defying expectations (reality?). The entire planet seems to be in search of safe yields, and this has led to continued strength in almost every bond market. Below is an interesting bit from a recent Goldman piece:

"The collapse in government bond yields has triggered a historic search for yield. A fixed income fund with 30% US treasuries would need 50% of its assets invested below BBB to generate a 4% return – an all-time high."

With yields at historic lows, and spreads very tight, there is bound to be some mis-pricing of risk out there. More on that to come.

Thursday, March 13, 2014

The Daily Read


New title, same stuff - just not twice a day anymore. Here's what I'm reading tonight.
"I am certain, however, that nothing has done so much to destroy the juridical safeguards of individual freedom as the striving after this mirage of social justice."

- Friedrich Hayek

If you have read the papers (that word almost demands quotations nowadays), you have undoubtedly read that concerns over China, the next US catalyst, and persistent emerging market fears are to blame for today's sell-off. Poppycock, all of it.

Today the S&P 500 let go of 21.86 points to settle at 1,846 - a decline of 1.17%. This is hardly "fear" or "panic" selling. In fact, traders are taking some profits. In my weekly research note (written and distributed every Sunday), I warned traders to be cautious in initiating new long positions. I did this simply because it is time for a breather - no one sprints a marathon.

Today's action saw steady and persistent selling, after a slight gap-up open, on solid volume. There were no "come to Jesus" moments; no 15-handle 5-minute candles on the charts - just a slow, steady move lower. Consider the chart below.


The upward trend in the SPY is in tact. I will not start to become worried until we see a test of the 180 level and a move lower (accompanied by some volume).

In terms of my current positions, I am cash-heavy at the moment. My TSLA and SCTY positions were stopped out for a small loss yesterday, and I removed my APR calls in POT on Monday. The only trade I have on at the moment is my GDX synthetic covered call and it is working out quite nicely, in no small part due to the upside seen in spot gold. To avoid getting whipsawed around, I am going to refrain from adding long exposure (at least in the near-term) until we see some support. The 50-day moving average in SPY is around 183 - I would like to see that level (at least) reached and held before I start snooping around for longs again.

In the meantime, maybe there is a short or two waiting to be found. More on that tomorrow.

Heads, ignore the pundits. Tails, ignore the pundits.

Tuesday, March 11, 2014

The Morning Read

I apologize for the brief absence. Here's the morning read - let's get back to it.
"The four most dangerous words in investing are: 'this time is different.'"

- Sir John Templeton

Good morning, ladies and gents. After a brief hiatus yesterday, I am back to the printing presses so to speak. Let's take a look at where the markets are shaking out this morning, shall we?

Asian markets were slightly higher overnight - the Nikkei added 0.69%, Hong Kong's Seng index was flat, and the Shanghai Shenzen 300 added 0.52%. European markets are mixed this morning. The FTSE is down 0.35%, while the DAX is up 0.20%. Not a whole lot of excitement to speak of this morning.

US futures are basically flat this morning - /ES -1.00, /YM -2.00, and /NQ up 1.75.

Yesterday, we saw markets open lower and continue the selloff during the early part of the day. Surprisingly, the trade from late-morning was higher into the close. Treasuries have sold off from recent strength - a trade I was a little early on, and subsequently missed the move - with the TLT falling from a recent high of 109.18 to settle at 106 yesterday.

It is getting old saying it, but there is no use in shorting the market. The profitable trade is higher still. Think about what most portfolio managers, analysts, institutional investors, et al are thinking. "We cannot possible see another strong year after the performance equities put in last year."

Equities are trading on the back of the largest scale central bank liquidity experiment in modern history. The incredibly invasive actions that the Fed, the ECB, and a litany of other central banks have participated in are likely to create very unusual and extraordinary times. It feels like Alan Greenspan all over again, just without the "new era" rhetoric.

Someday, the reckoning will be upon us. That day is not today, and is unlikely to show its face this year. If markets do take a breather and sell off, be wary of the pundits pounding the table, saying "this is it! This is the big correction!" They've been wrong since last summer.

Heads or tails, "this time" is never different.

Friday, March 7, 2014

The Morning Read

I hope everyone has had a great week. Here's what I'm reading this morning.
"I have yet to see any problem, however complicated, which, when looked at in the right way did not become still more complicated."

- Poul Anderson

Well, folks, it is the first Friday of the month. Non-farm Friday, as goes the popular sobriquet. To the surprise of many, the S&P 500 has held its ground after Tuesday's major move higher - I, too, might have expected some more profit taking during the middle of the week.

I am of the thought that today's NFP data will only matter if it varies widely from already-muted expectations. I could be wrong, though. Today could be the day it all comes crashing down - I highly doubt it, however.

Asian markets settled somewhat mixed overnight, as the Nikkei added 0.92%, while Chinese markets drifted lower (Hong Kong -0.19%, Shanghai -0.4%). European markets, as of this writing, are slightly lower as well - FTSE -0.28% and the DAX -0.78%. Mario Draghi "disappointed" yesterday by making not a single policy move in the face of what many consider increasing deflationary pressure.

US futures are all barely higher - S&P 500 e-minis are sitting at +1.75, Dow +14, and Nasdaq +1.50. They will continue to tread water until employment data is released at 8:30am EDT.

My present stance in the market is still bullish. I have closed several positions this week, to include BAC and XHB. I have sold some March premium in TSLA and SCTY, and have a couple of long-call positions in some other names. Additionally, my GDX Jan/Mar (rolling front-month) 24.5/27 diagonal spread has been performing nicely. Barring any major shift in sentiment today, I will continue to trade around current positions - taking profits when granted and adjusting any "difficult" positions accordingly.

Here's to closing out the week on a good note.

Put the odds in your favor today.

Thursday, March 6, 2014

The Morning Read

Good morning, folks. Lots to do today, but here are some reads.
"Stock market bubbles don’t grow out of thin air. They have a solid basis in reality — but reality as distorted by a misconception.”

- George Soros

Today's note will be short - I got a late start to things and have a fair amount to do before the opening bell rings. And to be honest, yesterday's action was quiet - US markets traded in the tightest range I have seen for a while.

Today, Mario Draghi at the ECB will update the world on whether or not they will sterilize SMP (Securities Market Program) purchases. In other words, whether or not the ECB will continue to buy bank assets as a form of QE.

Asian trading saw markets move slightly higher - the Nikkei was the outperformer, tacking on 1.59%; Hong Kong added 0.55% and Shanghai picked up 0.45%. Euro-markets are trading quietly ahead of the ECB's announcment - the FTSE is up 0.20%, with the DAX trading up 0.22%. I imagine we will continue to see tight-ish trading in the US also, as traders position themselves ahead of tomorrow's NFP data.

My quick take on tomorrow's payroll numbers: the only way I see equities sell off considerably is if jobs data comes in much firmer than expected. Consensus expectations are for a 140k increase in payrolls, so anything above 175k or so I feel would be "too good." If the number comes in within a 10-15% range in either direction of expectations, I am willing to wager that you will see stocks get bid up. Everyone is discounting recent economic data due to the weather, anyway.

Put the odds in your favor today, my friends.

Wednesday, March 5, 2014

The Morning Read

Here are some interesting reads to start the day.
"Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do."

-Steve Jobs

This Friday is "non-farms Friday," meaning non-farm payroll data for February is due to be released at 8:30am. After the volatile start to this week, I would expect things to quiet down ahead of this Friday's number.

Overnight, Asian markets were mixed as China is facing its first onshore corporate bond default (see "China solar credit does not equal gold" above). The Shanghai lost 0.93%, while Hong Kong trading saw a modest decline of 0.34%. In Japan, all was well - the Nikkei added 1.20% to finish at 14,897.

As of 7:30am, European markets are all taking very modest haircuts. The FTSE is down 0.60% and the German DAX is off by 0.31%. US futures are flat this morning - not a whole lot of excitement to note.

In terms of what I'm doing today - may continue to look for some more long exposure, but in the way of selling premium (i.e. selling out-of-the-money put spreads). There are not a whole lot of names "on sale" - that don't deserve to be - with the broad market printing new highs.

See anything interesting? Let me know. Have a great day.

Tuesday, March 4, 2014

The Evening Read


I hope you are having a great day. Here's what we're reading tonight.
"Be fearful when others are greedy, and greedy when others are fearful."

- Warren Buffett

The above quote is strategically placed - by way of PostIt note - right next to my monitors. And when we have days like yesterday, I am quite pleased with its placement.

After yesterday's all-day selling pressure, brought on by Mr. Putin's military "exercise" (a.k.a. invasion) in Ukraine, the S&P 500 raced to new highs today (on volume). Monday proved to be a buy-one-get-one-like sale for the nimble. The closing print on the SPX was 1,873, while the Dow and Nasdaq (largest percentage gainer at +1.75%) finished at 16,395 and 4,351, respectively.

It is nearly impossible to accurately gauge where markets might end up months or years into the future. Even in the near-term, it is a challenging task - especially if you have skin in the game. All one can do is formulate an idea on where the odds lie, and attempt to trade with those odds. 

With that said, Jeffrey Kleintop of LPL Financial has made some bold predictions. Borrowing from the article above, "Bull market's five year - you get the idea - I have posted a couple charts Mr. Kleintop provided the WSJ.

Keep in mind, the only thing that separated 2008-2013 from looking more like 1929-1934 was an incredibly different (and much more accurate) approach to monetary policy. If you see Hank Paulson, make sure you pat him on the back and give him a heartfelt "'atta boy!"



So, since the end of WWII, the current bull market is the second strongest on record. Again, this seems absolutely nuts unless one understands how truly awful 2008-2009 really was. Note that the strongest bull market since WWII ended with the crash of 1987. Hmmm...

 
                            http://s.wsj.net/public/resources/images/BN-BT739_kleint_P_20140304132544.jpg

This chart is the interesting one (I wish it went back to net inflows pre-2009). The retail money - to be kind - has not participated in this rally. The halved 401(k)s and delayed retirements brought on by 2008-2009 still resonate with many "mom and pop" investors. With that said, persistently low rates are causing some to go on the hunt for returns again.

If nothing else (because it certainly isn't consistently profitable), prognosticating is fun. Retail money is getting close (if not on it already) to the "buy" button. Everyone knows what happens next.

Heads, this time is different. Tails, this time is never different.

The Morning Read

Good morning, folks. Here are some reads to start the day.
"If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts, he shall end in certainties."

-Francis Bacon

"Just kidding, guys! It was only a military exercise that we've been planning for months; it had nothing to do with our horse losing power in Ukraine. But we're staying in Crimea. That's ours."

 That's the message the world received from Vladimir Putin early this morning. I don't think that anyone believes a single word of it - I definitely do not.

European markets have rejoiced at the easing of tensions - the Euro STOXX 50 is up 2.25% this morning, led higher by the FTSE (+1.52%) and the DAX (+2.11%). The relief has trickled into the US as well. S&P futures are currently trading 21.00 points higher, with Dow futures higher by +179 and Nasdaq rounding out the action at +43.25. I very much hope you were able to buy the dip yesterday; I am very pleased by the latest developments.

I apologize for the abbreviated nature of today's morning read. I have some non-market related appointments to tend to this morning, so I will spend much of the early part of the day away from the desk.

The shorts still cannot win at present. I will be keeping my exposure to the long-side of things. Heads, I'm right on the money. Tails, I'm not, but I'll get there anyway. Put the odds in your favor, my friends.

Monday, March 3, 2014

The Evening Read

And March is off to the races. Here's what I'm reading tonight.
"If stupidity got us into this mess, then why can't it get us out?"

- Will Rogers

If you are reading this, and also happen to be an active market participant, I do hope that you were not too badly hurt today. Around noon, it looked as though the sky was falling; however, US markets found a bid and traded higher off of the lows of the day. Volume on SPY was 167m - the most we have seen since February 7. Given the the significant "risk off" mood seen 'round the world overnight, I think today's action is somewhat bullish.

I added long positions in BAC and TSLA (the relative strength in the electric car-maker was unreal), and I will continue the hunt this evening for other names that held up well during today's barrage of geopolitical-inspired selling.

US Treasuries continued to move higher today, understandable considering traders' nervous jitters over the Ukraine/Russia saga. Thinking a little longer-term, however, this seems like somewhat of a juxtaposition in my opinion. The recovery in the US is still on track (and I believe it will likely pick up steam heading into the summer), ergo, the Fed will continue with the taper and eventually the discussion will change about rates. Instead of "sometime in late 2015," the rate-hike rhetoric will become much less, well, rhetorical and more based on an actual date that falls on a calendar.

What will happen to equities when the powers-that-be at the Fed decide that the good 'ole USofA's economy is done with the training wheels? I can imagine what would happen to treasuries, and let's just say I am not a buyer.

Heads, I might even be a seller. Tails, perhaps not just yet.

The Morning Read

Russia had a busy weekend. Here's what I'm reading on this busy morning.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said."
- Alan Greenspan

Vladimir Putin certainly ate his Wheaties on Saturday. As I was writing up my weekly research note yesterday afternoon, I noticed US futures nose-dive (Odd for 6:00pm on a Sunday). It did not take long to see an article in the WSJ reporting that Russian airborne and naval forces had indeed invaded and taken operational control of Crimea. That's enough to spoil anyone's Sunday evening.

Taking a quick look at overseas markets shows a lot of selling - in Asia, the Nikkei is off 1.27%, while Hong Kong lost 1.47%. European markets have fared even worse: the FTSE is down 1.95% and the German DAX is down 3.06% as of this writing. Considering Ukraine is primarily a "European" problem, this makes sense.

US futures were under pressure all night, and this morning have yet to find any reprieve. S&P futures are down 18 handles, Dow -132, and Nasdaq futures off by 35 points. Treasuries, Gold, Crude oil, and Wheat are all trading higher as of this writing. My first inclination is buy the dip, but it would be wise to see where markets find a bid this morning.

I am going to refrain from beating a dead horse and talk about something non-Russia/Ukraine related this morning. Over the weekend, Bespoke Investment Group put out an interesting note on the most heavily shorted stocks in the S&P 1500. Of note, the average performance of these 27 or so names was better than that of the S&P 1500 year-to-date. I have included the complete list below.

Candidates that interest me? I thought you would never ask. They include JCP, GME and ARO.










Friday, February 28, 2014

The Evening Read

Friday could not have come sooner. Here are some quick reads before the weekend.
"Sell a man a fish, he eats for a day. Teach a man to fish, you ruin a wonderful business opportunity."
- Karl Marx

After a strong rally this morning, we saw a dramatic finish to trading - US equity markets swung to an intra-day loss before retaking some of that ground into the close. The S&P closed 5.16 points higher to settle at 1,859.45; the Dow added 49.06 to 16,332; and the Nasdaq actually lost nearly 11 points to finish at 4,308. The day's trading ranges covered nearly the entire week's range - a clearly volatile day.

I would like to spend a quick minute on Ocwen Financial Corp (OCN). Ocwen services and originates mortgage loans - in FY12, $840m of their total revenue ($845m) came from mortgage servicing. Their only profitable business in FY12 was their servicing business, bringing in a cool $274m - lending and "corporate items & other" netted them losses of $260k and $16.6m, respectively.

These mortgage services typically buy MSRs (mortgage servicing rights) from the larger banks in order to service the loans and generate fee income. Servicing entails collecting the payments from borrowers and distributing them among the proper mortgage-backed securities' accounts. In January, New York's top banking regulator put the kibosh on a deal in which OCN was to buy a fairly large amount of MSRs from Wells Fargo. Since, the stock has lost 20 points and looks to be putting in a meaningful bottom.

Not having done a lot of the fundamental legwork as of yet, I cannot put an intrinsic target value on Ocwen; however, the market has taken this stock and beat it senseless. An attractive trade would be to buy ~.80 delta calls 6+ months out (the Jul 32.5s are trading at $7.40 as of this writing) and selling front-month at-the-money calls - basically a synthetic covered call. The idea here being to collect the depreciating time value (theta) of the front-month call and financing your underlying long call until the stock shakes off the bad weather. I have yet to put this trade on, but I am finding myself increasing interested. You would basically be risking $2 (February low of $33.54, vs. today's close of $37.44) to make $8 (or more). Not a bad risk/reward scenario.

I'll be doing some further work on OCN this weekend. Let me know if you would like to see the note.

See you Monday morning. Have a great weekend.

The Morning Read

Happy Friday, everyone. Here's what I'm reading this morning.
"I was seldom able to see an opportunity until it had ceased to be one."
- Mark Twain

Following further developments between Ukraine and their predominantly Russian-inhabited Crimea region (evidently Russian "military" has occupied two airports), European markets are trading slightly lower. The Euro STOXX 50 is down 0.58%, with the FTSE lower by 0.20% and the DAX barely off at -0.14%. Today's US open looks eerily similar to yesterday's. S&P futures are off 1.75 points, with Dow and Nasdaq futures lower by 8.00 and 3.75 points, respectively.

Asian markets were mixed overnight - the Nikkei lost half a percentage point, while Hong Kong was flat and the mainland Shanghai Shenzhen 300 was up 1.15%. News-flow, aside from Ukraine, has been rather light. The US economic data calendar begins at 8:30am with 4Q GDP revisions, followed by Chicago PMI, the UofM (that school up North) consumer sentiment index for February, and pending home sales. I expect markets to be most sensitive to GDP data - consensus expectations are for a revision to 2.4% growth.

I still expect the "surprise" move to be to the upside over the near-term. It is hard to pound the table and indiscriminately smash the "buy" button at current levels, but taking some selective longs (while not risking much downside) seems appropriate.

Interestingly, bonds have been rallying alongside the equity market - this is likely a further sign of the lack of "believers" in the rally. I believe strength in the bond market is short-term; they won't be able to hold the bid if economic data continues to improve over the next few months.

Time will tell. Until then, put the odds in your favor, folks.

Thursday, February 27, 2014

The Evening Read

Good evening, folks.
"You don't need to be a weatherman to know which way the wind blows"
- Bob Dylan

Here's a quick recap of the trading session today: S&P 500 traded 9.13 handles higher to settle at a new all-time high of 1,854; the DOW picked up 74 to 16,272; and the Nasdaq added 26 to 4,318. A somewhat positive sign is that we closed right near the highs of the day, so one could reasonably expect some follow-through tomorrow. Unless, of course, Russia does something stupid.

Traders are clearly concerned about this rally. A quick look at the CBOE Market Volatility Index (the "VIX" or "fear gauge") shows that volatility has been trading between 14 and 15.5 during the S&P's march higher into new chart territory. Compare that to trading ranges of between 12 and 13.5 for the last couple of attempts at resistance in January and late October/early November.

This is by no means predictive - the VIX was rather complacent in January (before the emerging market hiccup) and completely failed to price in risk.

Allow a young (but rapidly becoming old) man to prognosticate: there is going to be a lot of "sorry we're late" liquidity come to the market if we do not see a more significant pullback over the next couple of weeks. I am not going to go out there and trade on this thought, but the more I hear people try to debunk this rally the more I think it has legs.

The VIX looks a little pricey to me.

The Morning Read

Good morning, everyone. Here's a snapshot of what I'm reading today.
"The long run is a misleading guide to current affairs. In the long run we are all dead."

-John Maynard Keynes, A Tract on monetary Reform

I hope that you will excuse my lack of writing yesterday. Occasionally, the military must attempt to collect their use from me. This morning I am firmly planted at my desk.

The trading mood across the Atlantic has been affected in no small part by the happenings in Ukraine overnight. The FTSE is trading lower by 0.70% and the DAX is off 1.56%. This "risk off" appetite has spilled over into US futures - currently S&P 500 futures are down 5.5 points, Dow and Nasdaq cohorts lower by 47.00 and 4.75 points, respectively. Ukraine is facing the slight possibility that they might lose control of Crimea (a mostly Russian-friendly Southern region of Ukraine, home to Russia's Black Sea fleet); however, I do not believe this will be a major issue once US markets open and we get underway.

Janet Yellen is scheduled to give testimony (again) at the Senate Banking Committee. The only potentially "new" piece from the Chair of the Fed may be a clarification on policy stance as the unemployment rate falls to 6.5%. No one expects a rate-raise because no one believes too much in the unemployment rate at present - most of the decline has come from historically low labor participation.

US equities have been trading in a pretty tight range, still near highs - I am leaning to the bullish side. Every talking head on CNBC, Bloomberg, FOX, et al seems beholden to the idea that markets are "topped out" and "fizzy" at current levels. Expect the unexpected, I say.

Heads or tails, the relentless pursuit of profit continues.

Tuesday, February 25, 2014

The Morning Read

This morning's reads.
 "In China today, Bill Gates is Britney Spears. In America today, Britney Spears is Britney Spears - and that is our problem."

-Thomas Friedman

Much to my dismay, I will be forced to spend most of the day away from my desk. Forgive me (or perhaps thank me) for the light commentary. 

Asian markets were mixed overnight, as Shanghai continued its sell-off this week losing another 2.56%. Hong Kong was basically flat and the Nikkei added 1.44%. European markets are modestly lower at the time of this writing, the FTSE is off 0.85% and the DAX is down 0.49%.

US futures are slightly lower, although it is only 6:45am so it's anyone's guess. /ES -3.25, /YM -18.00, and /NQ -5.75. Crude oil is down $1.00 in early trading this morning to $101.82.

News flow for today will be focused primarily on housing, with the Case-Shiller home price index and FHFA index releasing at 9:00am. Consumer confidence numbers for Feb hit the tape at 10:00am. Housing data has been weak lately, due to weather and higher prices; however, I still think homebuilders are poised to be a strong performer (see Friday's evening read) over the next 1-2 years.

Put the odds in your favor today.

Monday, February 24, 2014

The Evening Read

Some evening reading material that I found interesting. Enjoy.
All major US indices showed strength today; however, they were unable to hold on to highs and sold off into the close. My call on OIH had been working since last week, and was a notable outperformer as energy stocks led today's action. I took half of my position in the Mar 47 calls off of the table. I hope you were able to participate in the success.

Game-changer for BBRY? Probably not.

Just how big is Ford's switch from Microsoft's Windows Embedded Automotive technology to BlackBerry's QNX software? I am really not sure, but I thought it might be interesting to take a look. BBRY shares responded well to the news, trading 7.5% higher on the day.

I have spent the last hour or so trying to get an idea of what Windows Embedded Automotive technology costs OEMs on a per vehicle basis to no avail. I did find a WEA development kit, retailing for $3,150 (here), but I think it is safe to say that manufacturers are not paying $3k/vehicle.

Let's get really crazy and say that it costs Ford $75 to install and license WEA on a car (or truck or SUV, etc.). Given an installed base of roughly 7m vehicles, that equates to $525m in sales to Microsoft in aggregate. That's a lot of dough.

Ford cited one of their reasons for switching to BlackBerry's QNX are the cheaper licensing fees (not to mention the fact that automotive manufacturers hold QNX in much higher regard). So, let us say that the cheaper QNX costs Ford $40 per vehicle to install and license. Ford sold more than 2.4m vehicles in 2013 - assuming half of 75% of them have Sync, that gets us to 1.8m vehicles. That's $72m in licensing fees to BBRY.

Given that BlackBerry did $11.07b in sales in FY 2013, this announcement is hardly a windfall for them. I originally intended this exercise to shed some positive light on the company; but, alas, sometimes you get to the bottom of the rabbit hole only to discover worms and dirt.

BBRY could use more than a drop in the bucket to change their outlook.

Tune in tomorrow for another coin flip.


The Morning Read

Good Monday morning. Here on some reads to start the week off right.


Before I offer my latest macro missive, let's take a quick look at how the markets are shaping up. Overnight trading in Asia saw declines led by Shanghai's shedding of 2.20%; Hong Kong ended 0.80% lower, and the Nikkei finished 0.19% lower. European markets are mixed this morning, with the FTSE down 0.09% and the DAX posting a tepid 0.10% advance. Aside from mainland China, we open this week with mostly a mixed bag.

The weakness in China was a result of concerns over lending to property developers. The Oriental Morning Post on Friday got their hands on an internal document from Industrial Bank Co. (see WSJ above) saying that the bank had stopped lending to the property sector because of risk.

Are Chinese banks dancing on a volcano?

A few weeks ago, the world learned of a bailout of one of China's Wealth Management Products (WMPs - think mortgage-backed securities in the US, circa 2007). The WMP was named "Credit Equals Gold No. 1" and contained within it ~$500m worth of toxic assets in the form of unrecoverable debts from a corrupt - and now bankrupt - coal mine company. Investors were made nearly whole after the Chinese government stepped in to bail the product out. This is being seen as China's internal "Bear Stearns moment."

A lot of China's astounding growth has come from domestic infrastructure investments. The government forced banks (which are mostly government-ran) to lend to these projects, even if they posed the risk of generating a negative real rate of return on investment. It is estimated that China's banking sector has grown by $14-15t (that's "t" for "trillion") since 2008 to a current level of ~$24t. That is a massive expansion of credit.

China has massive foreign currency reserves and will no doubt try to buy off the crisis (they already "bought off" the aforementioned WMP); though it seems likely the economic situation will continue to deteriorate. Chinese banks' bad loans increased for the ninth straight quarter to the highest level since the 2008 crisis, highlighting pressure on asset quality and profit growth as their economy slows.

Bloomberg reports: "Non-performing loans rose by 28.5 billion yuan in the last quarter of 2013 to 592.1 billion yuan, the highest since September 2008..."

These bad loans only account for roughly 1 percent of total lending, but as the saying goes, "a rolling loan gathers no loss" - it is likely that many loans are waiting to be accounted for as "bad." It is safe to expect that the Chinese will throw good money after bad loans in order to buy time, which will only increase the level of malinvestment and exacerbate the depths of the coming reckoning.

I would watch credit quality in China very closely.

Heads, China has problems. Tails, China has problems.






Friday, February 21, 2014

The Evening Read & the US Housing Market

It's Friday. Grab a beer and have a look.

"Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day's financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me tips and, I suppose, spent the money I and others gave him in the market. My cook had a brokerage account and followed the ticker closely."

-Joseph P. Kennedy, after liquidating his position in the market in 1928

In true non-jobs-report-Friday-fashion, US market action was fairly quiet. After a brief move higher in early trading all major indices faded lower - Dow closed down 30 points to 16,103, S&P down 3.5 to 1836 and the Nasdaq shed 4.1 to settle at 4,263. Riveting stuff, folks.

To anyone reading my weekly research notes, it should come to no surprise to you that I am bullish on the home-builders. Specifically XHB, TOL, PHM, and KBH. Today's lower-than-expected existing sales numbers were received with a resounding "whew" as the weather had a smaller impact than some feared. Housing stocks outperformed, much to my delight.

While my bullish call on housing was as much technical as it was fundamental, I read a very interesting piece of research that leaves me even more constructive on the fundamental side. The following is an excerpt from TD economist Thomas Feltmate's note, released today:

"Not withstanding the recent weather related shocks, the housing recovery still remains well intact. Existing home sales are well above their recessionary lows, while affordability still remains at a historically elevated level. Furthermore, significant underbuilding has led to widespread pent-up demand, which taken alongside the exceptionally low level of available supply, will lead to a ramp-up in residential construction in 2014-2016."

I was intrigued with this comment, and reached out to Thomas via e-mail;  I asked to see his data backing up this assessment. He responded with a wealth of information. I will summarize it for "blog etiquette" purposes - those of you who read my weekly note will get a more detailed analysis. Below are some key takeaways.

  • Construction average hours worked at all-time high (data back to the 1950s) - this means more construction employment
  • Millennials are the largest population cohort in U.S. history, NOT baby-boomers (surprised me, too!)
  • Based purely on demographics alone (i.e. new household formations), new housing units of 1.6m units/year through 2016 are virtually required
  • Construction employment gains have strong implications for spillover employment gains in other sectors, especially transportation, manufacturing, and consumer goods and service 
All told, the 8-page report was very well thought out and provided some strong foundations with which to be bullish on housing. For you active traders and investors out there, I will have more for you in Sunday's research note.

Heads or tails, make it a great weekend, folks.







The Morning Read

Here are some good reads to start your day.

Ukraine set to sign agreement to end violence - WSJ
Firm stops giving high-speed traders direct access to releases - WSJ
Wal-Mart's big box formula comes under strain - WSJ
Bill Akcman's Herbalife bet drops - WSJ
Demolition Man Renzi rattles Rome with plan to axe senate - Bloomberg

"The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy."

-Milton Friedman

If anyone has any doubt about the political aspirations of Vladimir Putin, you need not look any further than the developments in Ukraine since November. Viktor Yanukovych, after a closed-door meeting with Mr. Putin last autumn, has resorted to casting protestors as "terrorists" and "radicals" in order to justify shooting into crowds. And I am not exaggerating.

It looks like there might be a deal in the works between Mr. Yanukovych and the opposition; however, it is unclear if the mob if protestors camped in Kiev will approve. The latest count shows 77 dead and over 100 wounded from the clash between police and protestors.

A quick look at overnight trading, as US futures are up ever-so slightly at the moment.

Japan's Nikkei snapped back after significant selling to tack on 2.88% at 14,865. Hong Kong was also higher (+0.78%) while the Shanghai index fell just over 1%. European markets are firmer across the board, albeit very slightly - FTSE +0.20% and the German DAX +0.07%.

We are still sitting near highs, resembling a "coiled spring," in the words of Dan Fitzpatrick. I continue to expect markets to clear yet another rung on this worry-ladder.

Heads or tails, have a good day today.

Thursday, February 20, 2014

The Evening Read

Another day in the books, another evening read.


Here's a snapshot of today's action.

All major US indices finished the day stronger. The Dow finished up 92 points to 16,133; the S&P 500 tacked on 11 to close at 1,839; and the Nasdaq added 29 points to 4,267. We are still looking like a move to fresh highs over the near-term, and I am still trading that way (albeit lightly). I will still be looking to take profits into strength.

I have been talking a lot about over-hyped companies as of late.

It seems that 2013 was the year of the short squeeze. One of the most notable battles has been that over the legitimacy of Herbalife - in December 2012, Bill Ackman (of hedge fund Pershing Square) announced a massive short position in HLF. His thesis was not that of changing competitive landscapes or absurd valuation; his thesis was that Herbalife was an illegal business and should be shut down by the federal government.

To announce a position and then try to instigate regulators to virtually guarantee your profiting from it by calling on them to shut it down is a touch on the insane side. So insane that if he is wrong, one could argue that Mr. Ackman himself was operating in a legal "gray" area as well.

Carl Icahn - whom I believe deplores Ackman, anyway - soon thereafter announced a massive stake in HLF and has subsequently squeezed Pershing Square to death.

You probably know this part of the story. HLF shares doubled last year, and Pershing's losses on the trade mounted. However, the management of Herbalife has never been straightforward about their business, and seem to fail to answer the most basic of questions. For example, how much of their revenue comes from sales to purely retail customers (i.e. customers not part of the multi-level marketing "business")? To which, management offered that they do not have visibility to that granular a level of their operations.

Massachusetts' junior senator, Edward Markey recently asked Herbalife some very good questions. He and his team wanted an exhaustive response to each question, to remove any doubt of their business being involved in shoddy practices. In response, he received this letter.

Any serious management team, when faced with serious questions about the efficacy and legality of their business, would strive with dying breath to irrevocably destroy any shred of doubt. HLF management - it seems - has not.

I'm not sure how long Mr. Ackman can afford to be wrong before he is right, but I do believe the day he and his investors long for will come.








The Morning Read

Here are some good reads this morning.

A new chapter begins for Wall Street's greatest love story - Dealbreaker
Fed puts rate increase on the radar - WSJ
Facebook to pay $19B for WhatsApp - WSJ
Opting out of evolution: Darwin Shmarwin - Economist
Billionaire Dangote leads record Nigerian syndicated loan surge - Bloomberg

"At particular times a great deal of stupid people have a great deal of stupid money... at intervals... the money of these people - the blind capital, as we call it, of the country - is particularly large and craving; it seeks for someone to devour it, and there is a "plethora"; it finds someone, and there is "speculation"; it is devoured, and there is "panic."

-Walter Bagehot

I happen to have a fair amount of work to get to pre-market today - this morning's post will be a little shorter than usual. The bulls took a breather yesterday as all major US markets ended lower. Overnight trading in Asia followed the tone set here - the Nikkei traded lower by 2.15%, Hong Kong down 1.19% and mainland China off by 0.92%.

European markets are also softer this morning - FTSE down modestly, or 0.27% and the German DAX shaving off 1.12%.

Currently, US futures are slightly lower - /ES -5.00, /YM -37.00, and /NQ -14.50.

Volume on this rally up from early February lows has been somewhat suspect. I will look for the market to catch a bid and trade sideways somewhat if I am to keep my bullish bias; if we do not get that, we could see another test of the lower bounds of the trading range in the S&P 500. Time will tell.

Put the odds in your favor today.

Wednesday, February 19, 2014

The Morning Read

Here are some good reads to start your morning.

 "You can always count on Americans to do the right thing - after they've tried everything else."
-Winston Churchill

Today could prove interesting, my fellow market participants. Weakness in European markets spurred on by violence in Ukraine and Thailand might test bullish resolve on our shores.

Here's a quick look at where US futures stand:

/ES -6.25 to 1,831.25, /YM -50.00 to 16,057, /NQ -7.25 to 3,667. Gold futures also slightly lower, trading down 0.51% to 1,317.7.

In this week's research note (inquire if interested), I highlighted the irrational valuation that has been placed on the shares of 3-D Systems Corp (DDD - I currently have no position). This company makes 3-D printers, which have received a lot of attention in the past 18 months.

Not long ago, 3-D Systems' CEO Avi Reichental commented on the company's potential in 3D printing of human tissues and full-scale human organs, saying it is "immediately achievable... not a question of if it will happen, but when and how."

Immediately achievable? Let's ignore the vast sea of implications that technology (and that statement) would create for a moment.

It seems this hyperbole and borderline illegal corporate cheer-leading has spilled over to another name: Organovo (ONVO). There is a fascinating piece of research on SeekingAlpha (here) done by Richard Pearson that explains in great detail that ONVO's business is substantially misunderstood and recent share price gains are coming from shameful "pump and dump" operations around the world (think "Wolf of Wall Street"). Basically, ONVO went from being worth $2/share roughly 16 months ago, to just under $10/share now on nothing more than an announcement that the company presented demonstrated retention of key liver functions in bio printed tissues.

I strongly encourage you to read the note.

ONVO has cash of approximately $0.58/share, assets totaling $1m, and no real commercial revenues. Current market capitalization? $770m.

This isn't a coin flip. It's a fraud.



Tuesday, February 18, 2014

The Evening Read

Sit back, grab some expensive (recently more so) coffee and take a look..

"You must begin to see yourself as already becoming the person you want to be"

I have yet to do a significant amount of  reading tonight, but that should get you started.

US markets were a mixed bag today - S&P closed up 2.13 handles to 1840, Dow lost 24 points to 16,130 and the Nasdaq finished 29 points higher to 4,272.

Of note today was the action seen in commodities. The PowerShares DB Commodity ETF (ticker: DBC) closed 1.44% higher today. Coffee and wheat (to name a couple, see here and here) were notable performers, the former driven by dryer weather in Brazil and the latter by increased international demand.

Commodities had a rough go of it in 2013, and one day's move certainly does not indicate that the wind is changing. One could wager that incremental demand increases are out of the question as emerging economies wrestle with current-account deficits. Further digging looks to be warranted.

I would like to touch on the Market Vectors Oil Services ETF (ticker: OIH) for a moment. It looks like we could see a nice trade here - and before you say anything, I have no positions as of this writing. I will attempt to keep "talking my book" to a minimum here at The Gambler's Fallacy.

Let's consult the charts!



You can see that OIH had been trading lower from highs notched in November of last year. But last Thursday you see a breakout above that upper trend-line, and Friday and today's tape gives you an indication that the selling might be done. Crude and Brent futures did see strong moves to the upside today after an updated weather forecast showing signs of continued frigid temperatures in much of the country.

I would expect to see some offers at ~$48, but after that, $49 does not look too aggressive a target. Consider, also the ETF's 200day moving average at $46.42, just a $1.15 below today's close. That's a 1:1.24 risk-to-reward if you fancy $49 a reasonable target.

Heads or tails?



The Morning Read

Feels good to be back at my desk. I hope your long weekend was as good as mine. Here is what I am reading this morning.


"Not every mistake is a foolish one." - Cicero

Let's take a quick peek at the markets.

Us futures are modestly higher this morning: /ES +2.25, /YM +29.00, /NQ +4.25

The Bank of Japan sent the Nikkei soaring 3.13% as the central bank announced they will expand loans available to commercial banks (at nearly 0%). They will also lengthen the duration of those loans, giving Japanese banks a better carry trade. This must mean that policy makers (perhaps even Shinzo Abe himself) are growing concerned about hitting their inflation target.

You can build houses on fault lines for a long time before an earthquake strikes.


Saturday, February 15, 2014

The Evening Read & the Chocolate Factory

Regretfully, tonight's reading material comes almost completely from the latest issue of the Economist. I have been at Albert J. Ellis airport (never head of it? Exactly.), where the wifi is woefully inept. I am also in mobile mode, so the headlines will not be linked. 

Nonetheless, here are some interesting reads. 

The tragedy of Argentina - (Economist)
Saudi America: the economics of shale oil - (Economist)
Soros trims Herbalife bet after gain that hurt Ackman's Pershing Square - (Bloomberg)
Rosenberg sees inflation after calling housing bust in recession - (Bloomberg)

I'll refrain from giving a complete breakdown of the trading action today, as the mystery will likely have been revealed by the time I get this latest rant off to the presses. I will say this: broad indices want to visit new highs, regardless of the length of their stay. Also, I will look to start taking some GLD profits off of the table. 

The Golden Ticket Illusion

I was struck by a thought while in flight: The ambition of man knows no bounds. Consequently, the skepticism of man knows no more tempting a target than ambition. 

With all of the recent talk of income equality, it is easy to be skeptical of one's ambition. And I am well aware that the privilege and influence of the grotesquely affluent often makes it seem as though the game is rigged. 

But I fear that the rage over inequality may grow so blind that instead of questioning Willy Wonka about his business practices and ensuring he is not bribing cocoa exporters, we will camp in mobs outside the candyman's shop and ransack the recent good fortune of Charlie's golden ticket. 

Let me go a little deeper into this analogy (even if it is rather terrible). 

Charlie, at first glance, was extraordinarily lucky. So much so that a bystander would not see anything more than the exuberant young man delighted that he is one of the chosen few, and ask "why not me?" But is he just lucky? 

His family, cramped beyond measure in a house not fit for a pet, presented him with what little money they could muster for his birthday. They insisted that Charlie take an enormous risk. Take that money and shoot for the moon. Not to mention the regular pain he must have put his digestive tract through with his dream-inspired chocolate consumption. 

In conclusion, yes, he was lucky. But he was also willing and encouraged by his family to take an adventurous risk and subject his body to enormous discomfort. And to the outsider, they might not have been aware of Charlie's situation before he struck gold. 

So, with regard to closing the gap between the haves and have nots, let us be sure that we do not bludgeon the "Charlies" of the world to death. 

Heads, it's chocolate. Tails, it's gold. 


Friday, February 14, 2014

The Morning Read

What I'm reading this morning...

Happy Valentine's Day, ya' filthy animals.

I am expecting a pretty quiet day - traders complained yesterday of lower volume due to the winter weather that is hammering nearly the entire Eastern seaboard (saw 2" of ice here in NC on Wednesday). Yesterday, after gapping down following the double whammy of weak retail sales and higher initial claims, shares were quickly bid up into the afternoon.

Clearly, a lot of traders want to be (or already are) short this rally. I read Tom Sosnoff's e-mail every morning, and every morning he drones on about being short. I know Valentine's Day is reserved for the romantically-involved, but perhaps I should send him some flowers and a card that reads, "I'm sorry you're taking it 'in the shorts.'"

Do not get caught trading on the notion that "equities have been up X days in a row! We have to see a pullback!" That, my friends, is the Gambler's Fallacy. Even if this rally is one massive short squeeze; short squeezes can still wreak havoc on your P&L. Just Ask Bill Ackman.

Now for a quick look at where we stand. Higher this morning are European markets after stronger-than-expected GDP data. In Asia, Hong Kong and China are modestly higher, while the Nikkei is down -1.5% as of this writing.

Stateside, Futures are essentially flat (/ES +1.50, /YM +15.00, /NQ +6.00), while spot gold is up 1.3%. The gold bounce has worked well for us this week. It looks like we are going to see a test of resistance near all-time highs in the S&P 500 over the near-term, still remains to be seen where we go from there.

Heads, she loves you. Tails, she doesn't.

Thursday, February 13, 2014

The Morning Read

Here's a breakdown of what I'm reading this morning:
"It is an absurd and silly notion that international credit must be limited to the quantity of gold dug up out of the ground. Was there ever such mumbo-jumbo among sensible and reasonable men?"

Let us take a look at the markets, shall we?

At the time of this writing (6:34am EST) it looks like most major markets have sold off. Asia is being led lower by Japan, with the Nikkei 225 down 1.8%. European markets are a touch off: FTSE -0.7%, DAX -0.30%.

Currently, US futures are pointing to a lower open: S&P -9.00 (-0.50%) Dow -76.00 (-0.48%) and Nasdaq -17.75 (-0.49%), treasuries up a bit, 10-year at 125;175 (+0.24%). The economic calendar this week is light, so I would expect to see a continued pause or some profit taking around current levels for the major indices.

Last night I read an interesting article on Tesla Motors' (WSJ) fight with a car dealer's association in Columbus, Ohio. It seems as though Elon Musk wants desperately to avoid selling his vehicles via the dealer franchise model, and dealers want desperately the state of Ohio to refrain from giving Tesla a dealer's license. Tesla has accomplished a lot of "firsts" in the automobile industry (or, at the very least, a lot of "firsts in a long while"); might this seemingly small battle over distribution carry with it large implications? I'm not sure, but more than willing to take a look.

Put the odds in your favor today.

Wednesday, February 12, 2014

The Evening Read

Interesting reads for the evening

US markets were rather uninspiring today. Unable to hold mid-day gains, the S&P500 closed at 1,819 (essentially flat) and the Dow at 15,963 (-30 points). 10 year notes sold off with the TLT settling at a shade under 106. Like I said, uninspiring.

I am still long-biased, albeit sheepishly. 

"Let's consult the charts!" said the crudely animated treasury official. 

South Park's satirical coverage of the financial crisis a few years back was brilliant. I loved it. The episode climaxed when Stan finally made it to the U.S. Treasury to discover the true value of his father's (defaulted-on) "Margaritaville" margarita maker: $90 trillion. The arrival at that valuation involved treasury officials cutting off the head of a chicken and placing it on an enormous chart - wherever the death knell dance ended was the true value of the asset in question.

I have about that much faith in most charts - which is odd, considering a large portion of my trading is short-term. Tonight take a look at the interesting, and the absurd. Let's consult the charts.

First, the interesting. Ok, it's not really a chart.



Lastly, the absurd, courtesy of the WSJ.



Heads, it's 1929. Tails, it's not.