Research in Motion Bulls Sweating Bullets
Rumors of a negative earnings pre-announcement at Research in Motion (RIMM-NASDAQ) took the stock down to par earlier this week before it found its sea legs. The stock might mark time before RIM's September 25th earnings announcement, but RIM fans might be getting uncomfortable over a string of negative chatter concerning their upcoming product releases...will the Bold prove to be a dud?
RIM bulls are starting to trot out valuation arguments, which might be a stretch. Arguing the stock trades at a discount to its various growth rates might be true, but I am not willing to hang my hat on valuation just yet. I have argued the valuation highs were put in nearly a year ago, and multiple compression is slowly taking its toll on the stock. But it takes two to make a market, and some on the SellSide are keeping the faith:
Yesterday, Research In Motion (RIMM) announced that it will report its F2Q09 results (quarter ended August) on Thursday, September 25 after the close of the market with a conference call to follow at 5pm EST (dial-in: 416-640-1907). With rumors swirling earlier in the week that RIMM was set to negatively pre-announce results, we believe this release should allay any such fears. We note that RIMM shares have pulled back more than 20% during the past month due to concerns over the macro environment, product delays, expense discipline, and iPhone competition. Avian Research Note
Michael Masters Takes a Victory Lap
Michael Masters has created a stir in recent months with his pronouncements over the energy markets. The religious like fervor in which commodity bulls exhibited as recently as June is long gone, and the entire complex has gone...poof!
Masters broke down the numbers on oil futures trading, although it is far more complex than that, and ignores the swaps markets:
An independent study of oil markets concluded that speculation by large investors was a primary reason for the surge in oil prices during the first half of the year and for the more recent price declines.
According to the study, investors poured $60 billion into oil futures markets during the first six months of the year as oil prices soared from $95 to $145 a barrel. Since then, investors have withdrawn $39 billion from those same markets as prices have retreated.
Michael Masters of Masters Capital Management, which did the study, said the flow of money - not major changes in supply and demand - caused the volatile movement of oil prices. The report was released Wednesday by Senate and House sponsors of bills to put additional curbs on oil market speculation. Fortune
Walter Lukken, the chair of the CFTC, is fighting for the agencies very survival, and of course poo-poo’s Masters’ conclusions:
“Just as weather forecasters have no effect on the weather, energy speculators have no effect on the price of oil,’’ Scott Talbott, a lobbyist for the Financial Services Roundtable, which represents investors, told Bloomberg. “His fallacy is that he ignores the laws of supply and demand, which determine the price of oil.”
Masters says he extrapolates his numbers from publicly available agricultural data to arrive at overall numbers that include oil futures investments. Earlier this year reported that index speculators such as those that trade on S&P’s GSCI accounted for $260bn of assets, up from $13bn in 2003. As of Sept 2 that number was down to $223bn, noted Bloomberg.
Whatever the case, in arguing for legislation, lawmakers, primarily Democrats will point to the Masters report and an MIT report released In June alleging that speculation caused the rise in energy prices, Bloomberg adds.
And after the CFTC’s report Thursday, regulators may require Wall Street banks to regularly disclose their energy futures positions connected to the unregulated swaps market, according to people familiar with the discussions, suggests Bloomberg:
JPMorgan, Goldman Sachs, Barclays and Morgan Stanley control 70 per cent of the commodities swaps positions, and swaps dealers are the largest holders of Nymex crude oil futures contracts, Masters says in his report. “These large financial players have become the primary source of the recent dramatic and damaging price volatility”.
Of course, Masters has been long airline stocks throughout this entire drama, talking his book to some extent. But the bloom is off the rose; the decline in commodities has been vicious.
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Study blames speculation for oil’s rise
Fortune
Oil price speculation: Masters back on the attack
FT
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GOOG: Piper Adds to Alpha List
Alpha Seekers have banked some coin in the share of Google (GOOG-NASDAQ) of late, but Piper Jaffray says enough is enough and is looking for at least 5% upside over the next 90 days, apparently a prerequisite for making the "Alpha List".
But it is not all good, Piper is cutting its price target and estimates:
The firm maintains its Buy rating but lowers its price target on Google from $806 to $785.
The firm sees two specific potential catalysts that will boost Google's price in the second half of the year:
* as shares are down 18% over the last 3 weeks, Piper believes the market is betting that Google's September quarterly results may not meet expectations. However, the firm remains convicted that Google will be able to report in-line with the Street estimates as it feels that investor concerns regarding a slowdown in organic UK growth are overblown. Notably, Piper estimates that "a 10% miss in estimated UK organic growth equates to a 0.7% revenue miss and a 1% EPS miss to Google's overall numbers."
* Google has said that it expects the Yahoo! (Nasdaq: YHOO) search deal to begin in October and Piper sees the collaboration adding 12% to Google's U.S. search ad market share. If the deal ultimately passes DOJ scrutiny, the firm believes Google could control over 80% of the U.S. search ad market.
The firm lowered its FY08 and FY09 EPS estimates from $20.14 and $25.14 to $19.61 and $24.23, respectively. The Street is currently estimate FY08 EPS of $19.64 and FY09 EPS of $24.07.
Piper points out that over the last three years, Google has traded up an average of 30% from September 9 to December 31, meaning that by year-end, the stock could be trading around $550.
Overhang, in the form of an anti-trust investigation, could dog the shares for some time, however. Will Piper's call get any traction, and if it does, will it stick past today?
Piper Jaffray Adds Google (GOOG) to Alpha List
StreetInsider
Eric Bolling Puts Gustav in Perspective
Hurricane Katrina was a nasty storm...and Gustav is far tamer. Crude oil and natural gas prices are already retreating.
Eric Bolling broke down the ramifications earlier today on Fox Business Network:
“We talked to FEMA and the Coast Guard and Transocean rig driller, and we’ve listened to Governor Jindal and the sense you get is that we kind of avoided a disaster. And traders are really telling us that, with oil down almost $5 a barrel. We’re wondering, is this just a fluke? No.”
“Yes, Gustav had 115 mile per hour winds when it hit but not the 175 mph we saw with Katrina. Yes, the storm did rip through the important production areas of the Gulf. But it didn’t spend a lot of time there the way Katrina spent a lot of time. It went through around 17, 18 miles per hour –that’s pretty fast. It did go into some important areas of production and refining but it feels like we missed it. A lot of the damaging winds are on the Northeasterly side of the hurricane and it went a little too far north and east to affect some of the major infrastructure. We’re pretty fortunate right now.” Bolling on FBN
Go West Old Man (Rogers)
Poof goes China?
The Olympics were, at times, spectacular, but the hangover could be brutal:
China's tallest skyscraper, the half-kilometre-high World Financial Center (WFC) in Shanghai, has opened its doors, just as the country's property bubble shows every sign of being on the verge of collapse....The WFC offers the world's highest observation deck, complete with a transparent glass floor, the world's loftiest hotel, and some of Shanghai's priciest office space.
However, the formal unveiling, 14 years after the £640m project started, was being talked of as the turning point for China's over-inflated property market.....Minoru Mori, chairman of Mori Building Company, Japan's largest private property developer, was forced to admit that only 45pc of the office space in the WFC had been let and even Morgan Stanley, which is backing the project financially, could cut its leased space from eight floors to four.
The total wealth of China's 10 richest tycoons has declined by more than £15bn in 12 months. Telegraph
If Pinch is still in business a year from now he can send Tom back, and tells us what he sees. A shitstorm of biblical proportions could be hitting the fan.
Is it time for Jimmy Rogers to come home?
Shanghai's World Financial Center may prove to be a white elephant
Telegraph
A Biblical Seven Years
NYT
Warning signs from the centre of the boom
Globe and Mail
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