1. Playbook Says Sell Stocks

2. Cody Trump, Jr

3. Food Bank Bailout

1. The playbook that I’ve been laying our for you guys says that we’re likely rangebound between 7k and 9500 and that you should sell/short all extreme rallies and buy/cover on all extreme selloffs. That means you should be shorting this rally right now if you’re a trader.

2. Oil’s down 35% in October. And it’s down by more than that since our friend, Donald Trump Jr, bet me his inheritance against mine on Happy Hour that oil would see $150 before it’d see $50. I still say oil’s likely to be below $50 a barrel by the end of 2010.

3. I jokingly said I’d rather own a food bank than a real bank right now during Quick shots. Fact is, there’s always a food shortage at food banks, much like there’s a capital shortage at money banks right now. Support you local food bank.

PS. Check me out on ABC’s 20/20 tonight for more on how the well-connected dudes have destroyed our system.

You wired me awake and hit me with a hand of broken nails
You tied my lead and pulled my chain to watch my blood begin to boil
But I’m gonna break, I’m gonna break my, I’m gonna break my rusty cage and run - Soundgarden (which is the greatest name for a band ever)

* Remember the trading playbook here. I’ve been saying that we’re likely range-bound between 7000 and 9500 for weeks, months, quarters and perhaps years ahead. Tough as it is right now to do with stocks up 13% in the last few days, I think you gotta be selling this rally at DJIA 9300. I’ve been saying the right approach is to sell extreme rallies, especially when they get close to the 9500 area — and indeed a 13% pop in a few days’ time to take us to 9300 is just about exactly that set up. So, follow the playbook and sell/short this rally.

=

* Oil’s down 35% in October. Down by more than that since my friend, Donald Trump Jr, bet me his inheritance against mine on Happy Hour that oil would see $150 before it’d see $50. He even gave me 1 to 1 odds since oil had been in that straight up groove to $120 something when we made the bet. I still say oil’s likely to be below $50 a barrel by the end of 2010. Not there yet though. And heck, you gotta figure it’ll squeeze up in volatile action along the way down anyway.

=

*Porsche’s Volkswagen Stake Sparks Call for Disclosure (Update2)

So the dudes at Porsche, which is worth tens of billions for shareholders, figured out how to game the German stock market system by using options and options derivatives to take control of Volkswagen, which is worth hundreds of billions for its shareholders. Think of it this way - It’d be like RealNetworks bought up options to control Google.

Nobody’s selling any more cars or getting higher margins or creating anything of value here. But the financial markets are in such utter disarray and full of so many unintended loop holes from the recent destruction of our financial system by the richest guys on the planet who don’t want to deal with the losses that their business models created for themselves, their shareholders and their customers…well, you’re gonna see a lot more weird, inexplicable financial game playing.

Somehow I think the largest firms, which are already receiving direct taxpayer aid, are also going to be able to manipulate the game to shift huge volumes of private capital into their own pockets. Just like Porsche just did with this Volkswagen game that makes no sense.

Feeling better about the outlook for economy and the credit crisis now? No, not so much?

=

Fed opens swap lines with Brazil, SKorea, Singapore, Mexico

This is constitutional?! Please Supreme Court, step up and do your damn job of checking the out of control power from the Republicans and Democrats who have recently waaaay overstepped the redistribution of wealth and power to themselves and the largest companies and richest people. And now, even redistributing our wealth to other countries without you and me even having had one say about it.

=

* Economist Fleming Says FDIC Plan May Stem Foreclosures

Okay, so no more houses are created, no more value is created, no more anything is created, but we allow some bureaucrats at the FDIC to print and/or move a bunch of money from those who created value and services to build their net worth. And somehow we’re supposed to believe that’s going to be virtuous for those of us who created value and services and that shifting of money from the savers and the renters to those who can’t afford the homes they live in is going to “stem foreclosures”. And if it does stabilize the housing market for the homeowner off the renter’s back, then does the renter to participate in any upside to the value of the house? Or are those profits immediately re-privatized for the homeowner such that the ownership class of this country always gets to keep the profits and push off the losses?

I’ve got a proposal for the FDIC and Treasury and Fed to consider that follows the same line of logic. I think we should have all national TV news anchors should get a $10 million credit line at 5% interest from the government, which can and should tax all the cameramen and assistant producers and mailroom employees and secretaries and cafeteria workers and the cleaning crew to raise that $10 million.

I promise all you cameramen and producers and mailroom employees and secretaries and cafeteria workers and the cleaning crew that if you don’t do this immediately that TV as we know it will cease to exist. We’re staring down a TV abyss. And the best part of my TV Anchor Relief Plan (TVARP, as its known in shorthand among those in the know in DC), is that it’ll pay for itself.

Yeah, seriously, most analysts will explain to you, Ms. Immigrant from Poland who diligently cleans my office at 1211 Sixth Avenue (but who just isn’t as educated as the analysts are and therefore if we can just “educate you” a little better about economics just like the politicians who voted the original TARP deal through used to tell us all the time then you’d feel a lot better about giving your money to me for your own good) is that we’re going to [hopefully] turn that $10 million into $15 million.

Oh, you guys in the mail room who gave your money to the politicians to give to me in this TVARP won’t actually get that $5 million of profit or your original $10 million loan back — no, the politicians will know much better how that money should be allocated for your own good than you do, even after they’ve “educated” you.

=

It might be funny if were talking about $10 million. We’re talking about trillions that they’ve already taken from all you cameramen and cafeteria workers and given to the biggest companies on the planet, the guys on Wall Street and their many rich cronies and now apparently other country’s citizens too.

Feeling better about the outlook for economy and the credit crisis now? No, not so much?

It’s a random kind of thing
Came upon a delicate flower
I can’t believe a machine gun sings
Driveby, driveby  — Neil Young

I’ll do my usual Weekend Vittles piece tomorrow, but in the meantime, here’s a random collection of random thoughts -

* We definitely need to bail her out, asap.

Maid-Turned-Realtor Masterminded Las Vegas Mortgage Scam, Prosecutors Say

How else can we possibly save this economy if people like this poor maid are turned out of their jobs. Oh, wait, only executives and politicians get away with create mortgage scams (we even send them free taxpayer money when the scam goes wrong). Well, them and anyone who’s taken on a mortgage they can’t now payback.

* So we can’t afford to pick up the citizenry’s garbage with tax dollars anymore, but we can afford $2 trillion for Wall Street?

Chicago May Make Deep Trash-Collection Cuts: Sun-Times Link

* I thought the whole premise for giving the car companies billions of your tax dollars was because otherwise tens of thousands of people would lose their jobs. How many hundreds of thousands of people have to lose their jobs as the current shareholders fleece the US taxpayer to avoid recapitalizing the current shareholder? Classic Flip It - Jobs won’t come back to Detroit until the Big 3 are allowed to fail:

GM-Chrysler deal to mean big Michigan job cuts

And on that note, do I have to change the name of my Big 3 on Happy Hour to Big 2 if Chrysler merges with GM?

* You actually see anything all that wrong with this trend? Fewer people making huge dollars by moving the working citizen’s money around and instead creating value through servicing people’s alcohol desires is probably a bullish thing in the long run:

Wall Street’s Jobless Go Back to B-School, This Time to Mix Purple Hooters

* Wonder if there’s anything meaningful to extrapolate out of the fact that twice as many people are Googling “Obama” as are Googling “McCain”.

* And finally, you know you’re in a bear market when these words are actually printed in the WSJ and not just said ironically on a fake news TV show or something:

“But so far, investors have rewarded him and, in the process, upended Las Vegas’s established financial order. Though Wynn Resorts’ stock price has fallen 76% since last October, it has held up better than its peers.”

UPI/Newscom

“Investors have rewarded him”?! Because his stock is ONLY DOWN 76% in the last twelve months???

Maybe we’re closer to a bottom than I realize. Probably not though. This is gonna still get uglier before it gets prettier IMHO.

Get my investment newsletter at http://thecodyreport.net
Facebook me at http://www.facebook.com/profile.php?id=763890180

1. We Already Bailed Out Hedge Funds

2. Counting the Candidate Googles

3. Billions, Trillions - Whatev

1. Actual headline of the day: “SAC’s Cohen, Einhorn Raise Money From Investors as Most Hedge Funds Shrink”. Don’t we need to bail out the hedge funds now too? Oh, wait, we already did that for Bear Stearns, Citigroup, Morgan and Goldman – they were nothing but hedge funds anyway. Smart capital is supposed to flee from the losers, just like it did in this case.

2. I wonder if there’s anything meaningful to extrapolate out of the fact that twice as many people are Googling “Obama” as are Googling “McCain”.

3. Whenever the lying Republicans or the dishonest Democrats start talking about how bad each other’s budgets are for the deficit and taxes and stuff because the plans might cost “hundreds of billions” of taxpayer dollars…I simply wonder why the $2.25 trillion that they both stumped and voted for and that we just budgeted for bailing out Wall Street fits into that picture?

Here’s how I was trying to spur growth in my own head today (hey now, no ego jokes!)

1. Cutting Rates Hurts the Banks!

2. Interventionists - Slow Down Please

3. Hula Hooping at Hulu.com

1. If the Fed’s now paying interest to the banks for the junk they use as collateral these days, and if the Fed bases the rate it’s willing to pay those banks based up its own Fed Funds Rate that it cut today supposedly to help the banks – then didn’t they actually HURT the banks by cutting rates today? You see what happens when we change the system without thinking it through?!

2. Real headline of the day, “Fed Opens Swaps of $30 Billion Each With Korea, Brazil, Mexico, Singapore” Is anybody actually thinking all this stuff and all of its huge unintended consequences through? Maybe we outta slow down the printing press just a wee bit for a just a wee while? Anyone? Hello?

3. Have you guys tried Hulu.com? Being able to watch tons of new and old TV shows on demand on my 17” MacBook Plus is pretty awesome. Remember how hard it used to be say five years ago to watch any video on the net? Gonna get easier. Content is king and and content companies like Disney and Lion’s Gate are getting to be buys again.

1. Bearish Volatility

2. Political Encouragement

3. Welcome to 2002, MTV!

1. The stock market didn’t drop 10% from its highs from 2003 through early 2007. I’m not talking about a 10% drop in a single day, but for four years, it never dropped 10% from its highs at all. Nowadays stocks put on a 10% move in a single day. Stocks doubled from 2003 and 2007. Stocks are still down 30% from their recent highs. This wild volatility reminds us we are still clearly in a bear market.

2. Real headline today: “White House Encourages Money-Hoarding Banks to Start Lending” – I thought profit-motive was what was supposed to encourage banks to lend. And only profits make stocks go up, so why would shareholders want the banks to start lending if the bankers don’t think it’ll be profitable?

3. MTV just published every single video in their library to the net. Welcome to 2002, Viacom! Anybody else find it ironic that MTV stand for music television but you can only watch their music away from the television? The good news is that the record labels are finally figuring out some business models that will work online.

Say you don’t need no diamond ring and I’ll be satisfied
Tell me that you’ll want the kind of things that money just can’t buy
I don’t care too much for money, money can’t buy me love -   As if you can’t name this band

If you risked money on real estate in the last few years and now you own couple houses and a lot in town - The government’s gonna take from someone else and help you out.

If you chose not to sell any stock when your stock was up a bunch at some point in the last few years and now you don’t have enough money to pay your bills - The government’s gonna take from someone else and help you out.

If you bought and sold people’s mortgages and got paid handsomely for your time in the last few years but now find your bank insolvent because you lied to yourself and your investors and your customers about how valuable those mortgages are - The government’s gonna take from someone else and help you out.

If you borrowed billions in the last few years to take big companies private, collecting huge pay days and having the companies you buy stop investing in new technologies and laying off as many people as you can in the company in order to maximize short-term cash flows - The government’s gonna take from someone else and help you out.

If you’re not making enough money to pay taxes or you’ve been laid off recently or been hurt on the job recently - The government’s gonna take from someone else and help you out.

If you’re gambled with your developing country’s currencies and tax base and now your economy is in shambles and social unrest is rising - The government’s (IMF in this case) gonna take from someone else and help you out.

If you’re a giant corporation in the world’s second largest economy and your exports are being hurt by the big improvement in your country’s currency in the last few weeks - The government’s (Japan’s government) gonna take from someone else and help you out.

If you’re an insurance company and you blindly wrote policies on corporate defaults, mortgage defaults, and currency derivatives without bothering to make sure you had enough reserves to actually pay for any, much less all, of those claims - The government’s gonna take from someone else and help you out.

And if you’ve been working, renting and saving - THE GOVERNMENT’S GONNA TAKE FROM YOU AND HELP SOMEONE ELSE OUT.

Confidence won’t return until private ownership of losses is enforced again. The more losses the government puts on us, the more they socialize our markets, the more they spend trying to buy confidence, the less confidence we’re going to have.

Here’s a visual I made this morning to help:

Don’t vote for ‘em if they don’t represent ya.

1. The Beatings Will Continue…

2. The Next Peak Earnings?

3. I’m Hurt by Big Company Favoritism

Here’s what I was carving up in my own pumpkin today:

1. Real headlines today: “U.S. Property-Casualty Insurers Won’t Seek Government Capital”. “Trichet Says ECB Cut `Possible’ Next Week as Market Crisis Damps Inflation”. “Capital One, KeyCorp Among 18 Banks Receiving $35 Billion in U.S. Funding.” Stocks won’t go up until earnings improve and earnings won’t improve until the government lets the losses work through the system.

2. Broadcom sells into lots of high tech industries from cell phones to computers and the company’s trading at 8x this year’s projected cash flows. The real question for any investor is how long it’ll take to get back to 2008 earnings. 2011 is best case scenario, IMHO, though the market will sustainably bounce before the earnings do.

3. I have Social Network for the New American Revolution that I’m about to turn on in the next few weeks (stay tuned!)…of course, my access to capital’s been constricted during this confidence-crisis and that hurts. You know what hurts worse? That the government’s propping up my competitors at GE and Time Warner by lending them money in the commercial paper markets.

I keep hearing people justify the New Socialism of our entire financial system by saying that it “took systemic failure off the table”.   Wall Street brokerage firms don’t exist anymore.  Our entire big banking system is backstopped by taxpayers.  Big corporations with too much debt for the market to support anymore get to borrow from taxpayers at below market rates, horribly skewing the playing field in their favor.

Doesn’t all this intervention and changing on the rules and destruction of our system as we know it mean that rather than taking systemic failure off the table that it rather means the system has indeed been destroyed by the socialists running our financial systems, the politicians in power and their cronies?

The “systemic failure” is exactly what we’ve created by trying to prevent systemic failure.  And it won’t get better since our capital systems are now completely centrally-controlled.   Talk about going “all in”.  With a gun to my head from Uncle Sam too!  That’s not what I signed up for.

See, isn’t it all this central control that enabled all these concentrated bets by Wall Street and those who cater to it to bet made in the same direction?   I mean, if any bank in any town could manage his businesses in just about any way he wanted — and the trust in his bank dependent upon the bank’s history and practices…I bet transparency would quickly become a competitive advantage in attracting capital — wouldn’t we likely have thousands of competing business models rather than just thousands of competing banks all gaming the same centrally-controlled system.  Instead every bank on the planet seems to have decided to follow the exact same business model of securitizing any investment ever created with ever bigger sums of levered up capital around and selling off as much as they can while betting on the assets and the derivatives of those assets with lots of borrowed money from people who are also borrowing lots of money making the same bets.

You mean that didn’t work out in the end?  (Think more consolidation of capital and allocation will work out better this time?)

Yeah, that was BEFORE we just explicitly socialized our entire financial system.

Wall Street and the financial system are simply supposed to grease the wheels of production and enable effective deployment of capital.  Do we really need trillions of dollars being siphoned out of the system every year by firms colluding to game the system and then leverage the game up as much as possible to siphon ever more out of the economy?  Does every company who comes public need to be charged 6% on any IPO?

And yeah, Main Street’s definitely gonna feel the impact of these guys changing our system in their own favor in the middle of the game.   I mean, I am shocked by how shocked everybody seems to be whenever I say that China’s GDP growth could go negative next year.   I’m not convinced that’ll happen, but I do think it’s likely.   Did I mention that that financial system of the West just failed?  That won’t be good for China.

We’re gonna have to put through some painful policies to get there — and that’ll require putting some new people on Capitol Hill.   We’ll make that happen too.  Maybe not with a full sweep of all incumbents next week.  But in the next four years, you and I have a lot of work to do to get our rights back.  And to rebuild a system of capital deployment that those in power have destroyed.  And this time we won’t let them siphon nearly as much off as they move the money around as they used to.  And we’ll punish those who lie about how much risk they’re actually taking.   Yeah, private property laws.  Sounds good to me.

Things will be okay.  We’re gonna have to stop this corruption and collusion though.  And oh, do I have a lot of ideas about how we can do that over the next couple years.  Stay tuned — and watch out.

1. Bill Gross’ Gross Bill
2. 6000 Points Down…
3. Not Hank’s Kinda Big Brother

1. I heard Bill Gross say today, ““World not prepared for secular delivering, either financial markets or global economy.”  I thought this guy said that if you’d said him and his richest banker friends trillions of taxdollars that we’d all be okay.  Guess they just wanted the money after all.

2. I’m no bull.  And I do think we’re likely to test 7000 at some point in the next year or two or sooner.  But even if you think that the DJIA won’t stop til it hits 4,000, I’d throw this thought out there – it’d only need to drop 60% as much as it has already to get there.  We’ve just literally lived through an utter crashing of our stock markets, not that you needed that update.

3. I know you feel less rich today than you did just a few short weeks ago.  But I’d remind you that there are many people in your community worse off than you are.  So do something for your community this weekend.  Join Big Brothers/ Big Sisters.  Give energy if not money.

Get my investment newsletter at http://thecodyreport.net
Facebook me at http://www.facebook.com/profile.php?id=763890180