Tuesday Sep 19, 2006

Utter Nonsense

Taipan Group's Dynamic Market Alert

-- Utter Nonsense
-- How to Trade the Thai Coup
-- Clowns & Harlots: Good to the Last Drop

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Utter Nonsense

by J. Christoph Amberger

Mass media analysts blame the drop in new housing starts it on “higher mortgages” -- utter nonsense, considering rates are comparable if not lower than they were during the peak of the boom.  

Homebuilder confidence in the housing market is now a 15-year low. If you're looking for a visual of what these numbers mean, take a gander at a two-year price curve for Toll Brothers, Inc. (TOL-NYSE).

http://www.dynamicmarketalert.com/images/TOL-Daily.gif

One-year charts smooth out the decline, but the two-year timeline beautifully illustrates where the home building industry has been headed since August of 2005. (Long-time Taipan members will remember how our options strategist, Bryan Bottarelli, leveraged the impending decline into a highly profitable hedge play on the Philadelphia Home
Builders index.)  

So what does declining home building activity have to do with inflation? Let's look at commodities. According to the Copper Development Association, the average new home today contains about 400 pounds of copper and copper alloy products -- for electrical wiring and power cables, roofing materials and gutters, water pipes and appliances, as well as brass furnishings.  

These products account for 40% of the annual domestic consumption of copper. Electric and electronic products account for 25% -- and new homes tend to get stocked with brand-new appliances. Which are not getting bought, because the houses they were supposed to be put into are not being built. Does that mean we're short on copper? You bet we are!

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How to Trade the Thai Coup

by Christian DeHaemer, GRESSOR

The Thai military launched a coup against Prime Minister Thaksin Shinawatra on Tuesday night.  Tanks surrounded his offices while troops seized control of TV stations and declared a provisional authority pledging loyalty to the king.

Thai television declared a "Council of Administrative Reform" with King Bhumibol Adulyadej as head of state.  Army Commander-in-Chief Gen. Sondhi Boonyaratkalin attempted to take over power from the prime minister, who is in New York at the U.N. General Meeting.

So far this looks like a fairly benign takeover with no bloodshed.  The current PM is trying to fight it via press conference, but I doubt he is eager to return.

How to trade it when the market opens:

Rule No. 4 of Christian DeHaemer’s “55 Rules of Trading” states that when a disaster occurs in a foreign country, go to www.adr.com, find which company dropped the farthest and buy it. 

As it happens I wrote up the biggest company and proxy for Thailand in GRESSOR a few months ago.  Members can access it here:
http://www.gressor.com/

The Thai Stock Index was off 0.47% yesterday.  It is 12:28 a.m. in Thailand as I write this.  If the Stock Exchange of Thailand opens tomorrow, you will see a real bloodbath as everyone tries to take their money out at the same time.

We’ll wait for a bottom signal and coolly step in and relieve the panicked seller of their shares, and at a steep discount.  And when reason returns in the next few days, we will sell the back at a premium.

Not a GRESSOR subscriber? Click here to learn more.

Clowns & Harlots: Good to the Last Drop

by Christopher Corbett

While the widespread fluoridation of the nation’s water is a fine thing to be sure, the greatest achievement within my lifetime is that it’s now possible to get a decent cup of coffee anywhere in the land of the free and home of the brave. Time was, you’d cross the wide Missouri River and the potable java would soon be a pungent cross between 10W-40 motor oil and chicory. (Coffee was two bits in those days, but so was gasoline.)
         
I can remember driving all night down the East Coast and stopping in grim Greek diners in New Jersey -- places out of Edward Hopper’s famous painting, Nighthawks -- that served industrial sludge. This was coffee prepared in the traditional manner: a long-simmering La Brea Tar Pits-like cauldron of black, nasty brew that left the mug and your teeth stained. Now, even in flyblown wastelands the cognoscenti are hunkered down over lattes and latteccinos.
         
My own day is a pilgrimage of coffee drinking, moving from one cup to the next, a caffeine-fueled quest. I believe that you can’t drink too much coffee, a gospel I proclaim to those who will listen. (I never understood the inexplicable popularity of the TV show Friends but I salute it for promoting coffee.) I fully expect to be honored by the government of Brazil for my ministry. When I make a pot of coffee the peoples of Colombia, Kenya and Sumatra call to me. I feel obligated to the sainted memory of Juan Valdez and his burro to drink the whole pot. I may sweat and my hands may shake. I may occasionally hear things, or hallucinate.  Sometimes it feels like Buddy Rich is playing a snare drum in my chest. But it all adds up to a small price to pay for the pleasure of coffee’s company.
        
Coffee has not made me more a more tolerant or better man, but it has opened up new worlds to me. I have wonderful memories of an espresso booth on the banks of the Snake River in Idaho… a used bookstore on the Maine coast in the old fishing port of Rockland… a rainy winter morning in San Francisco’s North Beach listening to Puccini… a shack in the Florida Keys with the sun-burned citizens looking like runners-up in a Jimmy Buffet look-alike contest. And the Flying M cafe in Boise, where the girls have purple hair and Chinese characters tattooed across their lower backsides.
        
I love coffee places, with their rancid couches and mind-numbing music. I even love the chai drinkers and the latte ladies with their complex chemist-like orders (extra, extra soy!) who always pay with a debit card. Inevitably, there are scones (Bisquick, sawdust and raisins?) and walls bedecked with undergraduate photos of pale nudes (always holding their cats), girls with names like Aurora and Shay and Wendi (always with an “I”) sitting in an empty bathtub or at a 1950s kitchen table. These are places out of Tom Waits songs. There’s the kid in the refrigerator repairman’s uniform, the waif girl in an old housecoat, the furtive smokers clustered by the door, the halitotic dogs baying outside.
         
Just last year, what I have been saying for years was officially confirmed by the Scientific Community: coffee is the elixir of life! Not merely Chock Full o’ Nuts but, by gosh, chock full o’ antioxidants, too. Whatever they are, I’ll have another cup. (Actually my third!)  Wheeeeeeew. That feels soooo good.
         
So these days I drink coffee because it’s good for me. And unlike alcohol or drugs or the evil sot weed, it does not impair one’s motor skills or ruin one’s health. In fact, I think coffee makes you a better driver, though one must be careful about the musical selections while motoring if large amounts of coffee have been taken. I had a little misadventure mixing French Roast with the works of Mr. Jerry Lee Lewis during a drive to New England.
         
“I’ve had a lot of coffee to drink, officer,” I told the state trooper in Connecticut that morning.
         
He smiled and said, “Me too, pal.”
         
I got off with a warning.

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Earnings Announcements for Tuesday, September 19, 2006

AutoZone Inc, Christopher & Banks, CKE Restaurants, Oracle Corporation, and Progress Software Corporation are releasing earnings.

Brought to you by your FREE American Capitalist.

Sign up here:
http://www.dynamicmarketalert.com/ac/dma-amcsu.html

Unlock Dates for September 2006

9/20/06 – Clayton Holdings Inc is unlocking 7.5 million shares.
9/20/06 – Tim Hortons Inc is unlocking 29 million shares. 
9/27/06 – Himax Technologies is unlocking 52 million shares.

Keep an eye on Tim Hortons Inc. and Himax Technologies for significant sell-offs.  You may want to short shares or buy puts on these two positions.

Brought to you by Extreme Volatility Speculator
http://www.vixtrader.com

Quote of the Day 

“Actor George Clooney recently addressed the United Nations Security Council. Luckily, translators were available for countries that don't speak ‘handsome.’”

- Conan O’Brien