Thursday, January 14, 2010

Retail Sales, Kodak Moments and SEC Secrecy

Retail Sales - It's all in how you look at it... My wife's economic team told her that Retail Sales have grown for 4 mths in a row and December will make it FIVE in a row. But here's the deal, they are talking about Dec '09 vs. Dec '08. However, December '09 vs. November '09 Retail Sales fell 0.3% surprising most analysts. Forecasts from 80 Economists ranged from no change to a gain of 1.2 percent. Again, 80 skilled people making a forecast and no one can come close to being right.

For all of 2009, retail sales fell 6.2 percent before adjusting for seasonal variations, the biggest drop since comparable records began in 1993.

This does surprise me a bit, but gas prices hadn't really ticked up until January so I'd look for the trend to possibly reverse in January (despite the fact that sales of non-gas retail items might fall).

There was a bunch of Internet chatter yesterday focused on that relic of the 70's Eastman Kodak as option activity really spiked on a company that has missed the boat on the digital photography. Why would people be buying calls (speculating that the stock would rise) on a company like this?

Well, today the news broke --- and it will lead to SEC investigation of all those Charles Schwab trades coming out of Rochester yesterday --- Eastman Kodak has announced that it filed lawsuits against Apple Inc. and Research In Motion Limited. Kodak is alleging at the International Trade Commission that both companies infringement Kodak patents and intellectual property concerning digital imaging technology. The specifics claim that Apple’s iPhones and RIM’s camera-enabled BlackBerry devices infringe a Kodak patent that covers technology related to a method for previewing images.

Of course Kodak could have made iPhones and Blackberries in 1980's if they wanted to, but they were holding back that technology to wait for the market to develop. Please... that's ridiculous. These lawsuits are designed to be "Lawyer Full Employment Stimulus Programs".

Speaking of crazy trades, the market is still grinding higher - 11,000 is on the horizon for the Dow - and just when the market shows a little weakness someone (we have no idea who) traded 200,000 emini future contracts with a margin requirement of $1.3 billion. I've promised my wife I'd keep my margin trades under $1 billion so it wasn't me :)

The trade has been attributed to someone hitting a bad button, but here's the problem, since so many computers run trading operations, this massive spike in volume -- even a phantom spike like yesterday's -- triggers more buying which artificially pushes things higher. This keeps working until one day when it stops working...


SEC order helps maintain AIG bailout mystery

It could take until November 2018 to get the full story behind the U.S. bailout of insurance giant American International Group because of an action taken last year by the Securities and Exchange Commission.

In May, the SEC approved a request by AIG to keep secret an exhibit to a year-old regulatory filing that includes some of the details on the most controversial aspect of the AIG bailout: the funneling of tens of billions of dollars to big banks like Societe Generale, Goldman Sachs, Deutsche Bank and Merrill Lynch.

The SEC's Division of Corporation Finance, in granting AIG's request for confidential treatment, said the "excluded information" will not be made public until Nov. 25, 2018, according to a copy of the agency's May 22 order.

There is no defense of this position. The only excuse can be providing political cover for those in Washington. The President should immediately demand full disclosure whatever the political fallout.


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