Exiting Silently....while EU and Japan wake-up!

Draghi & Abe Pave The way for Ben's exit! - 04 July 2013

A few years and a few trillion dollars ago Uncle Ben was alone and lonely. Relentless pursuit led to a consistent strength in his strategy! He even sported a grin along with possibly a belt loosening weight!

And then came the beginning...yes beginning of the end! And there was no reason to think it will be an easy one!

With an Ex Goldman steering EU - and the newly elected Japanese Government giving Paulson's Bazooka to Abe.....well well the rainbow came just in time for the exiting Ben!

With Draghi and Abe following the footsteps of Ben - just a few years late- is all Ben was looking for!

The exit window is wide open for the Federal Reserve with or without Ben - as even the waging tails of PIMCO has lost its glory after uncle Ben demoted  them to the back bench while putting his magical feather on a Black Rock!

And there they go again...

Yes.

Germany's PIMCO is not the one to waste any opportunity!

Thanks to Big Ben's Big statement end of May about exit strategy- and quick to the draw was not just Mr Gross- but this time he was ably accompanied by his buddies - the Maestro Greenspan himself along with El Erian and a few other of their not so recognizable individuals.

Over 20 days and the 10 year jumping well over 2 percent- and they are still at it.

From low end Business Insider to Bloomberg-

Yes they did succeed for over a decade leading up to the BlackRock ascent - can they do this again?

IMAO - I doubt it- unless Ben is ousted and replaced by someone other than Mr Summers and Blackrock decide to skip the world of an opportunity to dominate the multi trillion dollar market.

NY London Tokyo Hong Kong....

And Silicon Valley!

What Frankfurt and Paris couldn't

What Detroit and Chicago didn't

What Beijing and Dubai can't

Yes it is Silicon Valley-

It is the confluence of exploding innovation - not just in Technology but in

Communication - beyond simply Telcos

Energy

Distribution

Auto

Biotech

and not to mention an already dominant Technology Industry from Semiconductor to net apps! Or the future version of financial markets & capital market.

Move Over PIMCO..

There is a Black Rock in the way!

And finally Germany's PIMCO and Bill Gross are losing their power grip on the US Policy Makers and the federal Reserve!

Hats off to a handful of Policy Makers in Washington and Mr. Bernanke US has escaped from the black mailing grips of Germany's PIMCO!

Black Rock and Mr Fink have become the new king on the mound with Red White and Blue painted  all over their strategies - not just in the Fixed Income market but also in the equity market as well!

PIMCO's Mr Gross and its flagship fund are trailing again this year to their peers - flip flop flip flop....on the strategy doesn't work after losing the crown and the ability to bull doze the policy makers - to Black Rock!

Gates to Omaha!

Reasons why Bill Gates should and will be the next Oracle of Omaha!

- Warren Buffet has entrusted his hard earned wealth to Bill Gates

- Buffet's son already has the Chairman role

- the only other person in recent memory who has equalled or surpassed Warren Buffet in Wealth creation

- Like Buffet , Gates doesn't fade with market preasures

- like Buffet Mr Gates is humble yet professionally arrogant

- As Microsoft moves from emerging/growth story to staple food like all other Berkshire Investments...it is only natural to make Gates part of the Berkshire Story!

- They are comfortable in each others prrsence and have mutual admiration and respect!

- Like Buffet -Gates is the only other entrepreuner who loves to make his peoplerich and independent!

- And Buffet is looking for someone to rule Omaha for the next several decades and not manage for a few years!

And the time is ripe for Apple!

Ready for Some Apple?

Yes...and it is time to own Apple....even if it is not for a glamourous reason!

What was then? from July 2012

Post: Is Apple headed to $380?
Link: http://coldfriction.blogspot.com/2012/07/is-apple-headed-to-380.html

What is Now?

Google will disappoint

bad is not that bad anymore - from product upgrades to management

Hedge funds will spread their risk as Apple goes Radio silence embracing Mr Jobs style once again

Tech Bubble 2.5 will support an expanded multiple

At less than 2 times revenue ( assumption for $380 target was based on a 30% drop in revenue before levelling off) it is worth owning

A boat load of cash will be coming home as buybacks and dividends for a very long time

New Enterprise Applications for iPad are finally showing up in VC radars

HP - A Goldman Opportunity!!

The Goldman Curse? Or is it a Blessing?

It was Apple that stole the limelight...but HPQ took the brunt of selling. Market - tired of repeated bad reports from analysts after stock has lost some $250 billion in marcap....ignored the Goldman report on Apple. At one point it was even up nicely. However HPQ took it hard...as the selling continued till the close. Any further weakness should be a buying opportunity for the following reasons.

-Ms Whitman has finally stashed away enough in provisions for bad actions from the past....should be ableto start recovering some as time progresses

-Having slashed expectations to such a low level - currently less than $3.50 And $3.60 for FY2013 and 2014- HPQ should easily beat expectations for the next 6-7 quarters

-EDSintegration pay off should start later part of 2013 as their strength in Government and Healthcare should help the topline

- Dell confusion should help HP

- at modest 8 times $4 should easily take HPQ past $32

- Oracle's hardware blunder to help HP

- Ms Whitman has finally capitalised on KPCB connect and found a friend in Morgan Stanley

Credits, Cars & Rockets: Silicon valley Style!

Disruptions in a life time come in many forms- some we notice a bit late , some we fail to participate and others we just let it slip by.

And we always praise, admire and reward the person or corporations that see through the adoption of disruptive innovations.

Very rarely do we see several disruptions running parallel at the same time and steered by the same individual.

We might be lucky to be participating in one and possibly watching the other two - all from the same mind and soul!

In recent months Elon Musk and his offerings were in the cross hairs of many - from NASA to NY Times! And I was lucky enough to closely watch both of them. Everyone knows NASA's shutting of the space shuttle....only a interested few have paid attention to Space X and its recent successful trip to the Space Station. As I was closely watching some of the schools sending their students' Microgravity experiments to ISS on Space X's Dragon 2.0  - it really was mesmerising to see the tenacity with which Mr Elon Musk and his team championed the effort - especially when there was a mild set back and they had less than a day to fix it to successfully dock on the International Space Station. Which they did successfully!

And just around the corner was NY Times and its attempt at bringing down another one of Mr Elon Musk's pet project - Tesla! And it was a cock fight that Mr Musk and Tesla was willing to take! And that they did live on CNBC putting his neck on line and finally shame on NY Times and its reporter.

Both efforts are coming on the heels of another disruption that Mr. Elon Musk was part of - whose influence we are watching and participating globally - Paypal has redefined the way we transact.

All these initiatives have had their ups and downs - and roadblocks from existing behemoths who have dominated their respective industries for several decades....and Mr Elon Musk and his team seem to be fighting and tweeting real time and succeeding every step of the way.

And today's follow up on Mr Elon Musk's tweets about Tesla's first quarter performance is another indication that disruptions can be made in deep rooted traditional industries - and can be done simultaneously ....Silicon Valley style.

Hats off to Mr Elon Musk!

Keep those tweets coming, Mr Musk!

DLS - Coloring My Head Red!

Well ... Not Exactly! 

My skin showed up a bit too early along with the greying hair. Lucky me - my Stylist - if you want to call her that, is polite and never brings up my diminishing return on hair investment. After fifteen some years of same place , time and tips- my styling time started getting shorter & shorter like my privilege status driven shrinking wait time! 10 minutes’ drive....5 minutes wait and maybe a few more minutes to tame my thinning patch of hair! Small talk big talk my ears didn't care. 

And then one day - something different to chew on! My hair stood around the rim of my ear lobes- Yes guilty...Exaggeration!

Yes she says I should color my hair....before answering I looked carefully around to make sure it was directed at me and only me!

Indeed!

My curiosity driven smile turns into a laughter - which will soon become sheepish!

And then this...

"blah blah blah... .being a sales man... blah blah blah ...you will see a change in your customers outlook....blah blah blah ...Its ok to get old...but You don't have to look one!... blah blah blah......"

A customer waiting with a satellite like dish around her head joined the chorus and another one and another one too!

Rewind....some blah blah blah and rewind some more blah blah blah..and play it again in my slowing brain which has become fast and furious suddenly.....It’s ok to get old...but.....

One more time Rewind and Play! It’s ok to get old...BUT YOU DON'T....

Hairs around the ears...yeah yeah same old exaggeration...so YOU KNOW  what I am talking about!

Now my head is warming up to the idea...and suddenly I am thinking wow...what a great tag line..and I certainly have under estimated this person all these years!

Forty minutes later....a jolt! Yes I knew I shouldn't have! Its pitch black! How am I going to face my Family with this? In that moment I didn't care about my hyper inflated charge and my stretched out time! The drive back - though a short one, looked even shorter as I was scrambling to find an excuse for this decision of mine...Remember Sheepish? This is where I would add that to my look as I enter the living area! And will see it a few more times the next few days!

Thanks to Disney and Mickey I didn't garner any attention there and so I slipped right into the shower and then study pretending to be busy and pre occupied!

Then started my elaborate routine of explaining why and how I did what I did! Good ice breaker- for a few days! Sailing smoothly- 

Then came the shocker!

Getting ready to trim my beard..#%?¥#% (not so severe curse word)!! Now I understand what Salt and Pepper look like together! The growth is good and uniform.

 The growth in my face and head- didn't know I had changed colors!

And a dinner meeting in a couple of hours! €#£%^¥|#!?! (now this one is a strong & severe curse word) my Stylist for not educating me on how to cope with this complication!

 Think....and Think harder! 

Can't be that tough- a couple of black and white tubes, a small brush and a 4 by 6 inches instructions sheet. 

Mistake? well let’s reserve the judgment for later and call it....

Mission Possible and An hour later I am ready! 

Japanese are hardworking , polite and detail oriented. Keep an eye on Detail Oriented! During a dinner meeting - the detail oriented Japanese friend kept staring at my head over and over again - being polite asked ....You Exercising Jan-san, You dieting Jan-san, You looking Healthy Jan-san...You this Jan-san , you that Jan-san and more and more Jan-san....but kept silent about my darkened head patch and facial growth while keeping a side eye on them! though squirm-ish I refused to talk with my mouthful!

To get a break in conversation - I excuse myself to the boy’s room!

Another shocker was waiting for me there. Mirrors don't lie - Black and More black and it had spread beyond its intended area. And I am thinking maybe it’s not a good idea to defer any judgment ...especially if it’s spelt m.i.s.t.a.k.e  as now I am staring not at a mistake but a BIG MISTAKE!

No wonder my detail oriented friend was working Hard at controlling his laughter...in trying to be polite?!? I am thinking as I was walking back.

Start the sob story all over again....yes..yes..Sheepish Again... from my stylist all the way down to the salt and pepper induced self-help experiment!

Putting the blame squarely on my Stylist- for being so innovative and talented and felt I needed to support her creative sales pitch after all these years of bald work!

Before I could end the credit rolls- the lady sitting in the next table butted in politely and spoiled my party!

Yes She said -she is also in that profession- for over 20 years and said that is the first thing they teach in their Profession before one starts! 

As if that was not enough damage to my pride she went on and on.....

And went on to say this is the easy way to double or even triple up on the bill without any protest!

And blah blah blah and more blah blah blah before butting out!

And the black patch which had started spreading from the hair was now spreading faster and faster and all over my face!

And that my friend is the beginning of my hyper inflated bills after fifteen some years of steady hand!

The Making of a Bubble!

From Tulip Manias to Tech Bubbles - everyone knows when they are in it - and some if not all even participate in them. Its easy to identify the symptoms of a bubble ...however to know the beginning of a burst is  very difficult and extremely painful! So here we will focus only on the beginning....and will wait for the market to show the burst!

Learning from the past or from one's own mistake - some say only leads to making  new and untested mistakes in future! however some of them happen in a large scale and even repeat several times ....like the Tech Bubbles...from 80s...to 90s...to 00s and possibly we are entering one....if we are not already in one!

One classic case in the past has been to see corporate execs pumping the shares with exotic forward looking statements! With FB and Twitter entering mainstream pop culture - it is even more easy for everyone to participate!

Tesla's colorful CEO - after emerging from several controversies - recently used the Tweet to pump up his company's share!

And eBay's CEO who has been successful in turning around the sluggish Topline- is also succeeding in projecting 3-5 year growth way beyond the recent past would call far....using new metrics that eBay has not been using them for in the past....maybe following  the footsteps of Mr Jobs in being creative in what and how is being compared to?

Not to mention the successful IPO of Splunk which was quick to capitalize on the Big Data syndrome - by carefully changing the Marketing  tagline for their offerings!

And the most glaring one is even the steady-hand Bloomberg decided to dedicate a show for this pending bubble - by moving their Tech team to one of the Piers in San Francisco.....and just announced that they are expanding the program to 2 Hours!

And who can miss the Google Glass or the iWatch!!!

Granted the recent study shows that Technology Spend is to cross $3.8 T yes as in Trillion Dollars ....possibly making Technology the most influential Industry in modern commerce world.......and there is a reason to be exuberant.......but some of these symptoms are too eerie not to recall the experiences of the recent past!

Cyprus Punishment!

Call it the Merkel Conundrum  or the Euro Curse- it certainly has woken up a can of worms which has been lurking in the dark!

May be it is just a logical extension of the Financial Whatever- taking from Peter to Pay Paul! Whether it is called the bailout  or austerity the ramifications are boundless and in this twitter era- the cause and effect are not necessarily proportional!

What is interesting is the sound bites that is coming out on the news media about the Russian Payback if this were to go through in the Cyprus Parliament! From CNBC to Bloomberg the cry is the same- don't be on the cross-hair of the Russian Mafia! And the Financia Minister offering to resign rather than visit Moscow to look for solution- atleast thats the way the media would like to depict!

The Germans - Having drained out most of the weaker economies with the aid of Euro - are strong in their feelings and position...making this not a one inning game even if the hair cut in Cyprus is not implemented. And this is a dangerous game that Ms Merkel should not play.

Even if it time for someone to re-write the Financial Systems and the Global Monetary Policy Machines - who has the capability and interest to make a run at it?

The Cyprus Syndrome!

Cyprus What? Yes - it is a small unknown till now entity which is trying to hijack the Bull run! What is alarming is the nature of haircut that is being enforced by Finance Ministers under the austerity label!

Is it really that easy and simple to swing?

Can this be a blip in this modern era or just the beginning of something that we will live to pay for?

As we had mentioned way back during the early stages of the Financial Whatever - this is just an indication of things that will necessitate a new medium of transaction that with need a whole new way of thinking and collaboration- a mile away from the current day Monetary system1

And there will be plenty to capitalise on this incident - and quick to the draw is Mr Bill Gross of Germany's PIMCO! A newbie to the Twitter era - wasting no time as he called for dumping Euro! while talking against his colleague Mr Greenspan's exuberance for the stock market by moving stocks and risk-on trades to the back seat!

Unwinding the irrational!

Yes indeed!

Mr Greenspan is back - this time with a different message!

He has started unwinding the "IRRATIONAL" from the Market Exuberance.....As a paid hand for Germany's PIMCO and working closely with Bill Gross and El Erian both of PIMCO - The Bond Pirates ....it certainly adds a new twist to the market.

In a different entry we had noted that Germany's PIMCO and Mr Gross had been sidelined by Mr Bernanke - making stock market an easy play for anyone with an interest and a  dart....and now Mr G calling the market undervalued and less appreciated by investors ??

A man of numbers and conviction - might have blamed himself partially for the bubble and we have called on it a few times- however Mr Greenspan who is next only to  Mr Reagan in bringing wealth and fame to the American Consumer - though bumpy at times.....is more right and more often better than the best in its class.

So We are ready to add exuberance to our Dow 22,000!

Vatican returns to its root!

In a quick decision white smoke cleared the way for cardinal Jorge Mario Bergoglio to lead the faithful through a transitory period.  Born to Italian immigrants the new Pope brings rich heritage and faith to Vatican.

A Case for Dow 22,000!

- Ben B will get re-elected for another term....so 10-15% correction before the news of nomination will be a great buying op

- Tech bubble like the back end of Clinton Era to be supported by Mr O

- Dow Inflation to be supported by Industrials, Pharma , Energy & IBM- who are all flirting with 3 digits

- Close to Half of US economy floated by the Government - Healthcare, Defense, Finance, Auto, Housing, Education....not to mention the Government!

- The New Normal also applies to a near permanent low interest environment making debt a common place in the balance sheet again- which will be used for dividends and share buy backs

- Euro joining Japan and China in lowering their currencies Supporting Dollar

- A change in the role of commodities and energy allowing global growth in markets suffering currently