TAXPAYERS LOSS RISES $35 BILLION ON GM BAILOUT

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To quote Lando Calrissian, this deal’s getting worse all the time.

General Motors(GM) shares fell to a fresh 2012 closing low of 19.57 on Monday. The stock hit 19 in mid-December, the lowest since the auto giant came public at $33 in November 2010 following its June 2009 bankruptcy.

Normally you might say, tough luck investors. But this is Government Motors. The Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. Shares would have to hit $53 for the government to break even.

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SOURCE: http://news.investors.com

kaltbaum pre market

Though indices didn’t budge by the close yesterday, they came back from earlier losses and saw some good moves in growth. AAPL is once again giving some coin to the service. HD did not move out but is still a play if it does. You are insane if you trade too much today…but I wouldn’t mind a probe in V somewhere in here…nice little breakout yesterday for this lower beta name. Otherwise, have a good July 4 and will be back on Thursday. Right now, I am considering everything trades.

kaltbaum pre market

Forget CRUS and AMZN this morning. I am ok with AAPL and if HD confirms…above 53.28…not 63.28 like I wrote last night.
 
I do not want to get caught into another news-driven whipsaw so going to start slow. BUT…volume was compelling and the technical look of market charts is much better with Friday’s action.
 
I tore a muscle in my back so while my family is out and about the streets of Paris, I am in my hotel room with anti-inflammatories and pain killers…how thrilling!

kaltbaum email

Greeting from Paris.
 
A 4th day follow through day for the S&P induced by more funny money saving the day in Europe…for the 15th…or maybe the 17th time. I would rather the market do this on a “no news’ day but you take what you get.
 
I am not thrilled by all the bullish emails I have been getting but nevertheless…we never argue with markets.
 
Leaders and thoughts
 
AAPL- I think you probe AAPL again as it moved off the 50 day again…will then need to leap 590…using 50 day stop.
AMZN- I think you can probe very small here…using 50 day stop.
ALXN- Strong…nowhere to buy.
BIIB- Again strong…nowhere to buy.
CRUS- Good move off the pullback wedge…small probe here with stop under 27.90.
CERN- Holds 50 day but would like a pullback.
DLTR- Reverses off 50 day…no place to buy.
EQIX- held 50 day…contemplating on buying breakout…or wait for pulling in again.
EXPE- movesd up Friday off constructive pullback. No place to play.
EBAY- Holds 50 day…may need some time.
MNST- Sitting on 50 day.
PETM- Very strong…no place to enter.
PRGO- very extended here.
ROST- Sitting on 50 day but vulnerable.
SHW- continues to ride 50 day but no place to enter.
TRIP- Trouble breaking out…
TJX- Holds and sitting on 50 day.
ULTA- Holding 50 day.
V- Continues to base…good volume patterns.
WFM- still strong…nothing to do.
 
I am also watching ISRG,PCLN,LNKD as all have good patterns.
 
Also…HD looks buyable moving above 63.28.
 
Homebuilders continue to act great…new highs in LEN,MDC,MTH,PHM,SPF,RYL,TOL. Expect some plays in this group.
 
A list of defensive issues for your review: abt,bmy,cl,chd,cvs,df,dps,ecl,hnz,hrl,hsy,kmb,ko,lly,mo,mrk,mkc,
pep,pm,vz. These are food, drugs,beverages, household products,, telephone utilites. Also, reits and electric utilities also leading.
 
Lastly…and I cannot stress it enough. Keep plays small. We have seen failed breakouts, failed moves, failed follow though days…especially off of news-driven crap. I have no idea if this move works. I just know what it looks like right now. There is no way one has or should have a strong conviction here…but if things start to work and keep working, we will add.

kaltbaum premarket

DOW futures up almost 200 as I write this. Very simply put: MARKETS ALL BUT IMPOSSIBLE BECA– USE OF THIS CONSTANT MANIPULATION AND INTERFERENCE. Yesterday, they were crumbling…after a late reversal…they pop up almost 2% today. My advice…wait this thing out. I certainly would do know buying on this gap. Technically, disregarding all news, support held yesterday and today, market has a chance to show something. The worst areas will gap up best as they get most of the juice from the news. So…oil,,commodities of all kinds and of course, financials will have a good bid as more and more bailouts continue. Keep in mind, this is end of quarter today…hmmmm!

 

The following is the news…really nothing different…just more loans to help out with outstanding loans and help for banks that own the crappy loans. One big vicious cycle. NKE and RIMM wacked this morning. I think RIMM is eventually a zero.

 

THE NEWS: Notice bad loans come off balance sheets…too funny!

Under the deal, Spanish banks will be recapitalised directly by allowing a €100 billion EU bailout to transferred off Spain’s balance sheet after the European Central Bank takes over as the single currency’s banking supervisor at the end of the year.

The decision, taken by a meeting of eurozone leaders in the early hours of Friday morning, will be based on a move to put the ECB at the centre of a “effective single supervisory mechanism” for banks after an EU summit in December.

“We affirm that it is imperative to break the vicious circle between banks and sovereigns,” said a summit statement.

A promise was also made to “examine the situation of the Irish financial sector” offering possible relief to Ireland by relieving the government balance sheet debt burden.

The Spanish bank bailout, to be agreed on 9 July, will initially use the euro’s European Financial Stability Facility (EFSF) before it is transferred into a new permanent fund later this year.

When the transfer takes place to the European Stability Mechanism the new loans will not be given seniority, giving extra security to Spain’s creditors.

After the ECB takes over eurozone banking supervision next year then the Spanish bailout will “very rapidly taken off balance sheet” and directly loaned to banks reducing Spain’s debt burden and borrowing costs.

Herman Van Rompuy, the president of the European Council of EU leaders, hailed the deal as an important step “to reassure markets and to get again some stability around the sovereign bonds of our member states.”

But, he warned, the new aid measures would be reserved for “countries that behave themselves” by abiding by the EU’s fiscal rules and austerity measures.

kaltbaum email

Greetings from Olympia Greece…now heading back to Venice to board a flight to Paris.
 
They did it again yesterday…came out with rumor in last hour…to save the day…but as I write this, futures are up huge as EUROPE IS SAVED FOR THE 400TH TIME. I will not go into the news because nothing has really changed except those who have loaned realize they must continue to save as they are owed tons…that will never be paid back.
 
Regardless, a lot of technical damage done even though market reversed hard. I will know a lot more after today’s gap. Keep in mind, we are at end of quarter.
 
Before today’s gap:
 
A lot of leaders were rolling over.
 
UA done.
 
SWI breaks below support.
 
All the discount/dollar stores topping.
 
MNST breaks the 50.
 
CMG crashes.
 
And just a lot of tops.
 
Regardless of news, we pay attention to the reactions…but you must know that with the constant interference and manipulation on a daily basis, it is hard to get a foothold…so continue to play lightly…continue to have close stops…and protect capital. There is no reason to play into this nonsense. There is certainly a clear loss of leadership…and shorting is too tough. Just look at the last hour and as of this second, the opening gap today.
 
I will be on land this weekend where I will have a more extensive report for you.

YUP…

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Abound Solar Inc., a U.S. solar manufacturer that was awarded a $400 million U.S. loan guarantee, will close its doors and file for bankruptcy because its panels were too expensive to compete with Chinese products, according to the U.S. Energy Department.

Abound, based in Loveland, Colorado, borrowed about $70 million against the guarantee, the Energy Department said today in a statement. Calls to Abound executives weren’t returned today.

The failure would follow that of Solyndra LLC, which shut down in August after receiving a $535 million loan guarantee from the same Energy Department program. Abound stopped production in February to focus on reducing costs after a global oversupply and increasing competition from China drove down the price of solar panels by half last year.

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SOURCE: http://www.businessweek.com

HERE ARE GARY’S FIRST COMMENTS ON THE HEALTHCARE DECISION

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He is still on his European vacation. 

If this is now declared a tax by the Supreme Court, we now have an unlimited taxing authority…not just through front door taxes but through back door taxes.

Getting past the constitutionality, I have much bigger issues. This is simply taking trillions of dollars more out of the hard-earned hands of the economy and into the hands of bureaucrats to dole that money out. This will have a huge negative effect over time on the economy and as I have said for the past few years, humongous deficits have to be paid back…and they are paid back by the real economy…in other words, you and I.

To think anyone in their right mind believes this won’t further the bankrupting of this country…is beyond all logic. There has never ever ever ever been a government program that didn’t cost trillions more than stated. The people who sold this, lied to everyone about cost. Already, they have admitted it is now double the original.

Gary will have further comments on the healthcare ruling and the effects on markets and the economy later tonight.

Yesterday very suspicious. Whenever market has a big day, I look at growth leaders first and from yesterday:
 
CMG croaks…lowered numbers and a lawsuit but doesn’t matter to me why.
 
The leading discount retailers look like they have topped…therefore, sell any small position you have in DLTR…which also did 2 for 1 split. I see FDO gapping down this morning…not helping. The service made serious cake in DLTR. This makes service officially 100% cash.
 
MNST serious distribution.
 
UA looks done…after failing breakout.
 
Need I say more. Now also seeing market gapping down some today. I believe we are awaiting the healthcare decision…but not sure that moves markets…maybe some healthcare stocks. The expectation is the mandate to buy healthcare gets knocked down…my issue is one-fold…they blatantly lied about the cost to Americans. What else is new!?
 

kaltbaum email

Greetings from Mykonos…another beautiful Greek Island. Just got back to the ship as it is 7 hours later here.
 
Not much to add. These summer months the past few years have not been very thrilling…especially the past two and now this. I am amazed at looking at the eem,efa,fxi,ewz,xme,kol,slx,oih,xop,xle versus the leading names I have been providing you. They are still shaping up well…for the most part. I noticed a few below the 50 day…and not yet coming back like a UA.
 
Today, ORLY puts the kibbosh on the auto parts retailers. AAP already trashed…now goes the rest…notwithstanding a big reversal.
 
I also like the recent action in LNKD/FB. They are moving with each other.
 
I am thinking into quarter end this week that the market does not get into any more trouble…but not a guarantee. The bigger worry is after the July 4th holiday…if the market does not get a firm rally.
 
Anyway…keep size small…keep stops stiff and dont try to do too much in a market that wants to carve you up.