Top Ten Surprising Government Cutbacks Get Ready #debtceiling

Uncle sam no

Image via Wikipedia

So what does Uncle Sam stop spending money on when everything blows up this week. Here is a list of potential solutions.

  1. Stop paying all elected and appointed officials in Washington. That includes the expense accounts. We’re getting bad value for our money.
  2. Cut back on social security and food stamps. Big savings here. Grandma doesn’t need the money. She just spends it on the grandkids anyway.
  3. Cut all government programs in congressional districts represented by tea baggers. They do not want the money any way. Just listen to them.
  4. Release federal prisoners earlier. It is very expensive to keep someone in jail. Actually I think Obama might just release anyone imprisoned for minor drug charges. Mass Presidential pardon anyone.
  5. Stop all international aid or welfare depending on how you see it. We obviously cannot afford it.
  6. Stop secret bribes to foreign despots that go straight into secret Swiss Bank accounts. Swiss Banks just buy safe US Treasuries.
  7. Tell Seal Team Six on the next big op they have to use less bullets but we still want a big win.
  8. Turn the lights and air con off in all federal buildings. Save money and it is energy-efficient.
  9. Tell the IRS to stop chasing accounts under $100.00 it can’t be efficient.
  10. Put the entire US Postal service on furlough. Who wants to get bills anyway.

Apple’s next lawsuit App’s must pay 30% or close $AAPL #apps

Apple Inc.

Apple (Nasdaq:AAPL) put its foot down and into its mouth by demanding that App’s selling stuff on iPad and iPhone must pay Apple 30%. Cha Ching said the lawyers and watch the million dollar fees go round and round. 30% is a lot and what business would not love to eliminate or reduce it.

Meanwhile other systems may be able to offer cheaper deals and the consumer will learn to shop around and get a better deal elsewhere.

Perhaps we are seeing the beginning of Apple Hubris and another  tilt away from the Apple ecosystem?

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. I am greedy and would appreciate lower prices for anything I buy on-line. Well why not?

Bad News Blues Financial Freddy Kruger stalking your portfolio #investorrelations #regfd #disclosure

The only actor from the Elm Street series to a...

Image via Wikipedia

The debt ceiling thing is taking up so much mind space that companies with bad news can just spill their guts er I mean disclose and probably get away with a lot. Watch this weekend and Friday night for hideous disclosures. Financial Freddy Krueger may be coming out.

Disclsoure: George Gutowski writes from a caveat emptor perspective. No stocks involved in this post. I’m just really scarred.

Ford India Expedition Hedged or Unhedged $F

Image representing Ford Motor as depicted in C...

Image via CrunchBase

Ford (NYSE:F) announced $1 Billion factory in Gujarat India. In part to satisfy Indian demand for economic cars. In part to satisfy global demand for economic cars. A Globe and Mail article based on a Mumbai Reuters story also mentioned a new plant in Thailand and four in China.

No talk about the currency used to finance the facilities. Of course the local labour and contractors will be paid in local currency. But what currency was the source? Given the falling US Dollar the local currencies are becoming more expensive. You know the finance guys at Ford have it mapped out and they know when they have to pay bills.

The plants become fixed assets denominated in other currencies. Does Ford hedge or should we stop reading their statement because everything is converted back to US Dollar.

Lets assume Ford establishes foreign fixed assets of say $7.5 Billion and currency has a negative fluctuation of some 5% . That equates to $375 million in adverse valuation. In a cyclical business that can be a lot.

Ford has raised some $19 Billion this year. Probably almost all of it in US Dollars.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. I do admire the Ford brand but I am not inclined to buy cheap sub compacts.

Sony No Banzai misses chance for redemption $SNE #sony #playstation

Magic Link

Image via Wikipedia

Sony (NYSE:SNE) announced Q1 earnings and revealed losses. Market sells off the stock. Duh. They blame the earthquake which we all know about. They blame the security breach which we all know about. They blame falling TV prices which they left out of the headline but we all knew about.

This was an opportunity for Sony to write off and restructure. Mother nature served up the perfect excuse.  They clearly have inadequate cyber security which has hurt their brand. The red ink should have been deeper and bolder. Cut costs and reserve for future cost and write-offs.

Management is too timid.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. Of all the consumer electronic decisions I have made recently or will make in the near future Sony did not figure prominently in my thinking.

Google Algorithmic Confusion $GOOG #searchengines #SEO

Image representing Google as depicted in Crunc...

Image via CrunchBase

Google (NASDAQ:GOOG) what am I going to do about you. WordPress just sent me a notice that I have published 275 posts in the past year. Yeah for me. But when you search Financial Skeptic on Google they still give the old Bloglines posts a higher rank. Have not used them for over a year. I post stock market comments exclusively. The older the comment the less relevant it is. But Google keeps pointing in the wrong direction. I must be the only one because if you keep this up someone else will clean your clock in the search industry.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. Yes I am deeply suspicious about Google’s secret algorithms. That’s Algo’s for the techies.

Hedge Funds Capitulate! No new money tipping point #hedgefunds #stockmarket

Lincoln on U.S. one cent

Image via Wikipedia

Hedge funds are showing signs of capitulating in the market place. Many are just simply not taking new money. Can you imagine a hedge fund not wanting the leverage. That’s the poker tell. The eyes have twitched and we know what they think. Sure some of the funds are huge but when you want to take chips off the table that is the only forecast investors need to know.

Watch for some pathetic investors suing and claiming not enough notice was given. Watch for some low-level hedge funds springing to life hoping to suck in the newly freed up money flow.

But in the end you should consider it a capitulation. Cleverly done during the supposed summer doldrums when we were all consumed  with the debt ceiling the big boys want to go home.

Disclosure: George Gutowski writes from a caveat emptor perspective. I do not invest in or manage a hedge fund. I have no plans to invest in or start a hedge fund in the next 72 hours as well.

Where’s the beef? Talk about weather very complicated. $MCD #QSR

These are the common British cuts of beef. Bas...

Image via Wikipedia

If the rain fall is poor and it is, then corn crops will be small. Cattlemen will sell beef if cost of corn goes up. Cheap beef now. Expensive steak tomorrow. Do we lighten up on QSR’s and operations with beef oriented menu’s. What about Bar B Q grill manufacturers. Oh they mainly make in China so here is another negative China story. Rainfall is one of the most complicated subjects known to man.

Disclosure: George Gutowski writes from a caveat emptor perspective. I eat corn and beef products. I do not have any positions in QSR stocks and have no plans to initiate new positions within the next 72 hours. I do like to Bar B Q and buy a new grill about once every four years. I do have opinions on the weather but have no formal training or competency in forecasting weather. I know a cost squeeze when I see one.

Unfunded pension obligations disappear #pensions #socialsecurity #retirement

Interest rate vs money balance

Many publicly traded companies have huge unfunded pension liabilities. Low interest rates are not helping the actuarial assessments. After we clear the stupid debt ceiling soap opera and interest rates will start to climb. This is what you do if you are a credit worthy company with an unfunded pension liability. The interest rate arbitrage will work in your investors favour.

Issue long-term bonds at low-interest rates. Lock up the longest term you can extract. Today’s interest rates are low. Keep the cash on hand for now. Wait for rates to go up and then pay your discounted obligations thereby extinguishing or significantly reducing exposure.

The financial engineers love the arbitrage. The politicians will like to see the cost of people come down which just might, and I mean just might encourage some hiring.

So if you are the Federal government with by far the largest unfunded pension obligation in both the social security system and the federal employee pension plan why not teach the tea baggers a thing or two and arbitrage your way partly way out of a very sorry mess.

Disclosure: George Gutowski writes from a caveat emptor perspective. I would benefit tremendously if certain investments reduced their unfunded pension liabilities. This probably applies to most of the S&P 500. 

Las Vegas sports book is saved. NFL goes back to work. #NFL

The new NFL logo went into use at the 2008 draft.

Image via Wikipedia

The millionaire players have stopped arguing with billionaire owners and reached some kind of big money settlement. Special note to wives, girlfriends and maybe even mothers. Your husband, boyfriend and son will be on a couch most Sundays during the fall season. America is saved.

Las Vegas sports books are also saved as now they will have action. America may have a debt ceiling but if Americans have football all else is doable. Wonder how many NFL players let themselves go expecting a strike and will not be able to regain form soon enough.

Disclosure: George Gutowski writes from a caveat emptor perspective. I do not own an NFL franchise, sports books or other businesses that benefit from continued play. I do watch the sport and have been known to put down a few bucks every now and then.