rovo's Market Journal -- 2011

[IPAfan]

As far as PUTS...I only like to sell PUT options if I can earn a good return on the cash that I have to tie up to write the PUT option. I'm not interested in writing PUTS unless I can earn at least 15% annually.

[IPAfan]

Well I understand that you can sell PUTS without posting collateral. The problem is that you end up over-levering this way and get killed if the markets drop. Cash secured puts are more conservative for a market correction, but if you're long and then short PUTS on margin you could get totally obliterated in a 2008 like market crash. I don't mind some volatility, but I'm not looking at risking my whole portfolio.

[rovo]

I picked up 1K SOXL this morning on the dip. Currently a little in the red.

[IPAfan]

DI,

I'm not putting down your investment strategy. In fact I think a reasonable amount of margined put selling would make sense in my portfolio once I'm fully de-leveraged otherwise. I will probably continue to make contributions in the future, and could probably contribute enough to cover PUT shares to some extent.

With that said I'd prefer to focus on selling PUTS when they make sense from a cash secured point of view. I should probably consider selling PUTS on margin at the same time I'd sell PUTS w/cash collateral. Again, I was selling PUTS a year ago, but just don't see a lot to be excited by now. I'm admittedly no expert.

[Value Buy]

Feb 28, 2011 10:45:06 GMT -5 rovo said:

I picked up 1K SOXL this morning on the dip. Currently a little in the red.

Did you ever get any Apple, or did it never drop to your entry point?

[rovo]

Value Buy, Yes, I picked up some AAPL: 500 @ $357.02 on Feb. 18 and 200 @ $340.05 on 24 Feb.; average cost of 700 at $352.1714.

Yesterday, in addition to 1K SOXL at $69.51 I picked up 1K TQQQ at 86.51. Also, on a lark, bought some options: GLL Apr16 $30.00 Call.

[rovo]

End of the month yesterday and I finished the month with a small loss mostly because of the drop in Ford. Holdings at month end, listed by value, are as follows:
Ford, HI, TBT, AAPL, MSFT, Cash, TQQQ, SOXL, GLL, SIRI, PSTR.

[Deleted]

on EEV my 1000 share order was filled this morning @$33.15, just sold it at yesterday's high of $34.06 (got lucky!!!!) still holding a partial long in EEV
stockcharts.com/h-sc/ui?s=EEV&p=D&yr=0&mn=5&dy=0&id=p86327833495

[Value Buy]

Mar 2, 2011 15:43:05 GMT -5 @di said:

Yesterday, my Plan gave the indication to Pick up more PPL. Which I did, but I wish I could have caught it at The Low for yesterday..
Currently at 32 Positions - 10 Down Slightly overall, 22 with Decent Overall Gains.
As to my PUT Option action - have seen a reversal at this point, however (A) All are still Healthily Above their Respective Strike Prices - and (B) There is still Plenty of Time Left for Time Degradation to do its work as these all have 2013 expiries.

I am a novice here, but, Rovo, I have to ask.

32 positions? Are you your own mutual fund or what?
I have 10 stocks, ranging from 100 to 2,400 shares, and rarely trade in and out. I will pare or add to these positions as the market dictates. Some I have held for years, hence my moniker.
I have trouble staying on target with 10 positions, keeping up to date on problems and opportunities with my core positions.

I do enter a few other positions where I know I will not stay long term, but try to hold for a few weeks, or months, but they seem more like crap shoots, because if your not at the computer monitoring everything constantly, I take too many hits to the pocketbook.
Are you a fulltime trader?
Hat's off to you.

[rovo]

Premarket trading is looking a bit stronger than the last two days. It appears the recent buys I made in AAPL, SOXL, and TQQQ will turn out OK. The AAPL trade is for the longer term but the TQQQ and SOXL are short term trades.

My gold trades are looking lame. GLL is down about 14% and the options are down deeply.

I still have 2K of HI for sale on the auction block at $22.40. This is the remainder of a swing trade and is not my major holding in HI. One other swing trade I have going is 2K shares of TBT and these are still under water by about 2%.

[Value Buy]

DI, thanks for the clarification.
Sorry for saying Rovo, as I was definitely asking you.

[rovo]

Today's rally was enough to pull the port into the green zone for March. The market stills seems to be nervous and I won't be counting any of those greenbacks until things calm down. IMHO we could drop as much tomorrow as we rose today. I'm not saying I think it will drop tomorrow but it just seems just as likely to drop as to rise.

[livinincali]

It's been a wild ride these past couple of days. Looks like Ford might have finally found some support at the 200 day moving average. It bounced nicely today, although now it's got to show some follow through.

[rovo]

Ford stopped at the 200 SMA yesterday and with that point holding today it makes things look a little better. Yup, we need some follow through.

[soycapital]

On the other hand, Apple is looking pretty puny on overall a nice up day. I don't own individual shares but have some in an ETF (IYW, up nicely over the last few months). Tech stocks require much homework and good luck in my opinion (things can change quickly)!

[rovo]

Soycapital, AAPL moves with the market for a while and then just breaks out. I picked up a few shares last month and these are for a longer term hold. My opinion is is about $450 per share around the end of the year but with a spread of $425 to $475. Their revenue stream is unbelievable, excellent net profit %, and low PE to Growth ratio.

[livinincali]

No follow through from F today so probably needs to retest the 200 day moving average again. It is pretty oversold on the daily so it should get some follow through soon, but far too often people short an overbought market only to see it get more overbought and people buy an oversold market only to see it get more oversold. Trends have a habit of punishing those fighting against them.

[rovo]

The following are a couple of reports on the trade balance for January.

TD Economics
March 10, 2011
Data Release: U.S. International Trade Deficit Widens Sharply in January
• The U.S. trade balance widened to -$46.3 billion in January from a downwardly revised -$40.3 in the
previous month. Market expectations pointed to a significantly smaller $41.5 billion deficit.
• Nominal exports gained 2.7% M/M on the back of sharp increases of automotive and industrial supplies.
• Nominal imports were up 5.2% on the month, which resulted from marked gains in petroleum imports,
as well as automotive, and capital goods.
• In real terms, exports expanded 2.5% M/M whereas imports jumped 4.1%.
• The non-petroleum deficit also widened to $19.7 billion from $14.8 prior.
Key Implications
• January’s trade figures are harbingers for what will likely be the broad external trade story this year.
Stronger consumer spending and business investments will likely lead to higher imports, putting upward
pressure on the U.S. trade deficit throughout 2011.
• A relatively weaker U.S. dollar – the currency has depreciated roughly 6.8% since its latest cyclical high
in mid-2010 on a trade-weighted nominal basis – could provide some offset by boosting exports.
However, if concerns regarding the European sovereign debt situation escalate and political turmoil in
the Middle East and North Africa persists, the greenback will likely appreciate, eroding this recent
competitiveness gain.
• In all, as domestic demand gains further traction, we expect net trade to pose a modest drag to overall
economic activity in the coming quarters.

Trade Balance
Briefing.com Updated 10-Mar-11 09:11AM ET
The U.S. trade deficit widened from $40.3 bln in December to $46.3 bln in January. It is now at its widest level since June 2010. The Briefing.com consensus expected the trade deficit to increase to $41.5 bln.

January imports were up $10.5 bln to $214.1 bln. Exports jumped $4.4 bln to $167.7 bln.

The goods deficit increased $6.1 bln in January to $59.8 bln while the services surplus was unchanged at $13.4 bln.

Half of the increase in the trade deficit can be attributed to imports of petroleum products. The increase in petroleum imports is partially the result of an increase in demand, yet a $1.21 per barrel increase in the refiner acquisition cost of crude oil may have also played a role. With crude oil prices increasing further in February, it is likely that petroleum imports will continue to grow.

Nonresidential investment in equipment also saw a boost in January as net imports of capital goods excluding autos and aircraft increased by $1.7 bln.

The trade deficit can be thought of as a Catch-22 situation for the US economy. A drop in the deficit has resulted from import demand declining at a faster rate than the decline in export demand. The result was an increase in GDP growth without any actual increase in output. The recent rise in the deficit was the result of both exports and imports growing, but with imports outpacing exports. We are now experiencing an increase in output, but GDP is negatively affected. The trade-off of more production for negative GDP growth is better than the reverse and we'll take the increasing deficit as a signal of a stronger economy

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[rovo]

Here is a rather long update on the auto industry for anyone following that sector.

Auto Industry Outlook and Review – March 2011 - Industry Outlook
4:29p ET March 10, 2011 (Zacks.com)
The auto industry is a highly concentrated one, with roughly 10 global automakers accounting for over 77% of total production worldwide. In 2010, General Motors Company (GM) led with a 19.1% market share in the U.S., followed by Ford Motor Co. (F) with a 16.7% market share, Toyota Motors Corp. (TM) with a 15.2% market share, Honda Motor Co. (HMC) with a 10.6% market share, Chrysler-Fiat with a 9.4% market share and Nissan Motor Co. (NSANY) with a 7.8% market share.

The economic downturn provided the impetus for a massive structural change in the auto industry, setting the stage for growth over the next decade. Given the high barriers to entry and the need for scale economies (in operations, supply chain and marketing), the global auto industry landscape is expected to be ruled by global automakers and suppliers based in the six major auto markets -– China, India, Japan, Korea, Western Europe and the U.S.

OPPORTUNITIES

To remain competitive, automakers will need to design vehicles that meet the requirements of consumers in both mature and emerging markets. Automakers will focus on more user-friendly and low-cost vehicles that are also the most advanced technologically.

The automakers will continue to shift their production facilities from high-cost regions such as North America and the European Union to lower-cost regions such as China, India and South America. For example, Greater China and South America together are projected to represent more than 50% of growth in global light vehicle production from 2008 to 2015.

There are two underlying factors behind this location shift in the auto industry. The first is the cost factor. The cost of labor in emerging auto markets continues to be a fraction of that in the developed world. The second is the demand factor. Many low-cost regions, including the emerging auto markets, have high potential for growth. Thus, the shift in auto industry production facilities will lead to a localization of the manufacturing base that will bring down transportation costs.

The emergence of trading blocs is also giving this process a push in the auto market. It is likely that over time there will be fewer car imports from outside a trade zone.

The role of governments must not be overlooked. Governments in all major countries have become active auto industry players. Their environmental policies will be strongly responsible in molding the auto industry in the coming years.

Further, automakers have started to reduce the number of technological platforms with a greater diversity of models produced from each platform in order to remain cost competitive.

For example, Honda, with its flexible common platform, has developed three dimensionally distinct versions of the Accord, allowing for designs where 60% of the components are common. Ford aims to build 680,000 vehicles per core global platform by 2015, up from the current level of 345,000 units.

Green Cars

Higher fuel prices and concerns over global warming have pooled attention on the auto industry that either rely less on traditional fossil fuels or use renewable sources of less expensive energy. Thus, “green” alternatives such as fuel-efficient electric vehicles (EVs) and hybrids will attract consumers in the wealthier countries, while flex-fuels such as ethanol and natural gas will be highly sought-after in the emerging auto markets where the local climate or resource base favors their usage.

Consequently, there will be a variety of power-train technologies in the auto industry by the next decade. It is likely that “green” cars will represent up to a third of total global sales in developed auto markets and up to 20% in urban areas of emerging auto markets by 2020. Some of the “green” cars have already generated a huge response in the auto industry. These include the Ford Focus, GM Volt, Nissan Leaf, Toyota Prius and Daimler AG’s Smart fortwo micro EV.

The market for hybrid cars was dealt a severe blow by the global economic downturn due to poor availability of consumer credit, low gas prices and other unfavorable economic conditions. However, they are projected to become a popular option for car buyers, particularly in the U.S. and Europe.

Globally, the hybrid market is ruled by Toyota and Honda at present. But other automakers such as Ford, General Motors and Nissan are also aggressively pursuing a plan to push hybrid sales.

The U.S. is the largest hybrid car market in the world, with sales accounting for 60%–70% of global hybrid sales. According to J.D. Power and Associates, hybrid-electric vehicle sales volumes in the country are expected to grow by 268% between 2005 and 2012. Presently, there are only 12 hybrid models available in the U.S., which would increase to 52 by 2012.

Detroit’s Comeback

The ‘Big Three’ Detroit automakers –- GM, Ford and Chrysler -– lost consumer confidence in 2009 after they were severely hit by the global economic crisis. The crisis also exposed the inherent problem with the Big Three’s product portfolio, which lacked up-to-date engineering and extensive research and development.

Further, the majority of their sales comprised pickup trucks and SUVs rather than fuel-efficient vehicles such as the small cars that the consumers have started to prefer. This skewed portfolio was further aggravated by the government’s push for fuel-efficient and environment-friendly cars. Ford rallied better than its hometown rivals, with an early response to the shift in consumer preference towards small cars.

However, the Detroit automakers, especially Ford and GM, bounced back with a recovery in the global market and restructuring of the product portfolio at the end of 2009. In 2010, Ford’s sales went up 19% to 1.94 million vehicles, while sales of GM and Chrysler grew 7% to 2.22 million vehicles and 17% to 1.09 million vehicles during the year, respectively.

Ford focuses on its Ford, Lincoln and Mercury branded cars, shedding the Volvo cars, while GM concentrates on four core brands -– Chevrolet, Buick, GMC and Cadillac -– withdrawing Saturn, Hummer, Pontiac and Saab.

Further, Ford has decided to expand its luxury Lincoln line-up at the cost of its Mercury line-up, which has been phased out at the end of 2010. The company plans to launch as many as 7 new Lincoln vehicles in the next 4 years, including a small car.

The Rise of Asian Automakers

The Asian countries, especially China and India, are expected to account for 40% of growth in the auto industry over the next five to seven years. According to Global Insight -– a U.S. based provider of economic and financial information –- 14.7% of growth is expected to come from India and 8.3% from China by 2013 (compared with 2008 levels) based on their rapidly growing economy.

Domestic automakers are likely to rule the key growth market of China as the government plans to consolidate the top 14 domestic automotive players into 10. These automakers would capture a share of more than 90% in the local market.

The Chinese automakers have been struggling hard to enhance their global profile by upgrading their technology to meet the international standards. To this end, Beijing Automotive Industry Holding Group (BAIC) purchased the intellectual property rights from GM’s Saab in 2009 in order to develop its own brands and introduce new models. BAIC purchased the rights to certain powertrain, engine and gear-box technology for Saab's 9-5 and 9-3 sedans.

In a similar move, Zhejiang Geely Holding Group bought Volvo cars from Ford in order to tap China 's high-growth auto market by acquiring modern, innovative technologies from the Swedish brand to upgrade its car lineup. In December 2009, Geely also signed up with Johnson Controls Inc. (JCI) to be its global parts supplier.

The Indian automakers are also contemplating entry in the international markets by introducing their innovative products that could meet consumers demand abroad. Tata Motors (TTM) has revealed it will launch its European version of the small car, Nano Europa in 2011 and an U.S. version of the same car by 2012. On the other hand, India’s utility vehicle maker Mahindra & Mahindra has announced launching TR20 and TR40 pickups in the U.S. that are more economical compared to other pickups sold in the country.

WEAKNESSES

Although automakers continue to focus on shifting their production facilities to new regions driven by cost and demand factors, developing the supplier networks remains one of the greatest challenges they face. Existing suppliers often lack the financial background to expand capacity in new markets. On the other hand, auto market suppliers are sensitive to technology transfers to local third parties, which may result in new and lower-cost competitors.

Since 1999, more than 20 of the largest global auto parts suppliers have filed for bankruptcy. The financial condition of the majority of auto market suppliers continues to remain weak, owing largely to historically weak demand and heavy dependence on automakers.

Higher dependence on a handful of global automakers makes suppliers vulnerable on several front, primarily pricing pressure and production cuts. Pricing pressure from automakers is constricting auto market suppliers’ margins. On the other hand, production cuts by automakers driven by frequent market adjustments are negatively affecting their operations.

Some of the auto industry suppliers who have a high reliance on a few automakers such as General Motors, Ford, Chrysler and Volkswagen include American Axle and Manufacturing (AXL), ArvinMeritor (ARM), Goodyear Tire and Rubber (GT), Magna International (MGA), Superior Industries (SUP), Tenneco Inc. (TEN) and TRW Automotive (TRW).

The shift in auto market consumer preferences towards hi-tech, fuel-efficient, environment-friendly vehicles, such as small cars/hybrids/EVs, is another issue. Auto market suppliers are expected to quickly adapt to the new technologies by investing in research and development, putting heavy capital burdens on them.

The automakers also face significant challenges in transforming their existing power-train technologies, as far as marketability is concerned. They are adapting the internal combustion engines to alternative energy, including ethanol and bio-fuels. Ultimately, a time may come when they switch to the all-electric power-train as their sole solution. However, the shift in power-train solution technology needs to be supported by adequate charging outlets in order to recharge batteries.

Safety Recall – The New Crisis

Automotive safety recalls were brought into focus by Toyota’s recalls in late 2009. Since November 2009, Toyota has recalled more than 14 million vehicles globally in about 20 recalls, crossing all other automakers. The U.S. Transportation Department had to impose a fine of $48.4 million due to late recall of millions of defective vehicles.

Toyota’s recalls were related to problems such as faulty accelerator gas pedals, slipping floor mats and defective braking systems. They led the automaker to suspend the sale of its models several times and halt new car launches for the year.

However, Toyota has revealed that it has repaired 5 million vehicles related to its three biggest recalls announced in late 2009 and early 2010. Through the on-site SMART evaluation program since April 2010, the automaker has also noticed a sharp 80% drop in customer complaints related to the sudden acceleration problem.

Following Toyota, other automakers had to issue recalls as well. They include Chrysler, Ford, GM, Honda and Nissan. Among them, GM recalled most frequently, followed by Ford. Since the beginning of 2010, GM recalled more than 3 million vehicles in the U.S., Canada, Mexico and South Korea. Among these, the largest recall occurred in June, involving 1.5 million vehicles, in order to fix a problem with a heated windshield wiper fluid system that had been causing fire in the vehicles.

Meanwhile, Ford recalled nearly 600,000 vehicles throughout 2010 and more than 1 million vehicles in 2011-till date. The 2011 recall included 507,000 units of F-150 pickups and 525,000 units of its Windstar minivans due to a corrosion related problem.

[IPAfan]

Tempted to use my cash to add to my cash position to add to my investments at this point. I'd be looking at buying all of my top three stocks right now (TTT, ENH, and FRFHF.) I think all trade below their fair value, and will probably do better than avg. at growing their intrinsic value per share over the mid-long term (5-10 years.)

I see some other good values out there too, but honestly I'd like to have the opportunity to grow my positions in the companies I like the most for the long term. Obviously if the long term view doesn't work out I'll try to move to another security. However, I'm hoping that I have some margin of safety in each of these holdings and even if I'm wrong I'm hopefully not going to lose a huge chunk of my long term investment.

I'm going to hold onto cash for now and continue to pay off debt and hoard some cash while keeping my investments intact. If I can get into ENH at a 15% discount to NAV I think I might grow my position. (I've got $25,000 invested in TTT, and I'd like to get $25,000 in each of my biggest 4 positions. It will take a while, but I can hoard money while I wait for an entry point.)

[yclept]

Just a thought -- I've got no dog in this fight:
Any insurance or re-insurance companies with coverage for losses in Japan are going to incur some big payouts. I would think through re-insurance a lot of them are tied together in ways that are impossible for an investor to discover, which will likely paint them all with the same brush for now. After the next quarterly results come out, one will be able to better determine which ones absorbed the greatest losses, but by then it will be too late for the stock prices, those in the know will have already dumped them. I guess one could watch insider trading, but even that is usually declared too late to be of much use in avoiding losses.

[rovo]

So we currently have two majors hot spots in the world: the Middle East and Japan.

The continuing problems in the Middle East primarily affect energy costs as production appears to be down a bit. Saudi Arabia is trying to make up the difference in quantity but their crude is heavy compared to Libya's sweet crude. There may not be enough refinery capacity available to process the heavy crude and thus there may be some shortage of supply of refined products. Hence, higher prices.

Japan is a totally different story. Millions of people are displaced and from the news pictures it appears there are 100s of thousands of homes destroyed and most likely shortages of electricity since they have shut down several nuclear parks. Japan may have to resort to importing more oil and petroleum end products as they attempt to rebuild the areas destroyed by the quake and tsunami. Again, higher prices.

Japan has excellent manufacturing facilities but the magnitude of the damage will probably drain their resources as they rebuild. Even if they are able to produce all of the items required for rebuilding, the process will still divert product from the normal markets.

As sad as it is for Japan, this is an investment board and what does this tragedy potentially do to our investments is a concern. What sectors can profit from the rebuilding is a valid thought. I think the costs of rebuilding will be between US$ 250 Billion and US$ 1 Trillion and will be spread out over several years. This may be the impetus to pull the USA out of the funk it is currently in.

My thoughts run to all or most of the DOW stocks, especially things like CAT and Deere for the short term. Forest products, as they begin to rebuild homes. Steel used to rebuild larger structures. Industrial equipment to both fill the gap in manufacturing and to replace destroyed equipment. Plastics for the surge in consumer products.

[yclept]

I see it differently from Rovo. I believe the Japanese disaster will exacerbate problems in the US economy, not improve them. Japan will likely use less oil for awhile due to the large number of vehicles/vessels destroyed. Any oil-fired power plants they have will no doubt run full-out while the nukes are repaired/replaced, but the fossil plants were probably already doing so before the disaster, thus I don't see an incremental increase in oil used for that purpose.
As to economic effect on the US, I see it as largely negative. Japan was the second largest buyer and owner of US Treasury debt (after China). With the huge amount of money that's going to be required to rebuild, I expect them to buy less US debt and likely sell some of the bonds they hold. This will cause interest rates to rise, slowing or reversing the feeble US recovery. Further significant transfer of money out of the US into Japan will result from insurance claim settlements -- I have no doubt that US insurance companies will suffer significant losses due to policies they had written on Japanese assets as well as payments to other insurance companies through re-insurance contracts with direct insurers. This will result in further (beyond the lessening of Japanese investment in the US) outflow of capital from the US economy to Japan.
Japan imports a lot of agricultural products from the US (food, timber). In the short term the food imports will probably shift more to grain and be relief aid (uncompensated to the US economy) rather than fruit/vegetables that were luxury items formerly flown in. Though they will need lumber eventually to rebuild, The majority of it won't be needed until clean-up is complete, insurance claims are settled, etc. I would expect a year or two at least before reconstruction funds are being deployed. In the meanwhile, the former timber usage will shrink significantly.
Bottom line, as I see it, is that Japan will indeed be spending massive amounts of money to recover from this disaster. They will be spending some of it in the US, though I suspect closer competitors (China, Taiwan, S. Korea) will see far more of the spending than will the US. In any case, due to the fact that we owe them so much money, a large portion of the money spent on recovery is going to come directly out of the US economy, regardless of where it's spent. Personally I see the net effect as negative for the US -- a large part of the rebuilding money spent will come out of the US economy. A relatively small amount will be spent in the US.
I do think US timber suppliers will see a lot of business in a year or two. Those big Japanese sawmill ships that buy logs out of the Pacific Northwest and turn them into finished construction lumber on the trip back to Japan are going to be going gangbusters in a year or two. It might be worthwhile to find out who builds those ships as I would guess they may be receiving orders to make a few dozen of them immediately.
This was just my bucket of cold water on the prospect that the Japanese disaster might help the US economy. I really don't think it will.

[yclept]

One other thought that's been rolling around in my head is that if the nuclear plants create a significant problem, the people's tolerance for building more of them may well preclude any further construction.
Japan has the engineering expertise and natural geothermal potential to start development of that power source in a big way. I don't know what the plays would be, but this is one discipline of alternative energy that might get a big boost over the next several years.
Awhile ago I read an article about a major experiment in one of the Nordic countries where they're drilling a big bore-hole to reach heated rock to drive steam turbines. PG&E still runs the Geysers facility in Northern Ca (though the output has been falling steadily as the rocks cool). If only GE wasn't so messed up with finance, it would probably be a good play for the steam turbines that energy source might require. Maybe airplane engine manufacturers will look at this -- anyone who builds a gas turbine (which is all an airplane engine really is) could adapt to build steam turbines.
So many quandaries! So few solutions. Who is John Galt? Now there's a blast from a useless book from the past -- been years since I've though of Atlas.

[Deleted]

these examples may be totally unimportant and insignificant...
that said, when i think of Japan, i always remember the crappy way they treat the US livestock market... years ago they stopped importing our beef due to a couple cases of mad cow disease... the sick cows came from Canada and were not from our herds..... didn't matter Japan used it a reason to completely cut us off..... another unimportant story suggesting their protectionism regards honeydew mellons, when our stores can sell them at 6 to 8 bucks, Japan sells a mellon there for 40 to 50 bucks.... they refuse to import from us when ever possible....
lastly, i almost never trade "the news", because i never know for sure how the market will react to the story.... most of the time the market trades the reverse of what i think it should to the news...

[ModE98]

Ah Rovo, good sage thinking! One can read management thinking from the clerks and blue collar types.

[rovo]

No one has a monopoly on thoughts. I may be dead wrong with my previous post but I thought it would be a good idea to post something and see what the rest of us have to say. We have to start somewhere.

I agree with Yclept about the insurance item. It will be devastating to several firms, one of which may be Berkshire because I believe they do a lot of re-insurance in addition to the normal stuff. This is an off-the-cuff comment as I'm not that familiar with Berkshire's holdings.

Just a thought on the China / Japan trade that I believe was mentioned by Yclept. I have no idea what the current state of trade is between these two countries but I do know they despise each other from WWII.

[ModE98]

Agree.... everyone has a "slant" on future developments, with no one having a total grip on it all. There's still a lot of potential problems yet to be seen. I know it took Japan nearly 30 years after close of WWII to really start to have a decent economy. Hope this catastrophe does not take half that time.
Yclept and others have some fine points to contemplate. Looks like we have some potentially negative things coming down the pike as a result of the tsunami and earthquake damage and years of reconstruction. Inflation looks like it will grab us one way or another.
Believe my brain and train of thought is rapidly deteriorating, so I am going to shut up and just go with the flow... not much we can do about it, all ships rise or ebb with the tide.

[lovetobike]

Since you are already discussing the impact Japan's disaster will have on the US market, I thought I add this:

Reuters) - Shaken by the prospect of nuclear meltdown after a devastating earthquake and tsunami, Japanese investors will overseas assets on Monday and bring their money home to help finance reconstruction.

Here is the link to the full article.

www.reuters.com/article/2011/03/13/us-markets-weekahead-idUSTRE72A31H20110313

[rovo]

The Tokyo exchange opened down 4.8% but has been recovering. Also, Japan's Central Bank has injected a huge amount into the markets and are urging banks to loan money for the rebuilding effort.

The Yen was gaining ground as people were converting into the Yen. This supports the comments made by lovetobike. Central Banks injection will most likely weaken the Yen a bit.

U.S. futures are red across the board but a lot can happen before tomorrow's opening bell. Lots of confusion will probably be shown in the markets until we have a better feel for the amount of infrastructure devastation in Japan.

Most of the automakers in Japan are shut down and the government is urging them to get up and running as soon as possible. They need the exports to generate cash and jobs. Meanwhile it may be good news for U.S. automakers.