Macro Tsimmis

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Archive for August, 2010

Why Americans should support the Cordoba Project (the “Ground Zero mosque”)

Posted by intelledgement on Wed, 18 Aug 10

If you think that putting up a mosque 600 ft. from Ground Zero & the inauguration, on the anniversary of 9/11/11, is immoral, inhuman and a complete lack of respect for the memories of all that perished on that day and their survivors & that politicians are doing a grave injustice to the fallen heroes, their families &…… all the people of NYC, THEN PLEASE COPY AND PASTE THIS TO YOUR WALL. GOD BLESS America!!

—a post on the wall of a Facebook friend

How hard is it for a f-ing American politician to simply say he/she believes in the right to worship, but that the Muslims (radical or not, doesn’t matter) are out of line for even suggesting the 9/11 location. F%$# ’em all.

—a typical comment

There has been much Sturm und Drang pertaining to this topic in recent weeks. The story is, a group of Islamic investors including the Cordoba project leader Imam Feisal Abdul Rauf purchased the 45-47 Park Place building last year. The five-story building, two blocks north of the site of the Twin Towers, was badly damaged on 9/11 when the landing gear from Flight 175 crashed through its roof. The group also signed a long-term lease on the adjacent unused building at 51 Park Place; they are currently negotiating to purchase that second property. In the meantime, they have merged the two buildings—removing part of their common wall—and performed some temporary repairs and Rauf now conducts prayer services there for local Muslims; these are attended by up to 450 people. The ultimate plan—the “Cordoba project”—is to raze both buildings and build a 13-story 100,000 square foot community center (“Park51”) including a gym, swimming pool, library, 500-person auditorium…and a mosque that could accommodate up to 2,000 worshipers.

Newt Gingrich was probably the first major national politician to come out against the so-called “Ground Zero mosque” last September. Harry Reid weighed in against the project in October, and John McCain, Rudy Giuliani, and a host of local New York pols joined the parade. But it was Sarah Palin who really amped up the volume with her series of mid-July 2010 tweets. It is most definitely a popular stance; about two-thirds of all Americans oppose the construction of the Park51 Islamic center.

Well…those of us who are in that majority really should want to bone up on our Air Force plane silhouettes so we can more accurately distinguish the bogies from the friendlies!

Al Qaeda, the guys who crashed the jets into the WTC on 9/11—the ones who consider themselves at war with the USA and ignore the Geneva Convention by targeting civilians—are bad guys. The Taliban—the ones who consider modernity, individual liberty, equality for women, and tolerance of all religions inimical to moral living—are also bad guys (not because of their beliefs but because of their attempts to impose them on others, not to mention their harboring of Al Qaeda).

The good guys include those such as Shaykh-ul-Islam Prof. Dr. Muhammad Tahir-ul-Qadri—author of the 500-page anti-terrorism fatwa—and guys such as Imam Rauf—whom the State Department is flying to the Middle East to promote America by telling audiences what it’s like to practice Islam under our regime of religious freedom and equality. The good guys include the vast majority of American Muslims—one of the fastest growing Islamic communities on Earth—who by-and-large are here for the same reason we all are: a better life and more opportunities for their children.

In case you missed it, on 9/11 the bad guys killed a bunch of these good guys, along with the rest of us Americans (partial list of Muslim 9/11 victims):

  • Samad Afridi
  • Ashraf Ahmad
  • Shabbir Ahmad (45 years old; Windows on the World; leaves wife and 3 children)
  • Umar Ahmad
  • Azam Ahsan
  • Ahmed Ali
  • Tariq Amanullah (40 years old; Fiduciary Trust Co.; ICNA website team member; leaves wife and 2 children)
  • Touri Bolourchi (69 years old; United Airlines #175; a retired nurse from Tehran)
  • Salauddin Ahmad Chaudhury
  • Abdul K. Chowdhury (30 years old; Cantor Fitzgerald)
  • Mohammad S. Chowdhury (39 years old; Windows on the World; leaves wife and child born 2 days after the attack)
  • Jamal Legesse Desantis
  • Ramzi Attallah Douani (35 years old; Marsh & McLennan)
  • SaleemUllah Farooqi
  • Syed Fatha (54 years old; Pitney Bowes)
  • Osman Gani
  • Mohammad Hamdani (50 years old)
  • Salman Hamdani (NYPD Cadet)
  • Aisha Harris (21 years old; General Telecom)
  • Shakila Hoque (Marsh & McLennan)
  • Nabid Hossain
  • Shahzad Hussain
  • Talat Hussain
  • Mohammad Shah Jahan (Marsh & McLennan)
  • Yasmeen Jamal
  • Mohammed Jawarta (MAS security)
  • Arslan Khan Khakwani
  • Asim Khan
  • Ataullah Khan
  • Ayub Khan
  • Qasim Ali Khan
  • Sarah Khan (32 years old; Cantor Fitzgerald)
  • Taimour Khan (29 years old; Karr Futures)
  • Yasmeen Khan
  • Zahida Khan
  • Badruddin Lakhani
  • Omar Malick
  • Nurul Hoque Miah (36 years old)
  • Mubarak Mohammad (23 years old)
  • Boyie Mohammed (Carr Futures)
  • Raza Mujtaba
  • Omar Namoos
  • Mujeb Qazi
  • Tarranum Rahim
  • Ehtesham U. Raja (28 years old)
  • Ameenia Rasool (33 years old)
  • Naveed Rehman
  • Yusuf Saad
  • Rahma Salie & unborn child (28 years old; American Airlines #11; wife of Michael Theodoridis; 7 months pregnant)
  • Shoman Samad
  • Asad Samir
  • Khalid Shahid (25 years old; Cantor Fitzgerald; engaged to be married in November)
  • Mohammed Shajahan (44 years old; Marsh & McLennan)
  • Naseema Simjee (Franklin Resources Inc.’s Fiduciary Trust)
  • Jamil Swaati
  • Sanober Syed
  • Robert Elias Talhami (40 years old; Cantor Fitzgerald)
  • Michael Theodoridis (32 years old; American Airlines #11; husband of Rahma Salie)

Their blood is our blood; their honor is our honor. Our common enemies would murder an American Muslim if anything even more readily than other Americans, because the very existence of such a person contradicts their contention that modernity and Islam are incompatible. The fact is that modernity and the concomitant education (even for women) and individual liberty are grave threats to the “traditional” male-dominated Islamic hierarchy precisely because they are attractive to most Muslims on the planet (as well as most other people). And because genuinely “true” Islam—back when it first started—embraced human progress and knowledge. Islamic culture as late as the 13th Century was the most advanced on Earth, contributing breathtaking mathematical, medical, literary insights; in their hearts, the troglodytes know that while they have for 800 years succeeded in distorting and crippling Islam, ultimately they are fighting a losing battle against human nature.

Speaking of blood and honor, the heroic 9/11 first responders—including the 400 who died—put their lives on the line that day in defense of nation and our way of life. True to our principles, they did not ask anyone they were rescuing if he or she was Christian or Islamic or Jewish (as Michael Bloomberg articulately pointed out). It does these true American heroes no honor to invoke their memory in support of discriminating against a particular religion.

So, Americans of all religions should be cheering for the Cordoba House project! Not only is it the right thing to do to support freedom of religion, but it is a stick in the eye for our common enemies! They attacked us on 9/11 in the desperate hope they could incite us into a new anti-Islamic Crusade, and thus turn the Muslim-in-the-street against the West and prolong their unnatural ascendancy. If our answer is to build an American Muslim mosque in lower Manhattan it will dramatically demonstrate that when they claim Islam and modernity are incompatible, they lie! Insofar as that action contributes to welcoming Islam back into the fold and enabling Muslims everywhere to embrace education and return to form with respect to their contributions to human civilization, it will be a good thing for America, a good thing for Muslims, and a good thing for all humanity.

But if our answer is to descend to their level and discriminate against our own citizens who happen to be Muslim, then our enemies will not only have baited us into proving we are no better than Crusaders, but they will have tricked us into smiting ourselves a terrible blow against all that we hold dear and that the heroes of 9/11 died to defend.

So…your choice. But please carefully study the plane silhouettes before deciding. 🙂

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BUY iShares Investment Grade Corporate Bonds ETF (LQD)

Posted by intelledgement on Wed, 11 Aug 10

Once again, we are darting in here against the macros, this time to go long corporate bonds. This is consistent with our recent sale of the ETF that shorted long-term treasuries (TBT). While in the fullness of time, we anticipate a collapse of the dollar and U.S. treasuries, in the short term, there is a strong flight-to-safety out of (stock) equities and into bonds, whose promise to return your principal whole plus pay you interest in the meantime looks really, really good in comparison to volatile stocks valuations.

And the iShares Investment Grade Corporate Bonds ETF (LQD) is not only paying a decent 5% annualized dividend (paid monthly) but as the Fed has continued to push interest rates down, the valuation of the LQD ETF has appreciated 9% year-to-date. Roll that up together and you have a compounded annual growth rate in excess of 20%.

Of course, if there is even a whiff of a rise in interest rates, then LQD’s valuation will plunge right quick, and in that event, the yield likely won’t save us from a loss. But we do not anticipate that happening anytime soon: not until the market loses faith in the dollar and U.S. government debt. As poorly as the financial crisis in general is being managed, we remain in a deflationary environment in the aftermath of a burst credit bubble, and given that circumstance, we still feel a trigger event for a serious crisis in confidence for the dollar and U.S.-denominated debt is most likely a ways off. So long as the high pressure system remains stationary, all the storm clouds are diverted around it.

Besides, the alternatives for storing wealth—aside from gold which of course we are long—just look so much worse.

So, our plan is simple: the sun is still shining here and we are going to make hay while it lasts.

The LQD ETF is managed to obtain results that correspond generally to the price and yield performance of the iBoxx $ Liquid Investment Grade index. The fund typically invests at least 90% of assets in the bonds of the underlying index, and at least 95% of assets in investment-grade corporate bonds. Generally, no single investment exceeds 1% of the funds assets and the expense ratio is low (0.15%).

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Activision Blizzard (ATVI) update #17—Finally! China approves “Wrath of the Lich King”

Posted by intelledgement on Wed, 11 Aug 10

Citing a Wall Street Journal story, the leading World of Warcraft (WoW) fansite, WoW Insider, reported yesterday that the “Wrath of the Lich King” expansion module will finally be made available in China by Activision’s (ATVI) licensee, NetEase (NTES) next week. Wrath of the Lich King is the second expansion module to be released for WoW following “The Burning Crusade,” and sold an all-time computer game record 2.7 million copies within the first 24 hours of its release in November 2008 in the USA and Europe. Worldwide, there are in excess of 11 million active WoW players.

The process of gaining approval in China has been arduous and protracted, replete with dueling bureaucracies and—in the midst of everything else—Activision firing their original Chinese WoW licensee and switching to NetEase. Many mainland Chinese players had reportedly been logging on to Taiwan-based servers, where the Wrath of the Lich King has been installed for over a year. No word on whether NetEase will make it possible to port characters developed on Taiwanese WoW servers back to the mainland (otherwise, mainland players who want to switch back to NetEase servers—which would presumably be cheaper and less likely to suffer network issues—would have to start over with new characters).

No official announcement yet from Activision, but if confirmed, this news appears to obviate the embarrassing prospect of the third WoW expansion module—Cataclysm, currently in beta testing—being released in the West before Wrath of the Lich King was available in China.

Previous ATVI-related posts:

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SELL ProShares UltraShort 20+ Year Treasury (TBT)

Posted by intelledgement on Fri, 06 Aug 10

We still like the macro analysis behind this play: as the supply of US debt increases, eventually, demand will dampen, and the incentive to buy long-term treasuries will have to rise to sustain enough sales to finance the government’s operations (not to mention interest payments on previous borrowings). This will depress the value of long-term treasury bonds, and thus cause the value of shares in this 2x inverse exchange-traded fund to increase.

However, timing is everything. We have pretty much been waiting—patiently but fruitlessly—for 18 months for this scenario to unfold. While for sure this means we are 18 months closer to a payoff here, we are up against a powerful flight-to-safety dynamic which, ironically, has ensured ever-increasing demand for long-term treasuries. No matter how many times we ask ourselves “Who would be nuts enough to loan the U.S. government money for twenty or thirty years?” the answer most days for the past 18 months has been “just about everyone.” When the alternative is an equity market where the value of even blue chips is unreliable (Citigroup down from $23 in 2009 to $1 in 2009 to $4 now; WAL-MART down from $63 in 2008 to $46 in 2009 to $52 now; Best Buy $47-$17-$34; Intel $25-$12-$20; etcetera) the guaranteed principal and ROI (albeit paltry) of treasuries looks like a veritable port in the storm.

And even though the long-term debt issues besetting the USA sans structural reform are as challenging as anything facing Spain or Italy today, the immediacy of the sovereign debt problems in Europe have only enhanced, relatively speaking, the shininess of U.S. treasuries.

Add to that the exigencies of deflationary pressures engendered by the side effects of deleveraging—viz., tight credit, continued pressure on real estate prices, and reduced consumer spending—which conspire to compel central banks to keep interest rates low. This does not per se guarantee low interest rates on treasuries, but it sure creates a headwind that pushes in that direction.

So we’ve got the best damn duck blind on the pond here, no doubt. But it’s been 18 months and all the ducks keep eschewing this pond in favor of neighboring ones. We will doubtless be back here, but in the meantime, we are cutting our losses (about 15%) and moving somewhere else with a better chance of bagging some dinner now.

Previous TBT-related posts:

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Activision Blizzard (ATVI) update #16—2Q10 results beat guidance but disappoint investors

Posted by intelledgement on Fri, 06 Aug 10

Our game publishing company, Activision Blizzard (ATVI), announced 2Q10 results yesterday that exceeded management’s guidance from three months ago, but failed to impress The Street…and the stock is trading sharply lower today, currently down over 6%. The guidance had called for revenues of $925 million and a profit of eleven cents per share in the quarter and the actual results included revenues of $967 million and a profit of 17 cents per share. While exceeding the guidance, the revenue results did fall short of what was achieved a year ago (1.038 billion).

CEO Bobby Kotick stated, “Our quarterly results were fueled by continued strong consumer response to Activision Publishing’s ‘Call of Duty’ franchise and Blizzard Entertainment’s ‘World of Warcraft.’ For the first and second quarters, we outperformed our earnings per share outlook, and we grew our operating margin year over year for the six month period, driven by our focused effort to increase digital revenues…. Looking to the balance of the year, we expect to release the best slate in our company’s history. Blizzard Entertainment’s ‘StarCraft II: Wings of Liberty’ is off to a strong start worldwide with midnight openings on July 27, 2010 at 3,100 GameStop stores in the U.S. and 8,000 retailers around the world. We are, of course, enthusiastic about Blizzard Entertainment’s upcoming release of ‘World of Warcraft: Cataclysm,’ which began a closed beta test on June 30. ‘Call of Duty: Black Ops’ is shaping up to be one of the best games Activision Publishing has ever created, the marketing programs are the biggest in the company’s history and to date, pre-orders of the game exceed the pre-orders for Modern Warfare 2 at this time last year. This fall, our lineup includes Activision Publishing’s ‘Guitar Hero: Warriors of Rock,’ ‘DJ Hero 2,’ ‘Tony Hawk: SHRED,’ ‘Spider-Man: Shattered Dimensions,’ ‘GoldenEye 007,’ and ‘Bakugan,’ all of which look to be very promising as well. We have never been better positioned for the holiday season than we are today with such a strong slate of games and the best team in our industry to bring them to market.”

Management also announced that as of 30 June the company had purchased $334 million—approximately 3.1 million shares—of common stock under the $1 billion stock purchase program announced in February. Also, during the second quarter revenue from digital online channels grew more than 20% year-over-year. Guidance for 2010 still calls for revenues of $4.2 billion including $600 million in 3Q10 and 49¢/share of earnings including 0¢ (breakeven) in 3Q10.

Second quarter highlights included:

  • For the first six months of 2010, “Call of Duty: Modern Warfare 2” was the #1 first-person shooter game in the USA and Europe
  • For the first six months of 2010, “Call of Duty” was the #1 third-party franchise in the USA and Europe
  • For the first six months of 2010, Activision Publishing was the #2 third-party console and handheld publisher in the USA
  • For the quarter, “Call of Duty” was the #3 franchise overall and the #1 first-person shooter franchise in the USA
  • For the quarter, “Call of Duty: Modern Warfare 2” was the #1 first-person shooter title in the USA
  • For the quarter, Activision Blizzard had four top-10 PC games—Activision Publishing’s “Call of Duty: Modern Warfare 2” and Blizzard Entertainment’s “World of Warcraft: Wrath of the Lich King,” “World of Warcraft Battle Chest,” and “Diablo Battle Chest” in the USA
  • 19 May—“Shrek Forever After” released
  • 25 May—“Blur” released
  • 14 June—Activision Publishing extends deal with Microsoft (MSFT) to release new “Call of Duty” releases first on Xbox LIVE through 2012
  • 22 June—“Transformers: War for Cybertron” released
  • 24 June—“Wipeout: The Game” released
  • 29 June—“Singularity” released
  • 30 June—“World of Warcraft: Cataclysm” beta testing initiated

Things seem relatively calm in China, although Netease (NTES), Blizzard’s partner who runs the “World of Warcraft” (WoW) subscription business there—and will run “Starcraft” if that game ever gets approved—had a bad quarter. Still no word on the oft-delayed “Wrath of the Lich King” expansion, which Chinese WoW players have been awaiting—excepting those who have “defected” to Taiwan-based servers—for 21 months now. It would be embarrassing if the “Cataclysm” WoW expansion is released in the West before the “Wrath of the Lich King” is available in China.

Speaking of Blizzard, they did manage to cause a stir last month with an announcement that all posters on their gaming forums—which are quite lively—would henceforth be forced to sign their posts with their real names, instead of their game-playing screen name pseudonyms, as has always been the case heretofore. The intent was to constrain the activity of so-called “troll” posters, who lurk on message boards and are quick to castigate other posters for no discernible reason other than to gain attention or cure boredom. The idea was that if the trolls had to ascribe the real names to their noxious messages, they would cease and desist, and the forums would be more civil and more pleasant for everyone else. Unfortunately, it turns out it was not only the trolls who objected to losing the cloak of anonymity. According to a CNBC report, “Others…were more worried that anything they wrote on those message boards could be easily found with a Google search—and an off-the-cuff comment made online could have repercussions for them in real-world relationships…. Still others were concerned that with access to their real name, other players could dig up additional information about them, including photos, addresses, phone numbers and more. Some female players said they feared harassment.”

After three days of increasingly bad PR, Blizzard management recanted, apologized, and scrapped the change.

In 3Q10, three games are expected to be released: “StarCraft II: Wings of Liberty,” which was published 27 July, “Guitar Hero: Warriors of Rock” for the Xbox 360, the PLAYSTATION3, and the Wii, and “Spider-Man: Shattered Dimensions” for the Xbox 360, the PLAYSTATION3, the Wii, and the Nintendo DS.

Previous ATVI-related posts:

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