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How on Earth is anyone surprised by rising delinquencies, 3 strikes & ye're out Trump, & other Quick Hits



February 17, 2009 – Comments (6) | RELATED TICKERS: COF , SBUX


What's in your wallet?

- Deadbeats Devastate Capital One - Capital One (COF) is getting hammered today (down 15% thus far) after reporting that its credit card delinquencies are rising.  shocking.  How on Earth is anyone in the market surprised by this?  We're in the middle of the worst recession in our generation, of course credit card delinquencies are going to rise.  I called this one all the way back in May with this post: Swish, Swish, Swish, Swish...What's that sound?.  Here's what I said:

"Many people have been anticipating that credit cards will be the next domino to fall in the credit crisis.  According to a study compiled by Bloomberg (see article: U.S. Consumer Debt Rises More than Forecast in March) overdue credit card payments at the six largest U.S. lenders have reached their highest since November 2004.  For those of you who are interested, these companies are American Express (AXP), Bank of America (BAC), Capital One Financial (COF), JPMorgan Chase (JPM), Citigroup (C), and Discover Financial Services (DFS).  Some of those might make a nice CAPS short, with COF and DFS probably being the best (or worst in this case).  I may have to see if I can end a couple of my two hundred live picks and give them the old thumbs down."

I shorted COF the day that I wrote this post in CAPS and have ridden it to a 80.38% drop and 37.7 CAPS points thus far.  I shorted it shortly after that in real life, when my trading window allowed, and rode it down fifteen bucks in less than two months before chickening out and taking my profits.  I am not currently short the stock in the real world.


Now that's some bad hair

- TAPPED OUT IN AC - Good old Trump is at it again.  One of his companies Trump Entertainment (he currently owns 28% of it) has filed for bankruptcy for the THIRD time.  Will they be allowed to reorganize and emerge from bankruptcy again?  It will be interesting to see what happens.  I hope so, sort of.  On one hand, I wouldn't mind seeing that phony Trump get screwed, but on the other hand I used to play poker at the Trump Taj Mahal all the time back in my single days and I will be sad if it has to close down.  BTW, how in the heck is that freaking show The Apprentice still on the air?


I think that someone had a few too many Sapporos

- Japan's finance minister resigns after denying he was drunk - Japan's finance minister resigned today after being accused of holding a press conference at the G-7 while drunk.  How could anyone blame the guy if he was?  Things are a mess out there.  I just picked up a couple of cases of beer at CostCo this weekend to help me get through and I'm not the finance minister of a country whose economy just shrank by 12%.



- Coffee Risks Squeezing Starbucks, Funds on Supply - "Starbucks, the world’s largest coffee chain, said Jan. 28 it expects “unfavorable” coffee costs in the year ending Sept. 30 to erode the benefit of lower dairy prices. The company said its cost of first-quarter sales rose 2.9 percentage points from a year earlier, partly because of higher coffee expenses.

“We are confident that we have the coffee we need and that increased premiums in specific countries will have little or no effect on our existing or future contracts,” Stacey Krum, a Starbucks spokeswoman, said in an e-mail.

The company usually has supply commitments for a year to 18 months into the future, so the impact of changing coffee costs may take that long to show up in financial results, said Jeffrey Farmer, an analyst with Jefferies & Co. in Boston, who rates the shares a “hold.” "

I predicted this back on December 3rd with the following post: Is Starbucks still a short? I'm guessing yes. Here's why.  The bet in CAPS (not real life) hasn't panned out so far.  The company's stock is up 16% since I wrote that piece.  I'm sticking with my thumbs down though.  With the cost of the company's main input rising and consumer spending rapidly falling I am still very bearish in Starsucks.




6 Comments – Post Your Own

#1) On February 17, 2009 at 5:35 PM, biotechmgr (< 20) wrote:

Great posting!

The Donald will not recover from this setback. I don't think he will be able to buy the real bottom in 4 years. No leveraged finance solution for him this time, so yes, 3 strikes, he is out.

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#2) On February 17, 2009 at 5:43 PM, Option1307 (30.60) wrote:

Those pics are amazing, rec for them alone...

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#3) On February 17, 2009 at 5:48 PM, abitare (29.98) wrote:

Classic Trump here:

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#4) On February 17, 2009 at 5:48 PM, Seano67 (24.42) wrote:

LOL at the Donald. Yes, bad hair indeed. :p

His casinos might be bumming, but I saw where he's still buying up primo golf properties, so I don't think he's hurting too badly. Who knows, he might come out of this mess smelling like a rose, or not.

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#5) On February 17, 2009 at 5:53 PM, Seano67 (24.42) wrote:

Trump's had some great public battles with both Rosie O'Donnell and Mark Cuban. Very entertaining, as the guy pulls no punches whatsoever. A down and dirty street fighter, he never hesitates to take a low blow against his opponents if that's what he deems necessary. I find that funnier than hell, and one thing you can say about the Donald is at least he's honest about his feelings. :)

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#6) On February 17, 2009 at 6:41 PM, bdash (26.19) wrote:

Ive been predicting bankruptcy (or a bailout) for COF for 2 1/2 years now so its nice to see we are getting closer. I have to say forgetting to re-short it in caps after seeing a day like today hurts.

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