Powered by Lithium: Making the Better Place Tokyo Electric Taxi Project battery switch station TNR.v, CZX.v, RM.v, LIT, LIT.v, TSLA, BYDDY, NSANY, WLC.v, CLQ.v, SQM, FMC, AVL.to,

  Better place is moving forward, this concept will add even more to the battery demand - you have to keep more batteries at the charging stations than there are EVs on the roads.

 

  "Electric Cars are taking mass media by storm again and after Nissan Leaf and Obama endorsing lithium ion battery makers and GM Volt Shai Agassi takes the spotlight with his idea "Our Goal is Not to Build a Car Company, Our Goal is To End Oil". According to him with 150 USD per barrel of Oil 1.5 Trillion USD will disappear from G20."

 

 

 

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Market SPX is set for a powerful Bear Market rally. DIA, SPY, QQQQ, TSX, CDNX, DXY, GDX, HUi, XAU

Market is anxious for a rally. TARP2 and Stimulus will be the bifurcation points, expect it to be powerful enough that some will be caught on the upside before it will go down to retest the lows. But it will be tradable and will bring risk appetite back with new look at US Dollar fundamentals, which are not warranting its levitation dreams at all.

Technically we are sitting at MA 50 break up, SPX is stronger then DOW at the moment and NASDAQ is stronger then SPX. Once financials will be running on TARP2 markets will all break up above MA50s and towards MA200. Please notice daily Head and Shoulder bullish reversal, with lows in October - November 2008 as Left Shoulder, Head in panic November and Right Shoulder in January - February 2009. STO is decisively positive and confirming accumulation, MACD is turning positive, RSI is confirming new highs.

For us observation on general markets is a reference point and a sign that new money flow will be available into Gold, Mining and Junior Mining sectors. Canadian Venture CDNX will benefit the most from Fundamental and now Technical picture as well.

Irrational Delusion Treasury Bubble. GDX, GDL, SVL, SLW, AUY,

Very shaky grounds here, still a very good chance to see Right Shoulder formed before move below 110. VIX and US Dollar is the key. Announcement about Stimulus approval of 825 billion will send this market in a tailspin.

Fear and Panic VIX is going Down. FXI, EWZ, GDX, AUY, SSRI, SLW

Have you noticed recently that all news are awful, but market is turning around on the worst news and closing Up? Shorts are afraid to keep positions over the weekend. Before they waited for a bad news, now another QE programme could blow them up in a new found Bull in worthless currency in the end. Rally is in the making for a short term in markets.

Amex Gold Bugs Index HUI and Dow relations during Last Dot.com Bubble. Gold shares are still in a Bull Market.

Few interesting observations: HUI is still up from its Low 36.01 (!!!) in late 2000 more then 589% at 248.12 at this Friday close. Emotions will let you think that everything was collapsing in the same irrational fashion moved by Fear with its indicator VIX as high as 76.94 on Friday afternoon. But from chart above you can see that Gold miners HUI are still in a Bull market, testing strong support at 200-250 area and performed a Double Bottom on a daily chart. So far Goldies HUI has given up from its high 514.89 (total increase of 1330%!!! from its Low in 2000) 52% of its incredible gains. With General Equities represented by Dow the situation is very much different: recent sell off has wiped out almost all gains from its last Low at H&S bottom formation around 8000 after Dot.com Bubble burst in late 2002. Now you can see why it was so important for PPT (Plunge Protection Team) to defend 8000 level and they smashed shorts into covering in late Friday afternoon. (That piece was written in middle of the day on Friday, they must be reading my Blog now, I do not mind: Guys please stop messing around and let the US Dollar go, leave a message and even I will tell you how to bring Gold into the Honest money again. Question is who would like or can afford to be Honest these days?) It is the last chance to keep Dow Paper Bull running in Equities with painting Double Bottom on multi year chart with Lows around 8000 mark. The question is that the real value is slipping away with US Dollar losing its ground. Gold value of Dow in 2002 and in 2008 at the same 8000 level are too very different things.

I am very cynical and biased here, I went long last week at my maximum and cut all my Put protections from downside. I am 100% Long for the first time in last five years. So I am eating my own bread as usual. Even my fellow Google GOOG deserve a break now from my accusation on overvaluation. Possibility of a powerful rally even in General Equities is too high to be greedy on picking the last 10-20% from the downside. You can not manipulate markets forever and charts above are the best confirmation. Bull is a Bull in Goldies HUI and painted Paper Bull in Dow is at the life support.

Next drama will be unfolded in The Treasury Bubble: all lemmings (this time professionals) are there sitting at the cliff. Once patient (world financial system) will be pronounced more alive then dead and Risk will come back into play, "Risk Heaven" of Treasuries "backed" by more then 10 trillion debt and coming Paper for financing all these bailouts will collapse. Tripple AAA rating of USA Treasuries is backed no more then Trust and it will never come back. Last Friday action was really astonishing with Equities collapsing, Treasuries were sold as well, Gold and Silver were trashed to give more legs to Dead Cat bounce in US Dollar.

On the charts above picture is telling more then thousand words. Goldies HUI were panished by Fear during initial sell off after Dot.com collapse, but bottomed in late of 2000 and never looked back. Dow on the other hand was making low lows until late 2002. Incoming flood of liquidity will bring Gold shares value back in line with underlining commodity and then they will finally decouple from misery of over leveraged financial economy build on borrowed time. This time is over.

Some initial ideas how to play this coming collapse of Treasury Bubble for your study.

P.S. I have one follower now! Who is it? Is it Ben or Hank? Guys I have a nice landing spot in my garden, send me couple of choppers, please. I will give you discount from my gold mines when you will come back to Gold Standard.

DIA, SPY, QQQQ, HUI, XAU, CDNX, SLW, SSRI, AUY, RGLD, ABX, NEM, GG, SST.v, TNR.v, CZX.v, SAX.to, OK.v, FVI.v.

Last Silver Bullet. Fed rate cut. Interbank guarantee. Where is the PPT?

Where the hell is PPT (Plunge Protection Team)? On vacation or busy trashing Gold and Euro in order to keep US Dollar alive after over the weekend Cut? Plan could be: to defend 8000 on the Dow and close into the positive tonight, Cut over the weekend and issue the blanket guarantee for interbank market. Market will fly next week. If the plan does not work: in the cards will be closing the markets and announcing banking holiday. Price is too big to fail. Today's valuations for stocks not exposed to financial WMD are totally irrational and based on Fear. If their plan works fortunes will be made. Public as always late to Sell. You will see PPT at work when DOW and S&P will move straight up. They let shorts to short yesterday and short covering will bring fire into the play. Gold is like a fishing rod today again, best buy.

Google GOOG bear case continued.

The last pillar of palace full with memories and sweet dreams about forgone Bull market is shaking: Google is firmly on track of our bearish scenario with further slowing growth, flat FCF and contracting multiple. We have wrote before http://sufiy.blogspot.com/2008/04/google-goog-has-deliveredanother.html about recent trends and now they are finally manifested in crashing stock price.

Trust is shaken and company is not immune to slowdown - sell off will continue and will surprise a lot of people with its magnitude: fear is much stronger feeling then greed. Our diagnoses is that company is at its peak in market share, biggest foreign market in UK is saturated and economy is in downswing there as well, it is still one trick pony and is feeling the hit of slowdown in economy. Financials were hit first, next is consumers, the advertising budgets are cut: first print media, TV; then web based as well.

On our bearish financial front signs of further deterioration are all over the recent report: Revenue Growth Q/Q has slowed -50% from 6% to 3%, Y/Y has slowed -33% from 58% to 39%. The same rate of decreasing rate of growth as in Q1 2008.
EPS growth was -5% Q/Q and 33% Y/Y. Yearly growth is still impressive, but nothing out of the ordinary in order to support bubble valuation in recession environment. Capex has decreased to 697,5 mil -17% Q/Q YouTube blades add broadband must be eating hard into the company's margin and it is desperate to cut it in order to save FCF. Cash Flow from operations was flat Q/Q. With a lot of spin around two closed offices are indication of drastic financial measures: boom is over.

Free Cash Flow in Q2 is 1068.6 plus 14% (in the Q1 FCF was 842 mil - here was a typo FCF was 937.8 mil). Company can play with TAC figures and reduce CAPEX further in order to deliver at least 4 bil FCF in 2008. But what will it tell us with further slowing growth rate in revenue? It means that company has hit a wall in its YouTube monetisation efforts and will start reduce even existing bleak expectation about break through on that front. Double Click purchase is dilutive to the rate of growth as well: display advertising will be cut first before click based.

With our prerecession multiple at 30 we will arrive to 120 billion market cap for Google which translates into USD377 target price.

Problem is that market is punishing the yesterday winner very brutally after missing its always overoptimistic expectations. I will put a crazy and heretic for a lot of bubble vision guests assumption that we will see in this bear market FCF multiple of 20 and Google's market cap at 80 bil (please put it in economic context guys: it is still Internet Advertisement Company, not water, bread or oil).

This valuation will translate into USD250 share price.

Global margin call LEH, MER, GS, MWD

Prepare yourselves: global margin call is coming. I hope that all Juniors are already sold from big banks own books. Cash will be the king this summer. Those who can preserve it will get fire sell valuation where it is matters with real hard assets.

If the March low will not hold wave of brutal selling will bring us into Second Bear Leg.


"Three of Wall Street's biggest banks face handing billion of dollars in collateral to their trading partners after their credit ratings were downgraded a notch on Monday, an unwelcome capital squeeze as they scramble to raise more funds.
Credit rating agency Standard & Poor's downgraded Merrill Lynch, Lehman Brothers (NYSE:LEH) and Morgan Stanley (AMEX:MWD) - three of the credit crunch's most prominent casualties - to A, A and A+ respectively, saying their profit outlooks were weakening and more writedowns were possible.
Because the downgrades make the banks less creditworthy, their trading partners in over-the-counter deals (such as credit default swaps or interest rate swaps) can ask them to post extra collateral as security."

http://us.ft.com/ftgateway/superpage.ft?news_id=fto060320081838383098

Banks fear new $5,000bn balance burden

"Accounting changes could force US banks to take thousands of billions of dollars back on to their balance sheets in the coming months in a move that is likely to curb further their lending and could push them into new capital raisings, analysts have warned."


"The off-balance sheet vehicles have been used by financial institutions to keep some assets off their balance sheets, thereby avoiding the need to hold regulatory capital against them."

Very cleaver idea, do I smell some ENRON cooking oil here? Banks have barely "sufficient" capital without this exercise. It means that they will have to raise further capital to accommodate this new risky assets, diluted earnings will go further down, guess what will happen to valuation?


http://us.ft.com/ftgateway/superpage.ft?news_id=fto060320081838383099

Lehman Brothers (LEH) may not be independent for long

My Puts are liking this idea:

http://dailybriefing.blogs.fortune.cnn.com/2008/06/04/lehman-on-the-block/

Common guys - I need some Capital to accumulate juicy juniors which are on the plates all around the market place...

Google GOOG company is "addressing click fraud concern" - market is "addressing related valuation"

Google's customers are all linked to consumers, who are losing their purchasing power by the hour in recent recession. ROI on advertising is falling, Google's customers are cutting ADs spending, debt financed prosperity has lifted all boats and Google's ad campaigns looked like justified before, but now results are not so apparent: customers do not have money or maybe Google was never so effective to attract them after all?


"...speaking at the Bear Stearns Media Conference in Florida, Tim Armstrong, Google's president of North America advertising and commerce, said that the recent slowing in paid clicks "was intentional on our part" and will result in "a long-term benefit for our business."
That's because recent quality initiatives at the company have resulted in fewer unintentional clicks and a higher number of "conversions," or revenue generated by intentional clicks, according to Armstrong.
"Conversions actually go up for advertisers, which is positive, but there are less clicks overall," he said."

http://www.marketwatch.com/news/story/google-execs-address-decrease-paid/story.aspx?guid=%7BC4C2D4C2%2D6453%2D41F3%2DA9A3%2D118EE4A0CC47%7D&siteid=yhoof

Google GOOG vs Commodities, Virtual vs Real

Shift to the real assets will continue further, once growth rate will slow even further compression of multiples will bring GOOG price further down to sustainable valuation:

http://sufiy.blogspot.com/2008/02/google-goog-web20-bubble-is-bursting.html

I could not agree more with this analyses:

http://www.alleyinsider.com/2008/2/google_very_exposed_to_us_recession__expert

Google GOOG WEB2.0 Bubble is Bursting

Finally great company has missed even greater expectations, more analyses will come later, but for now it is apparent that all financials deteriorated further: growth rate sliped at fastest pase ever. FCF in last year was 3.4 bil USD. Multiple at closing at USD564 FCF/MC (176.5 bil) was 51.9, compared to yahoo around 20. Recession will eat hard into Google revenue growth, CAPEX will hurt FCF further in 2008. Multiple of 50 Free Cash Flow to Market Cap is not sustainable any more, expect first stop at 40. It is 40*3.4=136 bil market cap, stock price USD435. With further recession fears multiple of 30 will come into play (50% over Yahoo!). It will reflect in stock price of USD326. On the Technical side stock has broken crucial uptred line on weekle bases. Technacal signal SELL which has been reported here 2 weeks ago now confirmed buy fundamentals.

http://investor.google.com/fin_data.html

http://investor.google.com/releases/2007Q4.html

http://www.alleyinsider.com/2008/01/live-analysis-google-q4-earnings-release-goog.html

Yahoo! YHOO is toasted from here. WEB 2.0 Bubble is bursting right now.

Free cash flow in 2007 was 1337 mil USD, they are projecting now only 925 (mid 850-1000) for 2008, it is 31% drop! Now Yahoo is valued at 20.7 multiple to FCF in 2007. Going into recession ( I think as you remember that USA is in recession last three Qs) with this multiple and crashing FCF will make stock valuation even at 14.35USD as very rich.

http://advision.webevents.yahoo.com/yahoo/earnings/2007/Q4/

Baidu.com BIDU China and WEB 2.0 Bubbles multiplied

Google GOOG Early Warning Bearish Trend Reversal

NASDAQ TEC QQQQ dailly is at SELL

New highs are not confirmed by RSI, MACD is at SELL, SLOW STO overbought, volume is lower at new High.

Markets are getting Nervous: VIX is rising

Markets are very close to panic mode: VIX is rising. "Buy" signal is still valid: MA50 cross over MA200 from August. Once crowd will realise that FED is NOT CUTTING RATES when everything is perfect, they are cutting rates to SAVE economy from melt down in Housing Market Collapse and Credit Crunch, the game with music chairs will begin. Rate Cuts are positive for Gold, Silver and Commodities I am expecting HUI and XAU - Gold and Silver mining companies to decouple from DOW, S&P and Nasdaq as it happen in 2002.

Positions PUT on DIA, SPY, FXI.

We have "Buy" on VXN: Volatily will rise with Tec melt down

Note MA50 is in "Bullish" cross of MA200, MACD at "Buy" and RSI is positive: Nasdaq Volatulity index is going higher. Positions PUT on QQQQ, AAPL, RIMM, GOOG, HHH, SMH

Google GOOG Earnings: Growth rate slowed further Valuation is Insane.

Google managed again to get amusement of the crowd by beating expectations, but the truth is that from now on the higher it goes the harder will it fall.

Growth rate slowed further to 57% Y/Y from 58% in Q2, and 63% Q1. Licencing and other revenue is still miserable 1%. Company has only one revenue stream and continue to be "a one trick pony". International revenue brought 48% and Google nicely profited from falling USD:

"International Revenues - Revenues from outside of the United States totaled $2.03 billion, representing 48% of total revenues in the third quarter of 2007, compared to 44% in the third quarter of 2006 and 48% in the second quarter of 2007. Had foreign exchange rates remained constant from the second quarter of 2007 through the third quarter of 2007, our revenues in the third quarter of 2007 would have been $24 million lower. Had foreign exchange rates remained constant from the third quarter of 2006 through the third quarter of 2007, our revenues in the third quarter of 2007 would have been $121 million lower."

Net Income margin is slightly higher at 25% of Revenue vs 24% in Q2 and lower then 27% in Q1.

Google managed to increase its Free Cash Flow to 1.1 billion USD from 0.7 billion in Q2, but it was "spiced" by reduced CAPEX to 0.55 billion from 0.58 in Q2 and 0.6 in Q3.

Revenue per Head has declined to 266 000 USD from 281000 in Q2.

It could be all very good news on solid company performance, but if you look at valuation at 640 stock is valued at ... 70 times Free Cash Flow (trailing). What is "normal"? - just 30-40 according to "value" analyst Henry Blodget. Even if Google will be granted 40 ratio for its market leader status its share price should be at around ... USD 367.

With all risks related to recession and ongoing competition Google's new target price at 800 by 2008 year end is "only modest" 23% increase from USD650.

Should the stock continue to rise on recent hype over USD650 it will be in parabolic move and I will build my put positions again.

Until Google corrects to "conservative" levels of valuation, market bubble will be growing and its burst after housing crash will be remembered for years.

More on Earnings to follow.