A salute to our local groundhog
Rocky took this snapshot of the local woodchuck (aka groundhog) in his backyard last summer.
Tomorrow is Groundhog Day. Since there’s no chance that any sensible critter will emerge through the snow and ice, Rocky offers a “shout-out” to the cute fellow alternatively known as a woodchuck, whistle-pig, land beaver, and Marmota monax. See: http://en.wikipedia.org/wiki/Groundhog
[Disclosure: The groundhog is one of the few species that enters into a state of true hibernation. As Rocky's daughter watched the too-loud Grammy Awards last night, Rocky went to bed and wished he could hibernate like a groundhog.]
Obama’s blue screen of death
Rocky thought that reading President Obama’s entire State of the Union speech would be virtuous and useful. He was sadly wrong.
Rocky’s primary computer contracted a horrible virus yesterday from a website which re-printed the speech.
If this was a political conspiracy, then Google is behind it too — as Google directed Rocky to this insidious site. And, if Al Gore “invented” the internet, then President Obama’s speech just un-invented it (for Rocky.)
The site implanted the “Internet Security 2010″ malware program — which takes control of the computer … and eventually results in the “Blue Screen of Death.”
Several websites advertise repairs for the virus ($39.95), however after consulting with Computer Man, Rocky learned that the virus is essentially irreversible. And the software vendors are simply extorting money.
[Disclosure: Rocky's primary computer was rebuilt from scratch, and his backup systems worked fine. Thanks to Computer Man for his expert advice. No thanks to President Obama. Rocky wonders whether a Republican President's State of the Union might result in a "red" Screen of Death?]
Wardrobe decisions for congressional testimony
Rocky lacks any substantive insights on today’s AIG grilling of Treasury Secretaries Geithner and Paulson by the House Oversight and Government Reform Committee. So he’ll instead focus on the important stuff.
Rocky notes that both Geithner and Paulson appeared to be wearing waterproof scuba diving watches.
Geithner’s watch came before the camera as he was pointing his index finger at the committee in a Clintonesque “I did not have sex with that woman, and even if I did, it was in the best interests of American Taxpayers” moment.
Paulson’s watch came before the camera when the Committee ran over Paulson’s self-imposed time limit, and he “graciously” agreed to stay for an extra eight minutes. The eight minutes ran to ten minutes, and Paulson objected. The Committee Chair graciously acknowledged Paulson for providing an extra two minutes.
If Paulson and Geithner had been Secretaries of the Navy, the waterproof watches would make more sense.
Perhaps Geithner chose a waterproof watch to protect against a waterfall of tears. In contrast, Paulson was probably enroute to a flyfishing date with Robert Rubin, Tiger Woods and Dan Rather at “The Perfect Cast,” a resort who’s list of celebrities is a who’s who of the morally challenged.
Let’s play “stump the tax man”
IRS Commissioner Douglas Shulman doesn’t file his own taxes because he believes the tax code is too complex. (See: http://thehill.com/blogs/blog-briefing-room/news/75119-irs-commissioner-doesnt-file-his-own-taxes )
However the complexity has now reached the point where even accountants and the tax authorities don’t understand the rules.
From New York’s new Form IT-204-LL-I:
“A partnership, LLC, or LLP with no income, gain, loss, or deduction from New York sources who is filing a partnership return solely because it has a New York resident partner, is formed under the laws of New York State, or is dormant, is not subject to the filing fee.”
That seems pretty straightforward. Except the next paragraph reads:
“The amount of the filing fee will be based on the New York source gross income for the tax year immediately preceding the tax year for which the fee is due. If the LLC or LLP did not have any New York source gross income for the preceding tax year, the filing fee is $25.”
These two paragraphs are 100% contradictory. The first paragraph says if you have no NY-sourced income, you don’t pay any fee. The second paragraph says if you have no NY-sourced income, you pay a $25 fee.
Rocky’s corporate accountant called the New York State Tax Department professional assistance desk for an official interpretation of these paragraphs. After thoroughly researching the issue, The Tax Man’s answer: “We don’t know.”
The Tax Man’s honesty is refreshing. This lastest example of tax code lunacy is not.
There’s still hope for the younger generation
Rocky’s teenage daughter hosted a sleep-over party for several of her girlfriends on Saturday night. For entertainment after dinner, the girls purchased a video-on-demand movie. Out of 16,000 possible FIOS choices, the girls selected the original Wizard of Oz.
After the movie, the girls discussed the fact that Buddy Epsen was supposed to be Tin Man, but was replaced after the metal-colored makeup triggered an episode of allergic anaphylactic shock. (Yes, they really called it “anaphylactic shock”!)
Rocky watched the interaction with amusement, and pondered “Have the 1950’s returned?”
[Disclosure: Rocky's daughter also cracked the "secret code" to the Verizon FIOS Video-on-Demand access screen. When next month's bill arrives, Rocky will discover whether less savory films have been ordered as well.]
Infinity times zero = zero
Ally Bank sent Rocky a letter apologizing for failing to pay interest on Leap Day 2008. Rocky grew excited at his unexpected windfall, until he sadly realized that anything times zero is still zero. And bank interest rates are extremely close to zero!
Rocky was also surprised by the Leap Day interest because his trusty Monroe Bond Calculator (vintage 1986) always assumed 30/360 for interest calculations.
Perhaps the biggest riddle is why the calculation error affects accounts “that were opened or matured between March 1 and December 31, 2008″ — since Leap Day was February 29, 2008.
Ally Bank, the retail banking subsidiary of GMAC, last week received an additional $3 Billion in US Government bail-out funds….perhaps for leap day interest payments?
Dick Clark and the long bond yield
A popular investment platitude is “The trend is your friend, until it ends.”
The above chart shows the yield of the US 30-yield treasury bond. For the past twenty years, buying the bond as its yield approached its 100 month moving average has been a winning strategy. Right now, that strategy demands a purchase of bonds — with a stop-loss a little bit above. (Remember that bond yields and bond prices move in opposite directions.)
However, if the bond yields more than 4.75% when Dick Clark rings in the New Year, this long-term “secular” trend will have ended. Historically, broken secular trends are dangerous beasts, and the first leg of the reversal can be violent.
[Disclosure: Rocky is agnostic about whether Dick Clark should have retired 20 years ago. He is also agnostic about the short-term direction of the bond market. Because he accepts that "the trend is his friend," he may buy a few bonds -- before he leaves his office to buy his New Year's Eve party hat. When Rocky wakes up in 2010, he'll find out whether the 20-year-long bond bull market remains alive -- or has joined Guy Lombardo in heaven. See: http://www.last.fm/music/Guy+Lombardo/Christmas+Through+the+Years/Auld+Lang+Syne]
What’s for dinner? It’s “X”
After breaking a fingernail 15 years ago, Trophy Wife swore off cooking, leaving Rocky as Chef de Cuisine in the Humbert Family.
For Tuesday’s dinner, Rocky prepared Roasted Duck Breast; a cold diced cucumber and tomato salad; and X (see picture above.)
Rocky discovered X in an ethnic food store last weekend. The knowledgeable and friendly store owner convinced Rocky to give X a try. Things went downhill from there….
Trophy Wife pushed X to the side of her plate without even a nibble.
Rocky’s daughter said, “Dad, you gotta be kidding! This looks like a microscope slide of bacteria colonies from my biology class.”
[Disclosure: The first reader of Rocky's blog who either correctly identifies X or provides a decent recipe for X will win a Unique Prize of Dubious Monetary Value. Hint: The owner of the ethnic food store was Armenian.]
Sorry, but we’ve run out of dollars
Just a few weeks ago, the Dollar was tanking and gold was spiking. Now, speculators want to bet on a rising Dollar, but the vault is empty.
This morning Bloomberg News reports, “The Powershares DB US Dollar Index Fund suspended distribution of new share baskets after exhausting its capacity to create stock under a registration statement with the Securities and Exchange Commission.” The ticker symbol is UUP, and it moves with the Dollar Currency Index. That is, when the Dollar increases against the Euro and Yen, the UUP goes up in price.
Translation: Sorry folks, we’ve run out of dollars!
[Dislosure: Rocky recently bought a "slug" of UUP calls as a trade. If the UUP trades at a substantial premium to it's net asset value because of this "shortage," Rocky will gladly sell his UUP dollars to the hungry buyers for more than a Dollar. This is a temporary technical/arbitrage condition. Rest assured, the Federal Reserve's printing press is still running 24/7.]
Turning a sphere inside-out
Rocky thanks his daughter for finding this strange and interesting video about turning spheres inside-out without puncturing them.
Warning: Only click on the video if you like math puzzles.
Weathering a relationship with Stormy Kromer
Every December, Rocky reunites with his old best friend Stormy Kromer. But not this December.
Stormy and Rocky were both engineers, inventors, mediocre baseball players, and according to Stormy’s website, “generally tough characters.” Their symbiotic relationship was based on mutual need and respect: Stormy’s legendary trademarked Flexible Fit hat kept Rocky’s bald head warm. In return, Rocky defended Stormy’s hat against ridicule from his teenage daughter and other fashionistas.
The hat was so ugly that when people walked past Rocky on his local Main Street, they would turn and whisper, “Was that the real Elmer Fudd?” (Note to town residents: Unlike Elmer Fudd, Rocky does not usually carry a 12-gauge shotgun. But he may have a concealed flashlight.)
The insults pounded Rocky like heavy rain on a duck’s back. Rocky, warm and happy, didn’t care.
But something had changed as he donned the red plaid adornment last week. Oddly, it was too tight and small. Unbearably tight. Either Rocky’s head had grown over the past nine months — or the hat had shrunk.
Rocky’s daughter jumped up-and-down with glee. “Hurray! No more Stormy Kromer!”
The fashionistas may have won this battle, but not the war. The Stormy Kromer website says Rocky’s Flexible Fit remains available in size 7-1/2 — with next-day delivery.
[Disclosure: Rocky admits that he has a "big head," but that doesn't detract from Stormy Kromer Inc., which is a privately-owned company in Michigan. Stormy still manufactures in the USA -- which is a good reason to take a closer look at their product line. In addition to employing Americans, Stormy may have prevented more cases of pneumonia than the Centers for Disease Control! See:
http://www.americanprofile.com/article/20775.html ]
The Federal Reserve and Elvis Presley
Homebuyers will face a new and important “development” in the next 90 days — and anyone thinking about buying a house (and even a bank CD) should pay attention:
As part of “Quantitative Easing,” the Fed purchased $1.02 TRILLION worth of “Agency MBS securities” (aka home mortgages) in the open market. The Fed will complete their purchases within the next 90 days. As the chart above shows, they will have purchased a total of $1.72 TRILLION of securities including $1.25 TRILLION home mortgages.
Putting this in perspective:
In 2009, home buyers borrowed a total of $1.01 Trillion. ( See: http://www.sifma.org/research/pdf/Mortgage_Related_Issuance.pdf for the data.)
The Fed has purchased EVERY new home loan made in 2009, and they pegged mortgage rates at an entirely arbitary yield !
Ladies and Gentlemen: The Federal Reserve has left the building!
Once the Fed steps back from the mortgage market, the “free” market will re-price home mortgage rates…presumably at higher yields. Rocky doesn’t know if the upward move in mortgage rates will be violent or gradual, but it will happen — and it will dwarf the effect of Congress’ homebuyer tax credits. It behooves homebuyers to bear this in mind when they consider when to lock in a mortgage rate.
[Disclosure: Rocky acknowledges that the one Elvis reference in this post was weak. So he'll add a second one: Elvis said, "The only thing worse than watching a bad movie is being in one."]
Did Yale lose $57 Billion in three months?
The Yale University endowment is valued at “only” $17 Billion, yet their March and June, 2009 SEC 13F Filing reported total stock investments of $62.7 Billion.
Rocky yelled “Boola-Boola” and rubbed his eyes. The obscene leverage shocked him, as did Yale’s September filing which reported investments of “only” $5.2 Billion.
How was this possible? Was this some sort of novel high-frequency trading strategy engineered by David Swensen in the Yale Investment Office? Or had a Harvard student hacked into Yale’s computer system (again)?
Alas, no — Yale’s Associate General Counsel issued a press release stating that there was a “defect” in their reporting program — which caused the March and June SEC filings to be wrong by a factor of 1,000!
Rocky wonders:
1) What would happen if the decimal points on his 2009 Tax Return “accidentally” move three places to the left? Would the IRS notice?
2) What would happen on a Yale economics final exam if a student’s answer is wrong by a factor of 1,000?
Here are the SEC filings for the green-eyeshade crowd:
Madoff jewelry auction & Valentines Day 2010
The US Marshals Service will auction Bernie Madoff’s possessions on Saturday. Proceeds will benefit the victims of his fraud.
For the auction catalog, click on : http://www.proxibid.com/asp/Catalog.asp?aid=23422
Rocky looked through the odd collection of watches, necklaces and Lynn Swann-autographed footballs (“certificate of authenticity not included.”)
He decided that Lot #7, a heart-shaped pendant would be a perfect Valentines Day gift for Trophy Wife.
Fast forward to Valentines Day 2010….
Rocky (to Trophy Wife) : “Honey, I got you a special present for Valentines Day.”
Trophy Wife: “That’s nice. What did you get?”
Rocky: “It’s an 18KWG heart-shaped pendant set with 7 princess, 4 half-princess & 40 baguette cut diamonds, total weight 2.75 cts.”
Trophy Wife: “Why is it in a brown paper envelope? And not a nice blue Tiffany box?”
Rocky: “Because I got it special. It was a deal.”
Trophy Wife: “A deal? That’s typical. Let me see, what’s this little paper tag with a star on it? Hmmm. Marshalls??? You bought me a piece of jewelry at Marshalls????”
Rocky: “No, silly. That’s US Marshals. I always think of you as the Wyatt Earp of our family.”
(Unimpressed, Trophy Wife examines the heart under her jeweler’s loupe.)
Trophy Wife: “Rocky, these diamonds are fake.”
Rocky: “I guess I should have known better. The price was too good to be true.”
[Disclosure: Jewelry gifts purchased at the Madoff auction may contain dangerous levels of bad karma.]







