Rocky occasionally peruses his favorite magazine store for investment truths using the “Magazine Cover Contrary Indicator.” Unfortunately, Rocky’s local store doesn’t sell Time, Newsweek or Business Week. Rocky’s local magazine store sells mostly lurid “periodicals,” “videos,” and cigars.
Hence, Rocky needed to develop his own contrary media indicator — independent of bulls, bears, and cleavage.
He found one!!
Bloomberg Radio occasionally adjusts their hourly market summaries. Bloomberg no longer even mentions the overnight change in the Japanese Stock Market (up 15% year-to-date); but instead they quote the “yield spread” on defaulted Greek Bonds. For Rocky, this is a very bullish omen for Japanese stocks. And it also means that Greece is irrelevant. (Rocky also noticed his local magazine store has increased its inventory of extremely lurid Shukanshi.)
[Disclosure: Rocky NEVER gives investment advice and he reminds readers that sometimes a “Cigar is just a cigar.” However, he confesses that this “radio indicator” contributed to his decision to recently buy some Japanese stocks (currency-hedged) such as the DXJ and NKY Japanese Stock ETF’s. He may stay with this position for a long time, or he may spit it out tomorrow like a bad cigar.]
The term Roach Motel (“where roaches check in, but they don’t check out!”) was coined by Black Flag pesticides in a decades-old advertisement. Judging from Rocky’s recent experience, Groupon membership is quite similar.
In light of the ongoing European financial crisis, Rocky is pleased to learn that the European Central Bank now provides visitors to their headquarters with a “hard hat” at no cost! However, they do ask visitors to “wear socks.”
No mention is made whether visitors must empty their pockets of spare change upon entering.
For a full text of the ECB’s dress code, see “What to wear” at:
A recent article in the Orange County Register reminded Rocky of the glory days from Baywatch , (the most-watched TV show of all time.)
The newspaper article explained that being a REAL lifeguard may be a better gig than being a TV lifeguard!
From the newspaper story: “According to a city report on lifeguard pay for the calendar year 2010, of the 14 full-time lifeguards, 13 collected more than $120,000 in total compensation; one lifeguard collected $98,160.65. More than half the lifeguards collected more than $150,000 for 2010 with the two highest-paid collecting $211,451 and $203,481 in total compensation respectively. Even excluding benefits like health care and pension, more than half the lifeguards receive a total salary, including overtime pay, exceeding $100,000. And they also receive an annual allowance of $400 for “Sun Protection.” Many work four days a week, 10 hours a day.
The article continues: “On face, the compensation packages for these guards are staggering. But take into consideration the retirement benefits being paid to currently retired lifeguards and lifeguards who will retire at these pay levels in the future and the problem is further compounded. Lifeguards are able to retire with 90 percent of their salary, after only 30 years of work at as early as the age of 50.”
The entire story can be found here: http://orangepunch.ocregister.com/2011/05/10/lifeguarding-in-oc-is-totally-lucrative-some-make-over-200k/44783/
[Disclosure: Although Orange County generously provides a $400 “sun protection” allowance, Rocky notes that they do not yet provide a plastic surgery allowance. Pamela Anderson wannabes should take note…]
IRS data show an epidemic of “math errors” on personal income tax returns.
During calendar year 2007 the IRS counted “only” 3,885,505 mistakes. Yet in calendar year 2010, they counted 10,554,735. That’s a shocking 272% increase in arithmetic mistakes. The full IRS data set can be found here: http://www.irs.gov/taxstats/article/0,,id=207345,00.html
The IRS says math errors “include a variety of conditions such as computational errors, incorrectly transcribed values, and omitted entries identified during the processing of returns.”
Rocky wonders whether the epidemic of errors is due to the widely reported declining math skills of Americans. (“One-quarter of students at undergraduate and graduate levels believe that 1 divided by 5 = 5.”) Or perhaps it’s due to the increasing use of Turbotax (thanks to Treasury Secretary Geithner.)
[Disclosure: Rocky always changes his calculator batteries before starting his tax return, and highly recommends this practice for other law-abiding citizens. The IRS data did not disclose how many of the math mistakes identified were in favor of the government!]
The bald facts
An interesting oil trade reminds Rocky of the song “America” from West Side Story (the Broadway show): “I like to be in America! OK by me in America!, Everthing free in America! For a small fee in America!”
Rocky notes the price of WTI crude oil in America is at a record discount ($15/barrel) to London’s “Brent” Crude Oil — even though the London oil is worth slightly less to refiners. Oil’s not yet “free in America,” but 17% is a remarkable discount.
Some production problems in the North Sea and an inventory overhang in Cushing, Oklahoma explain this discrepancy. Since America imports crude oil, Rocky believes it’s just a matter of time before cargos get diverted from the USA to Europe, and this price spread collapses. Hence, Rocky is slowly buying crude oil futures in America, and shorting crude oil futures in London.
If the spread doesn’t collapse in the next few months, Rocky’s Plan B is to fill his many empty Scotch Whiskey bottles with crude oil and “deliver” the recycled bottles to London…(which will also force the aribitrage to close.) Of course he’ll have to convince airport security screeners that the duty-free bottles of crude oil don’t pose an in-flight threat, and will explain that instead of a blended whiskey, it’s the “Brent blend.” He’s also prepared to hear the TSA Agent recite Anita’s words from West Side Story: “I know a boat you can get on.” See: VLCC.
[Disclosure: Rocky never gives investment advice, and these sorts of trades entail considerable risk not to mention a nasty hangover. Nonetheless, this trade is a “Rocky V.” (See “definitions” tab at the top of this page.)]