For this weekend’s open thread, I offer the “Corporate Screw-up of the Year Award”. Although we still have a month left, it is pretty clear who the nominees are. I will let you folks pick the winner.

Nominee #1: JPMorgan’s Incredible Growing Trading Loss

What was originally estimated to be a trading loss of $2 billion, and has currently lost “more than $6.2 billion”, originated from what one lawsuit (from several pension funds) has called CEO Jamie Dimon’s actions which “secretly transformed the [Chief Investment Office] from a risk management unit into a proprietary trading desk whose principal purpose was to engage in speculative, high-risk bets designed to generate profits.”

Dimon himself called it, “flawed, complex, poorly conceived, poorly vetted and poorly executed…This should never have happened…I can’t justify it. Unfortunately, these mistakes were self-inflicted…However, we also understand the need for rules and practices to ensure that hedging doesn’t morph into something different. What this hedge morphed into violates our own principles.”

Fortunately for JPMorgan, they are a “too big to fail” bank with over $890 billion in cash. Even Warren Buffett thinks Jamie Dimon should replace Tim Geithner as Treasury Secretary. Or maybe Warren is just offering that as a parachute? As Mel Brooks once said, “It’s good to be the king!”

Nominee #2: Hewlett-Packard’s Autonomy Mistake

Admittedly, the Hewlett Packard acquisition of software company Autonomy took place in 2011, it didn’t blow up until 2012. Here is the abbreviated story (from Wikipedia):

On 18 August 2011 Hewlett Packard announced that it would purchase Autonomy for US$42.11 per share, around $10.2B. The transaction was unanimously approved by the boards of directors of both HP and Autonomy and the Autonomy board recommended that its shareholders accept the offer. On 3 October 2011 HP closed the deal with over 87% of Autonomy shares acquired.

In May 2012 Mike Lynch left his role as Autonomy CEO after a significant drop in revenue in the previous quarter.

In November 2012 Hewlett-Packard announced that it was taking an $8.8 billion accounting charge, after claiming “serious accounting improprieties” and “outright misrepresentations” at Autonomy. However, Mike Lynch counter-alleged that the problems were due to HP’s running of Autonomy, citing “internecine warfare” within the organization.

The FBI is investigating it now. What we have here is a failure to perform due diligence.

Nominee #3: Apple’s “Which way did they go?” iMaps

Two Apple executives lost their jobs over it. But since Apple released the iPhone 5 on September 21st, with an absolutely godawful map application, the once almighty Apple stock has taken a dive, dropping from $696.91 to the low on November 16th of $505.75, a 27% drop. While Apple can bounce back from this, like they did from the iPhone 4’s “antenna-gate”, but they don’t have Steve Jobs to save them this time. Is Tim Cook up to the job? Or is this just the first of many mistakes to come?

When the final story is written on Apple, this could be the event which presaged the decline.

That’s all folks! Have a great weekend!

PORTFOLIO UPDATE: My portfolio closed down 0.27%.

Expect a roller coaster today, as the markets will be dominated by rumors out of Washington. S&P 500 December futures are flat at the moment, with a price target of 1417. If we have a positive opening, I will be tempted to go short (except for the fact I will be sitting in an orthodontist’s office with my daughter). I expect we will test the 1408-1410 support level at some point today. On the other hand, if we get a “happy talk” rumor, we could pop up to the 50 day moving average at 1422. But I don’t expect us to break either of these levels until something definitively good or bad happens.

The S&P 500 levels to watch today:

UPSIDE: 1417 (November 6th’s low), 1419 (2 data points), 1422 (April’s high and the 50 day moving average), 1428 (2 data points), 1433-1434 (2 data points), and 1437 (top of the Bollinger Bands).
LAST CLOSE: 1415 (also May’s high).
DOWNSIDE: 1412 (November 2nd’s low), 1408-1410 (6 data points), 1401 (November 8th’s high), 1397-1398 (2 data points), 1393 (20 day moving average), 1388-1391 (8 data points, including July’s high and the 10 day moving average), 1386 (November 21st’s low), 1384 (November 12th’s high and the 200 day moving average), 1380 (November 14th’s high), 1377 (3 data points), 1373 (November 9th’s low), 1371 (November 14th’s low), 1370 (2011’s high), 1363 (June’s high), 1362 (November 16th’s high), 1360 (November 15th’s high), 1354 (August’s low), 1352 (November 14th’s low), 1349 (the bottom of the Bollinger Bands), and 1348 (November 15th’s low).

Look at it this way. These are the people who are controlling our future:

From left to right, there is a tax cheat, a guy whose own political party doesn’t listen to him, a community organizer, and a guy who thinks paying income taxes is voluntary. Have a nice day!

(hat tip to Reuters via KCCI.com for the pic)

The Weekly Standard: McConnell ‘Burst Into Laughter’ as Geithner Outlined Obama’s Plan

A bad sign for President Obama’s plan to fix the fiscal cliff:

Mitch McConnell, the Senate Republican leader, says he “burst into laughter” Thursday when Treasury Secretary Tim Geithner outlined the administration proposal for averting the fiscal cliff. He wasn’t trying to embarrass Geithner, McConnell says, only responding candidly to his one-sided plan, explicit on tax increases, vague on spending cuts.

Geithner suggested $1.6 trillion in tax increases, McConnell says, but showed “minimal or no interest” in spending cuts. When congressional leaders went to the White House three days after the election, Obama talked of possible curbs on the explosive growth of food stamps and Social Security disability payments. But since Geithner didn’t mention them, those reductions appear to be off the table now, McConnell says.

Obama is pushing to raise the tax rates on couples earning more than $250,000 and individuals earning more than $200,000. But those wouldn’t produce revenues anywhere near $1.6 trillion over a decade.

One of the things that might have caused the laughter might be Geithner’s proposal to end the debt ceiling. Is this really the time to end the debt ceiling? If anything, it is the time to enforce it.

Another humorous aspect to Obama’s budget is his much-touted “Buffett tax”. As much as Obama talks about how important that is, it really doesn’t do much. From JP Morgan, via Zero Hedge:

Most of Obama’s $1.6 trillion in tax increases (note that is only $160 billion next year, with the deficit projected to be $1 trillion) are coming from “eliminating tax breaks” for the wealthy, and from “closing corporate loopholes” (see Obama’s budget proposal here). But it gets better: Even after this tax increase, Obama’s budget projects a budget deficit of $901 billion next year. With the debt ceiling already at $16.4 trillion, and the government set to hit that limit at the end of this year, it would have to be raised to about $17.3 trillion just to get through next year. With U.S. GDP at about $15 trillion, that means the debt would rise to 115% of GDP. That would put the U.S. between Portugal (108%) and Italy (120%) for the debt/GDP ratio.

Mind you, I don’t expect the Republicans to come up with a truly fiscally conservative proposal. But I can certainly understand why they would laugh at Obama’s proposal. For this lame budget proposal, Obama gets the bear:

Bloomberg: Euro-Area Unemployment Rises to Record 11.7% on Recession

The euro-area jobless rate rose to a record in October as the fiscal crisis and tougher austerity measures deepened the region’s economic woes.

Unemployment in the 17-nation single-currency bloc increased to 11.7 percent from 11.6 percent in September, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995 and is in line with the median estimate of 34 economists in a Bloomberg News survey. Inflation eased to 2.2 percent in November, the slowest rate in almost two years, separate data showed.

The euro-area economy has shrunk for two successive quarters, forcing companies to cut costs to help weather the downturn, and economists foresee a further contraction of 0.3 percent in the fourth quarter, the median of 25 forecasts in a separate Bloomberg survey showed. The Organization for Economic Cooperation and Development this week forecast contractions of 0.4 percent and 0.1 percent this year and next.

So Europe, how’s that austerity working for you? If it’s any consolation, the U.S. will be joining you soon…

Fox Business: Natural Gas Falls Further After EIA Supply Data

Just when you think natural gas can’t get any cheaper:

Natural-gas futures lost more ground Thursday after the Energy Information Administration reported that inventories of the commodity unexpectedly rose 4 billion cubic feet for the week ended Nov. 23. Analysts polled by Platts expected a withdrawal of between 9 billion cubic feet and 13 billion. Total stocks now stand at 3.877 trillion cubic feet, up 26 billion cubic feet from the year-ago level and 190 billion cubic feet above the five-year average, the government said. January natural gas was at $3.67 per million British thermal units, down 13 cents, or 3.4%. It was trading around $3.72 shortly before the data.

Keep this in mind before jumping into a natural gas investment: It could be years before natural gas starts to see demand rising faster than supply.

DIS: 0.52 to $49.72 (1.06%, -1.76% overall)–bought at $50.61
INTC: -0.56 to $19.53 (-2.79%, -0.36% overall)–bought at $19.60
LINE: 0.04 to $39.73 (0.10%, 0.56% overall)–bought at $39.51
NNVC: -0.02 to $0.50 (-3.85%, -10.71% overall)–bought at $0.56
PGX: 0.01 to $14.76 (0.07%, -0.87% overall)–bought at $14.89
SAND: 0.16 to $12.35 (1.31%, 1.48% overall)–bought at $12.17
SLW: 0.25 to $37.06 (0.68%, 20.52% overall)–bought at $30.75
YHOO: -0.04 to $18.87 (-0.21%, 24.39% overall)–bought at $15.17

OVERALL: -0.01%

“We all know what to do, we just don’t know how to get re-elected after we have done it.“–Jean-Claude Junker, Prime Minister of Luxembourg

I am looking to sell half of my Sandstorm Gold (SAND) position today at a small profit, mainly to cut down on the position. As of yesterday’s close, it accounted for 14.47% of my portfolio, which is a bit higher than I prefer, although I still like SAND as a long-term hold.

In the pre-market, I am trying to sell it at 12.50. I may lower that after the markets open.

UPDATE 10 am EST: I sold half my SAND at 12.45. The “final” line on that part of my position:
SAND: +0.26 today, +0.28 overall to $12.45 (+2.13% today, +2.30% overall)–bought at $12.17

The S&P 500 finished yesterday in the middle of a strong resistance/support range, at 1409. With futures strongly positive this morning, I see the next stop at the 50 day moving average of 1423. Beyond that, there are two strong resistance ranges, plus the top of the Bollinger Bands. While the market seems to have strength, it may get tired if we reach the 1437 level.

But don’t get too cocky: All it takes is an idiot like Senate Majority Leader Harry Reid to open his mouth and send the markets down. If that happens, we could easily return to the 1390’s again.

The S&P 500 levels to watch today:

UPSIDE: 1412 (November 2nd’s low), 1415 (May’s high), 1417 (November 6th’s low), 1419 (November 5th’s high), 1422 (April’s high), 1423 (50 day moving average), 1428 (2 data points), 1433-1434 (2 data points), and 1437 (top of the Bollinger Bands).
LAST CLOSE: 1409 (within the 1408-1410 range, with 5 data points).
DOWNSIDE: 1401 (November 8th’s high), 1397-1398 (2 data points), 1393 (20 day moving average), 1388-1391 (7 data points, including July’s high), 1386 (November 21st’s low), 1385 (10 day moving average), 1384 (November 12th’s high and the 200 day moving average), 1380 (November 14th’s high), 1377 (3 data points), 1373 (November 9th’s low), 1371 (November 14th’s low), 1370 (2011’s high), 1363 (June’s high), 1362 (November 16th’s high), 1360 (November 15th’s high), 1354 (August’s low), 1352 (November 14th’s low), 1349 (the bottom of the Bollinger Bands), and 1348 (November 15th’s low).

Bad news folks: I didn’t win the lottery. C’est la vie…

In other news, we get the second attempt at U.S. 3rd quarter GDP today at 8:30 am EST. According to Bloomberg, the consensus expectation is for an increase of 2.8% (last month’s report showed an increase of 2.0%), within a range of 2.4% to 3.0%.

McClatchy DC: Government weeks away from hitting debt ceiling

Fun times ahead:

While official Washington is focused on potential tax hikes and automatic spending cuts, another fiscal crisis looms on the horizon. A report released Tuesday warned that the federal government is likely to hit a ceiling on issuing new debt come late December and could begin defaulting on obligations by mid-February.

The report from the influential Bipartisan Policy Center, a policy think tank, also highlighted why there’s less room for the Treasury Department to maneuver than during last year’s debt-ceiling debacle. The center warned that financial markets may see greater turmoil than in 2011.

The government should hit its $16.394 trillion debt limit during the final week of December, according to the center. The Treasury Department can, as it did in 2011, turn to a number of extraordinary measures to avoid defaulting on the debt it has already issued. The juggling act by Treasury is likely to run out, however, somewhere around mid-February.

Thanks Washington! On the bright side, if the Dempublicans and Republicrats do nothing, that means the budget will get balanced by February. There’s some change I can believe in!

The Telegraph: Two-thirds of millionaires left Britain to avoid 50p tax rate

Although politicians love to demagogue the rich, there is a price when the government goes overboard:

In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to [Britain’s] HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

Since the announcement, the number of people declaring annual incomes of more than £1 million has risen to 10,000.

However, the number of million-pound earners is still far below the level recorded even at the height of the recession and financial crisis.

Last night, Harriet Baldwin, the Conservative MP who uncovered the latest figures, said: “Labour’s ideological tax hike led to a tax cull of millionaires.

Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.”

Governments can only squeeze the wealthy for more money to a point, at which time they take their wealth elsewhere. When governments get punitive with their tax rates, I don’t blame the wealthy one bit.

Fox Business: Seceding is Back in Vogue, This Time in Debt-Ridden Europe

This is what you get when you force one region to pay for the mistakes of the country as a whole:

In addition to stock-market meltdowns, recessions and high unemployment, the prolonged debt crisis in Europe is sparking another phenomenon: a slew of secession movements.

From Catalonia and Venice to Scotland and Bavaria, a number of disgruntled European regions are attempting to rid themselves of some of their less-affluent neighbors that they help subsidize.

While few are likely to succeed in seceding any time soon, the fact that the breakaway efforts are even on the table threatens to set a dangerous precedent and adds to the eurozone’s risk profile.

An actual breakup could also make it that much harder for the rest of a region’s countrymen to dig out of their debt-ridden holes.

“The economic crisis has weakened the glue that holds society together,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. “It’s not just that the Germans don’t want to pay for the Greeks. They don’t want to pay for each other either.”

If politicians in both Europe and the U.S. don’t get their acts together and start making the tough choices, they may be faced with even tougher choices in the next few years, such as their countries breaking apart.

After I win the Powerball tonight (sorry folks), I decided this is my next house (link here):

For the bargain basement price of $15 million, I get 6 bedrooms, 7 bathrooms, and 6 partial bathrooms. Located in Austin, Texas, next to Lake Travis (yes, the house comes with a boat slip), it comes on over 16 acres of land. But my favorite, and most frivolous, part of it: it has domes! I always wanted a house with a dome!

But look at this detail:

THAT is European-quality architecture! I love it!

Now, back to reality, and my portfolio, which didn’t do as well as the indexes today, but it was still a positive day:

DIS: 0.60 to $49.20 (1.23%, -2.79% overall)–bought at $50.61
INTC: 0.16 to $20.09 (0.80%, 2.50% overall)–bought at $19.60
LINE: 0.44 to $39.69 (1.12%, 0.46% overall)–bought at $39.51
NNVC: 0.00 to $0.52 (0.00%, -7.14% overall)–bought at $0.56
PGX: -0.01 to $14.75 (-0.07%, -0.94% overall)–bought at $14.89
SAND: -0.15 to $12.19 (-1.22%, -3.10% overall)–bought at $12.58
SLW: 0.17 to $36.80 (0.46%, 19.67% overall)–bought at $30.75
YHOO: -0.02 to $18.91 (-0.11%, 24.65% overall)–bought at $15.17

OVERALL: +0.36%

Watch the political chit-chat from Washington. When we get negative comments, like we got from Senate Majority Leader Harry Reid yesterday, the markets will react like they did yesterday, with the S&P 500 dropping from 1407 to close at 1398.

While I expect America’s “fiscal cliff” will get fixed, negative comments out of Washington will cause a market impact. Sadly, markets aren’t very good at differentiating between actual bad news, and political maneuvering. If you hear that the talks have been called off due to some disagreement, then it is time to worry. But as long as both sides are still at the table, then it is safe to be optimistic.

The S&P 500 levels to watch today:

UPSIDE: 1401 (November 8th’s high), 1408-1409 (4 data points), 1412 (November 2nd’s low), 1415 (May’s high), 1417 (November 6th’s low), 1419 (November 5th’s high), 1422 (April’s high), 1424 (50 day moving average), 1428 (2 data points), 1433-1434 (2 data points), and 1437 (top of the Bollinger Bands).
LAST CLOSE: 1398 (also November 27th’s low).
DOWNSIDE: 1397 (November 26th’s low), 1393 (20 day moving average), 1388-1391 (7 data points, including July’s high), 1386 (November 21st’s low), 1384 (November 12th’s high), 1383 (200 day moving average), 1382 (10 day moving average), 1380 (November 14th’s high), 1377 (3 data points), 1373 (November 9th’s low), 1371 (November 14th’s low), 1370 (2011’s high), 1363 (June’s high), 1362 (November 16th’s high), 1360 (November 15th’s high), 1354 (August’s low), 1352 (November 14th’s low), 1349 (the bottom of the Bollinger Bands), and 1348 (November 15th’s low).

The S&P 500’s December futures are down right now, to 1392. If the markets turn cynical, I would look at the 1388-1391 range as a target today, with 1383 (the 200 day moving average) as a deep downside support. On the other hand, any “happy talk” out of Washington could easily push the S&P 500 up to the 1408-1409 resistance level.