Hoodlum

And a little jab from Apple today after Steve Jobs resigns as CEO. http://www.theglobeandmail.com/globe-investor/steve-jobs-resigns-as-apple-ceo/article2140874/ “This is the right thing for Steve to do – to go out on top,” Mr. Gillis said. “I don't expect Tim is going to be spinning off the PC business any time soon.”

If there is even a hint of a future sales drop in tonight's quarterly release, Salesforce will fall very quickly. I plan on holding on to my puts for a bit yet as they are doing well in this environment.

I was surprise to see France in that list.

NBSK pricing in China has dropped 7% in the past month. Not sure if this will impact NA pricing in the coming weeks. http://www.paperage.com/foex/pulp_china.html

Either way Microsoft will make tons of profit from this.

I must have missed this. What if patent fees for Android cost as much as licensing Windows Phone? http://www.guardian.co.uk/technology/2011/jul/07/windows-phone-android-patent-seeking If Microsoft can get that money from Samsung (though it's more likely that this is an opening salvo; Samsung is said to want to get it down to $10, which isn't much of a negotiating position) then Android is going to become the best earner Microsoft has in mobile. Given that Samsung produced 19m smartphones in the first quarter, that would be $190m even at the $10 level; $285m at the $15 level. There's also a lawsuit going on against Motorola, in which it's claiming that its Android handsets infringe, and with Barnes & Noble over its Nook e-reader (which uses Android). And that's before Nokia - with which Microsoft has tied up a deal worth billions involving lots of intellectual property flowing back and forth - wades in with its patents against Android, because Nokia has got lots of patents in the mobile phone market. Microsoft would be able to litigate those for it quite successfully. Even then Microsoft isn't really finished with the patent licensing thing, because you'll recall that it was part of the consortium last week which won the bid for the Nortel patents, which all relate to mobile. Those, it will be able to litigate once the transfer of ownership is complete (Canada seems to be cutting up a little rough about it). And once that happens, then Android handset makers may really begin to wonder whether the game is worth the candle. If Windows Phone licence from Microsoft costs you around $25 (a guess), but the patent payments are costing you $24 per handset, is it really worth persisting?

Muddy waters is trying to use the SAIC to determine fraud at TRE. Here is an interesting article from February that explains why this is not possible based on how businesses need to be structured in China. http://weybenjamin.wordpress.com/2011/02/18/benjamin-wey-a-china-experts-views-on-saic-and-sec-filing-discrepancies-for-u-s-based-companies/

TRE will be volatile for a while so take advantage of it. I sold half what I bought when it was above $7 and just bought back the same shares again. Still a very small amount of my holdings. Most of TRE's Debt is due after 2013 so there is lots of time to clear the air on this. Here are some comments on the Carson Block Conference call. http://www.canadianbusiness.com/blog/business_briefings/29215--skepticism-mounts-against-sino-forest-short-seller

But that was known before their report.

The market is not perfect. The MW report had 2 main claims against TRE and that is what the press release from TRE tried to refute. Most of the rest of the MW report tried to pull stuff from the past to show some kind of trend to back up their 2 main points. The first item was clearly refuted as the revenue in question was clearly disclosed in the 2010 Q1 & Q2 MD&A. I am surprised MW missed this. The 2nd claim comes down to land ownership. MW claims they don't own the land while TRE says they do and that MW assummed they only purchased in Gengma, when they puchased in 25 other counties of Yunnam province. The auditors will likely come back and say nothing is wrong, but MW will say "where's the proof of the land records" and try to drag this out as they know TRE won't release that information for confidentiality reasons. In the end, if Paulson doesn't see anything wrong then he will buy shares at these depressed prices and there are only so many shares that can be shorted. I think MW has bitten off more than they can chew and are not accurate in their reporting of TRE, regardless of how successful they may have been in the past. I picked up some share of TRE today for the first time.

At some point this will all unravel. Salesforce’s Execs Bonus Bait and Switch

I am sure there are varying opinions on this. But do you think this is the direction certain parts of the US are headed in. And will we eventually see social unrest. http://www.thestar.com/business/article/994354--olive-america-the-world-s-sweatshop U.S. and a few Canadian manufacturers have long been relocating in the low-wage U.S. South. They’ve now been joined by European multinationals, most of which also operate in Canada. The Euros leave behind the social-justice practices of their homelands, as keen to squeeze blood from a stone as the most avaricious business operator. A stunning Human Rights Watch report from last September describes systematic exploitation of U.S. workers by such familiar European names as Ikea, Sodexo, BMW, Siemens, Daimler and Volkswagen. But China is no longer the “off-shoring” jurisdiction of choice. With annual wage gains now averaging 15 per cent to 20 per cent, combined with stagnant wages in North America, China will lose its labour-cost advantage over North America in just four years time, according to a report this month by the Boston Consulting Group.

Off the top of my head they had a strike of $100. They were small amounts as this is my first foray into puts.

What the best way to play this. I have mostly longer puts out to 2013 as I don't know how long it will take for the market to realize this.

Japan will be shutting down 3 more reactors that were not impacted by the earthquake. http://www.theglobeandmail.com/news/world/asia-pacific/japan-urges-three-reactors-be-suspended-over-safety-concerns/article2012877/ Mr. Yamada said the walls aimed to protect the pumps from damage from an earthquake and tsunami, and it will take a year or one and a half years to complete the construction. The plant provides power to around 16 million people in central Japan. Faced with a possible power crunch due to the shutdown, the prime minister sought public understanding. “We will experience some power crunch for sure. But we can overcome this with public support and understanding,” Mr. Kan said.

They had mentioned 2012 all of last year, but the lastest Q4 release mentioned that there would be no impact on earning until 2013. Still close to 2 years away.

Mercer International Q1 results. http://www.globenewswire.com/newsroom/news.html?d=220937

Well, it was a little worse than I expected. Not sure what the market was thinking over the past few weeks as it drove up the price of FFH. The same thing happened last quarter. So FFH was trading about 13% above Q1 book $354US ($337cnd).

I picked up some MERC today for the first time. It seems a better value than FBK right now.

What I find interesting with the recent rise of FFH is that it has happened at the same time the Canadian dollar has risen ($1.04) and the 10 year bond yields continue to rise (nearing February highs).

Here are some more comments on Canadian house prices. http://www.theglobeandmail.com/globe-investor/investment-ideas/experts-podium/signs-point-to-a-severe-housing-correction-in-canada/article1979229/ The current consensus is that Canada’s real estate market has achieved a “soft” landing and that prices will flat line but not decline substantially over the next several years. I disagree. The housing market in Canada is already in bubble territory. Average house prices have doubled in the last 10 years, while rents have risen by only about 30 per cent. The ratio of house prices to rent is now higher in Canada than in any other developed country. An even more powerful indicator also points to a severe housing correction in Canada. Residential housing investment as a percentage of GDP was 6.48 per cent in 2009, down slightly from 6.76 per cent in 2008, after peaking at 7.13 per cent in 2007. The previous peaks were at 7.26 per cent in 1976 and 7.18 per cent in 1989 – and we know what happened to the housing market in Canada in the early 1980s and early 1990s. After residential housing investment as a percentage of GDP peaked in the previous two cycles, the housing market crashed within a few years. I believe we are running out of time. By way of a comparison, this ratio peaked at about 6.1 per cent in the U.S. in the mid-2000s at the height of its housing bubble, and toward the end of the 1980s in Japan, when that country was nearing the end of its own property boom. Both countries experienced sharp declines in housing prices soon afterward. (I should mention that the ratio stands at 6.0 per cent in China at the end of 2010 – no wonder there is talk of a bubble in the Chinese housing market.) Canada is past the point of no return. What has propped up the housing market in Canada and delayed the correction is artificial demand from Asian investors. While it is not clear when this demand will dry up, it eventually will. Once it does, watch out.

The market seems to be suggesting this won't drag on. This is just one industry as I know Sony is getting hit hard from this. Canon is projecting a 27% drop in earnings from the earthquake. The Nuclear problem has added a significant level of complexity that previous earthquake cleanups have not had to deal with. At this point know one really know how long this will drag out. http://www.theglobeandmail.com/report-on-business/honda-toyota-extend-north-american-production-cuts/article1977559/ The parts shortage caused by the disaster in Japan means Toyota will shut all its Canadian and U.S. assembly plants for five days – with the exception of a Kentucky plant that will close for four days – between April 15 and April 25. That move came after Honda announced, earlier Friday, that the cut in output of about 50 per cent at all its North American plants will be extended through the week of April 18. “We anticipate that additional production adjustments will continue after that date,” Honda added in a statement. Toyota is reopening its Japanese plants and running them at 50 per cent of normal levels for two weeks beginning April 18, but will then close them for a spring holiday and assess the availability of parts before deciding whether and/or when to start them up again. A senior American Honda Motor Co. executive told industry publication Automotive News earlier in the week that the production cuts could last for another 60 to 90 days.

FFH will also have significant losses from the New Zealand Earthquake and the Japanese Earthquake/Tsunami. My guess is that FFH is currently trading slightly above current book value right now.

I think the market is currently underestimating the impact on the supply chain. The ongoing blackouts from the nuclear power issues is hindering Japan's ability to get back up and running. This is just one of many industries that are impacted. http://www.forbes.com/feeds/ap/2011/03/27/general-specialized-consumer-services-japan-earthquake-car-crisis_8377549.html In the weeks ahead, car buyers will have difficulty finding the model they want in certain colors, thousands of auto plant workers will likely be told to stay home, and companies such as Toyota, Honda and others will lose billions of dollars in revenue. More than two weeks since the natural disaster, inventories of crucial car supplies - from computer chips to paint pigments - are dwindling fast as Japanese factories that make them struggle to restart. Because parts and supplies are shipped by slow-moving boats, the real drop-off has yet to be felt by factories in the U.S., Europe and Asia. That will come by the middle of April. "This is the biggest impact ever in the history of the automobile industry," says Koji Endo, managing director at Advanced Research Japan in Tokyo. Much of Japan's auto industry - the second largest supplier of cars in the world - remains idle. Few plants were seriously damaged by the quake, but with supplies of water and electricity fleeting, no one can say when factories will crank up. Some auto analysts say it could be as late as this summer.

“If you don’t own a home buy one,” Paulson recommended; ” if you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.” Isn't that what got us into this mess? Looks like China is going in this direction as well.