Morning Call [7:15am ET] Yesterday morning I admitted to being double short silver with a 60% holding of the ZSL (i.e., 2x inverse) and that following the close on Aug 3 at $32.54 I knew that position was going to get hammered at the open, but that I’d hang in with my Ali rope-a-dope, figuring of course that Mr. Market, not I, was the dope and would be swinging hard for a higher silver price.
I wrote, at the time, that despite the barrage I was expecting at the open, I would still pull out a win. This is where trading money and writing about it separates the men from the boys as it were.
Yes, at the open yesterday, ZSL crashed to $31.66 and then dropped quickly to a low of $31.49. Had I not already been exposed with a 60% position, which I admitted was extreme, but which was evidence of the confidence I had in the position at the time, I would have gone in for more. But I am always conscious of risk, and so I told you I’d do the rope-a-dope, meaning I knew in advance what was coming but I would hang in and not fight back.
My plan started to work as silver started coming down from a spot price of about 18.68 down to about $18.44 as the over-sold Dollar started lifting against the Yen and the Euro. In about 40 minutes, the (double short silver) ZSL price had lifted to $32.19, which was above my cost base, and so, despite anticipating a test of the new support, I decided to hang in and wait for the next flurry of punches, which then took the price down to $31.80 by 11:20am. At that point, however, ZSL recovered again and I knew then that my major buy signal at 9:45am at about $31.65 was a good one, and so I just waited for the next up-move. Sure enough, just before 1:00pm, people were asking what happened to gold and silver. The spot silver price then dropped from about $18.55 all the way down to $18.23, and my ZSL (you see, it’s ‘mine’ if it’s going up; ‘yours’ if it’s going down :-)) zoomed to a high of $33.04. Success. I had roped the dope.
I signed off yesterday’s morning call with the usual, “Have a great day.” Then I added, “Now that I have calmed myself down, I expect to as well.” And I did.
It’s important to understand that sometimes you meet a challenge that is too tough and you have to have the wisdom to put your knee down (i.e., sell a bit). Wisdom, of course, comes with experience and that only comes after you push yourself into battle after battle. To become a warrior, you have to do it, not read about it.
At the end of the day, trading is not war, nor a prize fight; it’s about trading prices with a plan, backed up with experience. Mostly, it’s a matter of managing risk, and then seeking opportunity for gain. It’s mentally hard work. Rather than going to boot camp or doing your road work, which warriors must do before their own battles, traders have to prepare by examining as many of the factors that push and pull prices higher and lower. These are the so-called ‘drivers’ we talk about all the time in the blog: macro-economic data, corporate fundamental, technical and quantitative data, interest rates, commodity prices and forex.
This is nothing new to you. As I say, it’s just hard work getting your head around a mountain of information/data so that you can effectively assess a situation and make a trading plan. Then you have to execute because the unexpected is always going to happen.
The hardest part, really, is keeping one’s focus because life is always getting in the way, and you need to maintain your balance. There is no easy part. Moreover, it’s not a particularly glamorous life. The upside, as I see it, is that if you become good at trading, you have acquired a life skill that affords you a high degree of independence. In my case, I have always demanded that of myself. If you don’t have that same burning desire, it’s kind of difficult putting in the hours needed to learn.
At this point in the morning, traders know that Japan equities closed very strong, and Europe, while awaiting policy reports from the Bank of England and the European Central Bank, are somewhat bullish. In the futures markets, the Euro and precious metals are a bit stronger.
I can’t wait to get started.
CTA Trading Desk Post-Close Report
Another day of nothingness, traders content to only observe price action and unwilling to increase risk exposure ahead of the US unemployment report due Friday morning.
Price compression preceding a known volatility event is normal; the subsequent response should give us a road map for the next several weeks. Bulls need to capitalize on a better than expected number and drive the S&P up through 1150, while Bears are hoping bad news drives the S&P below 1100.
Sometimes the easiest trade is to fade an outlier number once it becomes apparent the news has been already factored into current prices. If prices immediately bolt above resistance on the opening, only to surrender gains after the opening 30 minutes, then short-term traders should consider selling against the opening range high.
If a disappointing number shoves equities lower but Bears are unable to sustain downward momentum, any subsequent rise up through Thursday’s high could ignite a violent short squeeze.
Any of those scenarios can be potentially very profitable for nimble traders. The real fear for independent traders is that the number comes in as expected and the market apathetically flat lines on minimal volume – a worst-case outcome for us all.
It is certainly a possibility that the lethargic price action will continue through the end of August, so be mentally prepared to deal with the possibility of scaling back your risk exposure accordingly.
Here’s to a wild and profitable day for all of us on Friday!
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Comments
FT: Putin announces ban on Russian grain exports
Vladimir Putin, the Russian prime minister, on Thursday announced a temporary export ban on grains after a severe drought decimated the country’s crops.
“I think it would be expedient to introduce a temporary ban on export grains and other agricultural goods,” Mr Putin told a Cabinet meeting. “We cannot allow an increase in domestic prices and we need to maintain the number of cattle.”
The ban will take effect from August 15, a spokesman for Mr Putin said.
http://bit.ly/c8o9T3
GSK: New Compound Offers Way To Fight Drug-Resistant Bacteria
GlaxoSmithKline PLC (GSK) Wednesday said a method of killing bacteria already resistant to existing treatments has been found which could help scientists develop new antibiotics to tackle bacteria responsible for many hospital and community-acquired infections.
The research results, published Wednesday in the journal Nature, are from collaborations between Glaxo and the Wellcome Trust's Seeding Drug Discovery initiative and the U.S. Defense Threat Reduction Agency.
Glaxo in a statement said its researchers used an imaging technique called X-ray crystallography to take a snapshot of the new compound latched on to the enzyme topoisomerase. The enzyme is part of the bacteria's internal machinery and helps the bacteria produce proteins and replicate.
Stopping this enzyme prevents the bacteria from reproducing. Medicines, known as the quinolones, that target the enzyme have been successfully used as antibiotics since 1962, but bacteria are increasingly developing resistance to this class of drug.
By looking at X-ray images, the researchers demonstrated that the new investigational medicine attaches to the enzyme in a different place to quinolones, enabling it to stop the same bacteria that are resistant to these older treatments.
"We already knew that targeting this enzyme was clinically proven to stop bacteria in their tracks, we just needed to be a bit more inventive in how we attacked it," said Michael Gwynn, from Glaxo's Infectious Diseases research group.
"These images and the data showing the efficacy of this compound against a range of bacteria validate our approach, demonstrating that the enzyme can still be blocked even in bacteria already resistant to other antibiotics that work against this same enzyme," Gwynn said.
Ted Bianco, director of technology transfer at the Wellcome Trust, said in a statement that "this is an important step forward in the race against antibiotic resistance. By solving the new structure of this important bacterial enzyme, and understanding how these drugs work, the team has opened the door for targeted drug design of new antibiotics, which are urgently needed."
Glaxo said the compound used in the study is one of a group being worked on to develop the best compounds in terms of efficacy and safety and should help identify drug candidates that could be taken forward into early stage trials in humans.
The rapidly increasing resistance of bacteria to antibiotics is a global issue, which can cause longer recovery times and hospitalizations, increased costs and rising mortality, Glaxo said, adding that around 25,000 people in the European Union die each year from infections cause by multi-drug resistant bacteria.
bad jobless claims, bad!
Consensus 455k Actual 479k
No biscuit. Initial reaction: SPX down 5 points on the news, gold and the euro up slightly.
Ugly new employment figures
The monster index was already showing a small slide due to construction and leisure/accomodation.
New jobless claims:
Prior Consensus Consensus Range Actual
New Claims - Level 457 K 455 K 444 K to 465 K 479 K
http://fidweek.econoday.com/byshoweventfull.asp?fi...
ps shouldn't you be in bed dave? ;)
Cara 100 Ratings Changes
Good morning.
ICE - Intercontinental Exchange coverage resumed an Overweight at JP Morgan.
Target $129.
KGC - Kinross Gold upgraded to Sector Performer from Sector Underperformer at CIBC.
today's econoday events
[No set time] Chain Store Sales
[No set time] Monster Employment Index
8:30 AM ET Jobless Claims
10:30 AM ET EIA Natural Gas Report
11:00 AM ET 3-Month Bill Announcement
11:00 AM ET 6-Month Bill Announcement
3:00 PM ET Treasury STRIPS
4:30 PM ET Fed Balance Sheet
4:30 PM ET Money Supply
ZSL v/s SLV Options
Mr. Cara,
Wanted to understand your reasoning in shorting Silver via the 2X inverse fund as opposed to via options (eg. Buying SLV Puts).
Don't the daily gyrations (up & down) of Silver work out poorly and eat into profits? Or, is it that your expectations are for a steady decline (say every day 1% v/s down 2% once day and up 1% next) and thus you prefer the 2X ETF.
This is meant as general 2x/3x inverse fund v/s Options question. Using the recent Silver short via ZSL more as an example of it than to discuss Silver.
Re: ZSL v/s SLV Options
mSquare,
You make a good point that options strategies and tactics lead to greater control of risks and opportunities. Unfortunately, the discussion relates to my trading for particular accounts that are not options approved by the clients' broker (IB) as the total funds in each account are less than $100,000. I buy or sell by portfolio weighting % regardless of whether these accounts have $50,000, $70,000 or $100,000.
Re: bad jobless claims, bad!
Consensus 455k Actual 479k
Prior week first time unemployment claims revised up to 460K from 457k.
These are levels at which job loss is occurring, not job creation. This is probably why Pelosi is calling back the House of Representatives to pass her $26 Billion "Jobs" bill next week. The bill sends money back to the states to pay off the teachers, police, and fire unions before election.
Cara 100 Update (Final)
CTSH - downgraded at Morgan Stanley from Overweight to Equal-weight. $63 price target. Valuation call, as the stock has gained 35% year-to-date.
ICE - numbers cut at Morgan Stanley. Shares now seen reaching $117. Estimates also reduced, given lower expected volumes. Equal-weight rating.
KGC - Kinross Gold upgraded to Buy from Hold at Stifel Nicolaus
--------
See you all when returning from vacation next Tuesday. Good luck and happy trading.
Regards,
BH
KGC (K.TO)
The market is made up of buyers and sellers. I gather some of you have strong negative views of Kinross's recent acquisitions, and that view would probably be aligned with the Street. On the other hand, I happen to believe that Kinross management is excellent and they say these acquisitions represented "a transformational opportunity" for the company. I was a buyer after the opening plunge on Aug 3, and I'm happy to be holding a +2% trading gain.
Credit Creation
I posted this so late yesterday that most people had probably gone home.
Did want other's thoughts so here it is again.
If Fed credit creation is akin to stocking grocery stores with food and nobody comes to buy any, you would have the equivalent of the M1 Mult falling. I have posted M1, M2 and MZM charts before from the St. Louis Fed and they are available there in the Fred Data section.
Here is the Multiplier chart from the Fed. Each time I see it I get more alarmed. Thoughts welcome!
http://www.youtube.com/watch?v=jxNEiZhpinY
youtube is for a little levity - the attachment is important
Re: Credit Creation
George,
As Dave said yesterday,
"Regardless of what the Fed's multiplier chart (or model) shows, money creation in the private sector depends entirely on the willingness of people and companies to borrow money. If real people and companies do not want to borrow, then no money is created, regardless of Fed models, multipliers and reserves, etc. There's no pushing on a rope, and there's no forcing people to borrow when they don't want to - or need to - or aren't able to."
This, in a nutshell, Is why I continue to be mostly in bonds.
"Creating money" with no demand for it is as effective as burying it in the ground.
We need jobs for people to be able to buy. We need people to buy to expand business and create jobs.
The whiz kids in D.C. are the cause of the broken U.S. model... Let them eat cash.
Re: Credit Creation
Thoughts were posted George:
http://caracommunity.com/content/bill-cara%E2%80%9...
http://caracommunity.com/content/bill-cara%E2%80%9...
Bernanke complains about tight lending standards!
HUH? After blaming loose underwriting stnadards for all our ills the last several years, Mr. Bernanke is now saying lending standards are too tight. Strict underwriting has been assumed the cureall to prevent foreclosures. Intersting idea. Underwriters don't have to be licensed or background checked. If they made so many mistakes why are underwriters not coming under the microscope like the front line brokers and loan officers?
Poor underwriting has very little to do with today's wave of foreclosures. Foreclosures are caused by lack of jobs and loss of home values. 780 FICO score borrowers, the top 1%, are walking away from their homes in droves. IN fact the lowest FICO score borrowers and easiest underwriting, namely zero down USDA and VA loans have the LOWEST foreclosure rates!
The supply of houses is too large for qualified buyers due, in part, to the tightened underwriting standards that Mr. Bernanke himself demanded. As foreclosures increase, the underwriting noose gets tighter. This cycle of paranoia has just gotten worse and worse. You have no idea how hard it is to qualify a borrower with 780 FICO these days who has a minor credit blemish. It's embarassing to grill a corporate CEO about why their wife missed making one credit card payment or went insurance shopping (which can lower your score quickly) and having to take the wife off title to close the loan!
RIMM
Hi Bill,
I was re-reading your Desk Briefing dated 11/09/2009 in light of the recent news and stock activity. You concluded the report by saying that when the broad market stabilized you would start to build long positions in the stock. Any updates to the report that you would be willing to share? The lower it goes the more interesting it looks.
Thanks in advance.
Re: RIMM
nssred,
It's too early I think to start building positions in RIMM. We need to see the market reaction to their Torch 9800 and the fall-out re their disputes with certain countries over the confidentiality issue. I'm not too concerned about the latter because the products are perfectly legal in most markets. But, the iPhone may be a category killer, and we need to see.
Trading Risk
Before my interest income was significantly reduced by monetary policy I had much greater tolerance for trading risk. My positions were large enough to generate worthwhile profits but not so large that losses could not be offset by extra interest income. The trading positions I take now are so irrationally small that I have no fear of losing, but I do not win much any more.
I'm just trying to look inside my own head. I am not trying to influence anyone or transmit a negative or positive message. I am sure many of your are much better suited to risk than me. Continued good luck.
Fortunately or unfortunately for me I have risk taking limitations that I am forced to respect not change. In making trading decisions, good or bad, in the end I have to keep in mind that I am the only one who reaps the rewards and sustains the losses.
More on Kinross
Credit Suisse today issued a summary report on KGC (K.TO):
Kinross Gold Corp. (K.TO) NEUTRAL [V] A. Soni
CP: US$ 15.77 TP: US$ 20 CAP: US$ 11.1b
Q2/10 and H2/10 weakness due to Chile, Kupol, Lowering Estimates and Target Price to $20 (from $21)
! Event: Q2/10 EPS of $0.16 in-line with CS and consensus est. of $0.16: K reported headline EPS of $0.15 and adj. EPS of $0.16, in-line with CS and consensus estimates of $0.16 (range $0.10-$0.22). K sold 14kozs more GEO than it produced, which was offset by higher than forecast cost of sales.
! Investment Thesis: K continues to experience operating issues at four out of eight assets. More importantly, K has little production growth in 2010 through 2013 and needed to do an acquisition to fill its production growth gap. The potential acquisition of RBI would fill that growth gap and provide growth in 2014 and beyond as well. K's two long term projects are far from assured (at very early stage, requiring permits, exploration and more studies). We think this is the key reason why RBI would be a good fit for the K and not because the market (analysts and investors) is undervaluing the Tasiast asset. While Tasiast could potentially be a 20-25Mozs asset in three or four years, we do not think most shareholders hold positions for that long. We currently model 14Mozs, with the expectation Tasiast will daylight that amount of likely reserve base within 12-18months.
! 2010 cost up due to Chile: 2010 production guidance unchanged at 2.2Mozs GEO but K guided to the high end of cash costs of $460-$490/oz.
! Q2 operating highlights production light, costs inch up: GEO production of 538kozs, below CS forecasts of 551kozs. Total cash costs of $496/oz, above CS est. of $473/oz. Strong performance at Fort Knox was more than offset by weakness at La Coipa (filter/clay issues) and Maricunga (slope stability). Both mines lost 14 days of production due to poor weather.
! Valuation: We are revising our Target price down to $20.00 from $21.00 based on a decrease in our DCF to $16.64/sh (from $17.98/sh) after incorporating Q2 results (and asset sales) into our model. We have also revised our 2010-2012 EPS forecasts downwards to $0.51, $0.40 and $0.54 from $0.57, $0.44 and $0.64, respectively due to lower production and higher op. costs.
[BC note] K hosted a conference call this morning at 8:30AM ET. The stock opened a bit higher but has since come off along with GDX and GDXJ. Silver is down to $18.20 and 'my' ZSL hit a high of $33.28 a few minutes ago (presently $32.90) but still up a bit on the day.
Bernanke complains
I always enjoy your posts, loannetter.
I'd say the bigger problem w/ refinancing is appraisals. If you have a home equity loan (locked in at very favorable terms), lenders don't want to refi you if you need a subordination (even if paper is all held by the same lender). When you talk to the lender, they tell you (as I'm sure you already know) that they can't talk to the appraiser or contest the results in any way. So, you end up w/ an ultra-conservative appraisal that effectively skunks your refi ability even if you have a lengthy history of repayment, good credit score and all else clears the underwriting hurdles.
To me, this is a worst-case scenario, because now the borrower is out $500 bucks on the loan app (and appraisal cost). Its almost like you need to have at least 30% equity in your house over and above your 2nd mtg (and who doesn't have one of those?) to even think about refinancing. Anyone with that much equity doesn't need to refinance anyway.
The refi lending market is text book example of the pendulum swinging way too far one way (creating the problem) and now it has swung way too far back the other (preventing the problem from being fixed).
Re: Credit Creation
"My bad". Thanks Dave, Grym and Les.
Re: Credit Creation
It's worth noting George that Keen is not theorising the "credit led - fiat money follows" understanding of money creation. He's happy to use data to contradict the theoretical model that "fiat money is created first - then credit follows" model that Bernanke is following in order to "avoid" the errors of the Great Depression. Keen's paper suggests it is neoclassical "same old, same old" doomed (like so much economic policy) to failure.
RIM's "mideast diplomacy" - a strange story gets stranger ...
Yesterday, RIM's CEO is quoted saying, re Mideastern gov'ts which want to spy on blackberry messaging, "We are going to continue to work with them to make sure they understand the reality of the Internet," he told the Journal. "A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." - Sounds a tad arrogant for starters!
He was explaining that much on the internet is encrypted, and govt's should get used to that, etc. BUT, gov'ts can easily spy on most traffic - including that emanating from PC's, iphones and androids. Only blackberry corporate traffic is strongly encrypted. (Consumer blackberries apparently are NOT protected.) Neither NSA, nor other western spy agencies, nor Chinese nor Russian intelligence are shutting down blackberry services. Why not? I expect because they can monitor BB traffic, probably with RIM and carrier acquiesence.
Still, it's critical for RIM to have corporate customers BELIEVE their BB traffic is secure. Their IT managers KNOW how cost-effective industrial spying is! I'd expect most do it against their competitors to one degree or another. Secure messaging is BB's main "edge" in the corporate mobile market. (The new BB 9800 doesn't seem to rival iphone or android on cell-sexiness!)
I'm surprised RIM's CEO hasn't developed a more sophisticated PR approach to the issues surrounding his "edge" in the corporate market.
The FT waded into this area today, but also failed fully to see the bigger issues. For example, NSA used to have zero contractors; now, per James Bamford, they have 5,000. How well is NSA data stored by contractors protected against use for commercial purposes? We'll never know!
Also, one retired federal prosecutor maintains that Obama's (massive) healthcare bill contained (buried) language permitting data captured by the US gov't for one purpose for the first time to be shared with other agencies for other purposes. Translation: if NSA captures information from your blackberry that might be of interest to IRS, there are no longer rules against that information being passed "across town" to IRS.
If you think this doesn't concern you, because "you have nothing to hide", think again. If you're liberal, imagine a future young Martin Luther King facing a future J Edgar Hoover. If you're conservative, imagine a young Ron Paul vrs. the same future J Edgar. - Either could be destroyed as a political figure before achieving prominence through leaking of their private communications. Prepare yourself for unending blandness in those who rise to the top of America's power structure!
Thank you's
Thank you Mr. Cara for your ZSL trading share. And I thank you for all the info you share, providing this blog your sincerity and dedication.
Thank you Les for your premarket updates. As a Calif person they sure help.
Thanks to all for tips, ideas, discussions etc.
It is sad the market has turned into a casino rather then a place to invest ones money in companies that are innovative, growing and helping society.
Governments need to pay as we go rather then spend more then is coming in.
Our US government was established to be represented by common people who served the people for a term or 2 and then went back to thier private life.
What we have now is a very corrupt system. Not the first time in history!
We all need to help each other.
Not Going Anywhere
http://ronsen.blogspot.com/2010/08/database-driven...
Maybe Ben should just give us the money directly to spend. I'm just seeing more and more desperate people out of work and out of hope.
Re: KGC (K.TO)
appreciate your gain on this stock Bill,
i dont believe its fair for any of us to attack a stock for behaviors or tendencies that are endemic to its sector as a whole.
i do believe we must consider Kinross from a broader perspective, its current price is about where it was in late 2008. the stock after dumping hard then bouncing is heading back lower.
there is no clear indication why Kinross should outperform gold or the mining sector for 2010 or 2011, or why it has trended downwards since early 2010 while gold has moved higher.
my questions to Kinross would center around the usual issues facing miners:
1. hedging, both in gold, silver and possible base metals
2. US dollar hedging.
3. share structure with respect to executive/insider sales, options and term lenghts of its top brass.
as an investor holding the stock for the past 3 years I would ask how the stock is down considerably while the underlying asset it mines has almost doubled in price.
i would ask further, how would acquisition of a mine with gold raise their share price when a massive rise in the price of gold couldn't? is more gold really the answer for this outfit?
its counter intuitive but has anyone dared to ask the question?
They are giving away money for homes at 3.xx%
Wow. just got a call from my finance/mortgage gal. For well qualified they are offering 3.7% 30 yr fixed! and that might go down even more if QEII begins.
I can only hope this creates one more melt up and I can unload my rental props in North Carolina.
Free homes for everyone, one more time!
Re: Credit Creation
ALOHA!!
What Keen does for me is to explain my monetary beliefs which is essentially DEBT will cause the C WORD to collapse money as we know it now, meaning "floating currencies" backed by the human condition of "faith and credit". Something I translate to every governments downfall as being the "faith" that government can obtain "credit" forever, especially at an affordable debt service level. To have Bernanke insist that he is keeping interest rates low in order to stimulate the real estate sector and help the average US citizen is just pure BS. Interest rates are low so the US Treasury can service its growing exponential debt without raising taxes to riotous extreme levels and without issuing a great deal more debt to pay off past and current debt.
What I am attempting to explain using the US TREASURY statements is to show there is a gigantic sum of money being created to PRICE FIX the US economy and the people until this "recession" ends. Both the Bush and Obama administration are gambling that this PRICE FIXING will be short lived. Keen says the opposite by Bernanke's weak actions, so if in fact the two political parties want to retain their power then they have no choice but to pump up the Treasury Debt and keep interest rates low while a huge sector of the US population attempts to retire on government promises like Social Security and Medicare. Growing right along with those government promises is unemployment, welfare and food stamps. Where is the $1TRIL+ per month of US Treasury withdrawals from the Federal Reserve Account accounted for in Keen's model? Not to mention the $7.5TRIL in US Treasuries issued YTD. Certainly as I point out every week net tax revenues are extremely minuscule compared to DEBT and outlays. There now exists a huge REVENUE DEFICIT at the US Treasury growing, not shrinking . As an example, on August 3rd there were $34BIL in US Treasury withdrawals yet less than $2BIL in net tax revenues. The YTD numbers show a staggering REVENUE DEFICIT. America is financing PRICE FIXING with staggering debt paid for by even more staggering debt. Revenues are in limbo. Keen's model shows that "revenue limbo" will go for a long time so long as Bernanke makes frivolous attempts to pump up the money supply. Its a CATCH 22! The C WORD is in play. Just make sure you do not entrust your entire financial future to government debt. The same rating agencies that allowed AAA for SubPrime now allow AAA for US Debt. The Chinese, our largest sovereign creditor, says different.
Even in Keen's model gold was used as an example of a more efficient monetary system since gold issues no credit and carries no debt so that gold acts as a brake on further issuance of money and debt. The last thing bankers want is a monetary system where credit is limited. In other words gold is not subject to the human condition in that you cannot print an ounce of gold, but in a corrupt futures market you can misrepresent total supply. Any time any commodity or monetary commodity is "warehoused" it can be subject to fraudulent misrepresentation of supply. Once again the entity that always seems to have the privilege to "warehouse" money/wealth is a bank, whether it is paper, gold or silver. That's a huge amount of wealth entrusted to banks. Have these banks demonstrated honesty and transparency sufficient to warrant such trust?
I have always believed that GLD and SLV are nothing more than bankers confiscating private gold. If you pay $X for a digital unit that represents one share of GLD do you own gold? As Keen says we have now witnessed just how trustworthy bankers really are. Why would banks like JP Morgan want to go through the enormous expense and manpower to set up and hold GLD gold on your behalf? So you trade your debt based money for a digital promise that somewhere in the World gold exists that has your name on it held by a banking cartel that extorts legal and monetary favors from the US Congress. This is the same US Congress that under FDR already confiscated US citizens gold once before.
I find it very anti-Constitutional to look back to when the USA was operating under the gold standard and to see most of that time period US citizens either had their gold confiscated outright or were not allowed to own it at all without a permit issued by the US Treasury. What the US Congress did was to uphold an Executive Order that declared a multi-decade banking "emergency", even when there was no "emergency". Where was the FREEDOM in that political system? JFK was the first US President to loosen the gold ban.
The long and short of it is that global governments and their banking system are going to extraordinary lengths to keep citizenry placated and keep "trust" in a failed monetary system in play at the same time. Of course it will be the fault of "greedy capitalistic producers of wealth" and not the paper shufflers and their lap dog politicians enmeshed in a quagmire of debt overload. Yet last time I looked Bill Gates or Rex Tillerson(XOM CEO) wasn't setting interest rates or writing Congressional Bills.
The other day when I drove into Hilo I saw my first "tent" on the side of the road right down the street from a Borders BookStore that was advertising a 50% off liquidation sale. Yep, the only book store in Hilo is closing its doors. Now if you have to be homeless then Hawaii is the place to do it.
An interesting bit of dialogue that came from a Miami Vice episode that I relate to the US Voter and the blind acceptance of monopolistic money and politics.
"Open your eyes ... There's no victims here, only volunteers!"
We volunteer to be loyal to our captors by continually voting the same two political parties into power. I can think of no better way to explain such brainwashed behavior other than voter STOCKHOLM SYNDROME.
Re: Not Going Anywhere
ALOHA!!
"Maybe Ben should just give us the money directly to spend."
They are by facilitating the US Debt. All you have to do is go down to your local unemployment/welfare/food stamps office and apply for it! You probably qualify if you are out of work and out of hope.
The Unemployment Benefits line item took a few weeks hiatus due to Congress not extending benefits but as of August 3rd its right back up to the $900MIL per day outlays of the past.
You can't have too many hopeless people parading around in the streets right before a major election can you?
Mortgage Deduction
If, we are going to talk honestly on this site, which we usually do. Let's eliminate the mortgage and property tax deductions and institute a 15% flat tax.
Jobs Report for Friday
The link below is the ADP report for Wed. August 4th. On page 3 there are two graphs for both Goods and Services with the ADP report in Blue and the BLS report in red. The correlations are .95 and .94 and the lines cross often. One might notice the wide divergences in May, 2010 and also Jan. 2009 etc. These were the BLS reported numbers being way different from the ADP numbers. Heretofore, these divergences are "corrected" over time (often quickly).
Presently, the best consensus number that I can find calls for +100,000 job growth in Private Payrolls. My interpretation of the significance of page 3 would lead me to conclude that that number is too optimistic.
http://www.adpemploymentreport.com/pdf/FINAL_Repor...
Reuters Says Obama Going to Forgive billions in Mortgages soon..
James Pethokoukis says get ready for more fun....
I am no Expert on accuracy of this info, but it sure seems very plausible.
http://blogs.reuters.com/james-pethokoukis/2010/08...
Re: Not Going Anywhere
Yes, you are correct Kaimu, but the process is asymmetric. Debtors get rewarded and savers punished.
Malinvestment gets rewarded and zombie and nonproductive companies live on and Schumpeter's 'creative destruction' gets overturned by committed Keynesians (some of whom probably need to be committed?)...
Re: Not Going Anywhere
I totally agree, eliminate all but the economic consideration on investment decisions.
Quick setup example
Wouldn't want to leave on vacation with no good chart to show for educational purposes, and they were rare over last week or so.
http://tradinglog.realitytrader.com/2010/08/aug-05...
Re: RIMM
Thanks Bill for the quick reply and the thoughts. Also, many thanks for the all the effort you put in to the website, blog, and reports etc. Your analysis and thoughts are very important.
Golds
I am a subscriber to Ian McAvity's monthly research piece and for the last few months he's included a really interesting bunch of charts showing large cap gold stock prices (AEM, BVN, KGC,AUY,HUI and IAG) relative to the gold when it first hit $732, $1000, and $1250. Except for IAG and HUI ALL are trading at or below when gold traded thru $732. Very interesting stuff.
Btw, for those like me who don't really understand technical analysis it's a very useful subscription to learn.
Correction
Sorry meant to say traded thru $1000. I apologize.
another day of buy the dips
Once again the market has proved immune to bad news. We're back almost to even again. Reminds me of the year-long melt-up rally of 2009.
Re: another day of buy the dips
interesting. first time I've noted such divergence between SPY and the Russell 2000 IWM, not that I've been following the latter for a long time.If anyone can educate me on the differences between the two I'd appreciate it.
I don't know
Crushing the sell-side analyst?
http://kingworldnews.com/kingworldnews/KWN_DailyWe...
Re: another day of buy the dips
Noticed the index divergence too. The $RUT led down the $SPX, $DJX, and $NDX big time. A small business crash? FWIW, it makes me wonder about manipulation of the numbers that appear on the business news screens, the Russell is not followed as much. Tomorrow down big? We live in interesting times for sure!!
Re: Golds
nssred,
I have known Ian McAvity for almost 30 years and know him him as a friend. I recommend his work.
Three things you might not know about Ian:
1. He was the most frequent guest ever on Louis Rukeyser's Wall Street Week investment show on PBS.
2. He was the person behind the deal that took Frank Holmes from Toronto as a young stockbroker to San Antonio and US Global Advisors, where Frank has enjoyed a terrific career.
3. He was responsible for bringing my mentor Ian Notley to North America. Can you imagine -- this small Toronto boutique firm employed two of the all-time best technical analysts at the same time.
Re: crushing the sell-side analyst
Thanx, that WAS a good, hard-hitting debate. Whalen showed no mercy ...
Re: KGC (K.TO)
Dr.c,
You present very legitimate questions. I also have my doubts about this latest play which appears to have been taken from the Peter Monk playbook for ABX: Mine the market and not the ore.... there's more money in it!
$RUT
Did want to point out the StockCharts label from yesterday which tagged a golden cross.
http://stockcharts.com/h-sc/ui?s=$rut&p=d&yr=0&mn=5&dy=0&id=p04211290065&a=193878088
Re: crushing the sell-side analyst
Your welcome, at least Ross didn't make fun of my source, lol.
edit:
I know presstv is a joke, but was trying to capture escalation in rhetoric...do not know if this will lead anywhere.
Re: Golds
Not re golds but an interesting article from 5 1/2 years ago.
http://www.billcara.com/archives/2005/01/my_on_the...
Medicare Deform
Isn't it just wonderful. The Obama Administration is congratulating itself for having extended the life of Medicare by 12 years as a result of its recent overhaul. It will accomplish this by cutting the fees of doctors and hospitals which is not what the public wanted. The public wants doctors and hospitals that are financially sound because they provide the care. You can't get care even with insurance if there are not enough doctors and hospitals.
Instead the blood sucking insurance and drug companies will be kept financially sound and ever more profitable.
Think of the reform the government would have accomplished if only Congress had enacted the public option and trimmed those obscene insurance and drug company charges. Its truly incredible how the government can transform a program that is probably long term viable into one that is almost terminal because it chooses to use a large part of the program's income for corporate patronage.
http://tinyurl.com/24g3ywg
Re: $RUT
If your graph shows a failed break, it could be ugly tomorrow, guess time and the market will tell. I can't, but it IS unusual, for my two cents.
CNBC: "You have to own stocks"
CNBC:
"You have to own stocks here," says one CNBC talking head after another. "There's too much money on the sidelines, and as stocks keep going up, investors will feel the pressure to put that money into the market. That will push stock prices even higher."
"First off, we've been listening to that sort of talk for most of the past year and stocks are roughly at the same level as they were last summer. Oh sure, the S&P 500 did manage to pierce 1,200 in April. That was the month mutual funds experienced their largest cash inflows of the year. It was also the month that preceded the 1,000-point 'flash crash'.
So much for the strength of the greater fool theory.
In order to coax the average investor back in from off of the sidelines one thing has to happen: Stocks need to get cheap enough to where the value and the potential for future profits— even with the threat of increased taxation on those gains— far outweighs the risk of loss in a rigged system. We're still pretty far away from that right now."
I wonder what others think especially considering that companies do not have the excess cash(free cash flow) and will be ridding themselves of debt for the foreseeable future.
Suddenly everyone is dollar bull
http://www.businessinsider.com/morgan-stanley-the-...
well, not everyone yet. The yen is strengthening or it was and so is gold or it was...does one think that if in fact the dollar does strengthen that doing so would provide great cover for the QEII and pull the rest of the world up as well when the dollar goes up?
Re: crushing the sell-side analyst
gforce, it was all in fun. Presstv reminded me of 'Itar Tass' in Moscow. And yes, Chris Whalen is one of the good guys that 'get it.' Thanks
Re: $RUT
I'm not Freddy Prinz (sp.) here. It's StockCharts graph and labels not mine.
Don't kill the messenger. lol
lowest after-hours volumes this past week
that I have seen for many months.....
Re: crushing the sell-side analyst
No offense taken. I may not like some of the slanted stories, but it does provide a comprehensive picture sort of.
Re: crushing the sell-side analyst
Ditto that about Whalen. Never heard of him before but now I know by your link, gforce, and the embedded link on King World. He's ok in my book.
What spooks me more,longer term,is the recent Felix Zulauf interview with Ritholz: Buy gold, Euro may go down big, all stocks are overvalued, etc.
Zulauf has been right in the past.
Good entries here
PWRD reports 8-16 with a good looking technical entry here. No debt!
HK just reported and looks strong going into seasonally rising nat gas prices.
NGD reported tonight and also looks rock solid with big upside when court decision to uphold mining operations in Mexico end favorably in a few months.
SLW reports on 8-11 with more upside expected.
My screen is green.
Ag observations
The American farmer should have a banner year. Although the winter wheat crop has long since been harvested, beans, corn, milo and cotton are still maturing. I even noticed that rough rice is up 11% over the last 2 weeks.
I commented about 3 weeks ago on Bunge, ADM, and Viterra (the old Saskatchewan Wheat Pool) as plays on increasing prices. ADM and VT.TO have advanced 20 to 30% since then. BG is mostly South American. It is winter there so no wonder it has lagged the group. However, should the crops in the Northern hemisphere continue to be stressed, the BG's of the world may catch up owing to big declines in carryovers.
Bill has alluded to the inter-connectivity of THE financial markets. I agree and would only add that the inter-relationships in the ag markets are at least equal if not quicker from time to time.
Given the obvious increase in feed costs to come, I sold quite a few less than mature beef critters a couple of weeks ago. My point is this. Pork, beef and chicken prices should decline somewhat owing to a glut of animals on the market. Anyone with freezer space might want to take advantage of this near term inventory glut because protein prices in 6 to 9 months may be 25% TO 50% HIGHER.
Prechter has his imaginary cycles, farmers live in real world cycles. FWIW
Ag observations II
My friends in Moscow tell me that the heat wave continues. Maybe 50% of the fruit and vegatables consumed by Muscovites are grown and canned on Dacha. Russians are great mini-farmers but without water and with too high heat, there will be little produce. The roadside mushroom venders this fall are probably toast as well! Without grain, even the chicken flocks will be paired. Heat is also very stressful on our beloved feathered friends.
Just thinking outloud but Smithfield, Tyson et al may benefit as well.
Make hay while the sun shines...
Bygone Era
This was interesting to me.
http://blogs.denverpost.com/captured/2010/07/26/ca...
Re: Bernanke complains
Thanks nebish. I won't disagree that appraisals are reflecting current valuation volatility. It's a crapshoot what any one appraiser who has been hired by any one Appraisal Management Company is going to risk saying something is worth these days. Depending on their own experience, their knowledge of the area, etc, etc. Everything hinges on how they compare a home to the area against recent sales..supposedly similar age, size and type including comparable neighborhood. If you are unlucky enough to be comparing your home during a particular 30-60 day period when a lot of short sales were dumped -- OUCH. Since the owner is the 'seller' of record (with the bank pulling the strings behind the curtain) it is impossible for an appraiser to know the level of objectivity in those sales. So distressed homes wind up bringing down the average values.
In today's rush to refi: we are relying more on auto underwriting (DU) program findings to get around some challenges. A good DU finding could mean NO APPRAISAL! In other words, there is more than one way to skin a cat. Programs depend on whether if you have a Fannie Mae or a Freddie Mac loan.
Does Fannie Mae own your home? http://www.fanniemae.com/loanlookup/
Does Freddie Mac own your home? https://ww3.freddiemac.com/corporate/
Re: Bygone Era
Thanks telestar3d.
I loved slide number 30. The corner grocery where potatoes were 6 lbs for 26 cents and oranges were a penny a piece. Glad there ain't been no inflation...
Futures at 3am - China strong
S&P +1.50 / +0.13%
Level 1,125.00
Fair Value 1,123.01
Difference 1.99
Nasdaq +3.75 / +0.20%
Level 1,904.75
Fair Value 1,903.86
Difference 0.89
Dow +15.00 / +0.14%
Level 10,650.00
Futures at 5 - Europe opens up and weakening
S&P +1.50 / +0.13%
Level 1,125.00
Fair Value 1,123.01
Difference 1.99
Nasdaq +3.75 / +0.20%
Level 1,904.75
Fair Value 1,903.86
Difference 0.89
Dow +15.00 / +0.14%
Level 10,650.00
Re: Bygone Era
ALOHA!!
Yes, it is always interesting to see how people lived back then during a "real" Great Depression! I also took a look at the links at the bottom for WW2 and VIETNAM WAR photos.
Ross ... Take a look at a Woolworth's Menu from 1960. Lets see, I could have ordered a three decker bacon and tomato sandwich, with apple pie and a milk shake for 90 cents and then if I was still thirsty I could have had a "king size" coke for another dime, all under $1. I can't even get a candy bar for less than $1 now.
LINK: http://tinyurl.com/2b6cw29
Contrast that with a menu from 1939 at the US Senate Restaurant in Washington DC where politicians were buying a Baked Lobster Dinner for 85 cents. A "pot" of coffee, not a cup, was 15 cents. What does Starbucks charge for a pot of coffee in this Great Depression 2 we are having now? I think you'd have to take out a loan for a pot of Starbucks coffee, especially the 100% Kona Coffee!
But wages have kept up ... Sure if you are CEO of Goldman Sachs ...
Re: Bygone Era
Thanks for the picture link Tel. I have a side hobby of genealogy, and equipment to scan and cleanup old photographs. Most old family photographs are BW. Color is especially valued, adding additional information I sincerely appreciate.
John
Re: CNBC: "You have to own stocks"
I think of CNBC as an unpronounceable four letter word;-(
Re: Ag observations
Thanks for the heads up, Ross. City slickers like me are clueless of such.
Re: Bygone Era
Great look back at a different America.Most of the people looked so worn out.I didn't see a pic of one overweight person.No health clubs,all hard work.
I grew up on a small dairy farm in the 50's and It was a struggle for
my Dad, who looked a lot like those careworn men in the pics.I remember
we couldn't afford much but every fall my dad would pick out the
lowest milk producer in our small herd(15-20 milkers)and have it butchered.
A lesson to be learned, the weak have to be culled out to make the rest
stronger whether a herd of cows or to big to fail banks.
Thanks for the link.Brought back a lot of memories.
CE1969