Morning Call [7:57am ET] Today’s focus will be on Europe. Following the close today in Europe at 1600 GMT (11:00am ET), the London-based Committee of Banking supervisors (CEBS) will release the new stress test results of 91 banks, which together account for 65% of all EU banking assets.
The stress test methodology is based on factors such as capital needed by a bank should (i) EU’s GDP fall by -3%, (ii) sovereign debt be required to be written down by certain percentages, (iii) etc.
More than ten percent and as many as 25% of these banks are believed to have failed, including from Greece, Spain, Slovenia and Germany. What does this mean to traders?
The weakest banks will be required to recapitalize over a given period of time or be taken over, so that ultimately, the system will stabilize. The object here is to lift the confidence of savers and investors in the financial system. Previous stress tests failed to reassure the market and the Euro fell, causing the US Dollar, US bonds and Gold to rally and equity prices to fall. However, this time there are bank rescue funds in place to support those banks that are unable to obtain the needed funding from the capital market.
So, beyond the immediate, and typical, mindless over-reaction to the results, nothing extreme in terms of extra pressure on market prices is anticipated. Gold, in fact, might lift or fall possibly plus or minus eight or nine percent over the next couple months, and thereafter revert to the long-term average. The 300-day Moving average is 1080, which would be about a nine percent haircut, which in turn would likely happen should (i) the financial system in Europe and America be determined to be stable, and (ii) the GDP of Europe and America return to normal, sustainable, annual growth rates of +3% or more. That may take some time to unfold.
The bigger issue, I think, is the state of the economy. Today’s reports from the UK indicate the economy there has grown the fastest in four years. Also, confidence is high at the Farnborough International Air Show near London, resulting in massive increases in orders for planes from both Boeing and Airbus and other manufacturers of military and commercial aircraft. But, there are analysts who remain skeptical.
All in all, the market is still unstable, looking for direction, still. My feeling, based on market trends, is that… well, I still have not made up my mind. This is one of those times I will have to review the data over the weekend and let you know in the Week In Review.
I have been looking at the German equity market this morning and cannot figure it out at all. Yesterday the country ETF (EWG) closed +4.0% higher, which is a huge increase. This morning the DAX index at 7:35am ET was showing a gain of +3.20%. The problem I have with that is when I look down the individual stocks in the list, I cannot determine where the strength is coming from – except for buyers of the index. What that means to me is something like a nose ring that leads the bull this way or that. Is this Mr Market or a few vested interests in control? You see, it’s hard to make up one’s mind when the data itself is so unstable.
[EDIT 9:15am ET: The data at Yahoo was incorrect. The DAX was up about +0.5%, so by assessing the changes in the individual components of the index I had presumed correctly that something was amiss. Btw, the DAX has been dropping quickly in the past few minutes as has the CAC and FTSE. Some of the big banks, especially the big three in the UK are soft here.]
The S&P 500 future is at the high end of the recent 1060-1090 trading range, presently at 1092 and looking like it might break out to a higher range. The operative words there are ‘looking like’, which could be another head-fake, like the brief dip to 1050 on July 20.
Have a great day.
CTA Trading Desk Post-Close Report
Equity prices opened a bit softer, marking time ahead of the release of the results of the European bank stress tests, traders looking to book profits after the rally over the past few days. Once this initial hesitation dissipated, stocks began to gallop higher, closing near session and weekly highs (S&P+0.82%), traders hopeful there will be some follow-through buying next week.
The S&P has broken above the declining trend line off the April 26 highs, recaptured the 50-day moving average, while closing just below the 200-day moving average. The 50% retracement of the April to July decline (1115) lies a few points above Friday’s close, giving Bulls hope they can squeeze the shorts if prices can be moved marginally higher early next week.
A measured move off the early July lows targets roughly 1140, just above 1131 roughly equal to both the June high and the .618 resistance of the recent decline When prices become compressed near the apex of two converging trend lines be prepared for the stored up kinetic energy to eventually propel prices forcefully in an impulsive directional move.
If the market breaks out to the upside expect under-invested money managers to reach aggressively for offers, giving the illusion of underlying investment demand for stocks. Please remember these operators are often compensated on short-term performance so they can be forced to chase prices even if they believe prices are overvalued and vulnerable to a correction.
We are cautiously optimistic prices can continue upward for the near term, and will keep a bullish bias until 1050 is violated on a closing basis. If the S&P reaches the 1130 to 1150 area profits will be taken and we will move to a neutral stance.
Have a great weekend.
Comments
Toronto
I arrived in Toronto on Wednesday evening. I have not been back much for the past two years, and the size of the place always makes an impression on me when I return. This week, there is the PGA Canadian Open being played on the St. George's course not far from where I've lived since the early 1950's. For those who have little appreciation for the city, read some comments from the golfing crowd. http://slam.canoe.ca/Slam/Columnists/Fuller/2010/0...
If only the weather permitted the courses to be open in February, I'd still be here.
euro this morning
The euro this morning is not very happy. From a peak of 129.60 this morning, its now trading at 127.98 and showing no signs of respecting any sort of support.
The bankers around the world already know the results of the stress test. What we have to consider is, is this euro move a head-fake, or is it a real indication of what the degree of weakness the banks are likely to show?
The euro move has already impacted the SP futures and gold to some extent. I would assume that if the euro continues to move down, the US equity market would follow it down as well. I'm less sure about what happens to gold.
Cara 100 Ratings Changes
Good morning.
AMZN - Downgraded to Average @ Caris & Co. Caris believes that Amazon's Q2 Kindle sales were too low and the firm thinks that investors will be concerned about the company's margins. PT Lowered from $164 to $125.
BCR - C.R. Bard Upgraded to Outperform from Market Perform at Raymond James.
MSFT - Upgraded to Hold @ Benchmark. Target = $32
MSFT - PT Lowered from $38 to $35 @ Oppenheimer. Outperform
NOK - Upgraded to Buy @ Wunderlich following the company's Q2 results citing valuation and less risk.
SNDK - PT Lowered from $44 to $36 @ Wedbush. Neutral
SNDK - PT Raised from $40 to $42 @ Oppenheimer. Perform
SNDK - SanDisk coverage assumed with a Buy at ThinkEquity.
----------
Mining Stocks:
CDE - Couer D'Alene Mines upgraded to Outperform from Market Perform at BMO
Capital.
HL - Upgraded to Outperform @ BMO.
SVM - Upgraded to Outperform @ BMO.
Edit to today's blog
I discovered that the Yahoo data was in error re the German DAX as now noted in the blog.
Bearish start to the day
I note the quick bearish turn in equity futures followed by a weak open in NY. Junior Goldminers are strong though.
Re: Toronto
"If only the weather permitted the courses to be open in February, I'd still be here."
I suspect if the weather was that good in February, Toronto would be unstoppable. The sheer size of the city, the low crime rates for its population base, its multicultural backbone, nightlife, restaurants and culture coupled with it being a 1 hour drive from the US border, the niagara wine region, cottage country and its economy, all of these factors make it such a great place to be already, even slightly better weather make it fan-freaking-tastic!!
while most places were undergoing slowdowns and recessions, here in the heart of the city there is a housing, condo and commercial building boom. all around me office towers, luxury hotels, condo's and houses being built in the heart of the city. no donought effect happening here, the downtown keeps growing and becoming a destination, while the suburbs become more dense and more built up with people looking for places to live.
from my office window i can look out on the CBC building, the convention centre, sky dome, CN tower, the towers of the financial district, the island airport, the island and beach, and the distillery district. yes traffic on the gardiner too, but what large great city doesnt have traffic.
we are blessed in many ways, but the weather is always the sort of hanger that people bemoan. living on the west coast for a while it seemed like the dominant thing to them, the idea of enduring long windy winters was too much. though i couldnt stand the long rainy seasons over there.
all in all we are very lucky to live in such a great city and for those who are just growing up here, they will have an even better and bigger city in the next 10-15 years as development plans continue at a quick pace. so much is happening here its great to be a part of it.
we suffer from a new york inferiority complex, and havent fully shed our roots as Montreal's ugly step sister. toronto is the only large city i know that openly admits a sister city like Montreal is a great place, but montrealer's will spit on the ground if you ask them about T.O.. in a sense we can never become a new york or a montreal, but i like to think we are the best of both.
_______
do i sound like an ad man for tourism toronto? ha!! im in a charitable mood this morning, too bad i cant say the same about gold!
RAS
I know some people here were following RAS a few months ago. They just reported earnings.
RAS earnings were better than i expected. REIT taxable income was $0.08/share, which means after they get through the loss carryforwards they will be paying dividends. i don't like that provision for losses went down but their occupancy rates on multifamily properties went up a lot and their office properties went up some so that makes sense to have lower loss provisions.
if they keep up these numbers going forward then they will be able to pay out a 10% dividend soon because as a REIT they are required to pay out 90% of REIT taxable income by law.
Re: RAS
I think I made a mistake on the carryforward losses: tax capital loss carryforwards are only available to offset future tax capital gains, and therefore they do not affect REIT taxable operating income. So if the company reports a REIT taxable operating income for the year they are required by law to pay dividends.
BP's continued arrogance and fraud
This company appears to have no equal when it comes to arrogance and fraud. News stories that BP has been doctoring photos at the crisis center have now been admitted by the company. Pilots and professional photographers, who could tell by closely examining the original photos, brought this story to light.
At what point does somebody in the Dept of Justice have the balls to charge BP senior officers and directors with fraud? It's a total disgrace the way BP employees have conducted themselves. Amoco would never have stooped so low.
World Market Data
Here is a site that might be better than Yahoo
for World Market data. (It is delayed, however).
http://www.marketwatch.com/
Cara 100 Update (Final)
AMZN - PT Lowered from $160 to $140 @ McAdams Wright Ragen. Buy
AMZN - price target cut at Citi. AMZN price target trimmed to $165 from $175 on bottom line miss. Maintain Buy rating.
AMZN - target, estimates cut at Barclays. AMZN price target trimmed to $132 from $155 on weak revenue forecasts, Barclays said. 2010 and 2011 EPS estimates decreased to $2.40 and $3.03, respectively. Maintain Overweight rating.
AMZN - estimates, target cut at UBS. Shares of AMZN now seen reaching $165. Company is spending more on fulfillment capacity. Buy rating.
CAT - target, estimates boosted at Barclays. CAT price target increased to $76 from $74. Accelerating machinery trends drive upside. 2010 and 2011 EPS estimates lifted to $3.75 and $5.00, respectively. Equal Weight rating.
CAT - estimates, target increased at UBS. CAT estimates were raised through 2011, UBS said. Company is seeing better demand across the board. Neutral rating and new $74 price target.
MSFT - PT Lowered from $37 to $35 @ Caris & Co. Buy
MSFT - estimates raised at Credit Suisse. MSFT 2010 and 2011 EPS estimates increased to $2.51 and $2.89, respectively. Strong 4Q10 results across all product divisions. Maintain Outperform rating and $40 price target.
MSFT - target lowered at UBS to $35. Company will be hurt by a lower market multiple. Buy rating.
NUE - estimates, target reduced at Goldman Sachs. Estimates were cut through 2012. Company is seeing lower customer demand. Buy rating and new $45 price target.
SNDK - PT Raised from $52 to $56 @ Caris & Co. Buy
SNDK - estimates increased at Goldman through 2011. Company is realizing higher margins. Neutral rating and $40 price target.
SNDK - target boosted at Morgan Stanley to $53. NAND supply/demand imbalance should remain through 2011. Overweight rating.
----------
Morning Chuckle:
A young fellow, thinking about what he wants to be when he grows up, is sitting at his father's knee and said: "Dad, I'm thinking of going into organized crime when I grow up". His father, without batting an eye, responds: "Government or private sector?"
Re: BP's continued arrogance and fraud
But Bill, The Guardian says that "a BP spokesperson, Scott Dean, said the photographer was showing off his Photoshop skills and there was no ill intent".
Ah huh.
And Bonnie heads straight for the Gulf. Straddles for BP, UNG and UCO (oil 2X): http://shockedinvestor.blogspot.com/2010/07/potent...
Going with the flow
We touched a few times recently on trading mindset with no bias, just using well structured setups instead of trying to predict and guess. I thought this morning trades illustrate the concept quite well by two trades on the same stock in both directions.
http://tradinglog.realitytrader.com/2010/07/july-2...
Full log text will be added after close, as always
Re: World Market Data
This might also help. Thanks NY.
http://mobile.bloomberg.com/markets/europe.html
Re: World Market Data
one other option
http://online.wsj.com/mdc/public/page/mdc_internat...
Mouse over any row heading to get a chart.
;)
Re: World Market Data
Also, mouse over the top left rectangle to get live channels for DAX, etc.
oil spill response construction effort
Oil Majors are actually thinking ahead? Perhaps this is one benefit to come out of the spill...
Barry has this at his site:
The four majors are trying to make the case that they should be allowed to drill in the Gulf, and that they have a plan — unlike BP — to deal with future disasters:
“Four of the world’s largest oil companies are creating a strike force to stanch oil spills in the deep waters of the Gulf of Mexico in a billion-dollar bid to regain the confidence of the White House after BP PLC’s disaster . . .
The new system, consisting of several oil-collection ships and an array of subsurface containment equipment, resembles the one developed by BP during three months of trial and error after its leased rig exploded April 20, unleashing the worst offshore oil spill in U.S. history. But the companies say it will be ready to go at all times and can be used on the wide variety of equipment found in the deepwater Gulf.”
http://www.ritholtz.com/blog/2010/07/gom-disaster-...
EU stress test results
12:00:16
*(EU) STRESS TEST SUMMARY: HYPO ONLY GERMANY BANK TO FAIL; FRENCH BANKS PASS (BNP, Credit Agricole, Societe Generale)
- Hypo Real estate has no immediate need for recapitalization
- Bank of Portugal: Portuguese banks pass
- Italy banks pass stress test
- Bank of France: BNP Paribas, SocGen and Credit Agricole have passed
- Sweden's banks pass
- Dexia Bank passes (Belgium)
- Denmark's Danske Bank passes
- Netherlands notes all Dutch banks pass: Rabo, ING and SNS pass
- Bank of Ireland needs €2.6B in additional equity, passed the stress test; Under the adverse scenario including the additional sovereign shock, Bank of Ireland's estimated Tier 1 capital ratio would be 7.1% at 31 December 2011 which is 1.1% or EUR933m in excess of the threshold of 6% Tier 1 capital ratio agreed exclusively for the purpose of this exercise.
(GR) National Bank of Greece passes; Atebank fails stress test; several large bank have failed the stress test in Greece
- Alpha Bank in Greece has passed
(SP) Spanish banks Diada, Unim, Banca Civica and Caja Sur fail EU stress test; all listed banks pass tests
Re: EU stress test results
I think it was John Law who first came up with the concept of a subjective floating decimal point...
NFLX looks ready
to squeeze now at 107
NFLX looks ready
to squeeze now at 107
ECRI
Now -10.5, not a good sign.
GE dividend
12:25:16
General Electric Co *INCREASES DIVIDEND 20% TO $0.12 FROM $0.10; EXTENDS BUYBACK PROGRAM
- The Board declared that the dividend is payable October 25, 2010 to shareowners of record at the close of business on September 20, 2010. The ex-dividend date is September 16, 2010.
- Board extended the existing share-repurchase plan, which would have otherwise expired on December 31, 2010, through 2013. Repurchases under the existing $15 billion repurchase plan were suspended on September 25, 2008. The plan currently has approximately $11.6 billion in remaining authorization. The Company will resume repurchases under the plan this quarter
- Note: Current yield approx 3.1%
Re: oil spill response construction effort
That is frightening to me! Their answer is that when they screw-up in a big way, they'll respond faster than BP did. That's far from acceptable, let alone reassuring.
I work in the food industry. Would it be OK for us to say "don't worry, if our food is contaminated, we'll make sure you get to a doctor really quickly". No way! We implement extremely rigorous sanitation and monitoring protocols to make sure that the food doesn't get contaminated. To put it in perspective, every 16 hours of production is followed by 8 hours of sanitization. Not to mention all the quality control checks from the receipt of raw ingredients, through production and while in storage.
I'd much rather hear those four major oil companies say they had protocols in place to make sure a spill wouldn't happen, (e.g. inspect the valves before using them to make sure they've been properly installed - not backwards!), and have redundancy built into their critical equipment and processes. Never mind the "don't worry, we're spilling billions of barrels of oil into the sea, but we got there pretty quickly and we're cleaning most of it up".
They're falling way short of gaining my confidence!
Is France shaping world psychosocial evolution?
You know, it was France who lent a lending hand or arm in Americas freedom from Tyranny early on or so the the story goes:
http://www.lewrockwell.com/rothbard/rothbard234.html
Re: GE dividend
Several questions if you have an insight:
What is GE's history of dividend increases?
What does that say about their growth potential in isolation and market in general?
They are buying back shares, this will increase EPS, generally what is your feel for how many companies are milking or not their ROE or another appropriate indicator?
Coxe link
Try this
http://tinyurl.com/2a5bdnk
Interesting this morning: Discussion of XOM's failure to replace reserves, or even attempt to. I notice 1 yr stock performance = BP
BP 350 safety violations vs XOM 1 over a period of time
Also tidbit: buried in the healthcare bill is a tax on those who buy and sell gold.
Unintended consequences
Remember great noise about preventing another flash crash and all the measures taken? When they published those, I was very skeptical. Well, today we can see first outcome that has nothing to do with original intention and harms anyone involved: GENZ is halted and un-halted second time in a few minutes, and quite possibly will be again for the third time very soon. How does it help anyone who is trading it? Isn't ruining normal flow of orders harming any trader that just took position, adding uncertainty caused by sudden stop of trading and resumption in a few min, for no other reason than certain % of the move? The more they tweak...
13:18:34
Genzyme Corp Halted; Circuit Breaker. Genzyme has received informal indication of interest from Sanofi - WSJ citing sources
- CNBC Faber: SNY's approach to GENZ was last month, and was essentially 'rebuffed.' Unclear if Sanofi will move forward with a hostile bid.
- REMNDER: on 7/2, reports circulated that Sanofi was preparing to make a bid for a large US firm, on the order of $20B(implies price of approx $75/shr), with chatter that GENZ, BIIB and AGN were potential targets
Hungary is well, Hungry for freedom from fascism
It appears reality makes a good bedfellow after all:
http://www.reuters.com/article/idUSTRE66G0RT20100722
Holy Moly
bio's popping all over the place... screen looks like a Christmas tree at warp speed...!
Re: BP's continued arrogance and fraud
“no equal when it comes to arrogance and fraud”
It’s the nature of the beast.
When the Gulf oil rig exploded, I wasn’t surprised BP was there. Who else? The first thing that came to my mind was their documented history in the refinery explosion of cutting corners and ignoring regulation requirements.
“On March 23, 2005, a fire and explosion occurred at BP's Texas City Refinery in Texas City, Texas, killing 15 workers and injuring more than 170 others. BP was charged with criminal violations of federal environmental laws and has been subject to lawsuits from the victim's families. The Occupational Safety and Health Administration slapped BP with a then-record fine for hundreds of safety violations, and subsequently imposed an even larger fine after claiming that BP had failed to implement safety improvements following the disaster.”
http://en.wikipedia.org/wiki/Texas_City_Refinery_(BP)
July 2010: Earlier this week there was the story about the release of a Lockerbie terrorist by the UK because he was dying of prostate cancer and had only months to live. Soon thereafter, BP enters a very lucrative deal with Libya. Now we find out the released terrorist is healthy and living a new life.
http://www.bing.com/search?q=Lockerbie+terrorist+r...
So is it any surprise BP might doctor photographs?
Then there’s their ongoing Whiting, IN refinery which processes crude from the Canadian oil sands.
“Last summer, (2007) environmental groups and politicians spent weeks opposing Indiana's decision to grant BP a wastewater permit for the project to increase the amount of ammonia and suspended solids the refinery discharges into Lake Michigan. In August, BP agreed to adhere to the standards of the previous permit, . . .” (would you trust BP on this? Yeah, right)
NPR reported “BP will be allowed to increase its discharges of ammonia into the lake by 54 percent and its discharges of suspended solids by 35 percent.”
2008 “BP PLC announced Tuesday it is moving ahead with the planned $3.8 billion expansion of its Whiting refinery despite legal challenges to air and water permits the state approved for the project.”
Oct 12, 2009 BP expansion plans, “construction, equipment purchases and engineering is about one-third complete at the Whiting refinery.”
Here’s a link to bing search results where some of the above quotes originated.
http://www.bing.com/search?q=bp+whiting+refinery+e...
Lake Michigan is vital to economies in the Midwest. It supplies clean water to area populations. It is also used as a recreational area by millions. FWIW, Indiana Sand Dunes just set an all-time weekend attendance record recently. Many resort towns in Western Michigan have also seen large increases this summer in weekend as well as vacation visitors (stay vacations?)
So again, would you trust BP on this?
Re: BP's continued arrogance and fraud
ALOHA!!
When the Gulf oil rig exploded, I wasn’t surprised BP was there. Who else? The first thing that came to my mind was their documented history in the refinery explosion of cutting corners and ignoring regulation requirements.
Let me reword this ...
"When the Global Financial Crisis exploded, I wasn't surprised that JPM and GS were there. The first thing that came to my mind was their documented history in the banking industry of cutting corners and ignoring regulation requirements."
This after the much touted and heroic passage of the new financial reform from the exact same idiots who created it Dodd and Frank. The new reform guarantees that the taxpayer probably won't have to pay for another crisis as long as Obama is in office and at least until the November elections!
CHANGE YOU CAN COUNT ON!!
Re: oil spill response construction effort
Manx you work in the food industry, and your team probably do a great job with sanitation. So shall we get rid of all procedures to deal with food poisoning, just because you guys have a great process? Your process works 100% of the time, without fail? No mistakes, ever, at any time?
What the majors are doing is coming up with a capability for handling a worst case contingency - when everything goes to hell, they have resources standing by in case that happens. That's like having doctors and medicines standing by IN CASE something goes wrong and someone actually comes down with a case of food poisoning. This makes ME feel safer, rather than less safe, because I live in the real world, where I know that the chances of Something Bad Happening is nonzero.
There are a lot of ways things can go wrong at sea - no process is 100% safe. Its impossible. You really want to have no capability to respond quickly to a spill? Having this capability actually scares you?
We need oil, and we need to take reasonable precautions in getting it. And we need to have a capability to clean up afterwards in case our reasonable precautions (for whatever reason) aren't good enough 100% of the time.
Even the phone company switching equipment with "five nines" reliability (99.999% uptime) doesn't work 100% of the time - it's down 5 minutes per year. I'm sure they have procedures in place to deal with downtime, too. They don't simply assume perfection.
TREASURY CLOCKWORK
ALOHA!!
Well if we cannot trust BP or JPM or GS then can we trust the US TREASURY?
We can if it comes to guaranteed spending and debt!
On Wednesday, July 21st, like clockwork, the two line items listed as Social Security and Medicare ran up another usual $10-$12BIL USD per week in outlays.
Total outlays YTD for FY 2010 for just those two line items is now at $879BIL USD. If you add in Medicaid the three total to $1.1TRIL USD. Total tax revenues YTD for FY 2010 as of July 21st is at $1.2TRIL USD. Revenues barely cover those three line items and nothing more. You might be saying ... "Yeah, but what about all those Medicare premiums?" What the measly $15BIL collected YTD ... those premiums? Okay lets count that, so now its $1.085TRIL USD instead of $1.1TRIL USD. Whoopee ... Medicare is solvent now!
If we were to have the US Treasury only live within its means then operational funding for only Social Security, Medicare and Medicaid would be covered and everything else like Defense Vendors, Vets, Military personnel, Foreign Aid, Food Stamps, Unemployment, HUD, TARP, Federal Employees, Transportation, FCC, FAA, DIF, FBI, CIA, GSE Investment and a litany of other government programs and services would have to be scrapped.
There are not enough tax revenues to fund the US government on a daily basis without issuing large quantities of debt.
Now tomorrow, July 22nd, Thursday, like clockwork, the US Treasury will issue another $100-$15BIL USD worth of mostly short term debt. Last week the Treasury issued $208BIL USD in debt, mostly short term.
Who can you trust these days? When it comes to DEBT the US Treasury is never out done! When it comes to SPENDING GONE WILD the US Congress is still King Of The World! Super-size my AAA!!!
NOK - Nokia: will its rebound continue?
On the heels of announcing lower earnings, Nokia continues to suggest that it’s established its bottom. I think people have been reading the company wrong.
- WSJ still lists Nokia as the world’s largest cellphone producer
- Nokia owns Symbian, an excellent smartphone OS
- Nokia dominates smartphones world-wide, by virtue of mkt share in Europe
- Given that anyone from hipsters to bidnessmen find utility in phones that are really full computers, why would anyone, in future, want to buy a “stupid-phone”?
- I don’t see why, if they cut price and go for volume, NOK can’t come back at least to the series of targets shown on the attached chart
- They can produce the “poor man’s iphone” wherein hardware and software are tightly integrated - which neither Google nor MSFT (windows 7 phone) can do …
What do other Caristas think?
NOK - annotated chart attached
Oops!
Re: oil spill response construction effort
I look at it from their business plan, while it(business plan) may be amoral it should not be devoid of reason or common sense; particularly when it comes to intangibles such as a good name or community altruism(read tax right offs)...especially the very human desire to make the world a better place. Now greed and other blinders are operating here under the cover of rejection of responsibility to be competent before an incident. I am glad the head of BP has extracted himself from the social froth by resigning, but this is so easy to do and the obscenity is never addressed as if changing/replacing a widget of the machine changes the whole engineered process.
TLT double top?
So I think something is up with bonds. Today, although the market is only up a bit, bonds are off almost a full percentage point. That's a pretty good sized move, and is usually reserved for major equity market moves up.
Maybe this has something to do with the bank stress tests? Euro trades bought US treasuries to hide in until the stress tests were done, and now they're unwinding those trades?
Anyone else have any thoughts?
FD: I'm short treasuries
Holly Molly
baz22.your call yesterday on RIGL was great...but I did my normal cheap bottom fishing trick and missed it...better luck to me next time.....have a great week-end.... it is hot and humid in central texas......thank god for A/C
Re: TLT double top?
Submitted by davefairtex (2053 comments) on Fri, 07/23/2010 - 15:32 #66185
So I think something is up with bonds. Today, although the market is only up a bit, bonds are off almost a full percentage point. That's a pretty good sized move, and is usually reserved for major equity market moves up.
Maybe this has something to do with the bank stress tests? Euro trades bought US treasuries to hide in until the stress tests were done, and now they're unwinding those trades?
Anyone else have any thoughts?
FD: I'm short treasuries
Do you think Gold will be effected one way or another?
Re: Coxe link
Thanks for that link, Westcoaster. I love Don's conferences.
I think what you are referring to as a tax in the healthcare bill is a reporting requirement that ANY business transaction greater than $600 has to be reported, even if it is to a corporation. It's not a tax, but surely leads right into a VAT. The gold/silver dealers have picked up on this, but it applies to EVERY business transaction over that amount in the US. Which is, of course, every transaction worth having, in practical terms.
Daniel Schorr has died at age 93 - I tip my hat !!!!
NY Times reports that, in his 2001 memoir, Schorr wrote, "being poor, fat, jewish, fatherless" had made him feel an outsider, and that he had "achieved identity through my stories".
There is so little honest, hard-hitting, investigative journalism in the US today, that we couldn't afford to lose him !
He continued to provide weekly commentary on NPR till the end ... Let's hope his example will inspire up-and-coming bloggers and digital journalists.
Celente keeping it real...it is upward and onward from here?
The man does not mince words. Ron Paul appears to be the winner nominally and maybe a little known network of banks or bookies as he says. Just kidding about the little known part. Does not mean there is no profit to be had however if one can get past the smell.
http://www.lewrockwell.com/celente/celente41.1.html
Re: Holly Molly
But you live to fight another day... trying to decide how serious to get with ' sgen '..... have a great week-end, also... hot as a hog in heat in NC today...
Unemployment Map - Scary Stuff
Take a look at this map. It shows how the unemployment rate has changed over the past several years. When you get to the map, click the arrow in the middle and watch how things changed. Incredible what "The Great Recession" has done.
The old saying, "A picture is worth a thousand words" is never more true than looking at this map.
Viewing it only takes a few seconds.
The darker the color, the higher the unemployment. 2009 has been BRUTAL. Watch the changes in the map from Dec. 08 to 12/09 - SHOCKING
This is a startling map.
http://cohort11.americanobserver.net/latoyaegwuekw...
Re: World Market Data
thanks for a back up market data page Fox. I went to Yahoo Deutschland this morning to verify the huge gap up opening on the DAX on Yahoo finance, but of course garbage in equals garbage out.
Re: TLT double top?
I'm not sure that normal movements in bond prices affect gold. But if the US starts to have issues funding its debt (and that would probably show up first as dramatic moves down in TLT) then that would definitely lead directly to a move up in gold. That's because traders would either start to see the US as a default risk, or the Fed would start printing money and monetizing the debt in response.
Re: Unemployment Map - Scary Stuff
George,
Not to worry!
Why, in our paper today we were told things have improved here in northern Illinois and we are now at only 14.8% unemployment.
Media talk centers on the jobless funds which will "help to maintain the recovery".
Just heard on NPR
I just heard on NPR Spain"s unemploment rate is 40% for young people.
Re: Unemployment Map - Scary Stuff
Thanks George , I sent the Map to some of my friends on my Email list . When we came out of the depression of 1920 , by 1923, American unemployment was reduced to 2.4 % , hopefully someone in Washington will have that as a goal . Bob .
Has anyone heard, they ran this stress test in Europe...lol
http://www.mcclatchydc.com/2010/07/23/98075/will-e...
Do you think? I know our service members do!
We used to stand for moral right and now nothing is left, not a political statement either:
http://www.mcclatchydc.com/2010/07/23/98060/nation...
All these inverse ETF's were up today
DZZ FAS TBT TNA BGU MWJ (ERX on increased volume slightly)
On lower than average volume too. I wonder, na, volume dynamics stay the same. This time is not different. Don't know what TBT being up means exactly, maybe nothing. I did buy me some BGZ for a hedge mostly and bought it too high at 14.88...with a semi tight sell stop to round out the emotions.
Re: Unemployment Map - Scary Stuff
I've played this horror flick a half dozen times. Each time I moved further back from the screen. From about 4 feet away I'd swear it looks like a congealing attack from both coasts by the BLOB...At the end, the only 'safe' places were the North Slope of Alaska and the high wheat plains of the midwest. This was as scary as a battle between Lon Chaney and Mothra.
The only remedy I can think of offhand would be to eliminate the minimum wage and reduce the retirement age to 60. We might then be able to afford putting antifreeze in our own toothpaste...God I feel stressed!
Re: BP's continued arrogance and fraud
Seamus,
Good reference to ongoing problems at Whiting, IN. The very name brings back bad memories. In the early 50's that refinery complex was part of a little remembered but ghastly explosion and fire that lasted for days. I know because I lived in the next town south, East Chicago,IN as a boy of 12 or 13, just before my family moved to downstate Illinois. I can still remember the glow in the northern night sky. There were deaths. I vividly recall one refinery worker walking down my street (5 miles from ground zero?), downtrodden and blackened, stopping to tell folks that this or that cracker unit or tank farm was destroyed. Standard Oil of Indiana (AMOCO/BP) was mainly involved I believe but there were others (Sinclair, Cities Service?).
To this day that area of NW Indiana on Lake Michigan is mostly a vast, polluted wasteland but BP is the legacy survivor. Maybe they have an attraction for trouble. The State of Indiana has surely been an accomplice. It is just another example of the hazards that can be expected from the oil age.
Re: Has anyone heard, they ran this stress test in Europe...lol
gforce,
I assume these are "computer models" being used to give us this vote of confidence.
Weren't similar models what those Whiz-kids used to set up Long Term Capital Management?
Isn't that what determined the "Great Moderation?
Perhaps it's what told us "only the low-end jobs will be lost".
I'm sure it was used in weather forecasts here which indicated rain 80% of the time all month — and finally came yesterday.
A real stress test in my view is watching/listening to forecasters without losing your temper at all the spin and fantasy being shoveled our way 24/7.
Re: Do you think? I know our service members do!
This is really sad.
I realize this has been a product of all wars to some degree, but beginning with Korea (dubbed a "Police Action") we have sent millions of young citizens to fight in what can best be described as political actions without real national support.
Passing this off as a"volunteer military" simply because there is no draft ignores that a ll percentage were Reservists and National Guard units made up of kids who were sold on membership as a ticket to college.
About all we hear these days — often after the latest Hollywood scandal BS — is the latest list of fatalities.
Bring them home? Obama's projected withdrawal has only set a time for the enemy to wait it out. Over here we hardly remember what the goal is. Any business with a vague model such as this would clearly fail. Meanwhile the enemy is making political gains daily.
No wonder so many are feeing such despair.
Re: Unemployment Map - Scary Stuff
Ross,
I have written many times here about how I watched this happen here in my home town.
First with people in manufacturing jobs (we had a lot pre-NAFTA), eventually with my business and my son's, and now even with my barber.
People can't find work here and can't sell there house to move elsewhere. Now it is beginning to look like there is no elsewhere.
Yet, our taxes are rising to pay government workers' pensions and even increases in pay.
The upside may be the realization that we are no longer divided by race — just by income categories. Crime is on the increase, including "hot burglaries", where they force their way in while people are home — at gunpoint. This has been happening in on both sides of the tracks.
When it gets bad enough something will blow. Arizona is setting a pattern for all of us who are fed up with being ignored.
In his July 23rd Blog, Bill said
"The problem I have with that is when I look down the individual stocks in the list, I cannot determine where the strength is coming from – except for buyers of the index. What that means to me is something like a nose ring that leads the bull this way or that."
On July 22nd The Zero Hedge blog stated:
"ICI reports that the week ended July 14 saw another massive outflow from domestic equity mutual funds of $3.2 billion, bringing the July total to $7.3 billion, and year-to-date equity outflows to a stunning $37.5 billion. Yet neither liquidations, nor redemptions, nor mutual fund capitulation, nor lack of liquidity, nor lack of human traders, nor rumors that it is all one big scam, can tame the market's most recent bout of irrational exuberance: in a time when equity funds had to redeem over $7 billion in stocks, the stock market surged by 90 points!"
http://tinyurl.com/3x754s3
Perhaps our markets are no longer "capital" markets but derivative markets. It takes a lot less in funds for the high velocity traders to move the markets if they were to buy mostly 3X and ultra etfs instead of stocks or unleveraged index funds. It might also explain how indexes can jump or fall 10 points in a blink. The dog no longer wags his tail. The dog is getting wagged.
Re: In his July 23rd Blog, Bill said
I do think it is a case of the tail wagging the dog or the bull being pulled this way or that through his nose ring. And I think it begins with the futures market, particularly the E-MINI contract of the S&P 500 on the Chicago Mercantile Exchange. That is a popular and potent trading vehicle available over longer hours than the cash market. It is leveraged and has less volume than the cash market but the latter is forced to keep up as the near term contract winds down to expiration.
With the E-MINI the name of the game of the pro's seems to be to constantly run stops up and down between resistance points and to probe for weakness at those points. If resistance fails, they run in that direction for a while. It's mostly very short term trading.
I don't trade the E-MINI but I follow it. My knowledge of it came from a blogger named Swinger who has recently put his excellent analysis behind the firewall of a paid subscriber service where it is no longer widely available.
Ag implications
Illini
A follow-up on last week's post. Thought you might find the linked article on wheat rust interesting. From the Economist, July 2010.
http://www.economist.com/node/16481593?story_id=16...
Whats a person to do? SDR's anyone.
Some intel on QE:
http://dailypaul.com/
maxkeiser.com (July 23rd-gold swaps) has a piece on SDR breakdown and it involves gold.
MORE CLOCKWORK
ALOHA!!
On Thursday, July 22nd, the US Treasury, like clockwork, issued their usual weekly marketable debt issue. Last week it was over $200BIL USD and this week it is only $119.4BIL USD. Every week more than $100BIL USD ... In fact so far this month, which is only 16 working days, the US Treasury has issued $596.4BIL in marketable US Debt, mostly Regular Series Treasuries, at $415.4BIL. So if we divide $596.4BIL by 16 we get $37.3BIL per day issued.
Then I look at Social Security and Medicare and I notice so far this month of July they have nearly the same outlays. Social Security is at $39.6BIL and Medicare is at $37.5BIL, only $2.1BIl separates them. Still for each tack on another $5BIL per day for those two line items.
We are watching as so far this month the US Treasury issues $596.4BIL in debt and in withdrawals has racked up another $786.2BIL USD or $49.1BIL per day. More than a TARP in 16 working days. Where is this money coming from that will pay for these outlays and debt?
With all that spending and debt this month we only have net tax revenues of $101.5BIL or $6.34BIL USD per day. That $6.3BIL per day in revenues does not cover the $49.1BIL per day in withdrawals or the $37.3BIL per day in debt issues. What allows such fiscal irresponsibility to exist? Without a corrupt monetary system there could not be such irresponsibility. It would not go unchecked for 39 years since 1971. Yet irresponsibility in the voting booth begets irresponsibility in Washington DC and in every State and City in America. In that sense then we get the government we vote for.
"An increase in the purchasing power of money is disadvantageous to the debtor and advantageous to the creditor; a decrease in its purchasing power has the contrary significance."-Ludwig Von Mises The Theory of Money and Credit(1912)
Who benefits again from currency destruction? Why is it interest rates are so low now? What two monopolies have engineered the decrease in purchasing power since 1913?
"When governments do not feel strong enough to procure by taxation or borrowing the resources to meet what they regard as irreducible expenditure, or, alternatively, so to restrict their expenditure that they are able to make do with the revenue that they have, recourse on their part to the issue of inconvertible notes and a consequent fall in the value of money are something that has occurred more than once in European and American history."-Ludwig Von Mises The Theory of Money and Credit(English version Preface)(1934)
It seems the US Treasury has never read this book before. They engage in political solutions for monetary ones in the name of retaining their power. Perhaps our fearless leaders need to re-read the Declaration Of Independence to see from where their power emanates. I think they have completely forgotten. I will pray they will be reminded in November.
Wow, this record may never be broken
http://presstv.com/detail.aspx?id=136122§ionid...
It is about time
From DC no less:
http://presstv.com/detail.aspx?id=136123§ionid...
TED -- what inspires you?
http://www.ted.com/talks/jeff_bezos_gifts_vs_choic...
Weekend Reading from Martin Armstrong
Tie the collective behaviour of people (specifically investors) as described by Armstrong in the "Collective Conscience" with the bi-directional volatility anticipated in "Are we Running Out...". Never too late to learn daytrading for those who haven't found their niche, given that even if Govts. pull off a quick fix this time, the problems return again and again until the rot is cleaned out of the system. Could be any number of years into the future. food for thought.
http://www.martinarmstrong.org/economic_projection...
I was particularly interested in the trend projection he gave - specifically that it is the public sector workforce that will shrink. We know that the velocity of money has not dropped into seriously negative territory because the Fed has flooded the economy with newly minted stuff - but it is not enough. As Mish points out in the following link, public employee costs are getting insane:
http://www.businessinsider.com/oregon-public-emplo...
and the great tax grab is underway to slow the inevitable disaster that the political class knows is coming, then wealth, as Armstrong points out, is going to be hidden by owners to preserve it. It's difficult to see an inflationary environment when no one wants to be seen with wealth, knowing that this wealth will simply be confiscated. Hidden wealth and a massive reduction in public expenditure. I'm curious to see how the market handles this and the time frame required for this to play out... bon dimanche
More weekend reading
from Steve Keen. An interesting look at the empirically false neoclassical economic theory that fiat money leads new credit - what Ben the Chopper is banking on right now with all the fiat money flooding the system. Problem is, according to the data, the credit tail wags the fiat govt. money dog. A good explanation on the role of "Cavalier of Credits" aka banksters. Read on:
http://www.debtdeflation.com/blogs/2009/01/31/ther...
interestings little tidbit - real wages increase during a deflationary period as nominal wages fall but deflationary pressures on prices outweigh this.
Sunday Morning Coffee: Attitude and Elvis
http://ronsen.blogspot.com/2010/07/sunday-morning-...
An Elvis sighting?
What a relief...
I'm sure all those bankers have been sleepless with worry, but "You naughty, naughty boys!" is enough punishment.
---------
WASHINGTON (AP) -- For all his tough talk about excessive pay for bankers, the Obama administration's pay czar let the executives go without a fight.
Kenneth Feinberg announced Friday that he would not try to recoup $1.6 billion in compensation given to top executives at bailed-out banks because he thought shaming them was punishment enough.
http://tiny.cc/lmekr
-----------
No change is what we can believe in.
Re: Unemployment Map - Scary Stuff
Very Scary and shocking picture indeed!! WOW :(
Friends, any one has an opinion on where GOLD is going from here
For those of you who follow GOLD moves, I am just thinking of taking a position here at these levels, any opinion or feedback is appreciated. Thx.
Re: Weekend Reading from Martin Armstrong
Les -
This Armstrong essay really stuck with me. When it happens, it will be a swift and brutal panic ... a black swan moment. Be prepared.
http://www.martinarmstrong.org/files/The-Money-5-4...
Cheers.
Re: Friends, any one has an opinion on where GOLD is going ...
analyst65 -
CFTC's Bart Chilton must now set position limits for traders in precious metals as mandated by the financial reform bill and new rules are expected very soon (2 weeks?). This may force the bullion banks to unload shorts and may have already started last week as seen in the COT. Got gold yet?!
http://jessescrossroadscafe.blogspot.com/2010/07/c...
Broader view from a true insider:
http://www.martinarmstrong.org/files/GOLD-5000-11-...
Another thought for you is that Obama is giving airspace back to Iraq which is code for Israel to use Iraqi airspace to enter Iran and BLOW UP its nuclear program without putting blame on U.S. authorities. That should be good for a panic spike in oil. Got Canadian oil yet?!
Truth is stranger than fiction, my friend.
Cheers.
Re: Friends, any one has an opinion on where GOLD is going ...
The whole Israeli air attack on Iran is one of the better stories, but less likely events, in my opinion. That's not because Israel lacks the will, but rather because militarily my guess is, it is unlikely that a single air raid could do sufficient damage to the Iranian nuclear program (having had years and years to prepare for just such a raid) to warrant taking such a risk to pilots and planes, not to mention the loss of reputation a very public failure would bring.
I'm guessing such stories are more useful for providing leverage in negotiations with europeans and others to encourage tougher sanctions: "if you don't show some amount of forcefulness here, the israeli pit bull will run loose off its leash and start savaging everyone in sight - and we won't be able to control him!"
Just my two cents.
I'd rate a COMEX default as a more likely event than an Israeli attack on Iran. :)
Trade of the Generation
Not trying to spam......or divert traffic from Cara community..... but I have written a longish post on the trade of the generation that may be of interest to others here:
http://soulek.blogspot.com/2010/07/understanding-t...
No one in Team Cara wants to take their eye off the ball which is so easy to get caught up in these daily if not hourly fluctuations. Don't forget the big picture! Team Cara understands the LONG side of the TOG. But do they really understand the SHORT side? I am hoping to start a dialogue of interest.
Re: Friends, any one has an opinion on where GOLD is going ...
davefairtex -
"... but rather because militarily my guess is, it is unlikely that a single air raid could do sufficient damage to the Iranian nuclear program"
Israeli Air Force is the best trained in the world. Threat looms large. Dual Israeli-U.S. citizen White House Chief-of Staff Rahm Emanuel will provide the coordinates and, you're right, it may require more than one raid but certainly no more than six hours to complete.
As for a Comex default, remember von Mises tells us that a fiat regime will never default. It's QE II, QE III, QE IV, QE V as kaimu says ... Heck, Timmy will raid Fort Knox and the Fed's Manhattan basement vault to cover the bullion banks before allowing a mass panic run into physical bullion. It will be interesting to see if the CFTC has the balls to limit the big boys. I seriously doubt it.
I see the air strike as more likely in the short term. Got oil?!
Cheers.
Re: Friends, any one has an opinion on where GOLD is going ...
Dr. S - with all due respect to the IAF, coordinates and training mean nothing if a dispersed and hardened set of targets present an impossible target for a single air attack. Various reports put the number of targets at 17, some of which are deep underground, hardened with help from the North Koreans.
http://www.heritage.org/Research/Reports/2010/01/A...
"It would take an extensive air campaign, probably including more than a thousand sorties over several weeks, to increase the certainty of destroying the bulk of Iran's known nuclear infrastructure. But Israel does not have enough warplanes and refueling capabilities to sustain such an intensive campaign against such distant targets over a prolonged period of time, especially if the countries located between Israel and Iran (Jordan, Syria, Turkey, Iraq, and Saudi Arabia) object to Israeli use of their air space, as they undoubtedly would, at least publicly.
Nevertheless, Israel could opt to launch a single surprise attack at a limited number of key facilities to disrupt the Iranian nuclear weapons effort. The overall success of such a mission would depend on the quality of Israeli intelligence on Iran's nuclear facilities, the capabilities of Iran's air defenses, the accuracy of the strikes and the capability of Israeli ordnance to penetrate hardened targets. A single wave of attacks would not bring lasting benefits; Israel would have to launch multiple follow-up strikes to inflict higher levels of damage on Iran's nuclear infrastructure."
You're thinking perhaps that a multi-week 1000 sortie air campaign is something the IAF could get away with? One strike I could see, and if the target was a single above-ground facility like the Syrian or Iraqi facility, it would make sense. Iran is a different case altogether. The fact that Israel hasn't already attempted to destroy the facilities tells me that it is a low percentage operation.
Re: Friends, any one has an opinion on where GOLD is going ...
davefairtex -
Thanks for all that useful detail. I see Israel and the Middle East as one big powder keg. Chaos of war leaves little hope for an accurate prediction. I will just say that both a nuclear option and a non-nuclear weapons target were not mentioned as Israeli options. It's all a bit bleak and I'm looking for a summer rally on Monday.
Cheers.
Re: Friends, any one has an opinion on where GOLD is going ...
Elsewhere in the link I provided they discussed the possibility of Israel going nuclear, and dismissed it as unlikely. My guess is, the tacit support that an Israeli strike has from the (Sunni) Arab world over a Shia Iran gaining nuclear capability would be completely lost if Israel used the bomb.
Things are difficult in the mid east, certainly, but I think they are largely rational actors - for the most part. We dealt with a distinctly hostile Soviet Russia having the bomb for 40 years, I think we can deal with this situation too.
I think time is not on the side of the Mullahs in Iran.
Re: Weekend Reading from Martin Armstrong
thanks Doc,
what I take from Armstrong is the understanding that commitment could be brutal in this economic and particularly monetary environment. I would like in future months and years get on the market train Bill touched upon in the WIR, but not right now. Very happy to learn at this opportune time to get in and out in a strictly controlled manner of trading.
http://www.telegraph.co.uk/finance/comment/ambrose...
futures at 4:35 - Asia mostly up Europe gap up and drop
S&P -3.60 / -0.33%
Level 1,097.00
Fair Value 1,099.09
Difference -2.09
Nasdaq +1.00 / +0.05%
Level 1,874.75
Fair Value 1,873.56
Difference 1.19
Dow -30.00 / -0.29%
Level 10,356.00
European car manufacturers deep in red, French banks holding green for the moment.
French banks are the toast of the Parisian Bourse today blah blah blah:
http://fr.finance.yahoo.com/actualites/la-valeur-d...
Great link to the WSJ world market data centre. thanks again.
6:50 am futures - Europe is chop trading
S&P -1.20 / -0.11%
Level 1,099.40
Fair Value 1,099.09
Difference 0.31
Nasdaq +0.50 / +0.03%
Level 1,874.25
Fair Value 1,873.56
Difference 0.69
Dow -11.00 / -0.11%
Level 10,375.00
Re: Friends, any one has an opinion on where GOLD is going ...
Dr.
History shows exactly what you say here. WW2 around the clock bombing by USAAF (days) and Bomber Command (nights) were unable to wipe out even above ground factories and rail yards for long.
Iran has the advantage of being able to put the nuke facilities deeply underground so even if all locations are known (doubtful) it is air attacks are unlikely to eliminate them.
Israel has an advantage the US never seems to acquire — even their politicians know how vulnerable they are. Here we have the problems of pleasing core political backers' beliefs and worry about world opinion. Therefore we continue to do militarily stupid things.
Korea, Viet Nam, Iraq, Afghanistan and now N.Korea? History may already be repeating in my lifetime.
Israel only gets to make one stupid military error. I doubt they will launch massive bombing raids unless actually attacked.
Re: Friends, any one has an opinion on where GOLD is going ...
Dave,
Agreed.
However, if actually attacked all bets are off. They would use every possible weapon in such an event. But Iran must know that.
Even with religious zealots we can hope for the Mutually Assured Destruction (MAD) effect to bring some sanity to the world.
Consider the US/China situation which is similar to the US/Russian condition. If we were to try to deal with either country using conventional weapons we would not stand a chance. Napoleon and Hitler tried. MacArthur knew it.
We can only hope everyone maintains a realization of the self preservation at any cost reaction to anyone when in a futile, indefensible predicament.