Morning Call [7:04am ET] Just as traders ought not to try to force a trade, financial bloggers ought not to try to make stories out of nothing. Markets are extremely quiet this morning. Let’s leave it at that.
Oh Europe’s economy is believed to have grown at an imperceptive rate during 1Q2010, which means that Germany is ok and the rest are falling behind; but that shouldn’t be news.
Also there is a storyline from Europe today that the debt crisis is under control, but a couple hours ago – just after 3am ET – the whole precious metals group started to perk up, so I’d believe the trading over and above the news reports.
In three hours Silver (July contracts) zipped from a low of 19.110 to a high of 19.665. Between 4:30am and 6, June Gold lifted from ~1229 to ~1244.80, which is a record.
In the US, starting this morning through lunch on Friday, there are many speaking engagements of the Fed leaders, or should I call these people spin opportunists. After a couple days with very little economic data being reported – a problem for the spin machine -- International trade figures will be out this morning at 8:30 am ET and the April Treasury Budget at 2:00pm. If the Feds can’t produce a surplus during tax time, their cause is hopeless, so let’s see.
Really there is not much going on. Let's wait an hour or two. Things can change quickly.
Have a great day.
CTA Trading Desk Post-Close Report
Equities continued their modest climb back from Thursday’s lightning-fast spasm lower, shrugging off overnight weakness in the futures markets. Good economic news out of Germany provided the impetus for buyers to bid stocks higher for the remainder of the day (S&P+1.37%). High technology stocks (QQQQ+1.89%), retail (XRT+1.92%), and industrials (XLI+2.32%) were some of the strongest groups with investors preferring small cap growth (IWM+2.66%) over stodgy blue chip stocks.
Gold soared again, setting a new all-time high near 1250 (GLD+0.53%) before easing back a bit into the close. Although the precious metal is clearly overbought and extended (RSI 7 on daily and weekly over 80, monthly 77) with miners (GDX+0.13%), and diverging negatively against the price of gold, shorting anything at a new all-time high is risky business.
The fundamental case for gold is extremely compelling, looking out over the next few years; investors should focus on adding to longs when the inevitable short-term weakness materializes. Rule #1: always trade with the main trend. This will keep traders alert for good risk/reward entries on the long side, helping avoid the temptation to short something just because it is “too high” and trading at a price never before seen.
The S&P has now rallied back to the underside of the 50-day moving average as it enters the 1170-1180 resistance zone. We anticipate the index will initially have difficulty breaching 1180l – marking time backing and filling under the most bullish scenario while the Bear case is allowing for a precipitous decline to begin at any time from this level.
So defense is the name of the game unless the S&P can overcome 1185 convincingly for more than a few hours. Adding upside exposure is a mouse click away if price action demands adding long positions to the portfolio.
The jury is still out so let the market tip its hand before making large commitments.
Have a great evening.
Comments
More Perfect Games
There is one small story buried in the NYTimes. Something about a few more HB&B's scoring perfect trades every day during the last qtr. They must all be more powerfull than a 300mph Japanese bullet train.
http://dealbook.blogs.nytimes.com/2010/05/11/the-l...
Re: More Perfect Games
Let's give Eric Dash the credit (not Sorkin) for the NY Times report.
http://www.nytimes.com/2010/05/12/business/12bank....
Anyway, perfect for 61 times four is statistically impossible unless the game is rigged, which is what I have always said. If HB&B can be all things to all people at all times, they are simply too big to lose money to the rest of us disadvantaged souls.
Keep it up and they'll be playing with their own money and the public (and mutual and pension fund managers who are the losers here) will decide to invest their capital elsewhere.
Gold & EUR
Consensus seems to be that the eurocrats have blown it and have destroyed confidence in the EUR.
Armstrong says in his latest piece that hyperinflation is caused always & only by confidence lost, which escalates the velocity of money all by itself, and not at all by how much money is actually printed.
Let's see now, if the EUR is to drop another 20% or so against the $USD to parity (let's not speculate just yet about the potential of it falling through to 0.85 as someone has predicted), and gold in $USD is to appreciate 10% - 15% already by summer . . . and if Armstrong has his timing right, continue on up and make an intermediate top in Oct. in $USD, where does that leave gold in EUR by Oct.? This is getting vicious . . .
Bob Hoye has some short-term price & time targets for gold from last week:
CHARTWORKS - MAY 7, 2010
Gold: The World’s #1 Asset Class
http://www.321gold.com/editorials/hoye/hoye051110....
Cara 100 Ratings Changes
Good morning.
DIS - Upgraded to Hold @ Citi following Q2 results
INTC - Stifel Nicolaus Resumes Coverage with a Buy. PT = $30
POT - Upgraded to Buy @ Desjardins
TXN - Stifel Nicolaus Resumes Coverage with a Buy. PT = $32
VALE - Upgraded to Neutral @ Exane BNP Paribas
------------
Zacks on BRCM (Cara 100):
Broadcom Corp.
By: Michael Vodicka
May 12, 2010
BRCM
Broadcom Corp. (BRCM - Analyst Report) recently hit a new multi-year high on much better than expected Q1 results that saw revenue jump 71% from last year. Estimates are on the rise, helping to keep the valuation picture in check with a forward P/E of 18X.
Company Description
Broadcom Corp. designs and develops semiconductors for wired and wireless applications. The company sells its Systems-on-Chip (SOC) to a broad range of industries, including broadband, mobile devices and infrastructure. Broadcom was founded in 1991 and has a market cap of $18 billion.
Broadcom's business has rebounded sharply from it's 2009 lows as both consumer and corporate spending have gained traction on a stronger global economy. This dynamic was on full display on April 27 when the company posted awesome Q1 results that easily beat expectations.
First-Quarter Results
Revenue for the period was up 71% from last year to a record $1.46 billion. Earnings also came in strong at 40 cents, 33% ahead of the Zacks Consensus Estimate. The company has been hot over the last year, boasting an average earnings surprise of 115%.
Broadcom's saw strength in three of its major segments from just the previous quarter, with infrastructure up 15%, mobile handsets/devices up 10% and broadband up 3%.
Looking forward a bit, the company's expects strong results from its set-top box line, with shipment volumes set to remain strong through the year. Broadcom also cheered China's legislative changes that will allow cable operators to offer voice and data services and a push towards HD that will drive the company's set-top HD business.
Strong Balance Sheet
Broadcom continues to maintain and strengthen its already awesome balance sheet, with cash and equivalents totaling $2.4 billion against no debt.
Estimates Jump
The analysts were encouraged by Broadcom's strong Q1 results, with the current-year estimate adding 49 cents to $1.82 and the next-year estimate adding 50 cents to $2.05, a solid 12% growth projection.
Valuation
With a forward P/E of 18.5X, shares of BRCM trade at a discount to the industry average of 21X. Its P/B multiple of 4X is a premium to the industry average of 2X.
The Chart
Shares of BRCM jumped higher to a multi-year high on the good quarter before dipping lower on the big market sell off.
........
interesting... aone
baz22/aone
I traded it twice using options last year in the teens, if i was doing anyting today i would just sell the 10 puts for next fri expiration as they are bid .40 on my screen from last nite.....4% cash on cash for a little over a week......thanks for mentioning it........lets see where it opens......
Not sure what you are alluding to vis-a-vis finance news Bill
But I just read from an analyst that money promised by the IMF to Europe, well, it's not really promised. Given that individual legislatures must decide to contribute to the EU fund, strangely enough it appears that there is not a dollar that the EU community can presently count on for bailouts. I'm totally bamboozled but admittedly amused by this "Strange Money, or how I came to love Double Speak" film.
http://seekingalpha.com/article/204591-shock-and-a...
Gold still going higher? As the author suggests, someone smells a rat...
Good strategy, toby
Thank you ! ( although, having the occasional insanity bouts, I dipped my toes in the water this am. at $ 9.60 ... small ).. seems they are serious about their production expansion ( + 20 % ), #'s close to market expectations, and Eaton contracts, and un-named major..
Re: Gold & EUR
(EU) Austria Mint: Recent gold orders coming entirely from Europe; Sees signs of 'panic' buying
(Don't know if this information is valuable, just throwing it in in case it is, just crossed the wire)
Re: More Perfect Games
Bill said: "Keep it up and they'll be playing with their own money and the public (and mutual and pension fund managers who are the losers here) will decide to invest their capital elsewhere."
Absolutely right Bill. In fact, I recently decided to go this route. I am a US citizen living in the PIIGS. I have a mortgage with a local bank. I have more than enough funds to pay off the mortgage and the only reason I took out the mortgage in the first place was because the Euro/$ exchange rate stood at an unreasonable 1.50 when I purchased the house. I have every intention of paying off the mortgage as the exchange rate moves towards parity. This, despite the fact that I pay a meager 1.22% on the mortgage.
I have also started exploring investment options in local businesses. For example, an aquaintance is planning on expanding her already solid English language school and I am looking into investing some money in this expansion. For the more adventurous, there is also www.prosper.com and www.kiva.org.
Oh and I store physical gold in my house.
The only risk I am willing to take in the casino that is obviously stacked against us is using options to limit drawdowns. Until I see HB&B's stranglehold loosen and a return of free markets, I think I have a better chance of winning elsewhere.
News on way up vs down
If you recall we climbed wall of worry, news was bleak. My pt is no one cares why their portf is up.
But news will have to validate why the portfolio is down, even if the two are unrelated.
These European debt issues didn't just pop up. The volcano has been there long before the current eruption.
Cara India Update
INFY - Infosys initiated with a Neutral at RW Baird.
Re: More Perfect Games
jragusa - "Oh and I store physical gold in my house."
How cool is that! So...uh where do you live then? I mean, exactly where? :)
Re: More Perfect Games
As was pointed out to me this morning; if the Fed lends billions of capital to the Big Four banksters at zero cost and then permits them to come back and buy Treasuries that guarantee a profit, two things happen: (i) the banks will always make money under those circumstances, and (ii) we need to get Congress to outlaw that practice because all it is by another name is theft, which we will all pay for in the future with higher interest rates. If HB&B is going to borrow from the Fed, they should be required to use it in their credit operations and not their principal trading. If they choose to do the latter, the Fed should be required to charge them the same rates the public has to pay. Then we'll see if these banksters can produce 61 x 4 straight perfect trading days!
Re: Gold & EUR
Anecdotally, I haven't noticed any panic retail buying in Sweden yet (on the Swedish-language Ebay site Tradera), but the news appeared first today in the major media (in Dagens Industri) about a "new ATH", so we'll see.
GLD:TLT just broke the previous high, this is the most important confirmation I think.
http://stockcharts.com/h-sc/ui?s=GLD:TLT&p=W&yr=3&...
Re: More Perfect Games
Bill -
Giving HB&B our money at zero interest for prop desk games is simply fueling the fire like unregulated CDOs. Consider Schwartzenegger's next move will kick off riots in L.A.
http://www.businessweek.com/news/2010-05-11/schwar...
Cheers.
quite a move in 1 minute this am
-34 one second
up 90 another
Re: More Perfect Games
Wow Dr. Strangelove,
If the Governator does that, it'll make what's going on in Greece look like a Sunday afternoon church social.
Regards,
BH
Mish on huge up days amidst a bear market
http://bit.ly/dabKdx
"The further increase in volatility is bearish. We often see that right at the beginning of major bear markets. You get some single day rallies that really impress everyone. We had one of those after the August 2007 swoon for instance.
Yet, the DJIA has never - not once - rallied 400 points during a bull market. Every single 400 point or more rise was in the context of major bear markets."
Investors Intelligence
Latest numbers out:
Date Bull Bear
05/12 47.2 24.7
unloved..
have watch mon continue downward for weeks... whew.. had thought the $ 59 area would be acceptable ( did not buy ) and it blew right past that.. so many negative events ( and John Stewart ponders a ' perfect storm ' !! ). Bill's team entered at $ 67 ( if I remember correctly ) many months ago, and had a nice ride up... now, being almost 20% below that mark, one begins to wonder... the government and competition ( re: Dupont ) are powerful forces, but certainly neither of these two are angles, either.. I have not done any ratio's, but on charts alone, $ 53.50 could be the mark in the sand... guess I'll wait and see...
RE Mish
Dow rallies should be in percentage terms not Dow points.
Here is a list and one might note the March 23, 2009
rally.
Largest daily percentage gains Rank Change
1 1933-03-15 62.10 +8.26 +15.34
2 1931-10-06 99.34 +12.86 +14.87
3 1929-10-30 258.47 +28.40 +12.34
4 1932-09-21 75.16 +7.67 +11.36
5 2008-10-13 9,387.61 +936.42 +11.08
6 2008-10-28 9,065.12 +889.35 +10.88
7 1987-10-21 2,027.85 +186.84 +10.15
8 1932-08-03 58.22 +5.06 +9.52
9 1932-02-11 78.60 +6.80 +9.47
10 1929-11-14 217.28 +18.59 +9.36
11 1931-12-18 80.69 +6.90 +9.35
12 1932-02-13 85.82 +7.22 +9.19
13 1932-05-06 59.01 +4.91 +9.08
14 1933-04-19 68.31 +5.66 +9.03
15 1931-10-08 105.79 +8.47 +8.70
16 1932-06-10 48.94 +3.62 +7.99
17 1939-09-05 148.12 +10.03 +7.26
18 1931-06-03 130.37 +8.67 +7.12
19 1932-01-06 76.31 +5.07 +7.12
20 2009-03-23 7,775.86 +497.48 +6.84
Re: RE Mish
You read my mind.
Re: More Perfect Games
Thanks for the link. Interesting how much more conservative he is than most in the US Congress. Stop spending, refuse tax increases — good old common sense.
1170 line in sand?
what resistance levels is everyone else watching?
tob
not necessarily recommending, but scln has been under the bio-rader for awhile... followed this one for years... in this week....
Re: 1170 line in sand?
NYU,
For S&P500, I'm looking at currently developing bearish crossover of the 20 DAY EMA below the 50 DAY SMA at 1173ish. Looks like that is potential major resistance. I'm looking at the 100 DAY EMA at 1142ish as support. I think that is our range at the moment. If that gets taken out, I'm looking at the 200 EMA at 1100.
RE: Line in the Sand
1173.33 is the 50 day line
RE: Line in the Sand
1220 the high with the Gann Square of 9 sqrt's at 35...
1220-35 = 1185
1220-70 = 1150
So I'd prefer to see how the range resolves... frankly I'm not too confident in technical analysis right now...it's maddening that governments feel that intrusion in markets is their raison d'etre.
tobyt
went ahead and sold ' scln '.... don't like volume .
SXCI
looks ready for more back to last weeks highs.
bio/scln,etc
baz22, tx for update on scln, just sold 30 HL june 6 puts for little over $.30, 5% cash on cash for 5+ weeks, also have the CLSN w/5 calls sold, and selling puts on CLDX 7.5s.......still staring at AONE as covered call, stock at 9.6 w/ next fri 10 call for .30, in my parameters but china really worries me.......
Re: bio/scln,etc
lifted this from yahoo... could be talking their book, but some rather large transactions took place in the last 10 min... http://www.istockanalyst.com/article/viewarticle/a...
Re: bio/scln,etc
AONE does look interesting and the capitulation at end of last week looks nice. Short interest out today and an additional 1.6m shares were shorted between 4/15 and 4/30. I find this somewhat astounding for a company with what appears to be a decent cash cushion. I think that given the capitulation low near $8 last Thursday that this looks like it could have some momentum behind it. And if it goes too low, GE may just buy the thing outright. Went long a small position at $9.85.
State Credit Spreads
Is there a place where we can check the credit spreads on state debt?
Dance Floor
Is gold about to be the "last off the dance floor", or is it just going to get disco fever from here?
Should I be selling some miners' shares here, or hanging on?
Theme Investing
My wife is a rocket scientist (really) and believes that biofuels will become the mainstay of the aeronautical industry in the next decade, especially the military. The military wants total independence from foreign energy sources.
Since many of these companies are "embryonic", I suspect there will be winners (and naturally losers) from this space.
Not sure where to get the fundamentals, but this is just a thought...as is.
Re: Theme Investing
Ron -
My cousin is a rocket scientist too (really) and worked extensively on the Atlas liquid fuel engines that had a bad habit of blowing up expensive satellites. I blame him but he's not my wife ;) What does your wife think of Coal-to-Liquid, the proven tech used by SSL to power South Africa and recently tested by USAF on all its aircraft. All we need is for Congress to give a long-term contract to a producer and coal will be in foreign oil's pocket for transportation energy. U.S. is the Saudi Arabia of coal. U.S. Military is on top of sequestration of emissions in this process too.
Cheers.
(No coal producers or SSL at this time.)
Re: State Credit Spreads
"Is there a place where we can check the credit spreads on state debt?" - teamonfuego
http://online.wsj.com/mdc/public/page/2_3022-bondb...
Scroll down to Tax Exempt.
Read Armstrong's latest on the meaning of interest rate spreads as they relate to inflation, deflation, stagflation, and federal deficits here:
http://www.martinarmstrong.org/files/The-Money-5-4...
Cheers.
APRIL MONTHLY BUDGET STATEMENT
May 12, 2010 2:00:03 PM
*(US) APRIL MONTHLY BUDGET STATEMENT: -$82.7B V -$57.9BE (19th STRAIGHT MONTH OF BUDGET DEFICITS)
- Total Receipts: $245.3B v $266.2B y/y (-7.3%)
- Total spending: $327.9B v $287.1B y/y (+13.2%)
"Resistaunce"
http://bit.ly/aqbqW2
jeez...
has this seemed like a full day already ? does to me...
Bankers jailed, sued as Iceland seeks culprits for crisis
Thought the group would be interested in this.
At least, one country is doing something about this looting.
http://tinyurl.com/2eszg8q
Re: APRIL MONTHLY BUDGET STATEMENT
** ( re Total Spending )... $ 100 B .. Ink Purchases
Re: Dance Floor
Since Feb. 8th GLD is up a little
over 15% and GDZ is up a little
over 30%.
This differential closes at some point
and can be viewed on a Perf Chart
as Stockcharts.
Both can continue to move up but
the Gold Miners do appear to be
ahead of themselves.
Re: Theme Investing
I have a small "investment" (i.e. a bit underwater) in Origin Oil OOIL which is developing the use of Algae to produce liquid fuels from concentrated CO2 sources like smokestacks. Could be equivalent of pyrite - fool's fuel. Definitely a DYODD.
RE: Dance Floof
Sorry the symbol is of course
GDX not GDZ
Re: SXCI
over $70 now /8%
No bids? Try no offers and see what happens
May 12, 2010 3:13:37 PM
SYBASE INC Hearing takeover chatter circulating
- SAP rumored as a potential acquirer, hearing price chatter around $6B
- Follow up: On contacting SY, company representatives noted that they do not comment on market rumors.
Re: Dance Floor
George, GDX has been underperforming heavily against GLD for multiple years. While it is noteworthy that they have gone against that long-term trend over the last 2 weeks, I think you may want to look at a longer time period before concluding that a pullback in the GDX:GLD relationship is imminent. GDX still hasn't reached the $55 level that it reached when GLD made its highs in 2009 even though GLD is obviously higher than it was then.
Money flow from intl
Is it coming out of bonds and moving into riskier investments?
Eur at lows of day. Bonds down.
Re: Dance Floor
Also important is that miners are actually levered to the price of gold so in a period of bullish momentum for GLD, GDX generally increases at a faster rate than GLD (and falls faster when this momentum reverses).
Re: Theme Investing
Hi Chris - Here is another for consideration. I now hold DYAI, which has developed an enzyme to assist the digestion of algae and other biomas to yield cellulosic ethanol, butanol etc. Kind of a sorted history with this stock, but seems to be catching a breeze lately. Happy Trading
RE Dance Floor
Billy, since the first of December 2009
to this week GDX is up 120% and
GLD is up 60%!!!
Re: Theme Investing
http://en.wikipedia.org/wiki/Algae_fuel#External_l...
Also, a press release for a meeting to be held in Washington to discuss potential for biofuels. No take on their site. the press release or its content; note the list of companies planning to attend - just a place to start with some research.
http://tinyurl.com/24wyr86
Re: RE Dance Floor
I assume you are referring to December 2008? If so, you chose the bottom of the market where all equities had crashed (and GLD much less so) so make what you want of it.
Here is the data since GDX started trading in May 2006:
GDX GLD
05/23/2006 37.22 66.38
05/12/2010 53.45 121.39
43.61% 82.87%
Since 5/23/2006, the first data point when both of these vehicles were trading, GDX is up 43.61% and GLD is up 82.87%. That's 4 years of data. It is important to note that for a long time, two large components ABX and AU were struggling with underwater hedge books that negatively affected returns. Both have or are in the process of unwinding their hedge books.
RE: Dance Floor
Billy, you are right. The December
was 2008 not 2009.
As you have done a lot of work in this
area, I have been looking at a spread
trade with GDX and DGZ.
As you noted, GDX is more leveraged than
GLD and swings both faster up and down.
During a pullback GDX can be down relatively
more than GLD.
My thought was to buy equal dollar amounts
of DGZ and GDX and close out the position
when they converged on a percentage basis.
Three trades of note are:
April 17, 2009 and close May 12, 2009
July 8th, 2009 and close Sept. 2, 2009
Feb 2, 2010 and close April 9, 2010
Do you see flaws in this??
Pattern recognition exercise
With the full expectation that I will (should) get laughed at for my pattern recognition skills, I humbly present my version (vision) of the q's at one moment in time yesterday.
Re: "Resistaunce"
Hi NYU. Thanks for the chart. While I don't have any complaint with the lower support line, which is clearly drawn on two well-defined lows, I do wonder about your upper resistance line. The first defining point is a well-established top (Nov 2007), but the 2nd point is based on the data of only the last couple of weeks. Does that date signal a major high? I think the jury is not in on that one yet. I'm not saying it won't be; it's just that it seems a bit premature at the moment.
Peace Dividend
Over my morning coffee, before work today, I cobbled together a few charts on gold. I STILL can't bring myself to jump on the bandwagon - a band wagon that's been merrily playing away for 9 years now. I haven't had time to trade short time frames lately but if I did Gold looks mighty attractive - again.
Upon reviewing this chart today
http://tinyurl.com/2uuc66q
($SPX:$GOLD during the last ten years - falling from a ratio of 500:1 to 75:1)
I couldn't help but think that a lot of the underperformance in the markets can be traced back to 9/11. What a great shock that was in many ways.
To make a long story short, I think the repercussions of an unsafe (unfriendly?) world are not conducive to good investment results. On the contrary, it creates malinvestment and saps people's confidence in their future.
I'm certainly no idealist but, as a kind of mental exercise, try and imagine the tidal wave of effects that would follow from a bold peace initiative across this planet. Somehow it doesn't seem so far fetched to imagine Obama front and center in such a push. Imagine what could be achieved if monies were freed-up from security issues. Kaimu could gives us an accounting of this. Imagine...a peace dividend...
http://www.youtube.com/watch?v=okd3hLlvvLw
How much gold does GLD hold ?
Reuters reported this today:
"The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at a record high of 1,209.499 tonnes as of May 12, up 17.3490 tonnes from 1,192.150 tonnes in the previous business day."
How do you locate and purchase 17 tons of gold between one day's close and the next?
Do I Walk or Do I Stay?
I wrote a consumer blog about the Strategic Defaults issue recently deified on 60 Minutes. Would appreciate thoughts of those wiser than I on motives behind the motives. I have this sinking feeling that Fannie and Freddie are going to keep taking homes over until they own the world and then offer to sell to them back to us 'for a price'.
http://tinyurl.com/37xb7e6
If you conclude you'll be perennially underwater, - WALK !
Why? - It's the only means of financial self-defense !
A mortgage loan is a business deal. The loan is secured by the value of the house (and ONLY the value of the house) under the law in most states. (There is no recourse to the buyer’s other assets.)
How loud was the criticism of Morgan Stanley for walking away from 5 San Francisco office buildings whose value had fallen below MS’s mortgage “obligation”. How about Tischman Speyer for walking away from their $5.4 billion “obligation” on NYC’s largest apartment complexes (Stuyvesant Town and Peter Cooper Village)?
SO, giant corporations are allowed to treat mortgages as business deals, but individuals are bound by “morals” or “ethics” – although not by law – to keep destroying their personal finances?
If mortgage-holders would agree to share the pain (and future upside) on the value of the house, perhaps “strategic defaults” wouldn’t be growing! But the banks won't give an inch, after taxpayers gave them $1T, continue to give them $ at 0% and let them lend it back at 30% on our credit cards. ENOUGH! Time to revolt!
Seems to me that, after trashing the mortgage and housing markets, Wall Street is counting on the suckers to continue acting like suckers! The corporate-owned media are happy to bash homeowners while giving corporations a free pass. That’s how I see it.
(BTW, I paid cash for my condo, and own it free and clear. I never carry a credit card balance.)
Theme investing... Ron,
Not much interest, yet, in this company, but I personally consider them the premier knowledge source/application for Biofuels... They have a very good working relationship with BP, and are playing an integral part in BP's biofuel capabilities... VRNM is the combination of two bio-science companies from a couple of years ago... both had been around for many years... http://www.verenium.com/
Re: If you conclude you'll be perennially underwater, - WALK !
Jock,
How does one know their home will be perenially underwater? Many homes in my area 'appreciated' nearly 300% in a three to five year span. If you care about a locale and are not just hopping the next plane then consider the domino effect to adjacent homeowners who live in fear of homeless people and vermin taking up residence in empty homes. I believe the state laws on recourse differ as to whether you can be pursued..I imagine the 'walk away' consultants could answer that.
Re: Do I Walk or Do I Stay?
loannetter -
I suppose debtors prison could be re-instituted to enforce the 'moral' obligation. There is a word for debt slavery and it's called 'feudalism' which is great if you're the lord.
What about reform of Fannie and Freddie, our 'moral' shackles? Can we have some reform? No? Okay. Time to walk. Action speaks louder than words.
Edit: Declining home values do not equal blight but that's a nice media fear mongering tactic brought to us by the financial industry, no? Just include a few pictures of Detroit.
May 11 video of oil flowing from Rig's ' riser ' pipe
at bottom of the ocean... video is near the end of the article.. mind-boggling scene... makes bio-fuels all the more important.. http://online.wsj.com/article/SB100014240527487033...
Re: Do I Walk or Do I Stay?
Dr Strangelove,
Did I pull the moral angle? How quickly one slips into inculcated rhetoric. But seriously, the way our system is set up a Blankfein will never have his FICO score ruined no matter the crime, but millions of Americans will be landed with astronomical credit card and insurance rates for their trouble 'standing up' to Wall Street. Of course if everyone does it.....
DIF HEAT
ALOHA!!
More bank bailout please ...
DEPOSIT INSURANCE FUND(DIF)
Seems to be "heating" up now over at the US Treasury. One of the proposed alternatives to getting private banks to pre-pay funds for deposit insurance was to borrow from the US TREASURY. This is found on page eight of the September 2009 FDIC directive entitled SPECIAL ASSESSMENT, RESTORATION PLAN AND PROPOSAL FOR MAINTAINING FUND LIQUIDITY.
As I peer into the US TREASURY STATEMENTS going back to April Fools, 4/1/10 it appears that the DIF is being funded more and more by US Taxpayers via US TREASURY outlays. Here it is and I notice a pattern forming.
DATE - AMOUNT
04/1 - $0
04/2 - $53MIL
04/5 - $0
04/6 - $0
04/7 - $0
04/8 - $0
04/9 - $0
4/12 - $0
4/13 - $143MIL
4/14 - $107MIL
4/15 - $0
4/16 - $0
4/19 - $499MIL
4/20 - $0
4/21 - $466MIL
4/22 - $0
4/23 - $0
4/26 - $263MIL
4/27 - $0
4/28 - $1.5BIL
4/29 - $0
4/30 - $142MIL
05/3 - $557MIL
05/4 - $2.4BIL
05/5 - $838MIL
05/6 - $1.1BIL
05/7 - $2.7BIL
5/10 - $6.4BIL
5/11 - $183MIL
Looks like the $0 days are getting thin ... Now US Treasury funds are getting pumped into the DIF each and every day.
Currently the DIF YTD for FY 2010 sits at $33BIL USD. Since the DIF merged two other deposit insurance funds in 2006 I can only find data for FY 2008 and FY 2009 to see where we were YTD compared to FY 2010. Here it is for May 11th YTD ...
FY 2008 - $337MIL
FY 2009 - $19.3BIL
FY 2010 - $33BIL
Look at that "flow of funds" progression ... Some $17BIL of the $33BIL was spent since April Fools. It seems the US Taxpayer is paying for his own FDIC now. Yet another backdoor bank bailout.
I have an idea ... why not raise the bank reserve rates severely instead, whereby the banks are forced to keep much more deposits on reserve? How about a 25% reserve rate? Let the depositors bail themselves out. Part of the reason we are in this mess are these explicit "guarantees" by the US government for everything and anything financial ... FDIC SIPC PBGF...
The US Treasury is the be-all-end-all counterparty for all risk ... social, political and financial! By using the US Treasury as a "deposit guarantee" that leaves the banks free to take on more and more risk. And that is what they are doing and that is not Constitutional ...
I didn't sign on for this ...
Re: Do I Walk or Do I Stay?
Loannetter,
What does a FICO score have to do with someones ability and willingness to pay? The FICO people are just stupid enablers of equally stupid bankers. Everyone wants an easy quick 'read' on who they lend money to. It doesn't work that way as the last 3 years have taught us.
There was/is a rule under the NYSE constitution and rules. Rule 405!!! Know your customer. Banks used to know their customers but no longer. It's all algorithims, zip codes and socialized risk that determines credit worthiness. What a sham.
If the banks are corrupt, they lead by example. Homeowners are only now discovering that the house is a specific 'bet' and that they have no personal liability (second mtgs excluded). Until house prices declined, no one was even aware of their potential liability or lack thereof.
The only people who should be concerned about a bad FICO score are the same people who rely on debt. If one has no debt, who cares? If my insurance company raises my rates because of my FICO score (and I do not even know what mine is) then I get a new insurance company or self insure.
My neighbor is a large land owner with interests in cattle, oil, oil seeds and some securities. After his wife died 3 years ago, he had to pay the monthly bills. She was the household bill payer. Some months he pays and sometimes he forgets. I'm sure he now has a FICO score of 550 but if you need $500,000 in ready cash and collateral, he will write you a check.
Walking away isn't about your father's morality. It's about PAYBACK!
Re: Do I Walk or Do I Stay?
Ross,
FICO scores are not a real indication of much more than a predisposition to pay your debts in a timely fashion. Most underwriters with a noggin' could --in not so distant times--justify lending (for a real bank) to your friend. But then it doesn't sound like he needs it. We have designed double blind doppleganger systems to take the thinking out of the process so that files may be underwritten by technicians in Bangalore. Unfortunately these same systems were set up to punish those who don't play by the rules and if you do walk from your mortgage the damage is a ten year sentence. Just sayin'!
I am concerned that walkers may be the ones experiencing the PAYBACK. About your check able friend...could you share his contact details?
How Could Any One Trust Investing in Ultra Shorts ETF's ......
After reading this ..
http://www.gamingthemarket.com/financial-armageddo...
No Wonder my brother couldn't sell his FAZ during the crash last Thursday. Looks like Thousands others couldn't either..
Should we stop trading ETF's then or What?
How Could Any One Trust Investings in Ultra Shorts ETF's ......
duplicate mesg
North America
Think about it.http://www.youtube.com/user/BVMTVOutlawCountry
Re: Do I Walk or Do I Stay?
Loannetter,
Your point is well taken. For the average Joe, a credit 'hit' may be uncomfortable for some time. But if he can expunge $50,000 he might be willing. Also, banksters are so so dependent on ole silly Joe that they will probably shorten the noose to 3 to 5 years. A kinda 'go and sin no more' but please come BACK! We need the spread!
You can't shoot all your customers because there wouldn't be anyone left to shear. Money lending is shylockery pure and simple. It can be good most times or like a vampire on your neck. Banks used to hire credit analysts supervised by senior management who learned to assess credit worthiness. Now the idiots rely on some statistical measure from who knows where.
Gaming the system
Is that not the problem? If your're not part of the solution you must be part of the problem.
Re: Do I Walk or Do I Stay?
I agree with Jock on this topic. Yes we as consumer have a moral duty to uphold our debts and obligations.
However, the banks are the enablers custodians of our money. They also have a moral obligation, which they failed to uphold.
I think you are mistaking the whats and whys. People are walking away because they are pissed! Think about it. You eat a bad meal, but most people pay anyway. You buy a stock and loses value, you deal with it because you still think its not rigged. the list goes on.
But with the common knowledge that Banks, enablers, and benefactors at the scene of the crime, also got bailed out. While the consumer is left with a short term underwater transaction.
Rage + common sense is what is causing borrowers to walk away. not moral hazard.
So if i owe $2M on a house I cannot even sell at $1M, why am i going to hold the bag, when my mortgage writer should have also held the bag, but got bailed out with my tax money?
The people at AIG should have known what they were insuring. But hey they were wreckless and we bailed them out. this list can also go on and on.
You can't raise a family and have great memories living inside a stock. Owning a home is still a big part of the "American Dream" much like how to women, "A Diamond is Forever". Great marketing and it worked. So Mortgage borrowers didnt unravel hundreds of yrs of this marketing overnight to be selfish about their credit scores or saving themselves.
Borrowers know quite easily when they see their monthly statement how much they owe. and they quite easily see when they hear houses foreclosed for half that, that they are screwed. but hey. Blackrock walked away from Stuy town.
Banking needs to go back to being boring again. So does housing. and everything outside of this, should not be savable by a bailout.
Too big too fail = too big to bail out = too big to exist
It's time to get Greek up in this place!
Re: Do I Walk or Do I Stay?
Ross,
The stastical models for credit risk were devised by Fair Issac to meet the lending guidelines created by and for Fannie, Freddie, AIG, FHA, VA and the like to load up their portfolios and rate them triple A this or that so the banks could sell them. Considering the likes of who were involved in stocking the pond and selling it... I just find it fascinating the creators of all the risky debt are the very ones profiting by having their losses shared and bailed while homeowners have to make really difficult decisions about walking or sticking out their ginormous debt.
Re: Do I Walk or Do I Stay?
NYUGrad,
I don't disagree with this premise. Rage is a powerful emotion and very real. The fact is: the deck is stacked against the debt holder. As a debt holder whether or not you feel duped or cheated; like a stockholder you have decisions to make about the future value. Are we really looking deeply into the potential as you would with your magical charts and trendlines or just storming off half cocked?
It's too easy and trendy to say people should walk or not. The decision is deeply personal and has immense consequences. So many of the important (boring) things about your home 'investment' involve evaluating the risk to the individual, their state of life, their future prospects, their resiliance, their responsibilities, their immeidate tolerance or aversion to risk, etc. etc. There is no easy answer.
Ben Lichtenstein, The Voice of The Crash, with Don Harrold
Great background to who this guy is, what he has does on the floor, and his retake on that 1000 point drop from the scene.
http://bit.ly/9tQLrm
Anyone found the fat finger yet?
Re: Do I Walk or Do I Stay?
The answer was VERY easy for the banks, insurers, rating agencies and politicians.
If every mortgage borrower protested by not paying mortgages until the conflict of interest at hb&b was removed. that is the most American thing we all could do!
"Bad laws go away, if no one follows them"
Re: Do I Walk or Do I Stay?
NYUGrad,
So you are suggesting everyone in America walk from their debt laden home or just stop paying their mortgage?
Cut to visual: People burning their mortgage promissory notes on the courthouse steps moments before the home is auctioned to the highest bidder? I think the end result would be devastating on several levels: for starters, there would be no lenders for home loans except private money so rates would quadruple. Small business would be hobbled by a lack of banks big enough to take on speculative risk balanced by profitable mortgage loans. New demand for rentals would create instability of supply and rent volatility. Oh the list goes on...and believe me I am the last person to defend HB&B. I deal with their idiocy every day.
I'm just asking for a thorough 'what if' scenario. We have no precedent for a massive walkout.
Re: Do I Walk or Do I Stay?
ALOHA!!
I'm just asking for a thorough 'what if' scenario. We have no precedent for a massive walkout.
Sure we do ...
Essentially one man took down the British Empire ...
GANDHI
He was the pioneer of satyagraha—resistance to tyranny through mass civil disobedience, a philosophy firmly founded upon ahimsa or total nonviolence—which led India to independence and inspired movements for civil rights and freedom across the world.
LINK: http://en.wikipedia.org/wiki/Mohandas_Karamchand_G...
The political and banking monopolies now in charge of America's destiny was no different than the British Raj that was in charge of every aspect of India's destiny with no input from the people of India, until Gandhi.
Gandhi organized many peaceful, non-violent protests of "non-participation" that completely baffled the British Empire and led to India's independence. What we forget here in America is that WE THE PEOPLE ultimately have the power not the politicians or the banks. WE THE PEOPLE were given the power in the US CONSTITUTION and the DECLARATION OF INDEPENDENCE and the BILL OF RIGHTS. DC and WALL STREET do not own us unless we allow them to. Nobody wants to acknowledge what is truly happening here in America. It is a power struggle and WE THE PEOPLE are starting to wake up. God knows nobody in DC or WALL STREET wants to see that happen.
Re: Do I Walk or Do I Stay?
Kaimu,
You know I was thinking of Ghandi and his hunger strikes, walk to the sea to make salt and refusal to bow to British laws, taxes and separatism during his era of unprecedented peaceful demonstrations. Of course he couldn't prevent the division of Pakistan or mass riots but his unofficial leadership did mentor the Indian constitutional process. If only we were that brave.
Perhaps the walkers are as good a start as we will get...like 40,000 politicians at the bottom of the sea?
Spanish bowing to EU pressure - cutting public salaries/spending
Little imagination required to understanding real/psychological impact this has on consumption/investment for the country. One can see European neighbours looking at Austerity packages next door and tightening the purse strings themselves. Double dip and deflationary spiral here we come.
http://www.telegraph.co.uk/finance/financetopics/f...
I wish I could get a handle on a PM setup, but I see now John Lee's entry into select gold miners was perfect. Not chasing here.
Re: Do I Walk or Do I Stay?
Not forever, but yes. Until the conflict of interest is removed in hb&b and dc
But don't worry. Fear runs strong in consumers hearts.
Euro is not cooperating
1.25617 print
Re: If you conclude you'll be perennially underwater, - WALK !
Jock,
I totally agree with your views on taking a walk. The problem in my city is that most of the people now under water paid a healthy amount down and paid faithfully as long as they were able.
The nearly total ignoring of the jobs losses and spinning of the current numbers has left them with their biggest (only in some cases now) asset as an anchor. No cash, no way to migrate, no prospects, no hope (audacity or otherwise).
There are 12 homes for sale within ten blocks of my house. many have been on the market for at least two years. Last week I saw my first foreclosure sign. The banks don't want to own any more of them.
Our largest bank, Amcore, was taken over by the fed last month and is now Harris Bank. The son of a friend, a 20+year employee lost his job and now finds he's lost his medical savings plan there as well and probably his pension.
--------------
Q: "How do you locate and purchase 17 tons of gold between one day's close and the next?"
A: Visit a lot of garage sales?
What Would Jim Grant Say?
My take on the inflation-deflation 'epochal' argument.
Grant's "Mr. Market Miscalculates" is outstanding
http://ronsen.blogspot.com/2010/05/what-would-jim-...
Re: If you conclude you'll be perennially underwater, - WALK !
Grym - What a sad tale. The media should cover situations like your neighborhood's - but surely won't as long as corporations own the media !