Bill Cara’s Blog for Oct 15, 2010 [See post-close report]

Good morning.

POMO Injection Scheduled For Today.

8:30 - CPI +0.1%
8:30 - Retail Sales +0.6%
8:30 - Empire Manufacturing Survey 15.7 (+11.6)
9:55 - Michigan Sentiment
10:00 - Business Inventories
14:00 - Treasury Budget

Bernanke Flapping His Gums Right Now.

Charles Schwab (Cara 100 SCHW) reports before the bell. .10 vs .09

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ATVI - Activision initiated with a Neutral at Longbow.

GOOG - Upgraded to Buy @ Caris & Co. PT Lifted from $550 to $700

GOOG - PT Lifted from $600 to $650 @ Stifel Nicolaus. Buy

GOOG - PT Lifted from $600 to $690 @ RBC. Outperform

GOOG - PT Lifted from $600 to $650 @ Benchmark. Buy

GOOG - PT Lifted from $600 to $640 @ Oppenheimer. Perform

GOOG - PT Lifted from $630 to $650 @ Kaufman Bros. Buy

ICE - Intercontinental Exchange initiated with an Outperform at Wells Fargo.
Valuation range $130-$135.

WFMI - WFMI gets a Buy-from-Hold hoist at Jefferies, which assigns it a price objective of $45.

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"I have never seen more Senators express discontent with their jobs....I think the major cause is that, deep down in our hearts, we have been accomplices in doing something terrible and unforgivable to our wonderful country. Deep down in our heart, we know that we have given our children a legacy of bankruptcy. We have defrauded our country to get ourselves elected." — John Danforth (R-Mo)

A lot of seesawing this morning. I like silver, energy, agriculture, and staying nimble. The uncertainty caused by the unknown future of the dollar is ridiculous. How can one make solid plans for the future in this environment? Glad I'm not a business owner.

For reasons stated earlier...

Sensing panic in the banking sector.

but shorted SLV/SLW on open when I saw dollar steady and gold weakening some. I also got ZSL and holding DZZ and short DBA. The bad news is I was stopped from part of UNG.

Edit: So far so good and if the trend persist till the close we'll got ourself a shooting star on the SLV and GLD charts.

Thanks TOF and Dave for moral support yesterday as the dollar thing was uneasy.

The ultimate divergence as the indexes approach 52-wk highs...

DIS - price target higher at Citi. DIS price target raised to $39 from $37. A late cycle media play. Maintain Hold rating.

FSLR - numbers increased at Goldman. FSLR estimates were raised through 2012. Increased scale is improving visibility. Buy rating and new $165 price target.

GILD - numbers increased at Jefferies. GILD estimates were raised through 2011. Base business continues to drive growth. Hold rating and new $41 price target.

GOOG - estimates, target increased at Citigroup. GOOG estimates were raised through 2011. Company is seeing positive fundamental trends. Buy rating and new $725 price target.

GOOG - estimates, target upped at Goldman. GOOG estimates were boosted through 2012. Company is seeing better paid lead growth and has new opportunities in display. Buy rating and new $700 price target.

JCP - Downgraded at Barclays to Equal Weight from Overweight. Valuation call, Barclays said. Price target held at $30.

MCD - estimates increased at Oppenheimer through 2011. Company should benefit from the weaker dollar. Perform rating.

It could be toast, BH. I just don't think so.

(a) I have no desire to be chasing anything right now.
(b) On the other hand, the 'blood in the streets' selling in banks has me buying.

It's really kind of a strange feeling.

DAG 'broke out' a short while ago at $6.75. I'm a seller but also understand that it is possible to buy high and sell higher.

Good luck and be careful.

http://tinyurl.com/27c7uql
AUST. REGULATORS GIVE NOD TO TAKEOVER OF ANDEAN RESOURCES
Posted on: Fri, 15 Oct 2010 03:38:54 EDT Symbols: GG, ANDPF
PERTH, Oct 15, 2010 (AsiaPulse via COMTEX) --

Australian-listed Andean Resources Ltd (ASX:AND) says its Canadian suitor Goldcorp Inc has been given the nod from Australian regulators to take over Andean for about $C3.6 billion ($A3.62 billion).

Good long term. All that extra debt, short term could be an issue. Still I placed a bid for a few shares this morning.
FD: No position presently.
J

Looks like a war between the TBTF banks and homebuilders that seem to want to sell off, and retail and tech, which want to follow google higher. The rebound in the buck back to 77 helped nudge things over the cliff, but not far enough to cause any real damage.

Where it goes from here I think depends on who wins this tug of war.

If there was a "banks that own mortgages" ETF, it would be down a whole lot at this point.

Interesting that bonds are still weak today. At some point the Fed will have to take notice and let this market fall, or else there will be no bids for treasuries and that will spell real trouble.

not trying to start an argument, but if you believe in what you are saying why did you invest long UUP?

As long as the FED keeps buying bonds and giving banks the money to buy them, I think bonds will be fine. Bernanke made it clear interest rates are too high in the short term. I'll be amazed if the fed funds rate wasn't cut Nov. 3rd to 0%. I'm thinking in 2 weeks we'll see a higher bond yield than all of 2011.

The banks definitely need the money. The FED would have to pay for their failure anyway, might as well do it now. Looks like a good bit of it will end up going to the states. They also need the money.

If only Obama had the balls to give a fire side explanation of the whole situation. The people would be able to make the right decision in November and this circus show could come to an end.

The buck today rallied right back up to old support - 77.17 - and then the rally failed, and folks started to re-short it again (or so it appears to me). I have no good feeling one way or the other about what will happen to it today. The rally today could have just been a dead cat bounce. UUP's MACD looks like its close to turning up, but ...

Whatever happens to UUP, I'm guessing it will take equities right along with it.

i think at this point, pomo is open 24/7 through the trashing of the USD or buying of other currencies.

Thanks for the heads up. Could move the currency markets.

Argues to be long the banks - especially BAC

http://www.cnbc.com/id/39686897

Schleppy - very good article. Makes sense to me, if there's a way for the politicians to save the banks through ex-post-facto legislation, they will do it.

Much like BP's hole in the gulf eventually got plugged, so will this hole. And it makes sense that the plug will be a systemic remedy, bought and paid for in Congress. It might take some time to sort through what needs to be done, legislation-wise however, so timing will be key. We could have a few weeks to a month of flopping around before something comes to pass.

Speaking of which, buying BP immediately after the spill would have been a bad idea...

Google and Apple alone could account for that.

Dave:
catching a falling knife labeled UUP

I may actually work (I hope as I'm short SLV/SLW/GLD/DBA) and there is plenty of negative divergence on TA, but it is still (I mean was) technically a falling knife.

Just as stocks that shrug off bad news and go higher, Gold selling off despite Bernanke stating his case for more QE has to at least give gold bugs a pause. Remember:

5 day: +1.49%
1 month: +7.81%
3 months: +13.02%
1 year: +30.00%
5 year: +86.82%
10 year: +451%

This is supposedly a currency so for a currency these moves are insane.

FD:
Long DZZ and DGZ and long Dec $130 puts.

ALOHA!!

This is supposedly a currency so for a currency these moves are insane.

Well, then TF next time you see the USD trading on the COMEX let me know!

jack - we ain't in the money yet until we sell. and even then it aint much of a gain (at least for me). the hardest trade is going against the grain. i am willing to get stopped out for a loss on this. I'm sure Vad is thinking: Why short here when there hasn't been an obvious break in trend? well, if the banks tell me anything it's that i won't have time to hop on the short side in the event of a break. I can't sit and watch the tape all day long so I'm just taking a shot at what I think is a shortable top. Its the same thing as buying at 1,050 back in late August: just do some research, go with your gut instinct and take a shot. Waiting for trends to change tends to cause me to get faked out too much.

I agree with you on the ST take but disagree on the LT view. If QE succeeds (whether its QE1, QE2, or QEn) and inflation rears it's ugly head (remember we see inflation in every-day's life but it's invisible yet to the Fed), gold will go ballistic. It will be choppy trade though. I'm thinking late 1970's replay (all of that: gold, oil, dollar, stocks, and return of republican president).

jack -

Yes I'm completely there with you, UUP is a falling knife. All I can say in my own defense is, I waited a long, long time for it to fall before jumping in, MACD suggested it was about to stick, and I saw bullish divergences on the RSI. But really, it's about this: sometimes I'm a little early getting into trades. If I were more clever, I'd have waited until it hit 75, since that level would be much more of a sure thing.

ALOHA!!

One of my more recent accumulations is Golden Reign Resources(GRR:TSXV). Up 16%+ intraday today on no news which must mean there are some great assays about to be published. For an early stage explorer what else could it be?

CHART LINK: http://tinyurl.com/26gz9ou

My average buy-in was $0.16CDN in August, two months ago, profit 200%. All shares were purchased on the open market TSXV. I will add more based on assays but I will not chase the price unless assays are spectacular and even then the best way to accumulate shares is through a Private Placement(PP), which is sure to come for an early stage explorer like GRR. Early stage equals high risk ...

FD: 200,000+ shares

Did you pick up some chips over at the FAZ table?

It's done!

http://www.spiegel.de/international/europe/0,1518,...

Can anyone explain the move in $LVS from a fundamental analysis point of view?

I just don't see it. I can see from TA what has kept someone in the trade but it just looks way over valued to me.

Short at $39.11 - 2nd attempt, I was short around $31.xx and was stopped out when it broke out of that base a few weeks ago.

Daily, weekly and monthly RSI are also high

Jack - I think the odds of a long term top in gold being in place are low. I believe my trade should be a short term one. I have believed for a while now that the global economy is stronger than most people think. While gold bulls believe this is supportive of further demand for the metal, at some point demand falls off as prices rise. Having recently shopped for an engagement ring, I can tell you that the price of gold has made rings a lot less affordable.

In addition to this, a stronger global economy generally speaking means an easing or pullback of economic stimulus. We have seen this in Europe and a lot of the stimulus in the US will be going away starting in q4 2010. Additionally, countries like Canada, Australia, China, and India have been gradually increasing rates to ward off inflation. I think a lot of gold bulls are focusing more on the sluggish growth in the US as a reason for gold prices to continue to go up but a good portion of the rest of the world is experiencing rapid economic growth and instilling anti-stimulative policies.

So I think there is a case for Gold putting in a major top here if global growth continues to accelerate. If I had to bet (well, I guess I am betting) I think any pullback will still be a temporary one, though, and a prelude to a final thrust higher which is coming soon (if it hasn't already occurred). Given my gold short position I'm not opposed to this being the top.

Looking at the daily back when it stopped you out around 31, and comparing it to now, do you see any difference? Same chart... If it could overcome high RSI back then, why can't it now?

Read yesterday's Catch of the Day and ask yourself, aren't you doing exactly the same thing, by trying to catch reversal at each pause? Then the thing consolidates for a while and breaks out again... why do it many times instead of getting in on clear reversal?

(US) Treasury Dept confirms it will delay semi annual currency report to after G20 meeting in November
- Delay to take advantage of the opportunity provided by the G-20 discussions
- important for China to keep loosening its grip on currency

most bubbles have the public involved, pretty much what makes them no?

historically we are no where close. jmho

Thanks for your advice Vad. I really appreciate it. I'm putting a stop loss to cover at 2% and see where this goes. I had it at 5% but I also looked back at the previous high volume days and 2 out the last three have been up so I guess that shows more accumulation.

Gilead looking nice today - hopefully get close over $37 today. Nice breakout on the daily of the $35-$36 area. Should be clear to $40 level. Volume nothing spectacular though...earnings on Tuesday the 19th.

Long w/ avg of $35.06

14:12:18
Former Countrywide CEO Mozilo and two other execs agree to SEC settlement; Mozilo to pay $67.5M settlement
- Mozilo to pay $22.5M civil penalty and $45M disgorgement. Former exec Sieracki to pay $130K.
- Settlement terms include no admission or denial of guilt.

In his essay from Sep 17, 2010 Armstrong argues against the idea that gold is a hedge against inflation. If that were the case he argues it would never decline and should keep up with CPI in spite of manipulation. Rather he believes it is a hedge against instability and gov't default.

http://www.martinarmstrong.org/economic_projection...

If you ski you know lots of skiers, if you trade you know lots of traders.

When people you ski with start talking about gold then we have something that is bigger picture, but when traders are buying gold etf's it is something I would expect and does not represent the publics involvement or a bubble imho.

When Nortel was in a bubble it wasnt your trader buddy that alerted you to the bubble,(he was probably shorting it at that point) it was the taxi driver, lawn care maintenance guy, and the newspaper boy. If they start talking about gold it might be best to get out. Until then the hardest thing to do will be to stay on the bull for the entire ride,where most of the money is made perhaps?

People from outside my trading spectrum of friends haven't got a clue or interest in gold. Not one bit to be honest. Even my trader friends are more heavily weighted to anything but gold, commodities mostly....

So, (just my own interpretation or thoughts)until such time that the public gets involved you may expect the unexpected from gold, public participation will be overwhelming and unexpected when it happens. Traders will be shorting it all the way up unaware of the underlying propelant which is really in great part them shorting it. That is what I am watching for or anticipate down the road. Haven't got a clue when.

I call it Cab Driver/Shoe Shiner indicator. Start closing your long when your cab driver tells you to go long and open short when your shoe shiner joins in. I may put a scientifically-looking CDSS Reversal Indicator label on it, for copyright and patent purposes.

Mokat - "Lets see gold's price in US Dollars when the dollar index is setting at 50 or less."

I think if the USD goes below 74 its status as the worlds currency reserve will essentially be over, and a global currency administered by the IMF will happen sooner rather than later. Allowing this to happen now would be a flag of surrender as it would be an admission that US has been usurped by China as the worlds dominant economic superpower. I think the US is caught between a rock and a hard place, and if it does defend its dollar then perhaps there will be less QE2 than markets are expecting.

If Comrad Bernanke loses control of the dollar devaluation (he seeks an orderly one) and a dollar panic ensues,
I assume equity and bond holders will all rush for the exit door, a trampling of great magnitude will develop.
Prey to the deity of your choice that this does not happen.

QE is good for bonds if Bennie is buying them.

Print Money> Inflate Assets-stocks, bonds,commodities> Increase
Consumer and Lender Confidence> Consumers Resume Borrowing and Spending Rebounds > New Jobs>
Tax Revenues Rise. Depression over......Then all is well in land of the free and home of the brave.

Remember the scene in an old James Bond movie where he is playing Global World Domination, an electronic game
owned by his nemesis, where the joysticks are wired and the shock increases until one of the players can't hold them. He, then is the loser. The winner controls the world. The scene is set in a Euro casino. Bond wins after an initial loss. He settles the 100k bet for a date with Domino. Bernanke is no James Bond. As the sun set on the British Empire
so is it about to set on the American one. Hopefully... we will survive and evolve into something better.

Someday, TBT should be a real winner unless the dollar falls faster than TBT rises or the counter party can't pay.

Or you can give Bill's team the job of managing it. :)

Bernanke really said inflation is too low? I dont have enough eye sockets to roll my eyes far enough.

Bill, I'm worried about what happens to gold every time the buck shows some strength. Today is just a minor pullback, but if the buck strings together a few up days, gold could unwind pretty quickly. Just my concern.

Agreed about oil's larger move today - and it was even more dollar sensitive today than gold. Then again, I don't own oil, so I'm not paying as close attention to it. :)

Nice chart tbar. You're right, I'm just focusing short term.

tbar,

when the dollar finds footing and bounces up, that should cause gold to pull back, and scare the markets in general. But ofcourse causality isnt so clear these days. Now that i am looking for a entry into gold, i am sure it will just keep climbing when the usd bounces for a little.

Total mortgage debt in the US: $10.3 Trillion.

Bear 30B, TARP 700B, stimulus 800B, MBS + treasury buy 1700B, AIG 200B, GM 50B.

Ballpark $3.4ish Trillion?

At the rate we are going, and the assumption the Fed will continue their debasing activities, wouldn't it have been much more productive/constructive for them to literally just pay everyone a % of their principal free and clear?

Then the banks balance sheets wouldnt be as toxic, unemployment wouldnt have persisted at this pace, etc etc.

Sure the debasement of currency would have been the same. but at least the money would be sitting in the value of the home. Not sloshing around in treasury purchases and at the hands of super computers, not being re-invested into growth. and we would also have avoided the pending foreclosure debacle.

EDIT: someone on cnbc said BAC is trading at ridiculously cheap value to their tangible book. Well sure. you can call a pig a swan all you want. its what is hidden inside their butt hole that is the problem.

ALOHA!!

Bill and Dave-Here is how I look at the POG historically.

1975-2010-CHART LINK: http://www.kitco.com/LFgif/au75-pres.gif

FROM-TO
1976-1980 - POG 8X
2002-2006 - POG 2X
2006-2010 - POG 1.9X

The approximate rise in the POG today, 2010 compared to the rise in the four year period from 1976 to 1980 is much LESS parabolic. Now the other side of that coin is the FED FUNDS RATE increased from a low of 4.65% in 1976 to a high of 18.9% in 1980. For those who believe that the POG will go down when the FED raises rates think again, as rising rates are the product of riskier debt not a safe harbor. Imagine if current FED FUNDS RATE rose the same percentage as 1976 to 1980 then the rate in four years would still be slightly higher than 1%. How in the hell would that convince anyone to sell their gold and silver LIABILITY hedge? Now if the FED FUNDS RATE rose to 18.9% from the current 0.25% then the US Treasury would be broke given the many trillions of current debt to service. To raise the FED FUNDS RATE to 18.9% from 0.25% is a 7500%+ increase not a 400% increase in 1980 ...

Hummmm ... BIG DIFF!!!

Like they say-when your barber and the taxi driver start speaking about buying gold and what mining stocks they are buying it's getting time to start looking for the door; parties about over then. We've still got a ways to go yet; buy the dips and enjoy the ride.

So, did traders take home banks for the weekend?

On a day when the market was up slightly, and when tech was up nicely, we had:

BAC: off -4.92% rel vol 3.81
WFC: off -4.5% rel vol 3.85
STI: off -4.69% rel vol 2.19
JPM: off -4.05% rel vol 3.95
C: off -2.71% rel vol 2.41

Most closed relatively close to the lows of the day, which tells me the answer from traders was "no thanks." The massive volume says this is no joke, and that holders of the stock just want out at whatever price they can get. BAC made a new 52 week low today.

This is election season. All of the state Attorneys General are public elected officials. Banks are currently not well loved, and every state Attorney General has aspirations on becoming Governor. My prediction is, this will be an issue all throughout the next three weeks prior to the election, and no state official will want to be seen as "soft on banking."

This mortgage crisis seems like the "BP oil spill" for the banking industry. It will get plugged eventually, probably by ex post facto Congressional action once the banks figure out what sort of magic new law they need to make all their chicanery legal (and the congress weasels figure out what sort of form this will take that will best get the US public to swallow another batch of pro-bank lawmaking). But it certainly won't get done before the election.

In a normal environment I would load up short and watch bank stocks get pounded for the next few weeks, but given the amount of intervention that now happens routinely in the marketplace, I remain content with my XLF puts and I can let someone else take the big risks (and make the big bucks).

And like BP, it might pay to watch market price and volume activity to see when the smart money was loading up - probably when things look worst, and analysts have released new downgrades for all the usual suspects. The trick I look for is very high volume, and no price movement. That's accumulation by someone with deep pockets, and that's when I will buy.

(a) A bank robber is usually defined as one who robs banks.
(b) You could also turn it around and define it as a bank that robs its clientele.

(c) Willie Sutton would be a good example of a bank robber. Angelo Mozilo would be a good example of a bank robber courted by banks.
(d) Countrywide would be a good example of definition (b).

So, did traders take home banks for the weekend?

I did.

Most closed relatively close to the lows of the day, which tells me the answer from traders was "no thanks." The massive volume says this is no joke, and that holders of the stock just want out at whatever price they can get.

Those are my kind(s) of stocks- I had a gas flying airline stocks during their 2009 nosedive.

I remain content with my XLF puts and I can let someone else take the big risks (and make the big bucks).

I'm in complete agreement there. My preferred 'backstop' is position sizing. A 5-6% maximum stake in any company, acquired in 20% allotments. Together with multiple entries/exits along the way.

But it certainly won't get done before the election.

I expect a great show at Gilley's the next few weeks.

2nd,
I consider this statement as the most valuable thing that came my way today, and I had a good day in the market.

"My preferred 'backstop' is position sizing. A 5-6% maximum stake in any company, acquired in 20% allotments. Together with multiple entries/exits along the way."

Thank you!
J

So, did traders take home banks for the weekend?

On a day when the market was up slightly, and when tech was up nicely, we had:

BAC: off -4.92% rel vol 3.81
WFC: off -4.5% rel vol 3.85
STI: off -4.69% rel vol 2.19
JPM: off -4.05% rel vol 3.95
C: off -2.71% rel vol 2.41

Most closed relatively close to the lows of the day, which tells me the answer from traders was "no thanks."

But... who did then? There was a buyer in every sell transaction, wasn't it? :)

Thanks for pointing that out, Vad. I would encourage anyone interested to load 2-yr charts of BAC, WFC, STI, JPM and C (what the heck- include GE, which also sold off 5% today- its two-year chart makes the point even more dramatically)- and note the pattern of price moves following high-volume sell-offs.

Bailout cost:
Politico: Cost could end up at $23T - http://tinyurl.com/mnrqrs

Human Events 8/2010: Cost nearly $4T...The dollar figures are breath-taking enough. The amount spent thus far on bailouts exceeds the inflation-adjusted cost of World War II ($3.6 trillion) http://tinyurl.com/25ghk4m

PRwatch 4/2010: $4.6T http://tinyurl.com/yljku75

Ourfuture.org 4/2010: $4.6T http://tinyurl.com/27eyq3k

I see the usual information overload while trying to get a handle on a dynamic, incomprehensible number that is in the interest of powerful parties to obfuscate. $4-$5T spent so far is probably as close as we will get for now. But...there are all those loan guarantees and fed/federal backing of depreciated assets of questionable value. So the "money spent" figure is undoubtedly less than the total liability figure that our politicians were so kind as to place on the back of the U.S. taxpayer.

I hope that helps.
J

At the risk of using the cliche' "it's different this time" and without knowing what special events were in play during previous high-volume sell offs, my take on today was -- concern over the "gathering dark clouds" represented by foreclosure lawsuits brought in all 50 states.

J- Let me quote a source I trust-

'What has been will be again,
what has been done will be done again;
there is nothing new under the sun.'

-Ecclesiastes 1:9 (New International Version)

Vad - The answer to your question is: In the absence of a retail buyer, the Market Maker.

If there is a retail buyer and retail seller on the other side of every transaction, then: Fair market value is the price a ready, willing, and able buyer will pay and a ready, willing, and able seller will accept for property under reasonable and ordinary conditions.

Therefore, why would the price change? Except that a buyer or seller would test the price. Clearly, the buyer would test the price to the downside and the seller to the upside. Today, it appears the sellers were not very resolute as far as the banks were concerned.

If only that were the end of the equation. Now add the the 'market maker' and the lack of transparency regarding the market makers (and other represented participants) actions.

How many of the buys today were retail buyers? We know of at least one (ahem, 2nd ave). How many of the sells were retail buyers (anybody?)? Or was it an induced sell (Did the market maker goose the sellers)?

As they say in Oz, Pay no attention to the man behind the curtain.

ALOHA!!

I would encourage anyone interested to load 2-yr charts of BAC, WFC, STI, JPM and C (what the heck- include GE ...

Okay I did that ...
2 YR CHART LINK: http://tinyurl.com/2fhgbvd

A different two year chart aspect from the "buy and hold" side ...

You can look at this chart as trading companies "under the radar" versus well worn TARPed out media maven BAILOUT debt machines. You can stick to the path most traveled or the one less traveled. All these "under the radar" companies(the ones with 100% returns and more) have no net debt. Can any of those banks say that? Can any of those banks say that without their US FED and US Congress "slash" FASB crutch? In fact those bank stocks look like boat anchors in comparison mainly because they are loaded to the gills with the wrong currency. That's what I call a "submarine portfolio" ...

So after holding the "best" bank stock(JPM) for two years you end up with a 0% return. Look at "C" as it is off the chart 0% squared ... So many times that stock was touted on Seeking Alpha over the past two years and in the comment section I always posted what a waste of time it was as none of the fundamentals have produced a dime of shareholder returns except for the CEO execs.

What this chart shows is "buy and hold" is not dead, but "buy and hold" mainstream MAD MONEY debt ridden crap is.

That is how I see it ...

http://articles.mercola.com/sites/articles/archive...

Oh Vad you're right, I mis-spoke. Blame it on being 5am for me when I posted. Clearly there were buyers for every sell order.

The question I really have is, is the market showing any real buying support for the stock, or is the selling pressure overwhelming the buying pressure? Today, more folks wanted to sell than buy. Same thing happened yesterday. Price dropped until some buyers appeared.

Could be folks put in stink bids that got hit. Could be pension funds buying because the stocks show "good value" according to some metric. Could be bargain hunters who sold earlier in the year look at the current discount and say "hey that stock is on sale, let me get some more of that." Could be shorts who were happy to cover after a 10% gain in two days, and wanted to wait for a rebound to re-short. Lots of reasons to buy.

But in a disaster story like this, where like the Monica Lewinsky scandal "truth is told slowly", and more bad news dribbles out every day, I like to buy when the big money is buying. And I only know that when the intraday charts show me some action that demonstrates this through price and volume, otherwise I end up buying something that is vulnerable to renewed selling pressure and it may just continue down the following day.

Big money buyers are no guarantee of success, but at least you have someone clearly willing to employ a lot of money at a given price point, and that makes the trade much lower risk. At least in my experience. And for me its all about lowering risk.

I love these disaster stories. Its when price & volume really shines for me.

Oh time frame is important too. I'm not a day trader, I'm a swing trader, and I'm looking for a swing trade entry point.

"....it seems obvious that we are in a period of stagflation -- slow growth and inflation."

Fleck's take on deflation and the Beard:

http://tinyurl.com/2eaucs9

Vad - There is a distinction between the market maker (or specialist) and everyone else. We would all like to be the market maker. But we cannot.

You asked "How do we know it was retail who sold and market makers who bought?" That is the point, we cannot know. Nor can we necessarily be on the side of the market maker if we do not know. The market is purposely not that transparent.

I think critical to our discussion is defining the market maker. According to wikipedia, a market maker can make money in both rising or falling markets, by taking advantage of the difference between "bid" and "offer" prices.

They have the advantage in information, can do things we cannot and get rebates from the exchange or are in a sense made whole for buying and selling.

In my mind, the market maker in the stock market is the equivalent of the Pawn Store owner in the real world. The exception is that the market maker controls a very limited market in each stock.

I called a pawn broker last week to see what they pay for a 1 oz silver coin. Their quote - $10. Right, with those odds, it is very hard to lose. Yes, we would all like to be market makers.

That is why I think it is a fallacy to say there is a buyer for every seller as if the market is a true representation of fair value. To say such a thing assumes there is only the retail buyer and seller and not the market maker. Perhaps if buyers and sellers could pay more attention to what the market maker (pawn store owner) were doing we might be a little more judicious in our purchases or sales.

Andina (ADM.V) having found a large occurrence of gold during exploration has declared an 8M+ ounce M&I gold resource in the District Manicunga, Chile (not far from the now-world-famous San Jose mine) which is being advanced through pre-feasibility and feasibility studies (to assess how economic its ore is, given expected gold prices).

At the helm of Andina is George Bee, an English-born US citizen with an impressive track record. Mr. Bee finished construction of Barrick's Pierina mine in Peru, and put it into production. He built Veladero in Argentina, also for Barrick. He was later COO of Aurelian, which sold their massive Ecuadorean Fruta del Norte deposit to Kinross. Now Bee aims to take the Volcan project through pre-feasibilitty by Q1/11.

Within 50 kms of Andina's "Volcan" deposit are major operating mines or projects of Yamana, Kinross, Exeter, and Barrick/Kinross. In the Andes, deposits are often high tonnage, low-grade, copper/gold -- with great metallurgical and economic challenges. While many cost billions to develop, Mr. Bee maintains that current plans for Volcan (with its primerily gold content) call for $600-650M in capital.

For those who already have projects (and have built facilities) nearby, the economics of Andina's Volcan may prove particularly compelling. Expected to produce 300K gold ounces annually at between $500 and $600/oz cash cost plus $200/oz capital cost, Volcan's costs would be lowered for a producer with infrastructure already in place.

Senior mining companies generally prefer to buy projects which have been "de-risked". As a rule, they'll pay more to avoid what might turn out a wrong decision. I expect Mr. Bee's Barrick experience affords major skills and credibility in this area. For example, Andina has already acquired crucial (and hard to obtain) water rights. His involvement in Aurelian's sale to Kinross suggests he knows how to package and present a deposit for sale to a senior.

What if Andina (due to a "double dip" or to conditions within key seniors) have to spend more time and money than planned, and possibly to take steps towards production beyond the "feasibility" study ?

With luck, such measures would increase the price ultimately paid. So, what could go wrong? One thing NOT likely to go wrong is regulation and politics. Chile is the best mining jurisdiction in S. America; most likely buyers already operate there.

Were there a protracted economic downturn or another "credit crunch" any sale might be pushed far into the future. It's conceivable the company could run out of money while waiting. Currently, Andina is cashed up with $32M having raised $40M in 2009, and doesn't expect to need to raise funds till end of 2011.

Although Andina has two other projects, the company DOES have a lot of eggs in the Volcan "basket". Should oil prices rise dramatically (as in the first half of 2008) the economics of a primarily open pit operation could be impacted.

Still, senior gold producers face increasing demand with decreasing supply of large deposits to replace the reserves they produce each year. Volcan has 8M+ ounces. Andina has just doubled its land package just doubled; only 10% of this land has been explored.

Given plans for achieving "reserve" status in 2011, Volcan seems a relatively secure bet, without the downside of many juniors, whose projects are at earlier -- and more precarious -- stages of development.

If Andina sits at one end of the junior risk/return continuum, Mr. Bee's previous project, Aurelian, surely occupies the other end: fifty times -- 5,000% -- share price increase over 7 months as Aurelian's 14M oz. high-grade deposit advanced from first drill results to first resource calculation. "

It's reassuring when a CEO's experience (like an investor's portfolio of juniors) spans the full risk/return continuum.

Details, details! (sorry)

Both Peter Schiff and Jim Rogers tend to be a bit dramatic, if you look at the headlines they generated in past. March 2009 they were predicting worldwide civil unrest during the market panic, which never happened, and they have over the past few years been calling for massive hyperinflation. Sure, gold has gone up, but today we have even Bernanke worried about deflation and some worry now that we will enter a long period of stagflation like Japan has been in since 1989. Always two sides to any story, but I take sensationalist headlines with a grain of salt.

The question I really have is, is the market showing any real buying support for the stock, or is the selling pressure overwhelming the buying pressure?

dave- I don't think anyone really knows. We all have our own approaches to trading, most likely forged from the fire of experience. The 'swords' we use are further ideally suited to our individual temperaments.

Your trading method dovetails nicely (based on what I know) with Bill's 'RSI approach'- rather than buying simply because a stock falls to the AZ, you wait for confirmation of buying interest (a Buy Alert).

For reasons too complex for me to understand, I enjoy wading into areas of desolation to carve out gains.

I may be 'early' in the sense of opening positions well north of the ultimate 'bottom.' But that's OK, as I 'trade around' the position so many times, the point at which the original position was opened may ultimately prove meaningless. A good (gaming) analogy might be playing the '6 and 8' for huge gains even if the original pass line bet loses on a 'seven out.'

So your question is a good one from the POV of a swing trade. It's much less meaningful to me- not to the point of 'I don't care,' but (as long as I'm buying on panic) 'It doesn't matter that much to me.'

I have to agree with Dave M.

Jim Rogers, of course, backs up his takes with action- selling his home in NYC and moving to Singapore being one example. But if he's enjoying life in Singapore (who wouldn't), it's not because of his take.

I think we can all learn from Walter Breuning, who after all lived through the Great Depression and two World Wars prior to now watching the rest of us take on the Great Recession.

2nd Ave - "But if he's enjoying life in Singapore (who wouldn't), it's not because of his take."

... I don't know, I still like to chew gum, but I don't pee in elevators anymore.

"Both Peter Schiff and Jim Rogers tend to be a bit dramatic"

Hi DaveM,

I can't argue with that, but have you been following the price of oil, gold, coffee, cotton, sugar, corn, wheat, soybeans or copper?

Do the prices of these items fall into line with Bernanke's deflationary world?

I may be a founding member of DENSA, but I do my own grocery shopping and pump my own gas. My electricity rates have gone up 30% this year.

Surely, Schiff and Rogers views are more in line with economic reality than Uncle Ben's worries about deflation.

IMHO, either Ben is lying, in an attempt to save his banker masters or he is flat out nuts.

Regards,
BH

BH,

I have no quarrel with his conclusion, "...it seems obvious that we are in a period of stagflation -- slow growth and inflation."

But he left out a some important items in this statement:

"It is true that certain assets have declined in price to varying degrees -- stocks and real estate, to name two prominent ones."

In my view the most important ones are wage and benefits deflation. With millions of formerly middle class workers unemployed and even more underemployed this is a period much like the Great Depression, but being masked by the government entitlements of Social Security, Medicare, unemployment benefits, food stamps and local charitable food pantries. Without these the reality of our condition will be possibly worse than the 1930s era.

The increased dependence on foreign energy, the speed of info and job transfers internationally, the almost daily Russian roulette of currency valuations — all are added factors which were not a problem during the Great Depression when we were more of a closed society.

Today patriotism is a dirty word. There has been little or no attempt to keep jobs here and instead legislation has favored off-shoring by big business in the name of free enterprise and free markets.

While our companies are saddled with hard fought protections of health and safety regulations — US expatriate companies increase profits in countries with no EPA, OSHA, FDA, child labor laws — hampering their gains.

I am in favor of trade, but we should require equal ground rules or penalties on imports.

We suffer job loss AND contaminated drugs, dangerous toys, and patent infringement.

Non of these were our Grandfathers' problems. None are being addressed or even mentioned by Bernanke or politicians. Therefore we will see even slower growth with deflation in important categories and inflation in areas where we have little choice — Food, Energy, Health Care and worst of all — Taxes.

DaveM,

In bad economic times, prices on luxury goods like big screen TVs must fall but I'm concerned about the necessities of life like food and energy.

Our seniors have been denied a cost of living increase in their Social Security checks, because there is no inflation. Poppycock.

The price of gold (US) will in large part depend upon how much money Ben prints up. I tend to agree with those who believe that the FED will strongly dilute the US dollar in an attempt to pay off our staggering debt with Monopoly money. If this scenario comes down, there's no telling how high gold can go.

Of course, all of this remains to be seen. I'm hoping that some fiscal responsibility arrives with the new Congress. I'm also hoping to be named Emperor of Japan. ;^)

Regards,
BH

Maybe I am wrong but I think of inflation in terms of what are the things that a poor person needs to buy. Food heat hydro.
Look at the stats from Weimar(near the bottom of this page)
http://nowandfutures.com/weimar.html

Poor people have no choice on needs, if it goes up they still have to buy it.

Cars and big screens are an option,among many other things we take for granted.

On gold in a bubble, here are 50 former bubbles compared to golds recent 10yr rise.

http://www.sharelynx.com/chartstemp/BubbleComparis...

Range bound?
here is a long term study By Ron Griess that suggests we are

http://www.financialsense.com/contributors/ronald-...

On the dow gold ratio, here is a chart I have used since the hs top in the ratio back in late 2002 broke down. It had a po of 9.6 which was hit 6yrs later in 2008. Too bad I can't trade around all that....lol
Maybe we go sideways with that dow gold chart for a while yet, I have no clue, but it does seem to be breaking down out of that flag. So the bankers seem important here to me. If qe2 is coming they won't do it on a whim, there will have to be a good darn reason otherwise the taxpayers are going to be pretty angry I would think(perhaps like never before in the last 30yrs)

jmo, I don't and won't pretend to know.

Tbar, Les

In terms of energy costs, I am paying 30% less for gasoline than in 2007 and 50% less for my natural gas. Electricity is up but not as much as where Bull Hunter is so it varies by region. Sure, some prices and food are going up, but I don't see Weimar Republic inflation around the corner. Corn is inflated again, but is that ethanol related? Corn is better used feeding people than fueling cars. I bet if you priced a Big Mac in 2000 dollars you are probably paying less today in 2010 dollars (and if you left it on a shelf the last 10 years it would still look like it did in 2000).

Jewelry still constitutes 50% of international gold demand, and an article I posted yesterday indicates that demand is slowing in India at current prices, and some vendors are predicting slow sales for this wedding season. Who knows? There are extreme bulls and extreme bears - I'm just not in either camp.

I spent most of the seventies in high school/college, and recall my parents talking about inflation during that period. In spite of a stock market that merely treaded water and interest rates that rocketed up to double digits, I have fond memories of that decade- when we cut back on expenses, we often discover the simpler pleasures of life: bull sessions that last well into the night, board games, BBQs and volleyball at the local park. None of that requires much (if any) money.

There are also ways we can profit from inflation. My folks were able to come out ahead partly by investing in income property around the University of Michigan campus. I just can't get into owning physical gold/silver, but that would be another route.

Whatever the next decade brings, I suggest taking it all in stride. Life is meant to be lived- not taken too seriously, and certainly not filled with anxiety. It helps to have faith in an afterlife. Pain, suffering and grief? All are (necessary) parts of life that we are unable to avoid, nor should we seek to avoid- we're ultimately enriched.

From my perspective, your example shows someone buying just above what other traders were willing to pay and trying to sell for what none of the other bidders are willing to pay at that moment. That seems more like a hope and a prayer than a spread trade. Unless, you have significant influence in the market and can ensure you get your bid or ask before market prices move away. Now, whether the market maker has that kind of control . . . I don't know but it seems to be implied.

I think pertinent to the Dave discussion is more along the lines of whether the market maker carrys inventory. If so, can the market maker be considered a trader in the truest sense of the word?

Also, by your example we are on equal footing with the market maker. Then for what purpose would you say the market maker exists?

Weber says US has confirmed that this is their goal:

http://www.reuters.com/article/idUSTRE69G03620101017

Ross, I think our legal system places the burden of proof on the mortgage holder in order to kick someone out of the home that they currently have the title to. Much like the prosecution in a criminal case must prove that the alleged criminal actually did the crime before he can be convicted. The criminal does not need to prove his innocence. The burden of proof rests on the bank, not on the homeowner.

Certainly we can reverse justice and presume that homeowners are deadbeats until they prove otherwise, but that would be ... well lets just say it would be against the way the founders intended our legal system to work.

"Prove to me you aren't beating your wife anymore."

I don't think we're quite that far gone, not yet.

The issue here as I understand it is, the bank/servicer must have standing to file a foreclosure claim. If you don't own the note, you can't file. And there are Is you must dot and Ts you must cross in order to transfer the note from company to company. FIne print, as it were, that must be followed. It amuses me (at some level) that the banks were so focused on bonuses and committing fraud that they didn't execute on the niggling little details that the law requires, so much so that they are now employing "Forgery, Inc" to fabricate the documentation that provides the standing to file.

It WILL get sorted out, eventually. I'm not certain it will happen in a new york minute, however. Folks in this country are still presumed innocent, and owners of their home, until PROVEN otherwise with appropriate due process.

Using Forgery Inc to fabricate evidence in foreclosure cases is just like cops planting evidence at a crime scene - courts frown on such things, as well they should. Even if the guy is guilty, the system still must prove it in a legitimate way, otherwise there is no justice or protection under the law.

Les, Dave M, Tbar, 2nd,

"Taking it in stride" sounds good, but when you're hit in the face with a serious, life-changing event, not realistic.

In our area (northern Illinois rust belt) for many it is already probably as bad or worse as the Great Depression. I only say "probably" because my memory begins with WW2 when my dad was working six-day weeks from before I got up until supper time. No car (no gas priority card), no phone, but I had a good, secure feeling childhood.

I do remember a lot of family talk a holiday get-togethers of how bad times were — an aunt and uncle lost their business (a service station) and their house. Dad went from bookkeeper to night watchman and stoking the furnace at the brick plant. Only our farming family members were "well off" and the food gifts were lifesavers, or at least health savers.

Here, unemployment has been officially as high as 18.7% and we all know people who are working at diminished income and with no benefits. Others are dipping into 401(K)s and paying 10% penalties.

My younger son (age 45) has lost two jobs, used his unemployment, worked two part time jobs for a while and is now cut to 32 hours. The company where he is has had equipment failures and no money to fix or replace — not likely to last much longer, IMO.

There are reports of former contributors to food pantries now standing in line as customers — over 700 families at last report — in city of 150,000.

The clearest graphic evidence is the increasing number of homes for sale throughout the city and the tall grass in front of empty windows.

Yesterday was the first news report of a $2 million budget cut planned for police protection with firings and many demotions in rank. Fire Dept. is facing similar cuts. Home invasions at gunpoint have been increasing.

The change in outlook can be devastating, especially for the young people who graduate with a diploma or degree and must compete with retirees for no brainer jobs — it is a very discouraging start to adulthood.

Still, I have a friend who has been untouched (age 77 and on a great military pension) and insists things are not so bad because restaurants are busy.

This election will be decided based on unemployment — Obamacare was a major miscalculation on his part.

There are two types of foreclosure processes - judicial, and non-judicial, it depends on the state. The judicial foreclosures - they require court appearances. If the homeowner doesn't come to the court to contest the foreclosure, the initiator of the proceeding (forged evidence and all) acquires title. That's what I understand anyway.

Not sure what will happen to all that vacant property. Maybe Fannie & Freddie will go into the landlord business.

This is all such a waste of time, energy, resources, etc. Families homeless, and homes empty. It just seems wrong.

Bert,

"language barrier," eh? Meaning, you know the subject and you are correct, while I don't know what I am talking about, and it's a language barrier that prevents me from understanding what it is we even discuss?

Let's see.

You do realize that the text you refer to is from the book 3rd edition of which is published in 1996? There were so many changes in the marketplace structure since then, it's not even funny to apply that write-up to what we have today; not even speaking of the difference between specialist (which used be a king of AUCTION type of market) and market maker (which is a player in Over The Counter type of market).

I don't think you realize what happened since then. In 1996, there was SOES, SelectNet, first ECNs just started appearing, specialists were taking phone orders, there was very limited Internet access to NYSE and almost none to AMEX. Over next 15 yeas SOES turned into SuperSOES which turned into SuperMontage; SelectNet disappeared; ECNs matured, consolidated, some of them merged, some went belly up, some turned into separate exchanges and then merged again with main ones. Each of these events changed the way traders access marketplace and dramatically altered the role of both, specialists and market makers - up to practical extinction of specialists.

What I listed is not even half of the changes that took place but even that should give you an idea that your quote from the book of 1996 reads as a bad joke today.

http://bit.ly/dCYMEc

The following author has been reading up on a DB report in which the report's authors didn't use leading indicators to calculate a history of business cycles in the US, but a thought experiment where they worked backwards from the result to create a chart of business cycles in the median/ best case/ worse case scenario

They included results from the present 25 years - the period of great moderation where debt was used to alleviate recessions - with recessions going back to 1854. From this a chart of business cycles was created, with the short story being that the next recession is due between summer 2011 and summer 2012. This, when unemployment and consumption continues to remain trapped in the previous recessionary cycle perhaps explains, in the author's opinion, why QE2 is already being put on the table by the Federal Reserve.

Worth a read.

http://fistfulofeuros.net/afoe/an-unusual-but-inte...

Interesting article in local paper, resonates with me very much:

http://www.timescolonist.com/business/Predict+futu...

ALOHA!!

Les-That application is the tip of the iceberg. A few years ago I owned shares in a mining company CLIFTON(CFTN:OTCB). I bought in not because of the mining aspect but because of this ...
LINK: http://www.americanbiotechlabs.com/

I think silver has a future with this application and as antibiotics break down due to viral mutations and antibiotic resistant strains develop these sorts of applications become more viable.

Here is their Congressional Testimony before the Subcommittee on Africa at the House International Relations Committee back in 2005 ...
LINK: http://www.cliftonmining.com/congressionaltestimon...

As you read the testimony they have tested their products in Ghana, West Africa, so there is yet another Ghana backdoor connection that ties into my current PMI GOLD connection.

FD: I no longer own shares of CFTN

Ross- That's a pretty good summation of the latest 'gate.

(a) Either they own the house or they don't. If they don't, what are they doing there?
(b) If they own the house and can't pay, then go ahead and foreclose on the house.

Do I read every piece of paper I sign when closing a mortgage? No. Do I read every line of every document when opening a bank/brokerage/charge account? No. Does that mean that everything I've 'attested' to is null and void?

All of us (OK, there will always be one or two in the room who claim to have read it all) 'robo-sign' things all the time.

Very much what I feel about most predictions I read. Add to your scenario that if shortly after uneventful take-off "prophets" made a very rosy predictions about how glorious the flight was going to be... and you pretty much get experts throwing all kinds of prognoses, so their misses get forgotten quickly while rare hits get hyped as confirmation of their prophetic abilities. How about TV market guru hyping never-ending winning streak in technology sector, end of "old" economy and birth of "new paradigm" - in Jan-Feb of 2000, no less! Or Big Ben evaluating the housing sector as "going through contained retreat" - in the spring of 2007! Those are the most prominent examples, but really, how many of the economists foresaw the whole thing coming? Even among those few that did see housing bubble bursting, how many realized that it was about much more than just housing? Even while crisis was raging in full power, I continued hearing "Oh, we need to fix housing situation and things will stabilize, after all it all started with housing"...

Not to dismiss experts (real ones anyway) altogether - they are useful in dissecting the present, in helping a layman put pieces of complicated mosaic together. But as far as foreseeing the future goes...

Attached is a transcript for a hearing in a Florida court to re-hear a previously granted motion for summary judgement in a foreclosure case. Lots of things come to light in this transcript that bear on the current issue of manufactured evidence in these foreclosure cases.

To dispense with these cases rapidly (cheaply) in the judicial foreclosure states, lawyers for the banks file motions for summary judgement, based on an affidavit of the information on the loan provided by these document companies. Affidavits must be based on personal knowledge. If not based on personal knowledge, the affidavit is hearsay - it's just a "business record affidavit."

For a summary judgement to be granted, the case must be very strong, because it cuts off a right of a defendant to a trial - one of these pesky constitutional rights that Ross finds so burdensome. (Kidding Ross) The standard for summary judgements is, the evidence must be "beyond the slightest doubt", which is greater than the criminal standard "beyond a reasonable doubt." Thus, the presumption is seriously in favor of a defendant in such a situation.

Because they are hearsay, these affidavits do not meet this burden of proof, and prior to the hearing, the judge has uncovered this with his own research. He begs the plaintiff's attorney for even one case that suggests he can use hearsay evidence in a motion for summary judgement. (There are 50 cases that suggest he cannot)

The running commentary by the judge is also instructive. It reveals a real soul-searching by His Honor about the propriety of what had been going on for quite some time now.

For instance, judges in Florida foreclosure cases have been admitting known hearsay evidence when it is not objected to (i.e. the homeowner doesn't show up to defend himself in court), but this judge has started to think whether or not that is something he wants to continue doing.

He also mused out loud about how he really wanted to see a defense attorney depose some of the people signing these affidavits, to see how the documents hold up under cross examination, with the clear implication that he felt they would not hold up at all. (We know how that part turned out)

To save you the mouse click (and the 30-minute read), the judge ends up reversing himself. Date of this gem: April 7, 2010, six months ago. I'm not sure if this was the match that ended up lighting the fuse, but it might have been.

If you like watching a plaintiff's attorney that seems unprepared, without a leg to stand on, and severely out of his depth get savaged by a well informed judge, you should read it the attached transcript:

http://mattweidnerlaw.com/blog/wp-content/uploads/...

Well I guess I'll remember not to scream that "gold is going to $5k" more than once in your presence Dave :)

Mokat,

"75 workers by the end of the year and up to 150 by the end of 2011. Average wage will be a whopping $12.00 per hour."

When I started my business in 1966 I charged $15 per hour. The thought of what $12/hr today is able to buy after the effects of 44 years of inflation is staggering. Today I filled my tank at $2.99/gallon — back then it was $0.30/gallon and as low as $0.23 when a gas war was on.

I may have mentioned this before, but our city is kissing up to a company which will bring 250 jobs if we give them enough "incentive". An offer of a lease on a $39 million building made to their specifications has been mentioned.

What are they thinking?

After 3 years.....how can there be any documentation left for the attorney generals to subpoena? Not only Blankfein, but how much did Paulson really know before he came running into the White House screaming the sky is falling and I have the only solution?

Asia trading sees the dollar up +0.34 (0.44%) to 77.60, taking down futures of gold, silver, oil, and SPX.

2nd -

I think your and Ross's points are completely valid things to present - at trial. But depriving someone of their home, without a trial, based on (legally) weak evidence is something our system frowns on. Specifically, the proof to just snatch someone's home away without due process requires pristine, incontrovertible proof that is of a higher order than is required in criminal trials. Its called "without the slightest doubt".

And if you read some of the depositions (I have) of the folks who have signed the affidavits that are purportedly such proof, well let's just say they fall way short of being "without a shadow of doubt." The banks know this, and that's why they stopped their foreclosure proceedings. They ran a bluff, it was called, so they folded.

Depriving someone of a major bit of property without trial or due process - isn't that un-american? That's what a "summary judgement" does. And when you add to this the errors in service (proper notification of the case), it means people's homes are taken (sometimes by mistake) and they don't even know its happening.

In the legitimate cases, the banks will likely prevail at trial, but the shenanigans the banks have engaged in really make their own case much more difficult for them to make. All the shortcuts they have taken is exactly why they cannot produce the note, why they are not able to produce a clear chain of title, so they have some flunky at a law firm fabricate (and back-date) a document that is allegedly based on their own, personal knowledge, a document created from whole cloth to satisfy the niggling requirements of "proof beyond a shadow of a doubt."

So to me the real question is, is it ok to fabricate evidence to convict someone who is "probably guilty" so we can throw him in jail without going through the bother of a trial? Don't these homeowners deserve due process, and their day in court? Are banks somehow exempt from having to prove their case?

I encourage you to go read the trial transcripts and depositions on the subject. I found them quite educational.

Fantastic WIR. Thank you for the time you have saved me with such an expansive break down. A question for you if you have the time.

I am trying to learn more about the pricing in of certain situations with respect to individual investments. If you or anyone could offer any advice it would be greatly appreciated. As we know prices are forward looking and the contrary trade (the situation priced in being wrong) offers a good deal of gamable profits if foreseen. I know with individual stocks you can use the P/E ratio to judge what future profit is being priced in and the financial situation of the company for the equity price. However, I find it much more difficult to determine what might be priced in at any given time for commodities and the indexes controlling the broader market. More clearly, how could I better determine what is priced in presently and the general amount a particular input may be effecting the price?

davefairtex,

I agree with you: these shenanigans are un-American.

As someone close to this, I know that many people are being lied to, given false hope, defrauded and ill treated by their banks on a daily basis. I said yesterday to a client who asked about the current banking environment: "Just know you are dancing with the devil and our job is to be sure you stay safe".

Believe me when I say it is not just people who fall behind on their payments who find banks tough to deal with. Imagine your bank listed a late payment (wrongly) on your credit report or kept an old lien on your title that had been paid off years ago or recorded a lien meant for your neighbor's house on yours. These things happen every day and are bloody difficult to resolve.

How did average citizens become so subject to the whims of the powerful names on Bills' WIR? We sold our souls to that devil when we chose dreams of material wealth over sanity. Our educational system is so dumbed down that most adults don't know how to fill out a home budget and feel insulted when asked to account for their income against their expenses.

To your question: "Don't these homeowners deserve due process, and their day in court? Are banks somehow exempt from having to prove their case?"

Enter a person who becomes informed about due process. This person is now elisting their state attorney general, the OCC, their congress person and possibly hires an attorney to systematically unravel an unfair, sloppy, illegal foreclosure. At great personal expense. One fellow was told his bank took his home back 6 months ago (while in the middle of negotations) yet his name is still on title and he is going nowhere while challenging their right to kick him out. Does he have that right to live in his home without paying for his mortgage (while the late fees and interest mounts)? How long can such cases drag out? Years. The only beneficiaries are the attorneys and investors. But at what cost to the fabric of our culture and individuals' lives? Will this person eventually lose his home? Quite likely. Imagine the anguish of living through such a nighmare, added to the several years of financial ruin that likely precipitated their default.

When you say the person is 'probably guilty' of being in some stage of default, the banks in question are equally guilty of lying to their investors about the grade of their MBS loans while also lying to the homeowners about their willingness to offer some means to resolve their situation, while by the way, first setting this person up for a loan they quite probably never qualified for in the first place.

It has baffled me since the first time I heard about the impending reset of so many subprime loans why the hell don't these banks just fix the ARMS and lower their rates to prevent this very crisis they engineered? I guess you could say if they knew their own packages were rigged to explode they must have had a plan to benefit---oh yes--that's right all those buy back FDIC and Mortgage Insurance schemes to help them recover their 'loss' on notes they probably bought at a firesale of a failed mortgage bank for 50 cents on the dollar. These are, to my mind, criminal institutional mechanisms that actually encourage a bank to foreclose and benefit by first enticing a consumer into their snare.

Should that fellow have gotten a $400,0000 mortgage on his questionable income? It's just too obvious to me that the brightest minds in banking not only saw this coming but engineered the entire thing with more than willing American dreamers. The easing of lending standards to foster greater home ownership and urge people to move up the ladder beyond their means was clearly a set up from the get go. Now I know why so many people came to me who could afford $150,000 tops, remarked "But Countrywide said we could afford $300,000!" I kid you not. Those who fell for it are now living in their camper van. By the way a great investment these days is RV parks.

It is just possible this particular powderkeg will take down the banks as Ross observed has been happening since the Athenian Financial Crisis.

S&P -3.70 / -0.31%
Level 1,171.20
Fair Value 1,172.46
Difference -1.26
Nasdaq -1.50 / -0.07%
Level 2,093.50
Fair Value 2,095.52
Difference -2.02
Dow -41.00 / -0.37%
Level 10,983.00

or so it looks like. autos flat in volatile trading. French banks getting a bid. $ strengthening. $/yen wait and see.

http://www.finviz.com/futures.ashx

Good morning.

1st of 3 POMO Injections for this week scheduled today.

9:00 - Net Long Term TIC Flows
9:15 - Industrial Production/Capacity Utilization
10:00 - NAHB Housing Market Index

Cara 100 Components Earnings Reports After The Close: AAPL, IBM

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MICC - Millicom downgraded to Hold from Buy at Citigroup citing valuation and competitor price cuts in Ghana and Tanzania. The firm keeps a $100 price target for shares.

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Note to Les: I see so many movies and can't remember most of them a week later. "There Will Be Blood" has stuck in my craw for years.....an outstanding sleeper.

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"This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill." — Charles A. Lindbergh, Sr. , 1913