Bill Cara’s Blog for Oct 8, 2010 [See post-close report]

5-10-15-20-25%??

DIS - price target boosted at Barclays. DIS price target raised to $42 from $36. Valuation call. Maintain Overweight rating.

FCX - price target higher at Barclays to $130 from $120. Despite macro uncertainty throughout the summer, we maintain confident in our long-held copper thesis.

Very nice action in Alcoa - FWIW. I see a lot of money flowing into industrial/commodity related stocks at the moment.

I think if AA can hold on to its gains today, the rest of the market may be playing catch-up for the remainder of the day. We shall see.

cheapy, you asked and the linky is here:
http://marcfaberblog.blogspot.com/2010/10/october-...

Will stealth QE continue to pump up stocks into the election or have the pumps gone silent? I seem to recall a few shocks in October pasts.

Trying to time this just right(rriigghhtt), short gold(DZZ), Pick up some down side insurance in VXX & TZA. At least until Halloween. I reserve the right to change me mind anytime.

Best of luck to everybody.

Ross,
Took a moment to look up that one.
http://en.wikipedia.org/wiki/Assignat
We think we have it tough now. We ain't seen nuttin yet.

ADBE - Upgraded to Buy @ Standpoint.

Well, moving my 'cash' in my trading accounts to CYB is working well so far: Up 2% after averaging in from June 23, 2010. Compare that to a 30-year U.S. treasury. It's not volatile and the World Bank, ECU, IMF, UN, and all the big central bankers, the U.S. Fed in particular, Geitner, et al., are begging the Chinese to let it rise for the sake of humanity ....

Cheers.

I plan to list my two rental props in Raleigh NC without an agent so I can minimize cash outlay.

And if there are now buyers who were in contract for a foreclosure and are delayed in limbo, i am thinking they might want to buy a house that is not a foreclosure/short sale. After all they need a place to live, and i am sure they already sold something else or didn't renew their rental lease, expecting closure.

Let's hope.

for those jumping on the train now...!.. http://www.youtube.com/watch?v=dkBArqISsJo&feature...

I'm up 1.4% in just 3 weeks. Thanks for bringing it to my renewed attention last month. I had been in it before but it was going nowhere so I got out. I don't see why Geitner keeps complaining about the Chinese. Clearly there occurred a change in their policy in early Sep. I guess he wants the pressure to stay on.

Bank of America Corp. said it is placing a moratorium on all foreclosure sales across the U.S., amid political pressure on U.S. banks to examine foreclosure-documentation problems.

http://bit.ly/c1qIPg

UUP, DZZ and short SLW still hang above stops.

To remain long here is incredibly risky and dependant on the FOMC meeting Tuesday. I think we see at least a pause in QE. To keep going with the experiment would be down right reckless. China isn't budging on the yen and I think we'll see if they want to continue down that road after a little equity implosion. Let the market come down a little and the month your contracts strike, boom another rally. Probably just like from April to Sept 1st. Best of luck.

At some point, the short squeeze ends. I have no idea if it ends here, but I think these ETFs are due for a little upside.

http://reflight.blogspot.com/2010/07/all-that-glit...

ALOHA!!

From CTA Trading Desk Morning Report by Geoff:

"Let me return to the issue of longer-term fiscal sustainability. As I have discussed, projections by the CBO and others show future budget deficits and debts rising indefinitely, and at increasing rates. To be sure, projections are to some degree only hypothetical exercises. Almost by definition, unsustainable trajectories of deficits and debts will never actually transpire, because creditors would never be willing to lend to a country in which the fiscal debt relative to the national income is rising without limit. Herbert Stein, a wise economist, once said, "If something cannot go on forever, it will stop."

"If something cannot go on forever ..." The short version is IT WORKS UNTIL IT DOESN'T!

To rely on the CBO(Congressional Budget Office) is like having Nancy Pelosi as your financial planner! The CBO is and always has been a mouthpiece for the US Congress, whereby if Congress does not like any of the numbers the CBO puts out they just call up and have them revised. I have never taken CBO numbers as gospel. I much prefer the GAO numbers.

" ... because creditors would never be willing to lend to a country in which the fiscal debt relative to the national income is rising without limit."

Hello ... Earth to Ben???? What exactly is the US PUBLIC DEBT in relation to the Congressional DEBT CEILING? Obama just raised this supposed "ceiling" over $1TRIL this year. When it gets to its current limit what do you think Congress will do Ben? The DEBT CEILING has been rising since 1940 when FDR created it, 70 years of rising debt. The "debt ceiling" is laughable at best! What choice does fiat money have but to be lent, especially to the country that holds the Reserve Currency? Can debt ever truly be paid back or even idle? Someone there at that meeting should have asked Ben when the last time the US Treasury had no debt and how that was accomplished. It was accomplished without a central bank for starters. I mean what exactly does anyone expect to happen when private banks control our money? Its like going to a Harley-Davidson dealer and demanding they sell you a Toyota Prius! Its not going to happen ... Banks only objective by their very nature is to promote and encourage debt and long term indebtedness, especially when they own the "money monopoly". Don't expect a banker to resolve long term debt issues since it is their bread and butter to make sure long term debt expands not contracts. IT WORKS UNTIL IT DOESN'T ...

"“Defective documentation has created millions of blighted titles that will plague the nation for the next decade,”

"For any and every U.S. residential property which has a mortgage that has come within reach of the large U.S. banks over (at least) the last four years, it now has a title which cannot be relied upon by any potential buyer."

http://tinyurl.com/2drgymx

-------

I highly recommend that everyone read this important article.

How is it wrong to stop the illegal foreclosure of homes when the banks are unable to produce a title? Its good Obama vetoed this piece of crap bill and look now all the foreclosures by BAC are being stopped. That is exactly the right call. The Banksters are scared. That is good right, stop with the regime change crap, you guys are courting republicans who got us into this friggin disaster (admittedly with the help of some corpratist Dems but If you think the repubs are going to do jack to their masters you are seriously deluded.

ebelog - totally agree with your comment about the Obama veto.

My guess is, once the banks see they cannot make their illegal operations (perjury factories) into legal ones, they'll start looking at other options. Those options include actually talking with delinquent homeowners, encouraging short sales with potential relief on deficiency judgements, offering re-financing with principal writedowns, more flexibility on forgiving penalties, and other incentives to avoid the foreclosure path altogether. If a homeowner voluntarily relinquishes title to the servicer, presumably this problem goes away. Yes?

I don't think this is a bad thing, ESPECIALLY since these SAME BANKS were egregiously complicit in perpetrating this whole fraud in the first place.

..hehe... someone needs a refresher on 1000 years of contract law...hehe.

And when was the last time that "congress dealt with (any) issue."

Are there any disclosures you want to make in this assertion?

..hehe...

What is going on now is the banks and their buddies in Saudi Arabia, China, UAE (think Hedge funds) are spending 100 million dollars this month alone via the chamber of commerce to influece our elections via the ridiculous citizens united Ruling. These countries now see the opening to push the people they want (republicans are the only beneficiaries of this largess) in order to get things they want. Its one thing to has scumbag lobbyists advocate for AMERICANS who happen to have a different opinion but since the ruling FOREIGNERS who are none to friendly to us will be dictating the terms of our countries surrender without ever firing a shot. Think about that when you vote for teabaggers and assorted republicans. Rant off

MnGnTx how does not producing the title (showing that you have an enforceable Lien)make what the banks wanted right (ie. Having someone give an affidavit that the lien and Title exist). You are trampling on the rights of the owner of the property and adversely possesing something that you have no proof is yours? This has happened countless times already where banks possesed a home that was NOT THEIRS. I said nothing about the congress, I said it was good the Obama vetoed this crap bill. You want to fix this country, get the friggin money out of elections, cap everyone at a set amount and let the IDEAS win the debate, Not who can yell louder and Lie more furiously.

OK, OK, That's funny, ha ha ha. Sometime ago someone told me that these ETF's track the daily performance of Russell 2000 ^RUT, not IWM and perform 3x, but I guess I was wrong, anyway, thanks for the clarification Mr. Funny Man !! :)

I wonder who has the most leverage on the other?
- the banks who need Obama's support
- or Obama who needs the banks' $upport

Ebelog, we are in agreement... not sure what was misconstrued, but I did not intend to imply that what Obama did was inappropriate. I am behind him entirely on this one.

First off, let me reiterate that I really do appreciate this blog and each and everyone of you guys. We are all in this together. All of us... no one left behind. And this is a great venue (thanks Bill) for a diverse, intelligent, capable, concerned group individuals to come together to discuss what is going on in the world... most specifically concerning the economy and trading. I don't even trade, so i dont have much to offer in this regard. I sat for the series C a few lifetimes ago, but I have never had enough money to trade personally (my life decisions and I own them). I don't even own a house, so have no mortgage either. I come to learn about what is going on in the hearts and minds of my brothers and sisters around the world. I come to interact with you guys.

When I reference 1000 years of contract law I am referring to the fact that there exists a small handful of components to any contract in common law. These include an exchange of value and full disclosure.

First, exchange of value: How can any bank, which by statute/code cannot loan their own credit, offer a home buyer value? All of the value has always been in the hands of the home buyer. It is explicitly the home buyer's signature that creates the "money" that the bank then "loans" back to him/her. The banks need the buyer to provide the funds, not the other way around. There has not been an exchange of value between the bank and loan recipient. Arguably, the loan recipient receives value for the promissory note... they get a house. The home seller receives value too... they get cash for turning over the house. But the bank is and remains a third party interloper for the exchange. They have no sweat in the game, so to speak. They may facilitate the transaction, but isn't this what all those origination and broker's fees are supposed to address. Since it is the signature on the promissory note that creates credit from nothing, the bank has offered nothing of intrinsic value in the exchange. So there is NO viable lawful contract to be had here at all between the bank and they buyer.

The banks own books will validate this assertion. If the homeowner were to demand an affidavit from the bank demonstrating exactly where the bank inserted its own credit... its own monies, if you will... they couldn't produce such proof. Not only could they not produce this because it didnt happen, but they couldnt produce evidence to this effect because banks are prohibited from doing so by legal dictates. Should a claim be made in the event of buyer default, to be in compliance with 1000 years of common law contract practice, the banks books must not only prove that they have given something of their own relative value in the transaction but that they also have never received compensation for their part in the exchange. The banks hypothecate the promissory note for at least 10 times its nominal value immediately upon receiving your signature. How can this possibly ever, ever, show up as a loss on their books. Buyers could default on their loans, and then rob the bank for an additional amount of 9 times the nominal value of the original promissory note and the banks could still not show a "loss" on their books... THEY NEVER HAD ANY SKIN IN THE GAME.

Now it gets really fun... cause now-a-days the banks usually sell the buyers promissory note to a third party within 3 to 5 days of its origination... How can you show a loss for something that you have just sold for face value to someone else? There are other issues too, like the fact that corporations can only contract with corporations... human beings cannot legally contract with corporations. Human beings can only contract with human beings. "You" were turned into a corporation through your birth certificate bond... yes it is a bond and it is traded for value as a bond in international commerce and it is worth millions if not billions of digital money... And, yes it represents the establishment of a corporate trust for reasons of esoteric commerce... No, it is not technically or in actuality, "YOU" at all, even though you will be held liable as surety for it in our equity courts. This, by the way, brings up the full disclosure component of a lawful contract... Did the banks tell you that the only way they could legally do business with you was if you agreed to be surety for your "corporate token?" Did the banks disclose that your signature originated all of the funds involved in your home purchase? Did they tell you they were going to hypothecate the promissory note attached to your loan agreement for a boatload more than its nominal value? Were you party to this business arrangement? Did the banks tell you they were going to sell your note when you bought your house and therefore would not be holding it at all during the 30 years they would hammer you for principal and interest? I don't care what the fine print says, if the party to a contract is NOT FULLY INFORMED OF all pertinent aspects of the contractural agreement into which he/she is entering... if this system was not clearly explained to him by legal representatives of the bank... and it wasn't, cause most of the button pushers at the bank have no clue about any of this either... then the disclosure clause required in any common law contract was not fulfilled... period....

So what is the bank doing charging the buyer principal plus interest on something it never had to loan in the first place? The value exchanged was the home buyers signature for the house. The bank is an interloper. And no, there is no intrinsic value in their magic ability to turn your signature into all of this money. The home buyer could just as easily accomplish this slight of hand without the hassle and complications of dealing with the bank and without the complications and hassles of paying interest, except for the fact that our government has been so kind as abdicate its constitutionally enumerated and mandated monetary responsibilities in order to set up this wonderful arrangement with the banks on our behalf... so nice of the gubmint to do this....

Oh, wait a minute.... WE ARE THE GOVERNMENT. The government derives ALL of its authority... every single iota.... from we the people. We breath life into this institution by any and all standards of measurement. That when WE get wise and tired of this game, then WE will change it.

I am not the most eloquent, or the most articulate, or the most educated in these matters... but I hope the above dissertation provides a little clarity and perspective to my comments.

Sincerely

Hi MTN - Do you think MTN will do well now with winter coming on? I have owned it and done well there over the years - even skied at some of the areas a time or two. Bye the bye - title never vests to a bank, the borrower gets that part under the rule of LAW, with the originator or its assignee of record secured by a deed of trust recorded in the county/parish/borrough/town courthouse. Fannie with other parties (read government minions) developed MERS to avoid the sort of nonsense that will now take place. The originator or assignee (read a delegated lawyer (who WE will end up renumerating) for Slice & Dice,Inc.(c)) will have to go to the assignment of record for the deed of trust with extensive billed lawyer hours and deal with the fact some people don't make mortgage payments. OH - and another bye the bye thing - the government asked them to forestall these actions agreed to under the rule of LAW for how many months now? I suppose this is all in the political calculus of the powers that be. All this reminds me of my investment in KRY. Happy Trading

hope things are going well... today, I started ' clsn ' as a buy and add. Sold imgn and mvis into first moments strength ( may be kicking myself over the ' imgn ' sell, but made very good % profit, and can always buy again ).. increased stake in ' astm ' by another 20 %.. good trades to you, baz.

You've been a blessing to us, Jack. Warm greetings back atcha.

Regards,
BH

I for one have found your post-close reports to be spot on and informative, especially this week. You bring focus to the blur of daily happenings. Thank you.

Cheers.

http://www.businessinsider.com/chris-whalens-forec...

http://www.paulvaneeden.com/Actual.Money.Supply

http://globaleconomicanalysis.blogspot.com/2010/10...

A sign of the times. Sugared kakaschka with a cherry on top.

This from Thursday:

Consumer Credit - M/M change
* Prior = $-3.6 B
* Consensus = $-4.0 B
* Consensus Range = $-7.5 B to $-2.5 B
* Actual = $-3.3 B

Annually, revolving credit is down 7.2%. Non-revolving credit is up 1.2%. Taken together, these are deflationary; shrinking credit means less money flowing into the consumer sector. Given that consumer credit generally grows from 5-15% per year, a growth in credit of 1.2% is unfortunate, and shrinkage by 7.2% annually is dreadful. Worst year for consumer credit prior to 2009 was 1991, when consumer credit shrank by -1.1%.

The continued shrinkage in consumer credit says there is no recovery - at least not one sponsored by the consumer. If left to their own devices, consumers would still be deflating the supply of money and credit.

ALOHA!!

Dave, just for perspective the US Treasury on Thursday, October 7th, just one of the many Thursday's we have every year, one of 52, created and issued $115.4BIL USD of debt. In fact the US Treasury deposited $1.97BIL USD in tax revenues yet they paid out $4.9BIL in refunds on Thursday. Where did that nearly $3BIL deficit come from? It came from the creation of more debt, more FRN's added to the money supply, something inflationary not deflationary. So the drop in consumer credit of $3.3BIL is nearly covered just in tax refunds issued to Corporations on Thursday. Lets look at spending here in a minute.

This is why I say the US Treasury is PRICE FIXING 101. They create more debt in one day than consumers can destroy in a month! The US Treasury operates on debt issues in the trillions per year while consumers can only add billions. Just in Unemployment Benefits(one line item) the US Treasury handed out $157BIL USD to US citizens in FY 2010 to spend as they see fit. That is $157BIL USD added to the money supply along with the other $8.4TRIL in marketable US Debt issues for FY 2010.

On Thursday, October 7th, the US Treasury reported net outlays(spending) for that day of over $16BIL USD. If only $1.97BIL came from tax revenues then where did the other $14.BIL+ deficit come from on that day? The US Treasury is highly inflationary, more so than US Consumers and their credit appetite.

When you are standing there in the voting booth in November think about the "representative" you are voting for, because they will be "representing" you and your kid's future in so many more ways than just healthcare or Iraq. They will be representing your monetary future. They(the US Congress) hold the power to literally render any of your trading profits worthless and they have been exercising that power of currency destruction and taxation without representation for as long as I have been alive.

Now the difference between what you report on US Consumer Credit and what I report on US Treasury Debt is in the issuance and how that credit/debt is dispersed. The US Consumer Credit is used to buy a wide variety of goods and services from food to TVs to cars to guns and vacations. The US Treasury debt in turn is spent on "promises" that go to select crony capitalists like Defense Vendors and Medicare providers like Big Pharma and to select unions that will promote government agendas in such areas as Education and Employment. Much of the expenditure of Big Government is to preserve the power of the US Congress and in turn the ruling class of the banking elite. Where would the banks be without US Treasury bailing them out in 2008 or the Deposit Insurance Fund(FDIC) line item on the US Treasury Statement that amounted to over $40BIL on the last day of FY 2010? The individuals and the corporations who feed directly in the US Treasury debt trough benefit much sooner than the average law abiding US citizen who has played by the fiscal rules of responsibility his or her entire life and never took handouts from GSMs(Government Sponsored Monopoly). You and I who do not take food stamps or unemployment benefits or who are not on any government payroll will not see a dime of this "monopoly money" until we qualify for what is left of Social Security and Medicare in our old age. We are the OPM(pronounce opium) the rest of the World lives off(smokes) ... So TRICKLE DOWN ECONOMICS is very much still alive and well. It never did die when Reagan left office and in fact "TRICKLE DOWN" has been in full swing since 1913, way before Reagan was even governor of California, even before BONZO.

http://tinyurl.com/2anmgkk
If we are 'The Choir" this article is singing to us.

excerpt from Barron's on original Washington Post article by Ezra Klein:
Janet Tavakoli: Resolution Trust Needed to Clean Up Mortgage Mess
Tavakoli: “This is the biggest fraud in the history of the capital markets. And it’s not something that happened last week. It happened when these loans were originated, in some cases years ago.”

Lots of mortgages can’t be saved, Tavakoli believes, and the solution for the financial markets, and the economy, is to put together something like the Resolution Trust Corporation, which cleaned up the S&Ls in the late ’80s. That will write the final chapter in the recovery from the financial crisis, she suggests.
J

BH,

I agree. Recently I tried to explain to a friend who has "no interest in gold" and to whom just because he "can still get a dollars worth of whatever he needs" that the value of gold is still a benchmark against which currencies are measured. I got nowhere.

People who have not been hit by job loss, have no need to sell their home, who are still receiving a pension monthly along with Social Security see this recession as little different than any other.

I can't remember a time when so many variables — currency fluctuation, POMO, regulation and accounting practices, info overload — all on a global scale were in play and constantly shifting. And at warp speed. We seem to need to limit our thinking to "either/or" in defense of our sanity while the world is going crazy all around us.

Perception is everything. This is why government diversion and spin are so dangerous.

Still, like everything else, that doesn't mean the price in dollars cannot pull back after a long run-up.

http://tinyurl.com/2w2we8n

Salesforce.com
Secular interest rate trends.
Guys really worth reading.

James Grant, editor of Grant's Interest Rate Observer, and Neal Soss, chief economist at Credit Suisse Holdings USA Inc., talk about the outlook for Federal Reserve monetary policy, the labor market and the dollar in a video from Bloomberg TV:

http://finance.yahoo.com/video#video=22349616

So, MtnGntx, I appreciate your position on loan-making and contract law and value exchanged, and it makes some amount of sense. And creating money from nothing and collecting interest on it, sure its the banker's scam, and one I'm not a fan of. But at the risk of being called an unwitting dupe of the Israelis - or the Pentagon I might suggest you lost me with your response.

Luggie is most probably a mortgage guy. He closely watches interest rates, has investments in the market, would prefer to be a buy and hold investor, and is generally a conservative republican/business guy. Of course he won't like what you have to say. Suggesting (coyly) that he's a trained infiltrator smacks of McCarthy-ism. Surely someone can disagree with you without having to be trained by The Organization. Can't they? Must disagreement be ridiculed by the use of insinuations like the ones you laid out?

Rather than suggesting (indirectly) that some person is a member of some organization, perhaps if you engaged in a debate on the merits, that would be more compelling to an educated audience? Can't your ideas stand criticism? From where I sit, you have really done an injustice to your thoughts and ideas.

And I swear, if you call me a dupe...well I don't know what I'll do, but it won't be pretty. Lots of capital letters may be involved, and it will probably end in "it all works until it doesn't."

I can believe that HK folk look down on people from the mainland. The people who live on HK island look down on those who live in Mong Kok. I'm sure the rich people on the mainland look down on the un-educated farmers from the countryside too.

Still, this is aside from the central point - that of freedom to criticize. For example, this blog and others are freely available in America. If we were to start repeatedly criticizing the government of China, would it be freely available in China? My sense is, no. Do you feel otherwise? Is specific, constant, harsh criticism of the central government permitted on the mainland?

I consider what you can say freely without being silenced is one metric of real freedom. With all the ... crap that has happened in America lately, we still retain that essential freedom - to criticize our own government, for whatever good it does.

Last point. I am intrigued about this being your first post. After just taking MtnGntx to task about his accusations of shills coming onto blogs and criticizing posts, I can't help but wonder if ... nah. It can't be. :)

NYUGrad,

FSBO gives some buyers the willies. Those who go for it are often not your most viable buyers. You immediatly slap on the 'cheap seller avoiding fees' lable. As a seller, you have no agent to verify the validity of your buyer or be the gobetween. You can expect real estate agents to steer people away from your street to avoid losing their captive buyer. Just sayin!

I know several people whose homes have sat empty for over a year trying to avoid the commission while sales popped on either side. You are missing out marketing visibility and sheer numbers of people seeing that listing or being driven past if you have a legitmate MLS listing. Of course there are seller sites but agents don't like presenting offers to an owner. It's a cultural thing I guess. Depends on the town. Raleigh is pretty conservative.

Bull Hunter,

I read Bill's comments very day, Hussman every week and NIA. I was slow getting into gold, but mine is up 41.4% (so far) and while I'd like to see a pull back I plan on continuing to average into it each quarter.

The only point in the latest NIA video I find fault with is his perception that people are not talking about a bond bubble. Since I am heavily into bonds I have noticed a lot bond bubble talk.

Although I am not "married" to bonds they are doing just fine with 10 yr zeros up over 16% this year and my Treasuries mutual fund is up 7.97%. I have also done well trading both TLT and LQD and like the ability to set stops on them.

To each his own, but IMO most of those talking bubble-talk simply want to sell us something else.

I think societal collapse is already happening, but in slow motion. Much of the TV talk and gov blather is designed to hide what those in the worst areas of the country already are experiencing.

I appreciate your comments and good wishes, thanks.

Grym

http://photography.realitytrader.com/2010/10/leaf-...

Vad:
Thanks. Your photographic art is quite visually appealing and relaxing. I enjoyed it very much.
Bruno

Kaimu,

hat off. you are the one I respect here with fair comments.
I am with you the same opinion. All the governments are corrupt. Small government is the way to go.
Thanks

I'm not so sure about about the NIA Bull. Watch this and share your thoughts. I'm a skeptic but it could be a facade "false profit" pump and dump scam. Do you get their newsletter?

http://www.youtube.com/watch?v=U0LrDzJRMRI

Regards,
KC

Hi All - Here is a nice tidbit I noted today. I would be interested in observations about the referenced stock. Happy Trading

http://www.nytimes.com/2010/10/10/business/10novel...

Thank you, Bull... Jim Grant has always been one of my favorite... thanks for all your contributions,...

knifecatcher ,

I'm not familiar with the history of the NIA. I followed Daniel (from Vision Victory) there when he became involved with site.

I don't play penny stocks, but looking at their stock suggestions, they seem to have many of the larger miners on their list, as well. If you visit the NIA site, http://tinyurl.com/36jnorb, you can see their stock suggestions for yourself. I believe that you'll recognize many of the miners that Bill has mentioned, including three Cara 100 companies.

I've yet to see any George4Title videos or articles since Daniel has taken up residence there. My best advice is to watch Daniel's videos and make your own decision about whether or not he is some kind of crook. I really enjoy his videos and have learned much from them. Watch "Meltup" and let me know what you think.

As far as their stock suggestions, I don't really follow them. If there is indeed pump & dump going on, it's certainly not with GG, POT or SLW.

To the best of my knowledge, their "newsletter" is nothing more than an email alert that a new article has been posted to the site. Sometimes, the text of the article appears in the email.

Please report back after you've examined the site.

Regards,
BH

The last name of the head of their optics division is Watt. The last name of their spokesman is Ross.

This puppy is a slam dunk 6 bagger with a 4 touchdown lead at the end of the 4th quarter. Only problem is that they along with TI usually come in first in the ugly dog show.

Both have great science and engineering but are left at the gate when it's money pot showdown time.

It could be different this round and my rooster could be taught to sleep til noon on sundays...Companys have genes like a rutabaga. No-one that plants a rutabaga seed expects that an orchid will grow.

I don't mind a company that employs a lot of guys with squinty eyes so long as they have larceny in their hearts...

I had ranted by email to Tarsis managment asking how (with the public price at .50) the company could offer a private placement with units at .25 consisting of 1 share and an 18 month full warrant at .50.

To my surprise, I was called Friday afternoon by CEO Mark Blythe and CFO Mark Brown. They explained that the pricing of the placement had been set on Sept. 2, when the public price was lower. (Checking later, I found the stock had closed that day at .305, so the unit was not too large a discount).

The new shareholders were institutional "strong hands" prepared to buy more shares in future at higher prices. They maintained the proceeds would support drilling, expected to yield good results.

They further said they would keep their jobs at Almaden to keep Tarsis overhead to a minimum. Almaden has 4M of their 23M shares outstanding (management has 3+M). Duane Poliquin (Almaden's well-respected Chairman) had provided valuable assistance to Tarsis.

I have to say I was mightily impressed that the two key guys at Tarsis took the time to phone a ranting retail investor. (They had no idea I share my thoughts with 140K of Bill's readers!) I'm quite happy to "eat my words" regarding Tarsis' attitude towards retail investors.

Nontheless, I am left scratching my head wondering whether they couldn't have renegotiated terms of the offeringm given that the Yukon has probably the hottest exploration jurisdication in the world this summer.

On the other hand, I've seen in funding my own startups how quickly investor enthusiasm can dissipate. The critical point (which trumps a few cents better pricing) is to accept investors' money when it's available, and to be sure that you're cashed up, in case there's a "credit crunch" ahead.

For perspective, Tarsis market cap, post-financing is still just $10M, which leaves lots of potential upside. They've done well so far in the Yukon, and I like the fact they "winter in Mexico" working on their properties there, meaning that drill results and newsflow don't end with the onslaught of Yukon winter.

I like their early-stage exploration and "prospect generator" focus. I like the frugality of starting up Tarsis "part-time" in close collaboration with Almaden, which - given their recent success - provides a "halo effect" for Tarsis.

I'll hope to be able to take a close look at their next private placement !

disclosure: no position, nor other ties to the company.

Jock

knifecatcher,

Thanks for the vid. Assuming they had no sound so the bots would not interpret? Such subterfuge. I wince when anyone misspells (and probably misprounounces) 'niche' as 'nitch'. ***SIGH****.

Of course, anyone too cheap to have a private website listing via anonymous proxy ($9.99 a year) assumes people researching their associations is too dumb to notice. Good catch!

Ross, your posts are so lyrical and brutal at the same time.....

Loannetter,

I'm not so much lyrically brutal as poetically futile. I like to have fun with words and concepts but there is a serious lack of humor in the world today. We, all of us take ourselves much too seriously.

I do appreciate your comments on the real estate markets. I told someone once that I'm married to finance but architecture is my mistress. When I'm bored with one, I go to bed with the other.

Given my bent on the way the world will work, I am looking for distressed debt on viable commercial RE. There is a Hilton hotel on the waterfront of a big fresh water city of Dallas lake that is underwater (financially) even at full pool stage. The pity is that the mortgage holders are using the FASB extend and pretend to float the equity holders well long past their expiration date.

Until markets are allowed to clear, the political/economic gamesmanship will force a new form of stagflation which will result in boredom for anyone with serious sideline money to invest. Chasing T-paper yields is for children and the infirmed who see rainbows as candy.

The true beauty of commercial real estate investing is that you can use your own estimates, due diligence, cap rate assumptions, tennant quality, location assessments and everything that a Moody's algorithm can never capture. If only markets were allowed to clear, one could wave off the pond scum and see the reflection of true value. It may happen in the fullness of time but until then;

Good luck, us.

ALOHA!!

Ross-There is a Hilton hotel on the waterfront of a big fresh water city of Dallas lake that is underwater (financially) even at full pool stage.

If you are referring to Rockwall and Lake Ray Hubbard I know that Hilton Hotel well! I am not so sure how they got anyone to invest there as it always seemed a strange spot for a Hilton. Here in Hawaii the placement of Hilton Hotels are not so dubious ... they make more sense.

Still I have thought I should take advantage of the active volcano here as it is the number one tourist destination and open up a B&B for geologists ... HA!! Maybe you could steer me to the right Hilton execs so I can pitch my idea the "Kaimu Hilton" ... It'll be an eco-adventure concept ... Perfect timing as the Volcano Inn has shut down for renovations and Pele has graced us with better views and more fireworks!!! We'll just make the hotel modular so we can move it! HA!!

BH,

Interesting — I own Permanent Portfolio in my Roth. My son spotted it a while back and I bought it also.

I try to read a wide range of opinions and reports, then evaluate them by what fits reason, what I'm hearing of friends situations and my own actual experiences.

Because we have generally been in dire straights in northern Illinois for years, I find virtually nothing on the downside to be surprising anymore. I've been mostly playing defense (at times to my detriment) for a long time, and have managed to avoid big losses.

I missed out on much of the tech decade and booked smaller gains. Then, made a huge gain with SKF only to become careless — quit using stops out of overconfidence — and was blindsided by the ban on bank shorting and finished 2009 flat.

I think NIA is a bit premature, but certainly worth reading. The mix of price increases and smaller quantities for the same old price while wages and housing prices drop is wicked and has hit our area hard. The good jobs are long gone.

Our city is currently wooing a company which would only provide 250 jobs — promising to build facilities they can lease and offering tax breaks. This is pathetic considering 20 years ago we were a machine tool center, major player in aero-space, furniture and hardware producers. All these are gone.

Our latest unemployment is officially around 14%, but we all know better.

What are you experiencing and hearing in your area?

Grym

Hi All - Thanks for the varied opinions re ALU - will look for the Jock's dog entry (chihuahua). Been a good week for the litter, but....who knows. Here is a quick look at mortgage lending's roots. Happy Trading
http://finance.yahoo.com/loans/article/110975/did-...

I sold out of the money puts on VXX @15 on thursday. Second guessing my trade at the moment. If the $VIX is a derivative of a derivative and VXX is a derivative of $VIX isn't the same as 3X ETF and don't they eventually go to zero?

When do the puts expire? I wouldn't worry too much right now. If you had sold them this summer, you would have a problem. However, you sold them in (what I consider) the midst of a capitulatory buying binge by distressed shorts. The fact that you're concerned is actually a good sign- VXX may be ready to climb its own wall of worry. If you had sold puts in early May, you would have made alot of money over the following 3-4 weeks.

FD- I purchased VXX outright @ 15.43 (thanks for pointing out my typo, gb58) near Friday's close.

the VXX selling of puts naked is a real interesting trade.will have to see if I can do it at my broker monday...they have such restrictive rules on options with the unusual (in their mind) products. I just tried to put access to KingWorlds recent interview of both Rick Santelli and Art Cashin in this message but I am hopelessly illeterate in this area. They weere fascinating. Re real estate....the freeze on forclusures should help existing "unencumbered" homes sell better...keep in mind that starting in 2012 there is an "additional" 3.6% sales tax on houses complements of Obamacare........The best to everyone for the remaining week-end and the most enjoyable of Thanksgiving days monday to our canadian friends.........

Ron nice observation and a very memorable name for the set up. I noticed that the formation was always below and above the flatline as well as the MA on the MACD. Have you seen it work on more extreme areas of the MACD.
Bob

I am not sure I'd ever do naked put writing on VXX. Looking at the chart VXX:$VIX I note that VXX is an instrument that is just "built to go down." It dropped 25% vs. its own index over a two month period from Aug 9 to Oct 9. It dropped 64% over the course of a year - and remember, this is relative to its OWN INDEX (VIX).

Over the course of a year VXX itself went from 50 to 15, while VIX went from 23 down to 20 over the same timeframe.

Looking at the weekly chart, I would say that the odds of VXX going up or even staying the same over a medium term timeframe are very much against you. Those premiums better be really, really rich.

http://bit.ly/dukl3M

Goog, AAPL, JPM and INTC all report before 18th.

Lets see if the dollar can crash far enough to recapture S&P 1219 and Nadsaq 2535.

BH,

We vacationed in your neighborhood about 30 years ago — beautiful scenery. We had friends who lived in Philadelphia for a few years and they showed us around.

Sounds a lot like here, just a little later schedule there.

Our big industrial layoffs were about 15 to 20 years back. A recent joke is that anymore vacancies at the shopping malls and we can revert to corn. Our home invasions are on the rise and gang related shootings are at least a weekly event. Some seem to have no motive and several have hit kids — one killed asleep in her bed.

I hope that when enough people realize how bad it is our "leaders" will take action beyond meaningless slogans.

Re Early picking: I am seldom wrong, but usually too early. I've been preaching about job destruction, tech's high prices with no earnings and the effects of NAFTA (Not A Fine Thing, America) for 25 years and so avoided making gains from the bubble machine.

What is the secret to your success...Timing!

Better to be wrong and lucky ;-)

My wife and I just got back from a long drive in the country — a couple hundred miles across Illinois and back thru southern Wisconsin. Beautiful fall colors, clear skies and warm weather. Good to forget about TV news, politics and financial concerns.

Thanks for the detailed report.

Grym

Dave & Bill,

"....its about mortgage debt, and unacknowledged losses. Until truth comes to the banking industry, things will not improve."

I'm not so sure its about only mortgage debt. That may be the leading component but weren't there many derivatives created on many other shaky "assets". I use the term "assets" with tongue in cheek.

davefairtex -

"The Fed may get creative and start purchasing REO housing stock with printed money. Maybe a few trillion thrown directly into the housing market would do the trick, at least from the standpoint of asset price reflation. Let's not discuss exit strategy, the price paid for the units, or the property management issues though. This would be popular with existing homeowners, and not so popular with renters or prospective home buyers who now have to compete with the Fed.

But short of such direct intervention, I think reflation is probably not going to be effective. A bubble never grows in the same place twice, or so I've heard."

The Freddie Mac and Fannie Mae bailout was what triggered the banking crisis in Q4 2007. That was the de facto securitized housing debt bailout. Now, Fed is pushing REOs back onto the banks' balance sheets for sloppy paperwork and title work shortcuts. Holding costs are overwhelming the now federalized Fan & Fred expenditures and are expected to ramp up dramatically as time grows short.

Fred and Fannie are now in a position that requires massive housing to be dumped onto the market without more pie-in-the-sky reflation funny money. Two choices now: Dump and crash housing BIG TIME or pump and reflate until Confidence in the USD goes POOF.

The macro economic workout of this unfathonable housing crisis is ongoing. Hope that helps. Pucker factor: 11.

Cheers.

Here is the web accompaniment video http://bit.ly/b9A027

"Tour the new $250 million NYSE data center in Mahwah, N.J. with Steve Kroft and his team of producers."

i have to wonder if technology is good in this case. this facility can be run by as few as 15 people. And with the world wide web this data center's location will not be hard to find. Mahwah NJ is not a big town.

toby, know you were in and out, but this very basic graph has me focused on the Feb. 08' trigger area.. will be dips, as in ' dcth ', but medical devices have much different approval process, as you are aware. Perhaps I am a little early, but timing is everything in these matters. 30% lower than when we discussed it last, with steady advancement. Anyway, good luck in all your adventures !... http://finance.yahoo.com/q/ta?t=5y&s=CLSN&l=on&z=l...

Bob -

Doesn't bother me. The companies don't compete. Alamden's find is in Mexico, and Tarsis - if it succeeds - will do so in the Yukon. (Tarsis does have a property in MX, but at very early stage.) Also, it's fully disclosed to Almaden, which has taken a position in Tarsis and helped them out in interpreting geology.

If Tarsis' find proves worth developing, the CEO and CFO will no doubt move to full-time at Tarsis.

My guess, following precedent noted by Steve Keen, is the good old "C" word must be returned to consumers so that they have faith in their future and are once again prepared to take on further debt. Difficult to see how that can happen at the moment, what with the view of the United States economy most people see.

Perhaps November produces a lift of more substantial proportion when Obama becomes a lame duck President and a possible moratorium on further social contracts (perhaps even rollback of present health care?) gives business the confidence to roll out plans for expansion. A long shot, but in a time frame that could occur quicker than we might expect.

Dow 10944.00 -3.00 -0.03%
S&P 500 1160.50 -0.50 -0.04%
Nasdaq 100 2021.25 +0.50 +0.02%

China's main market getting with the program:

http://online.wsj.com/mdc/public/npage/2_3051.html...

Asia fairly strong, except Japan, which probably isn't happy with record high Yen. So much for BOJ intervention.

noted. thanks. Elsewhere, from Evans-Pritchard:

"The atomic bomb, of course, is quantitative easing by the Federal Reserve. America has in effect issued an ultimatum to China and G20: either you stop this predatory behaviour and agree to some formula for global rebalancing, or we will deploy QE2 `a l’outrance’ to flood your economies with excess liquidity. We will cause you to overheat and drive up your wage costs. We will impose a de facto currency revaluation by more brutal and disruptive means, and there is little you can do to stop it. Pick your poison."

http://www.telegraph.co.uk/finance/comment/ambrose...

Very interesting observation.

Reflections on a new economy:

http://www.youtube.com/watch?v=hpSdKZm1D2A

hat tip to Jesse's.

Good morning.

NO POMO Scheduled For Today.

-----

BRCM - Broadcom upgraded to Conviction Buy from Buy at Goldman. Target $44

COST - Costco downgraded to Underperform from Market Perform at BMO Capital based on valuation and high expectations. Target to $55 from $58

Thanks for the link NYUGrad.

It did nothing to increase my confidence that there was no mention of the possibility that government PPT/POMO may be taking part in such market manipulation.

The most chilling aspect to me is that computers control virtually all the most important functions in our modern world — electric power grids, water supplies, military defense, etc.

It is my understanding and belief that our dependence on tech intelligence operations rather than HUMIT (human intel) was a major contributor to our decision to invade Iraq. Bush "The Decider" only had to be told what we "knew" — what do you suppose his knowledge level is concerning the methods of collection and its integrity?

In the mid-1980s (1984 ironically when I bought an original 128K Mac) I told a friend that if the US was not including an override function in any planes, missiles or other military products which were computerized and sold to foreign powers we were missing important chance.

When Y2K was a big concern and a shortage of techies led to hiring outside "experts" to upgrade government and business systems I wrote my congressman due to the likelihood that access to data was being compromised.

Think of the endless possibilities of a massive coordinated shutdown.

ALOHA!!

And while the French deny that they are in talks with China over the creation of a new currency regime, I heard French finance minister Christine Lagarde say in person at a meeting in Italy that France would use its G20 presidency to push for an alternative to the dollar. She specifically cited the “Bancor”, the idea floated by Keynes in the 1940s for a commodity currency priced off a basket of metals. The US risks gambling away the “exorbitant privilege” it has enjoyed for two thirds of a century as currency hegemon.

Yet the surplus states have most to lose if this brinkmanship tips into commercial war. They must know this, but what we are witnessing may run deeper than a calculus of advantage. Was it naïve to think that Confucian Asia and the old democracies of the Atlantic seaboard can share an open global trading system?

What was naive was to think that a global monetary system composed of debt liabilities can survive for an eternity. The idea that prosperity can be achieved through sovereign debt issuance to me is as naive as the idea that accumulating more debt per household leads to prosperity. Quite clearly we see before our eyes that more debt leads to fiscal default in the form of total currency destruction.

What I try to do is look to see who the next AIG will be, the next derivative counterparty who defaults. In a LIABILITY BUBBLE the size we have now there will always be another AIG waiting in the wings. Sovereign debt is but one fraction of the overall LIABILITY BUBBLE as every global currency, especially a USD, is now the "counterparty" to the debt derivative known as "sovereign currency". The ultimate counterparty of last resort being once again the US Taxpayer, who as I point out in nearly every US Treasury Statement is severely underwater at the moment by a rate of approximately 800%. In other words to implement a "PAY-AS-YOU-GO" scheme at the US Treasury real net tax revenues must rise by 800%. How and where and when will that ever happen? It will not. It is political suicide for the two party monopoly. The logical conclusion is that the US Treasury will eventually be forced to default on its entitlements and military line items. If that never happens due to political hubris then the USD will be destroyed like every other currency of past Empires.

I can see one way to renege on entitlements is already being implemented at Social Security, which is to freeze COLA. Over at Medicare one way is the Obama Care Health Reform whereby service is reneged visa-vi long wait periods for substandard services. These tactics would ween the recipients off the system to a point where politicians can say overall participation does not warrant further continuation of the entitlements. This is similar to the tactics of currency destruction. At some point the eventual worthlessness of the "paper promises" is the catalyst for a new system.

On a global fiat currency system I guess France and China feel it is time to talk of an alternate Reserve Currency. Not to a "new debt" issue, because clearly changing one debt based "reserve" currency for another is a ruse, so it becomes a priority of "basis". The basis of currency has to change. Something that rewards the wealth producers(commodities) and not the debt producers(US Treasuries). DEBT=LIABILITY and as long as the monetary system operates under such a "barbarous relic" there will never be any meaningful CHANGE in global economies. And so we come to what is mentioned in this article ... how FDR devalued the US Dollar against gold. Currently the US Treasury values a USD at $42.22 per ounce. Does anyone on this planet believe that $42.22USD is a credible valuation? It is about as credible as the FASB and MAIDEN LANE I, II and III ... Once again we have yet another "liability" to add to the LIABILITY BUBBLE that is the USD. Just about any where you look the only universal "reflation" is the LIABILITY BUBBLE. If you look at the World as a global Balance Sheet then liabilities far out weigh assets. I view the global Morality Balance Sheet in the same manner as one, meaning the Debt Balance Sheet, begets the other. The more debt liabilities are increased the more moral liabilities increase. Its HUMAN ACTION expressed in the monetary system of today. The global decay of morals eventually leads to War. It's just human history repeating itself no matter how much sophisticated technological hubris is applied. Take away the iPhone and the marvels of DNA and we're still cavemen. In order to be successful at "trading" you must remove your own emotional bias then the same formula for success must be applied to our monetary system because right now it is evident at the G-20 that the emotions of ego rule our monetary system, human nature. That is what a tariff is. It has no basis in production or capital accumulation, it is destruction. Naturally the US Congress threatens those who produce the wealth of the World with a tariff. That is like telling China ... "Hey bud, hey Wennie, if you expect to keep on getting these USD paper IOUs in exchange for those flatscreen TVs then you better help us devalue our IOUs!" If it wasn't any more absurd I'd say we were all living in a monetary Monty Python skit!

MONTY PYTHON G-20 LINK: http://www.youtube.com/watch?v=WlBiLNN1NhQ

...

davefairtex -

"For reflation to work, the money must go where its 'needed' - housing. Explain to me how that happens. Short of actually buying houses, I don't see how."

Well, firstly, I'm not in the reflation camp. I believe the shoe will fall in housing and real estate in general but if reflation were to be implemented in housing all that would be required is targeted gov't incentives like a $9,000+ tax credit to new homebuyers (sound familiar?) and a zero down payment at 0% for 50 years using ye ol' Fan/Fred paradigm. Remember what Bob Dylan said: "Fools rush in where angels fear to tread."

Cheers.

Harold Lewis is Emeritus Professor of Physics at the University of California, Santa Barbara. Here is his letter of resignation to Curtis G. Callan Jr, Princeton University, President of the American Physical Society.

Harold Lewis is Emeritus Professor of Physics, University of California, Santa Barbara, former Chairman; Former member Defense Science Board, chmn of Technology panel; Chairman DSB study on Nuclear Winter; Former member Advisory Committee on Reactor Safeguards; Former member, President’s Nuclear Safety Oversight Committee; Chairman APS study on Nuclear Reactor Safety
Chairman Risk Assessment Review Group; Co-founder and former Chairman of JASON; Former member USAF Scientific Advisory Board; Served in US Navy in WW II; books: Technological Risk (about, surprise, technological risk) and Why Flip a Coin (about decision making)

'Global warming is the greatest and most successful pseudoscientific fraud I have seen in my long life'

http://tinyurl.com/2ab7uto

I suspect an avalanche of these "small" victories for humanity in the coming months as the elite's shell game rapidly unravels. We love you guys for standing up and making your voices heard. .. Keep it honest, keep it straight... And keep it up! The peoples of the world are listening.

http://www.bloomberg.com/video/63400346/

There's gotta be a long-term speculative trade in this ongoing story somewhere.