Morning Call [8:30am ET] Yesterday morning, I gave you an insight into how I had backed into a corner as the Bears were breaking through all defenses put up by the Bulls. Here is a follow up to that discussion, taken from the end of the day log:
[8/24/2010 4:03:47 PM] Bill Cara: at 3:20 I had recovered and then some in the emerg mkts, then boom
[8/24/2010 4:05:41 PM] Bill Cara: I am impressed with the precious metals though, telling me either anxiety is rising (VXX up) or Dollar going down. But mkt is on the edge of the ledge here. Wall St has to decide tonight what they want to do.
[8/24/2010 4:06:37 PM] Bill Cara: I'm thinking Dollar down and pm's up and that will hold equities up a bit here.
[8/24/2010 4:09:03 PM] patrick veech: bonds once again led the day-oversold markets that don't rally are vulnerable to irrational selling at some point-1040 still the maginot line
[8/24/2010 4:09:29 PM] patrick veech: must remain flexible
[8/24/2010 4:10:40 PM] Bill Cara: agreed on 1040
Yes, I had switched out of the EEM for the 3x bullish EDC for the Emerging Market portfolio at a cost of 25.345. After a slight dip, prices ran 25.32, 44, 59, 64, 66, 79, and 82 (taken from my notes). With EDC at 25.82 at 3:25pm, and all my indicators looking positive – I’m now trading by the minute – I crossed my fingers for a close right at that level or better.
But, I knew how fragile the market was as VXX was very volatile and the US Dollar quite unstable. Then, as I wrote, boom: down goes EDC, down goes EDC… all the way to 25.38, from 25.82 in 30 minutes, finally printing a 25.50 at the close. A profitable trade, but, nevertheless, it was a very unsettling, ugly close. All eyes set on S&P 1040.
With this in mind, I woke early and saw the US Dollar in retreat against the Euro, Aussie and Loonie and figured that equities and precious metals would lift this morning, despite my concerns for the economic data to be reported (Durable Goods Orders at 8:30am ET and New Home Sales at 10).
That indication for the precious metals made me smile and so I returned to bed knowing near the close yesterday, anticipating a run-up in gold and silver, I added a further +15% to my GDXJ (junior goldminer index) @ 28.60, 11.9% to the Cdn accounts only in Fortuna (FVI.TO at C$2.25) and 15% in Silver Wheaton (SLW at 20.55).
But when I got up for the second time this morning, I liked what I saw with the PM’s, but shocked that the Euro, Aussie and Loonie were crashing. Ouch. Eyes back on the 1040 Maginot Line.
This being on the edge of the ledge is high anxiety, but as I wrote, it is the place where the boys get separated from the men at this serious business. I’ll keep you posted.
Relieving the stress is being with family. Recently, as you know, I got to see my newborn granddaughter Caitlin Eve Cara, daughter of Fiona and Will. Using her cell phone camera, my daughter Stef captured the moment of our first meeting.
Have a good day.
CTA Trading Desk Post-Close Report
Finally, we see the first glimmer of hope for a beaten down sector. The first clue came yesterday when homebuilders (XHB+3.51%) shrugged off a horrendous report finishing mixed even as the broad market crumbled. Confirmation came this morning when another less than sparking housing number merely slowed the advance of the downtrodden group, buoyed earlier by better than expected earnings from Toll Brothers (TOL+5.81%).
When bad news doesn’t knock an underperforming sector lower opportunistic traders close out bearish bets, and may even trade from the long side with a tight stop. All the bad economic news had been factored into current stock prices; long liquidation completed paving the way for short covering and bargain hunters to push prices higher.
While the housing stocks have exhibited relative strength the past two sessions, the broad market teetered on major support barely fending off urgent selling (S&P+0.30%).
In a perfect world the S&P would have knifed through 1040 early in the session before reversing violently trapping shorts, putting more distance between the low and the close of the day. Yes, pessimism is running rampant, markets oversold and overdue for a bounce upward. Unfortunately the lack of upward momentum off the morning lows leaves open the possibility that a subsequent, feeble rally may only be able to crawl its way back to 1065 or 1085 before to succumbing to a wave of institutional selling once the head honchos return from the Hamptons.
The jury is still out, discretion the better part of valor; “scout” longs can be employed on a reconnaissance mission, but the bulk of the troops should be held back until the all clear signal is given, and the possibility of an ambush greatly diminished.
Have a great evening.
Comments
FDRS TABLE
ALOHA!!
Over at the Cunning Realist there is a new article entitled "RAPP SESSION"(dated Aug 24). Apparently the US TREASURY is so concerned about its "image" that it has decided to conduct these informal meetings with a select group of "bloggers". Imagine if you will that one day Bill Cara got an invite from Tim Geithner to sit down at a table and discuss, lets say, financial reform. Well, that is exactly what is happening at the US TREASURY now. They are seeking input for their policies from prominent bloggers that they select as the most important. You will recognize some of the bloggers like the guy from NAKED CAPITALISM and one from SEEKING ALPHA, but there are a few that I never heard of, like Tyler Cowen from "Marginal Revolution".
In this link you will read Steve Walden of "Interfluidity", another one I have never heard of, as he describes the US Treasury meeting with Tim Geithner and five other Treasury officials, Here is the link ...
LINK: http://www.interfluidity.com/v2/933.html
It is a lengthy read and they cover many stock market and derivative issues from the US Treasury view point and the bloggers present their views. They also discuss "macro-economics" and stimulus and the general direction of the US economy and various remedies.
What I find almost horrific is that none of these participants, both on the US Treasury side of the table and the blogger side have absolutely no actual BUSINESS EXPERIENCE to draw on. Here we have a "table" full of stock and derivative traders and ex-politicians and ex-bankers discussing how to get the US economy going in the "right" direction. It is no different than Obama holding a JOBS SUMMIT and not inviting anyone from the SMALL BUSINESS sector. Obama and his Economic Advisers invite ivy league professors and Fortune 500 CEOs and union bosses, but no small business. This is exactly the same. Somehow in America we have gotten off track. We have come to view the economy and the stock market as one and the same. I will tell you that in my business, which is one that is very small, I have never bought fertilizer stocks like POT to spray on my plants. Much like the stock market never worries about my orchid production. You cannot possibly think that solving derivatives clearinghouse issues will create jobs. Or that if the DOW trades at 11,000 we will have full employment. Or if the real estate market moves back to 2006 levels the US Treasury will be debt free. Here at the link I provided these people sit around a table, that was actually owned by FDR, to determine "macro-economics", yet none of them have ever owned or had to operate in the real world small business sector manufacturing an actual product that consumers need for their daily and longer term survival. Its like a bunch of economists sitting around FDRs TABLE debating inflation and deflation in a fiat currency world, in an environment of total currency destruction, the monetary hell Karl Marx brags of when he correctly predicted the demise of Capitalism. We're debating the symptoms of the last 4% of the US Dollar's purchasing power. WHOPPEEEEE !!!! Boy, do I feel confident! Instead we should be debating what day we eliminate the US FED and US INCOME TAXES. In reality America has been bankrupt ever since FDR confiscated US citizens gold.
In the very lap of our Founding Fathers House we have a bunch of "non-producers"(aka: paper shufflers)of the blogosphere meeting up with a bunch of "non-producers" of the political and banking realm to discuss financial and economic policy, which in real terms amounts to INTERVENTION. How best should we INTERVENE in the lives of our citizens and free markets? This is something our Founding Fathers never dreamed the US Treasury would ever sink to. Our Treasury sinks to faux-capitalist endeavors like owning GM shares and intervening in everything from healthcare to derivatives. The US Treasury should be concerned with only one matter and that is the US Constitutional mandate of providing a sound monetary system backed by Congressional fiscal responsibility. That's something America has not seen since the days of Andrew Jackson in 1836. OH MY GOD!!! WHAT A FOREIGN CONCEPT!!! I MUST BE ONE OF THOSE OUTLANDISH TIN HAT GOLD BUGS!!! The problem with America is that the US government and its Treasury has grown so large that they actually think they can INTERVENE on our behalf and guarantee all of us ever lasting "happiness"! They tell us that all we have to do is just keep voting for them! And so we have every chance we get ...
In reality John Lounsbury of Seeking Alpha,one of the participants, may be a brilliant trading strategist but has he ever built a school or produced a single I-Pod? He can advise you all day about trading AAPL and Steve Jobs brilliance but he has no idea how to even begin to set up a plastic injection mold and die cast system or even follow a circuit board schematic. I would be surprised if he could show me the symbol for a transformer on an electrical plan. He knows all the stock market symbols but maybe very few symbols of real production. Those real bricks and mortar production lines where you wallow in the trenches of the dirt and sweat of real employment, not just the BLS number or the cost to produce number on a quarterly financial report. Those numbers do not even give the slightest hint as to the real life human beings who toil 9 to 5 hidden from stock market charts and TA. We trade prices, but inevitably we will be reduced to trading monetary confetti.
So your reply to me may be ... "Yeah, but injection molding is not his expertise!" Then I would have to answer ... "Then what exactly is a table full of stock market traders doing at the US Treasury?"
Off we go then into the "Fantasy Land" of job creation via stock markets and derivatives. So purposefully disconnected is the US Treasury that they don't even know what "real money" is worth. I will give you a clue Mr. Geithner it is a little higher than $42.22 an ounce now!
Here are some of the challenges and remedies that were spoken of in that meeting ...
Abstractly, I think some of them(US Treasury officials) should be replaced and perhaps disgraced. But having chatted so cordially, I’m far less likely to take up pitchforks against them.
Officials began by talking up the buzz of activity occasioned at Treasury by the Dodd-Frank Act — putting together the Financial Stability Oversight Council, “standing up” the CFPB — with the happy implication that good and important things were happening. We peppered them with skeptical questions.
I was pleased that, thanks to both Tyler Cowen and Yves Smith, we had a solid discussion of derivative clearinghouses. I am a big fan of standardized derivative exchanges and clearinghouses, and trade on them frequently.
Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least.
A senior Treasury official gave the proposal a sympathetic hearing, but opined that exchanging a government claim against a homeowner for a bank’s claim against a homeowner in order to solidify bank balance sheets was not the best use of limited budgetary and policy implementation capacity. (For a change, I agreed with the Treasury official on this one.)
In a nutshell, he proposed insisting, by regulatory fiat, that future GSE’s borrowing costs be kept at a level appropriate to a private firm with no Federal backstop, implicit or otherwise.
The spurt of GDP growth due to post-panic inventory restocking was always going to end. But a sovereign debt crisis in Europe strong enough to shake confidence and financial markets in the US was not expected.
They understood that the core problem preventing business expansion isn’t access to capital but absence of demand. But I got the sense that, as they see things, they are boxed-in on that front, paralyzed and hoping for the best. When someone asked about monetary policy, an official said he really couldn’t comment on behalf of the Fed, but then proceeded to comment anyway, that in a very sharp downtown the Fed would have (presumably unconventional) ways to intervene, but that we were probably near the limits of what the central bank would do on the economy’s current path.
My suggestion was that Treasury should take the lead from Congress and propose a “two-year guaranteed income program”. If I were writing a proposal, I’d offer a lot of detail and caveats, but during a short meeting with scarce air-time, that was the sound-bite I came up with. As regular readers know, I think the government ought to be transferring equal sums of money to all adult US citizens irrespective of tax or employment status. That’s a form of stimulus that seems fair on face, that doesn’t pick winners and losers or skew the direction of the economy, and is plainly not corrupt.
Amid the talk about flagging demand, blogger John Lounsbury had the courage to “drop a stink bomb”, as he put it. He said that in his view, the United States needed to move from a consumption to a production oriented economy, and that we ought to use the tax system to get there, increasing taxes on consumption and reducing taxes on capital.
Its all what I call PRICE FIXING 101 ... All at the expense of OPM(Other Peoples Money) and OPF(Other Peoples Future).
There was much more "discussion" going on but I just picked as much as I could read without bloody hurling! All in all remedies could be boiled down to more market regulation and more "new" taxes. Hummmmmm??? How innovative! These people define the Austrian Economic words "misallocation" and "malinvestment". They have been brainwashed into believing that politicians and their endless regulations and taxation actually benefit the economy and business. At the US Treasury hard working American citizens have been reduced to the label of "taxpayers", servants to government largess and intervention. WE THE TAXPAYERS ... Treasury believes that a fraudulent bank balance sheet is more important than the value of our money or jobs. In the real world of small business, which is the largest employer of Americans, it makes us, small business owners who are the real risk takers, scared to death to invest, so we do indeed invest the least amount of capital as possible in order to just "survive". That's all we small business owners are reduced to here in America ... surviving government intervention. We have no FREEDOM because Capitalism has long ago died off thanks to political and banking INTERVENTION. We have no sound money in America so therefore we have no sound economy or stock market. We will never have any long term stability of any kind so long as our money is unstable. HELLO!!!! It really is that friggin' simple! So I ask ... HEY, MR GEITHNER WHERE IS THAT DEBATE?
Hard-nosed Fed sends global markets reeling
"This has been one of the most interesting days in finance ever," said Andrew Roberts, head of credit at RBS. "We are right at the tipping point. Yields are about to collapse even further, equities are about to turn over. The end game approaches, probably in next few weeks."
http://bit.ly/dg8m24
Cara 100 Ratings Changes
Good morning.
AMAT - Applied Materials downgraded to Underperform from Market Perform at First Global.
Washing Machines
Old news now (from 17 minutes ago) but people are going to start beating their clothes clean on rocks at the river.
Durable Goods Orders
Released on 8/25/2010 8:30:00 AM For Jul, 2010
Prior Prior Revised Consensus Consensus Range Actual
New Orders - M/M change -1.0 % -0.1 % 2.5 % 1.0 % to 6.5 % 0.3 %
Ex-transportation - M/M -0.6 % 0.2 % -3.8 %
Tough to lay off TBT this AM
This looks pretty tasty to me. Options are way overpriced, so you've just got to bite the bullet and go long the ETF.
I'm going to be disciplined and wait a little more, but I'm thinking that w/ the 10 year at 2.42%, we're just about there.
TBT looking like a very hot chick making eye contact across a crowded, noisy room right now.
rim
got cought with a ton of rim. no stop loss. a valueable lesson. will she come back to 60.00 plus level? does anyone use the tool average down on a up tick.hoping some positive news --moving forward russ
New Home Sales
276 vs 340 consensus
That's it, We are Bouncing off 1040 on the S&P..
At least what it looks like for NOW, not sure if it will sustain thru the end of the day. Many are saying the revise in the GDP down is already priced in so we may see a small bounce here at this level. Again, not so sure about that.. GLTA.
Remember, Today's is the 5th down day in the marekt so far
A bounce off here is very well expected from these way over sold levels.. As long as 1040 holds
Re: That's it, We are Bouncing off 1040 on the S&P..
the close should be a better indicator than the initial response to home sales data regarding the 1040 level
Mortgage applications rise 4.9 pct. on low rates
Now the Media is releasing the positive news to reverse the market direction here..
http://finance.yahoo.com/news/Mortgage-application...
Re: That's it, We are Bouncing off 1040 on the S&P..
analyst65,
Looks like it may -- for now, but there needs to be a bigger lift this morning to get the Bears thinking they may be trapped, and then the short squeeze would be on. Watch US Dollar/Euro, VXX, and IWM for clues.
The bigger picture is precious metals. Yesterday, I figured the econ news this morning would be bad, so I went longer. Was a good call. Traders are now thinking Bernanke has to fly his helicopter to Jacksons Hole on Friday, i.e., next round of QE is inevitable.
Re: That's it, We are Bouncing off 1040 on the S&P..
Bill,
Won't we have to have at least one quarter of economic contraction before Bernanke can make a case for embarking on another round of QE?
Stocks just look real, real cheap to me right now.
INTC
MSFT
AMAT
SD
CHK
RRC
PFE
THC
Everything just looks dirt cheap here. I'll be real surprised if 1040 doesn't hold. I think smart money is getting long and accumulating quietly. Bonds are simply overbought, QEII notwithstanding, and precious metals do not seem to be trading off any real supply/demand issues, but rather as alternate currencies at a time when the talk has turned to Japaneese style deflation. Pessimism seems overdone to me. LEAPS have never looked better on some blue chips. If only WMT would fall to $47!!!!!!!!!!!!! To paraphrase Warren Buffett...the over-sexed guys will be heading to the whorehouses soon.
further failure
for the cunucks:
XFN.TO
XEG.TO
two of the larger if not the largest shares of the TSX are energy (nat gas, oil, oil-sands)and Financials. (materials is too broad of a term to be considered a true sector imho)
check out the breakdown on these 2 etf's which give a great snapshot of the movements of the TSX.
not looking good, but the volume is somewhat flimsy.
gold looking good but once again the volume is not impressive at all on the recent run up. if we truly have further weakness in the market we need to see some indication that gold is truly ready to break free of its chains, for now im still wondering if it will simply be as Bill says "last off the dancefloor" while the gold-bugs are chanting that the great disentanglement between gold shares and the market has happened....
up down
CAT FDX GE are down-delayed
SBUX WFMI are up----delayed
lets see how they finish?
edit--------------------------------------------------------------------
Homebuilders appear to be bucking a nominally negative report card today!
----------------------------edit------------------------------------
GS and three of the four horseman are riding higher today.
------------------------------------------------------------edit---------
Silver, does it pretend or portend?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Apple was shining in the end, along with GS and an even for JPM.
Starbucks and Whole-foods were both still up.
Silver is on a tear, at least for today anyway...will there be follow through?
Re: Tough to lay off TBT this AM
'TBT looking like a very hot chick making eye contact across a crowded, noisy room right now.'
Those are the ones we teach the kids to stay away from, right? ;)
The Best Picture
Not the market but Bill holding Caitlin! I stared at that picture for a very long time. So many thoughts went thru my mind! I was emotionally affected, positively! What a beauty!!
Why did Bill Gross Really go to Washington?
Try this on for size. He's 'never been there before'. Why now? Could it be that he was being warned? Is some type of bond default on the horizon?
It reminds me of Bush's visit to Saudi King in summer '08 with crude at $147.
Re: Tough to lay off TBT this AM
Right now she's a redhead.
Q. What do you call a Redhead with an attitude?
A. Normal
For PM Traders
Dates to keep in mind
Aug. 26 Comex September silver options expiry
Aug. 26 Comex September copper options expiry
Aug. 27 Comex August gold futures last trading day
Aug. 27 Comex August copper futures last trading day
Aug. 27 Comex September E-mini copper futures last trading day
Aug. 27 Comex September miNY silver futures last trading day
Aug. 27 Nymex September Asian gold futures last trading day
Aug. 27 Nymex September Asian platinum futures last trading day
Aug. 27 Nymex September Asian palladium futures last trading day
Starting to get long
Entered small positions upro and udow. Will run these with loose stops. Bonds are insane, 100 year bond anyone?
Of course it all can keep falling. Deflation or stagflation, if the real numbers ever come to light, I'm betting on stagflation. If deflation or stagflation everything drops doesn't it?
GCI
jeez...when i look at GCI i wonder why i don't just go all in long on that one. it's trading at 5 times current year's earnings and 3.5 times free cash flow. the company has the earnings power right now to pay out a 10% dividend.
i know, i know...newspapers are dying. but this company has 30% of its biz in online companies like careerbuilder.com and cars.com. and the newspaper biz is still highly profitable.
FD:
long this morning at $12.04.
Tough to lay off TBT this AM
All I'm saying right now is that maybe you should go over and chat her up some and see how well you get along...she may be just your type after all.
Re: FDRS TABLE
As Bill is Canadian, I think Kaimu should represent the community at the RAPP session. All in favor/favour ...
SPY versus SPY*
Policy goals: We can do it. Add your own.
http://ronsen.blogspot.com/2010/08/spy-versus-spy....
* No banker will go hungry. (We can do that).
* Goldman Sachs will NOT breach 140 (Maybe we can do that).
* Prices will not go up (Even if we have to rejigger the numbers, we do that.)
* Central bankers will remain more popular than Congressmen (Set the bar low).
* Gold prices will stay under 1250 or so (Heck, we can guarantee that in a manipulated market).
*sense of humor is the last item in the portfolio to go.
Green as in Gold to start your day Bill
thanks for the explanation - illuminating.
Re: Green as in Gold to start your day Bill
Hi Les, You are up late tonight in Switzerland. With Bill covering the Americas, you covering Europe and Kaimu covering Asia; I think we have superb global watch dogs.
Re Gold, I am biased bearish so this is slanted that way.
If there is a break of 1040 and panic were to set in etc. wouldn't GDX, GDXJ and even Gold start to retreat? Wouldn't money move to your Swiss Franc even more so than it already has and then to the USD as well? Wouldn't copper go back below 3.00 and Silver break 17.06 which is a mystical support level presently.
Re: Green as in Gold to start your day Bill
?
Just learning the ropes George, but thank you for the kind words. Perhaps I can half jokingly suggest that by the time I am of the age of many here (I sense a 45yr+ crowd here) I may possess limited competencies in this fascinating industry, if Bill doesn't go and pull the blog prior.
We are not that far ahead of NYT; +6 hrs only.
As for your questions pertaining to the miners, I can only parrot others in understanding that they get sold off (specifically the miners) when everything else gets dumped. Dr Copper is intimately linked to economic health - whether it moves according to economic conditions is not for me to suggest. I've learnt to trade otherwise.
Swiss Franc is getting bought up like Gold and is at new highs against the Euro. Euro money is fleeing for safer pastures. As to the future - ?
Congrats to your family Bill!
Caitlin is a very cute baby!
I was up in Toronto last week on business and thought of emailing you but i was in and out same day.
Tomorrow Continuing claims...
Friday GDP.
What is interesting to me now is both are expected to be bad. So i am more interested in the reactions. Already positioned in QID and FAZ earlier in the week.
Google phone
12:48:06
Google Inc To enable VoIP calling to cell phones and landlines from gmail and Google Talk
- Calls to the U.S. and Canada will be free for at least the rest of the year and calls to other countries will be billed at our very low rates.
- Calls to the UK, France, Germany, China, Japan and many more countries will cost $0.02 per minute.
- Google rolling out this feature to U.S. based Gmail users over the next few days.
- If youre not a U.S. based user - or if youre using Google Apps for your school or business - then you wont see it quite yet.
Hard-nosed Fed sends global markets reeling
http://www.telegraph.co.uk/finance/comment/ambrose...
Very simple piece of this puzzle, but the Yen's behaviour against the $ helps explain (I think) a little of the market movement.
http://www.google.com/finance?q=JPYUSD
Note the double bottom (sorry, not bounce) in April (Guess which day that spike was?).
If I understand correctly (and please correct me otherwise) the Yen carry trade is being unwound to the detriment of more speculative investments like US markets and being repatriated into Yen, leading to a 15 year high against the $. The trend since May is clear (and in the longer time frame as well).
Politics or the truth?
He says lets throw the bums out:
http://wallstreetpit.com/41948-house-republican-le...
Now, will the White house have to answer embarrassing questions?
Going Long
Moving the buy-and-hold into FSRBX/FSELX/FSENX.
Opened positions in BAC/WFC @ 12.54/23.24.
Are you financially oppressed yet?
MS has an opinion on bonds and governments defaulting.
http://www.scribd.com/doc/36402437/MS-Default
Re: Going Long
I followed you on the WFC/BAC. Been sitting on all cash for a few weeks and needed to feed the MONKEY. Hope to get a $2 bounce in the next few weeks and then possibly back out for October.
markets reaction
Worst new home sales ever: test the lows and trip some stops, then a big homebuilder rally. Oil build in inventories: test the lows and trip a few stops, then oil up +1.5%.
The overall market rally was not dramatic, for sure, but can the news really get any worse? And 1040 was defended successfully again. I think we'll have to wait to see if we get confirmation tomorrow when the jobless claims come out.
My feeling (not strongly held): bounce along the bottom here (with perhaps a head fake in each direction) for a couple of days, and rally on Monday when there's no bad news to interfere.
Re: markets reaction
davefairtex -
"My feeling (not strongly held): bounce along the bottom here (with perhaps a head fake in each direction) for a couple of days, and rally on Monday when there's no bad news to interfere."
Personal Income and Outlays due at 8:30 am EST on Monday. Expected weak numbers should rally the bond market and put pressure on equities. It's a significant enough report to move markets.
Weak feelings ["My feeling (not strongly held)"] can bite you in the ...
Cheers.
Thanks Ron for dotting the i's and crossing the t's
I wonder how this long shot would effect bonds if at all?
http://www.kitco.com/reports/KitcoNews20100824DC.html
Re: FDRS TABLE
Man, I learn alot from others on this blog. I didn't know Timmy G. & the boys invited people up to the Treasury to schmooz. Thanks for the link.
Re: That's it, We are Bouncing off 1040 on the S&P..
I guess I called the bottom of this move right this morning when level 1040 was hit and we reversed up firmly today :) , need confirmation though tomorrow as well to feel good about it but I still think this short rally may not last long, perhaps two more days and that's it. Will wait and see. Market negative news and condtions will continue to flow for some time to come until we really really hit bottom and we are not there yet.
FD: forgot to disclose in my first morning posted note that I went long on TNA with a large position at 31.84 and sure it paid very well by end of the day. Thanks Bill for your earlier hints of a possible bounce at these levels. It clarified the market moves for me more for what is next.
Re: Politics or the truth?
Maybe B.O. will fire the Treasury brain trust(FED too), then resign. One can hope for change.
Sound advice?
From: http://www.hussmanfunds.com/wmc/wmc100823.htm
To the extent that we observe fresh credit problems, we should not pursue the same policies. Instead, we should focus on restructuring debt. Let the bank bondholders fail, and defend depositors and customers through the standard procedures that the FDIC has followed for decades. Deal with the debt of Fannie Mae and Freddie Mac by asserting that there is no explicit government guarantee, and let the holders of the mortgage pools receive precisely what they are entitled to receive without public funds. At the same time, expand the role of the FHA to provide explicit government guarantees for future mortgages in return for actuarily fair risk-based premiums, and require mortgage originators to retain a piece of the mortgage loan, along with appropriate capital requirements, and the stipulation that this retained portion bears the first loss if the mortgage goes bad. Finally, refuse to trot self-interested bank and Wall Street executives in front of the public to extort the nation through fear of the word "failure." Banks fail all the time and customers don't lose a cent. The only implication of failure is that stock and bondholders of reckless institutions aren't rewarded for their malinvestment at public expense. (end of advice part)
This doesn't entirely remove those risks, of course, particularly if we begin to observe a spike in credit spreads (which would be associated with default concerns and a likely drop in monetary velocity), but it clearly changes the environment. Gold stocks and the XAU have essentially gone nowhere since May. Last week, in response to a favorable shift in the Market Climate for precious metals and currencies (largely resulting from the shift in Fed policy and interest rates), we increased our exposure to precious metals in the Strategic Total Return Fund toward 10% of assets, and raised our exposure to foreign currencies to about 5% of assets. This is still not an aggressive stance, and we would prefer the opportunity to accumulate a larger exposure on substantial price weakness, if it occurs. But as this week's comment makes clear, the Federal Reserve has begun to play with fire, the effects of which I doubt Bernanke fully appreciates.
I wonder if we will get those breathtaking and gut wrenching shakeouts in the precious metals that cause traders to puke up their positions? Just asking.
An update on the stimulus:
http://dmarron.com/2010/08/24/a-new-price-tag-for-...
Health Reform Bill Taxes
I think its past time for the rich to pay their share of taxes instead of talking about giving half of their money to charity - their family controlled charitable foundations. They cannot continue to place almost all the cost of government on the middle class, place unjust burdens on the middle class and reap the rewards of extortionate laws.
This is the new tax burden that the rich and the politicians have placed on the middle class for the health care reform package that extorts excessive insurance and prescription drug money from us. I cringe every time I hear they are planning to enact legislation to address a problem because whatever the problem their cure for it will make us appreciate the bad old days.
http://tinyurl.com/23c7wew
"Personal Income Tax Rates Will Rise
The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).
The lowest rate will rise from 10 to 15 percent.
All the rates in between will also rise.
Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as highermarginal tax rates.
The full list of marginal rate hikes is below:
The 10%
bracket rises to an expanded 15%
The 25%
bracket rises to 28%
The 28%
bracket rises to 31%
The 33%
bracket rises to 36%
The 35%
bracket rises to 39.6%
Higher Taxes On Marriage And Family
The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income.
The child tax credit will be cut in half from $1000 to $500 per child.
The standard deduction will no longer be doubled for married couples relative to the single level.
The dependent care and adoption tax credits will be cut.
The Return Of The Death Tax
This year only, there is no death tax. (It's a quirk!) For those dying on or after January 1, 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes, a business, a retirement account, could easily pass along a death tax bill to their loved ones. Think of the farmers who don't make much money, but their land, which they purchased years ago with after-tax dollars, is now worth a lot of money. Their children will have to sell the farm, which may be their livelihood, just to pay the estate tax if they don't have the cash sitting around to pay the tax.
Think about your own family's assets. Maybe your family owns real estate, or a business that doesn't make much money, but the building and equipment are worth $1 million. Upon their death, you can inherit the $1 million business tax free, but if they own a home, stock, cash worth $500K on top of the $1 million business, then you will owe the government $275,000 cash! That's 55% of the value of the assets over $1 million! Do you have that kind of cash sitting around waiting to pay the estate tax?
Higher Tax Rates On Savers And Investors
The capital gains tax will rise from 15 percent this year to 20 percent in 2011.
The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.
These rates will rise another 3.8 percent in 2013.
The Second Wave
Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The "Medicine Cabinet Tax"
Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The "Special Needs Kids Tax"
This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.
There are thousands of families with special needs children in the United States , and many of them use FSAs to pay for special needs education.
Tuitiion rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year.
Under tax rules, FSA dollars can not be used to pay for this type of special needs education.
The HSA (Health Savings Account) Withdrawal Tax Hike.
This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 0 percent, disadvantaging them relative to IRAsand other tax-advantaged accounts, which remain at 10 percent.
The Third Wave
The Alternative Minimum Tax (AMT) and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired.
The major items include:
The AMT will ensnare over 28 million families, up from 4 million last year.
According to the left-leaning Tax Policy Center , Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business 'expensing' will be slashed and 50% expensing will disappear.
Small businesses can normally 'expense' (deduct) rather than slowly-deduct or 'depreciate' equipment purchases up to $250,000.
The traditional $250,000 figure will be cut all the way down to $25,000!
Larger businesses can currently expense half of their purchases of equipment. In January of 2011, ALL of it will have to be "depreciated." (The depreciation period over which a business must write off a major expense is often THIRTY YEARS.)
Taxes will be raised on all types of businesses
There are literally scores of tax hikes on business that will take place. The biggest is the loss of the "research and experimentation tax credit," but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced
Teachers will no longer be able to deduct classroom expenses.
Coverdell Education Savings Accounts will be cut.
Employer-provided educational assistance is curtailed.
The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed
Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.
This contribution also counts toward an annual "required minimum distribution." This ability will no longer be there.
PDF Version Read more:
And Worse Yet?
Now, your insurance will be INCOME on your W2's!
One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort.
If you're retired? So what... your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year.
For many, it also puts you into a new higher bracket so it's even worse.
This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases."
Re: Going Long/ Don't Stop
http://tinyurl.com/35uxqld
The daily grind of trading prices can easily burn you out. By the time I settled down at my desk for lunch, ready to watch the sell-off accelerate, I was barely cognizant of the price action. That's when it began to dawn on me that stocks were catching bids. AMAT/CSCO/HPQ/INTC were springing to life- the Four Horsemen were snarling with Nietzche, 'That which does not kill us makes us stronger. And if you gaze for long into an abyss, the abyss gazes also into you.'
I had earlier in the week selected FSRBX/FSELX/FSENX as retirement fund candidates due to heavy weightings in WFC/INTC/AMAT/XOM. I also had BAC near the top of the watchlist as approaching a -40% drop from the April high.
So there was little hesitation in buying all of the above as the indexes turned around.
No opinion as to whether we retest/exceed the lows. At some point we all need to act, and today seemed to be as good a time as any to reverse the 'Sell in May' decision-> now 60% invested/40% cash.
Now that I've made the decision to go long, I'm going to wedge my feet against the slope, and hope the Four Horsemen 'don't stop.' The Pale Rider is never far behind.
NASA is on the march again with innovation
http://www.businessinsider.com/nasa-robot-robonaut...
Dabama
Dabama here....OK lets figure out how to save America.
Chorus of PPT actors---Sure what you got in mind boss?
Well I am thinking that drawing a line in the sand worked so well in Iraq and Afghanistan, that we draw a line on the SPX and defend it.
PTT hehe, we know hwo to defend it...we just make the hush hush call to Goldman, Morgan, and those newish guys, and they crank the futures...we just have to give them free money, that they can pump with, and they can also lend that money back to us to Support T-bills also. High five guys!!! We save the country, the market, and our debt all in one shot!!!!!
Dabama: OK good, so where should we draw that line....
PPT--deep thought............hey how about 1040, you know, like the tax form....yeah yeah,,,,,
Dabama: great and easy to remember, OK code word for da pump boyz is 1040 taxes. Just call them and say hey did you file your 1040 tax form yet....it's perfect
High fives, high fives.
shareholders to nominate board directors
http://tinyurl.com/237um42 Also: http://tinyurl.com/24fkg94
I think this is long overdue.
The Washington Post
SEC gives shareholders more power to nominate board directors
By Zachary A. Goldfarb
Wednesday, August 25, 2010; 8:58 PM
"For years, the nation's largest companies - from FedEx and Macy's to AT&T and IBM - have opposed proposed federal rules that would make it easier for shareholders to oust directors on corporate boards. These industry giants have said that the proposed rules would be costly and hurt average investors saving for retirement or their children's college education."
"On Wednesday, the companies lost the argument. The Securities and Exchange Commission voted 3-2 to approve new rules giving shareholders new powers to nominate directors to corporate boards."
Move over ebay
Here comes Alibaba
http://tinyurl.com/28rbpdg
Chinese e-commerce giant Alibaba.com gathers army of American sellers to take on eBay
August 25, 2010 | Matthew Lynley
Re: Health Reform Bill Taxes
And people think members of the tea party are nuts. Retirees are going to flip out. Most employers will be raising insurance premiums for active employees & retirees this or next year as well, meaning the taxes will be higher on the higher insurance costs/premiums. Tax on tax. What a novel idea.
Thanks for highlighting all the changes.
How do you say flat rate for everyone, no exceptions?
Re: Health Reform Bill Taxes
Health care has become the ultimate example of 'the tragedy of the commons.' A gargantuan honey pot of money is available through insurance (they always take their cut) and government. The family or individual who does not tap into it even for the most trivial reasons is a schmuck. Healthcare has become another 'right.' When one has a 'right' to anything, the costs be damned.
An example is my brother in law. He is an IBEW journeyman electrician and a damned good one. He is one that 'stretches' to give an honest days work. His union dues are outrageous but his medical is to die for. His medical covers everything from cradle to grave including dental. His kids had teeth braces even though they were not mis aligned by so much as 1mm. The reason was that they were 'free' and that if he did not use that benefit, others would. I don't blame him for his decision, he is a practical man and not an altruist.
There must be a way to socially allocate the katrillions of monies collected for healthcare and return it to the individual in a way that would allow each to make personal decisions. Some would purchase insurance and others would not. The range of options is endless but only if there are choices. The government gives you only one choice, a Hobson's choice.
futures 2:30am - Shanghai threatens b'down
S&P +0.70 / +0.07%
Level 1,055.30
Fair Value 1,053.69
Difference 1.61
Nasdaq +3.75 / +0.21%
Level 1,793.50
Fair Value 1,790.64
Difference 2.86
Dow +13.00 / +0.13%
Level 10,060.00
Traders looking for support confirmation is my guess. $, Eur/USD looks like testing of new respective support/resistance. A solid drop to under 83. Forex traders doing the monkey?
Let's see if the jobless claims joker can "put a smiiile on that face" today.
RISK REWARD
ALOHA!!
As I read all these posts and links about Obama and how he's not to blame becasue Bush caused this mess and about the rich and how they need to pay more taxes and how IBEW workers work hard and have outstanding benefits one word kept flashing through my brain ... The word is RISK!
Who takes IT? And who should be rewarded?
In America today the government and unions and the poor take on no RISK of capital at all. First the government produces none, they just levy taxes and create debt. Unions take no risk, they just use political connections to trade votes for wage leverage. How much RISK does a burger flipper at McDonalds take on? How much risk does a welfare bum assume?
So who is it that takes on the RISK in America? As it stands the vast majority of America and Americans want business to assume all the RISK while those who assume no RISK at all are given the REWARD. As a consequence those businessmen who see the writing on the wall make plans to either leave America and move their business operations overseas or they reduce their RISK exposure, by reducing their operations and eliminating jobs.
Say you wanted to start a business right now. How would you do it? Do you have enough money saved up to pay for office rent and equipment and employees? Or would you need to take on a loan to get started?
If you are employed right now, especially by a small business, do you ever even bother to ask how it is your employer(the RISK TAKER)got to a point where he was able to afford to hire you? All large corporations started as a small business at some point. They started with an idea and then grew that idea into a business. Microsoft was small and so was Apple. Even GE was small way back in Edison's garage.
I would like to take an informal survey of people here who have ever applied for an SBA loan to start a business. I will raise my hand and say YES, I did submit a loan application to the SBA. First I had to come up with a BUSINESS PLAN. How many people here have ever been faced with the task of creating a BUSINESS PLAN? These "steps" are part of the process of RISK ...
Now raise your hands if you have ever applied for a mortgage loan? Any one here have house payments? I cannot raise my hand since I have never had a mortgage. I have to ask you this. When you went to the bank with application in hand did they ask you for a WAGE AND BUDGET PLAN? Did they ask you to put up any collateral for your loan? When I applied at the SBA for a business loan not only did I have to present a BUSINESS PLAN but I had to put up property as collateral for the loan. My business partner had to put up his home in Walnut Creek, California as collateral. That was too much ... As my partner put it THE SBA WANTS US TO PROVE WE DON'T NEED A LOAN IN ORDER TO GET A LOAN! Well said ... The RISK of taking on an SBA loan was more than we wanted to assume. We ended up starting very small. In a spare room at my business partners house with a phone, a fax machine and some pricey estimating software called BID PRO. There was no fanfare or government grants as we were so anonymous we were invisible. It was an extremely stressful time as we both quit our jobs and were living off our savings. We started a multi-million dollar business from a room 12ftx15ft. Yet none of our employees could care less what sort of RISK we had on our backs. All they cared about was their pay check did not bounce. None ever bounced. The IRS could care less what sort of RISK we faced or the added stress of getting payroll deposits in on time. The IRS just feeds off your productivity and then shares you profits and then when you fail to comply to their rules they threaten you with everything from jail time to bank levies and property liens. Do you think my Congressman cared? Our only financial and moral support came from ourselves and family and friends, which was only a GOOD LUCK wish, no envelope with cash. When I think back on what I accomplished I am really amazed that I ever even bothered starting a business, because the RISK is just all consuming and overwhelming.
Now imagine if SBA loan requirements were applied to residential mortgages. Nobody in America would own a home as we'd be a Nation of renters.
Then when I hear comments that the rich are not paying their fair share I have to ask ... HOW DO YOU KNOW? Then what is RICH? Then what is FAIR? Then the latest place I am coming from is ... WHY TAXES? Why raise taxes when the US Treasury and the US Congress refuse to stop gargantuan spending and all consuming debt? What I am trying to point out via the US Treasury Statement is that the US Treasury could raise taxes 800% and we'd just break even on spending and debt issues. Pick a day ... any day ... Here try the latest ... Tuesday, August 24th. Total net tax revenues equals $1.08BIL USD. Total withdrawn from the US Treasury account at the US FED equals $12BIL. The US Treasury issued no debt on Tuesday, but wait until Thursday. It is like this every single day. Tax revenues never equal spending(outlays/withdrawals). Every single day every year tax revenues are always much less! MUCH MUCH LESS! Billions of dollars less. To the point where our country is TRILLIONS of dollars in debt and sinking fast.
Some of my best years owning my own business I grossed over $400,000 per year. In fact my business partner and I each grossed the same. We would read how some CEO of some big huge construction company was only paid $200,000 and laugh! Yet on the other side on that same W-2 that showed $400,000+ gross wages was the other two boxes that showed tax deductions for Fed and State that went over $150,000. Then when you see how we MAX out Social Security and Medicare, whereby we pay out the maximum level you have to wonder why anyone would say the RICH need to pay more. How much more is fair? Well, maybe $400,000+ per year is not considered RICH. It isn't if you compare that to Blankefein over at Goldman Sachs or Jamie Dimon over at JP Morgan or any other Fortune 500 CEO.
There needs to be a REWARD for taking on RISK. If there is no reward then there will be no risk. If there is no risk then there will be much less jobs in America. If taxing people more solved anything then California and New York would be debt free. More taxation never solved a damn thing and it never will. It really is that simple.
Yet one of those brilliant bloggers from SEEKING ALPHA, in my post FDRS TABLE, proposed to Tim Geithner that the US Treasury tax "consumption" in order to make people produce more and consume less. Hummmm???? I thought we already had "sales tax" for the POOR and "luxury tax" for the RICH!
Here is a novel idea. Just like there was no ESTATE TAX for the 2010 year lets try no INCOME TAX for 2011. I can hear you now ... "Hey, but our beautiful and ever-loving government wouldn't be able to survive!" Well, they can always just print up some more debt. Heck, they're going to do that any way whether there is INCOME TAX or not. They are right now ... 800% more outlays than revenue! Well on Tuesday, August 24th there was a 1200% REVENUE DEFICIT! I would only agree to pay more taxes if the US Treasury would agree to cut all spending 75% and pay down the principle on the US DEBT, not just interest. Otherwise, its all a waste of time and money, mainly "my time" and "my money"!
Next time your employer hands you your pay check think about RISK. And if you don't like your pay or your boss then do what I did. Start your own business and you take on all that RISK yourself. I guarantee you that you will not have time to sit on the sofa and watch American Idol with your wife. You won't have time to or money to go on vacation. There is a high probability that you will end up spending double the current hours you work for much less pay. Then there is an even higher probability that you will fail within one year and an even higher probability that you won't make it five years.
Its easier to just TRADE! Still even when you TRADE who takes the RISK? Okay ... and who takes your profits? Okay ... we're on the same page, just different paragraphs!
futures 5:30am - Europe bounces
S&P +2.50 / +0.24%
Level 1,057.10
Fair Value 1,053.69
Difference 3.41
Nasdaq +0.75 / +0.04%
Level 1,790.50
Fair Value 1,790.64
Difference -0.14
Dow -4.00 / -0.04%
Level 10,043.00
7 am note. French Banks gap and drop - credit agricole holding nice gains, soc gen. just turned red. Euro car manufacturers doing better.
Re: RISK REWARD
"When you went to the bank with application in hand did they ask you for a WAGE AND BUDGET PLAN? Did they ask you to put up any collateral for your loan?"
When we applied for a mortgage to build our first home, both my wife and I were working. We knew we could manage the monthly payment, planned to put in "sweat equity" (all interior and exterior painting and landscaping), but were turned down.
To qualify I had to be earning per week what the monthly payment would be. I was making $70/week before withholding and my wife's income was ignored because she could become pregnant and quit work. I understood the logic and never considered it discrimination, just good lending practice.
My dad cosigned for me, she did get pregnant, we still made all the payments and continued to save to build a bigger house which we paid off ASAP and were debt free by age 30.
Deferred gratification is what I later heard it called — we saw it as simple good sense.
When we added on to that second home 43 years ago (still there) the lenders required the house as collateral and a mortgage policy (life insurance on me). Instead, I opened a margin account and borrowed on my own assets — no policy, less interest and paid it off in two years.
Never did I ever think we would be paying off the mortgages on an entire nation in our old age.
What the hell happened to self-sufficiency?
Picture Horace Greeley saying, "Go West, young man... the rest of the people will pay your way."
Bond RSI scan
is giving off distribution zone and sell alerts for various bond etfs.
TLT is in a Distribution zone for 8 days.
FD: long TMV