Morning Call [7:28am ET] Today the market will be focused on (i) quadruple witching, (ii) developments regarding Greece, and (iii) the vote in Congress on healthcare legislation.
At this point the US Dollar is modestly stronger, and precious metals a tad weaker. European equities are up on average about +0.55%, which is about where Asia-Pacific equities closed.
Canadians seem amused at the strength of the Loonie, and the hype in New York over the strength of the Canadian economy. Seems a bit over the top for my liking. Also, a Loonie at par is a marvelous opportunity for snowbirds to take their money south to Florida and Arizona to buy relatively inexpensive real estate. The inflow of capital to Canada seems to be hot money, but the result of an over-heated Loonie will likely be the loss of Canadian manufacturing, loss of much-needed tourism and support for depressed US real estate markets, all of which represent more permanent benefits to America.
If the Bank of Canada was run by someone other than the former Goldman Sachs Canada managing director who appeared on the radar a week before being handed the job, I might not be so concerned this Loonie:USD play is not part of a scheme.
Have a great day.
CTA Trading Desk Post-Close Report
A stronger US Dollar (DXY + 0.65%) pressured equities (S&P -0.51%), crude oil (USO -1.78%), and precious metals (SLV -2.40%, GLD -1.78%) as traders unwound positions on quadruple expiry Friday.
With the House scheduled to vote on the healthcare bill Sunday and its outcome uncertain, traders were content to square positions unwilling to assume elevated risk ahead of the potentially market moving event. Hard to envision this particular legislation beneficial to financial markets in the long run, but anything is possible short-term during this period of enhanced government intervention in capital markets.
The VIX made a new yearly low 16.17 and rallied to finish higher on the session, notching a key reversal day (lower low, higher high, and a higher close). This type of reversal pattern is generally a reliable indicator of higher VIX prices, although a weekly reversal signal and the Bollinger Band set-up we mentioned last evening have superior predictive returns. Higher VIX prices usually mean heightened volatility and lower stock prices over the intermediate time frame.
If an early news inspired sell-off Monday morning is able to hold the S&P 1150 area, the market may be able to gather itself for a run-up to the 1228 level into the end of the quarter. Conversely any sell-off violating the 1150 area (January high) is vulnerable to a significant sell-off, especially if 1130 fails to contain the decline.
Risk is once again rising, stops must be tightened.
Have a great weekend.
Comments
Cara 100 Ratings Changes
Good morning.
BBBY - Sterne Agee Initiates Coverage with a Neutral.
ORCL - PT Raised from $28 to $29 @ Jefferies. Buy
RIMM - Wunderlich Initiates Coverage with a Buy. PT = $96
--------
NKE (Cara 100) Poised For Breakout? :
http://tinyurl.com/y9le9ot
Looks like fed rate increase rumor has legs
http://www.bloomberg.com/apps/news?pid=20601087&si...
Vadym was right yesterday. My limit call buy order on UUP did not go through yesterday. Too bad, it's going to be more expensive today!
Fortunately, I'm 100% cash.
I've problems with getting the U$D future charts from http://futuresource.quote.com/charts/charts.jsp?s=DX%201!&o=&a=V%3A60&z=800x550&d=medium&b=CANDLE&st=
Any better sources for U$D futures?
BIDU
Looks like the reaction to the news of Google pulling out of China may finally be wearing off...then again I'm biased as I initiated a short position yesterday.
Since January when it was first reported that Google may ultimately pull out of China, BIDU has gone up from $385 to $575 premarket today, a gain of 50%. It has had 3 gap ups (including today) on this news alone, each one resulting in a smaller gain. If I had the guts to put on a bigger trade I would short this again in the pre-market.
Cara 100 Update (Final)
BBY - Upgraded to Buy @ Government Sachs
CHRW - Macquarie Initiates Coverage with an Outperform
WAG - Caris & Co. Initiates Coverage with an Above Average. PT = $40
WAG - estimate lower at Credit Suisse. WAG 2010 EPS estimate fell by 2 cents to $2.23, 2011 set at $2.70. Near-term outlook is challenging. Maintain Outperform rating and $42 price target.
Gas & Oil "Goldrush" On In Pennsylvania
Land owners in the state are selling the gas and oil rights to their land as the frenzied exploration of the Marcellus Shale is underway in the Keystone State.
There must be a way for traders to profit from all of this. Two of the big players I've been able to uncover are Range Resources (RRC) and Mesa Energy (MSEH.OB). Tons of equipment, manpower, water and roads are needed in this exploration. Two equipment names that should benefit are Ingersoll Rand (IR) and Caterpillar (CAT).
If any of you folks know of any publicly traded companies involved in the Marcellus Shale Exploration, I'd appreciate hearing from you. This operation is approaching an advanced state of lunacy here.
Thanks,
BH
India raising rates
March 19 (Bloomberg) -- India’s central bank unexpectedly raised interest rates for the first time since July 2008 after inflation accelerated to a 16-month high.
The Reserve Bank of India increased the benchmark reverse repurchase rate to 3.5 percent from a record-low 3.25 percent and the repurchase rate to 5 percent from 4.75 percent, according to a statement in Mumbai. The surprise decision comes a month before the bank’s scheduled monetary policy meeting.
India and China, the world’s fastest-growing major economies, are withdrawing stimulus steps as stronger consumer demand stokes inflation and asset bubbles.
http://www.bloomberg.com/apps/news pid=20601087&sid=aUXNPMmbrvC0&pos=1
Who the heck do the Indians think they are? If America's finest can't spot a bubble, then it can't be spot by anyone...;)
bon weekend
Yuan and PALM
Our Big Mac index shows the Chinese yuan is still undervalued
"Our Big Mac index, based on the theory of purchasing-power parity, in which exchange rates should equalise the price of a basket of goods across countries, suggests that the yuan is 49% below its fair-value benchmark with the dollar" Source:Seeking Alpha
What are the best ideas to play this long term trend? (EURO/USD is LT downward is my opinion)
Vlad, loved your piece on not fighting the trend. I was right about PALM as a short last year ever since the launch of the PRE but the stock kept going up so this is a well deserved lesson not to short trend, eventually I made some of it back but I should have waited for the trend to buck before committing to the "short thesis." Vlad any comments on PALM now - would I be right in saying we are well into the trend or does the BUY alert on RSI App pose a concern?
FD: I still see PALM as a great short with only a buyout as the only salvation. I took out 3 put options with different time horizons knowing I have been wrong on timing many many times..
Thanks for any comments all.
90% Cash, 2.5 years reading this blog
Spot gold? Why the extreme move down?
Any thoughts. This is not normal fluctuations
tia
Unbelievable movement
in Mosaic... what are the quants planning ?
Re: Spot gold? Why the extreme move down?
this is quite normal,
rumours or actual rate increases by the fed move gold down on the day/week.
longer term we know that gold can rise alongside interest rate hikes but for the past while gold has been capped, along side weak volume on gold miners which is a sign that there has been little conviction on any upside action.
base metals suffer either way as do most stocks. its great jawboning by the fed, raise 1/4 of a point after talking about it to artificially appear to be fighting an inflationary monster on the horizon, which has the effect of bringing down gold and commodities.
commodities as a class are not going to fare well going forward in a situation where even occassionaly rates are increased. it will create a chilly climate for these assest, luckily gold is not a commodity and it will after some suffering do well but what a ride its going to be.
as always, the Jim rogers, the sorros, the fabers, the roubini's, their advice will prove either aimless (ie: extreme volatility comments that dont really say much) or flat out wrong (jim rogers pumping commodities that are allegedly going to run out because of chinese demand despite it not being proven)
they will leave behind bodies of followers who thought we were running out of copper, gold or oil. we arent, and a 5 year chart of oil tells us we've had a massive run up after a bigger dump and no volume to show that they will ever return to that status. peak oil is going out of style once the toronto star and new york times start running stories like "we all know that oil is in limited supply and will continue to be in teh future, but what can we do in an oil scarce future to remain competitive in a global economy?"... when people collectively assume these ides are true, it means they will have their money taken from them by hucksters who will pretend to agree while selling them oil shares..
look at UNG for your proof, new supply continues to come on line. there is nothing to say it will be scarce 5 years from now let alone 10.
without some mishandling, the fed will look to capitalize on the EU weakness to gradually raise rates which will hurt commodites and the PMs for some time imho, we need an upside breakout on volume to prove otherwise (as per my prior comments of a move above the 1140 ish area this is likely some ways off)
good luck gang.
PUDA close
to breaking out with volume.
POL Is mocking me
Plastics plastics plastics where have I heard that. I was expecting a $9 break all week on this one. Had a 9.06 limit buy order.Gaped right over me and its now mocking me at 10.25.
health care vote
Right now the market is waiting for the vote. I think the market will have one big push higher to crush the shorts-one more time if the health care bill is voted down. If it passes I feel the market will move down sharply. It is 50/50 at this point...
Any thoughts on this?
Re: Yuan and PALM
Seeker,
glad my post helped. Being right on the underlying company and being right on stock direction is not the same thing. KTEL shorters at $20 in 1997 were right about stock being worthless - didn't save them from getting killed as price moved to $20, before collapsing and disappearing altogether. Trading is not just about direction - it's about timing, risk control and discipline.
PALM got a headline today which, if not a someone's mistype is a total novelty for me - I don't believe I've ever seen this before:
March 19, 2010 9:06:20 AM
Palm, Inc Price target cut to $0 from $4 by Canaccord; Retains Sell rating
Chart wise, it's in no man's land. can slide lower, can bounce on short covering or buyout hopes, can drift here for a long time... I wouldn't take any position here, this play is about over for shorts and not at all ripe for longs, IMO.
Re: Spot gold? Why the extreme move down?
With all due respect. This is normal? Please see attachment
Re: Spot gold? Why the extreme move down?
photogray -
This is normal. The plung protection team has been strategically crashing gold at the NY open for years now especially when massive QE takes place (treasury auctions) or when triple witch is upon us. It's been discussed here and all over the blogs ad nausem. Go to Gata or just google gold supression or plung protection team.
Cheers.
All out
Don't like the ominous healthcare bill action this sunday nor the ides of March stats. Lack of volume could be here for a long time. Just gonna watch and wait if it takes all summer with my trading cash. Minor loss pulling out but it could be a lot worse next week ....
another win for bloomberg
Of course this won't end here. It might end up with the Supremes. I'm sure the Fed will drag this out until their last appeal is exhausted. After all, they can afford the lawyers - since they're the guys who print the money.
http://www.bloomberg.com/apps/news?pid=20601087&si...
March 19 (Bloomberg) -- The Federal Reserve must disclose documents identifying financial firms that might have collapsed without the largest ever U.S. government bailout, a federal appeals court said.
Re: Spot gold? Why the extreme move down?
Between monday and tuesday, GLD gapped from 108 to 110 overnight. Now it just reversed the gap. This is normal considering what U$D charts are doing since yesterday. For couple of days I was writing how dollar should bounce and gold and PM are weak on TA. It did happen as it should.
Re: All out
amen... same.. started early yesterday from 16 positions.. keeping 2
Although, I wait every day, all day, for trades like the
the Somx's, amgn's, genz's, etc... Back on the ' Vad ' pad !!
Re: Spot gold? Why the extreme move down?
dr.cosa
Much of what you say makes good sense to me. I totally agree with your views on hype, hucksters, and the like. HB&B will be hyping peak oil at the tops, and saying it doesn't exist at the bottoms, and investors that blindly follow predictions such as this year's GS $85 oil prediction will be taken to the cleaners. As with all these sorts of things, timing is critical.
At the same time, I believe that peak oil production is a real issue, and over the next five to ten years it really will cause us a great deal of grief.
I also feel that looking to UNG for proof that peak oil isn't real is misguided for several reasons.
First of all UNG has well-known problems that go way beyond natural gas fundamentals. Chart UNG:$NATGAS on a daily chart and you will see what I mean. The instrument is just absurd. Another reason to watch your wallet when dealing with HB&B.
Secondly, because of infrastructure, natgas and oil are not fungible commodities. Generally speaking oil is used as a transport fuel, while natgas is largely used in heating and electrical power generation. That's just the way our infrastructure is set up to use each fuel.
Case in point. The US produces 30% of the oil we use, but we produce almost all of the natural gas we use. If they were fungible, we would import vastly less oil, and the price differential between natgas and oil per gallon-equivalent would be zero. It's not. If you live in Utah, natgas is $0.93 per gallon equivalent. Try getting gasoline at that price.
Option ex days have been duds.
Haven't option experation days been really quiet for an extended period of time?I want some volitility! Oh wait, the games started.
Bob
Re: Spot gold? Why the extreme move down?
dfx:
some reasonable points, though i believe that the relationship dynamic is constantly albeit slowly changing.
coal is undergoing a resurgence, and with improved extraction and efficiency methods i believe it will be a goto energy source especially for the US going forward. it will be cheaper to access and process than oil sands especially in an environment of $60-$70 oil. nat gas is tricky simply because transport issues are more risky and costlier than bulk coal freight moving across the country by rail or by boat from say australia.
w/ the gradual speeding up of hybrid production over the next 20 years nat gas will fuel more than just oven's and furnaces as the power generation will eventually make it to plugged in cars recharging alongside coal and hydro power.
add to this the massive underwater finds in both oil and gas that continue to pop up, and i fail to see a reasonable argument that says even in an environment of declining production of oil, that there will be measurable suffering as opposed to other sources taking its place, much the same way coal was pushed to the side in the 19/20th century as crude took centre stage. we have plenty of coal, and aer better at burning it and extracting it. imagine the improvements over the next 20-30 years in these process for both oil and nat. gas? especially considering how small the oil sands were reserve wise 30 years ago till today, all it takes are changes in the price structure and technology to be a game changer.
regardless, i think the energy play has become too crowded w/ too many mainstream commentators parroting the peak oil argument which was laughed at 6 years ago when i used to bring it up by most. when i hear some self-righteous condo dweller tell me how the suburbs will be ghost towns in a decade beacuse gas will be too expensive, i laugh and show that a chart of suburban development going higher YOY for the past 20 years along side a gas/oil price doing the same thing. my question is: if higher oil prices were met with increased suburban development, why would it suddently reverse?
Pairs Trade
I paired up my short BIDU with a long SOHU at $54.5. SOHU has a small share of the search market in China and with Google leaving, it could be a beneficiary.
Re: All out
Same here, sold all positions on open today except for CEF and XOM. Also sold 70 calls on XOM a few days ago.
Looking for more weakness next week and than a jam up into the quarter close, we will see.
bobbyo, yeah what a bunch of skinny, ah, crooners, would not mind having a shot at their diet and also my favorite stones song. I have read that before going on tour Micky spends 4 hours a day working out with Minny to get ready. Then again, maybe it is just genetics.
It is early but here is one for later.
http://www.youtube.com/watch?v=LPnAx5SO-PY
Vad, love this statement of yours, "Trading is not just about direction - it's about timing, risk control and discipline." Excellent!
C$
forewarning: Do you ever sit down and compose a post here about something you think people would find interesting and useful, only to find, when you are finished organizing your thoughts, that you’ve probably only said something mundane like: “buy low, sell high!”? Well this is such a post.
Canadian Newspaper headlines, with their usual impeccable sense of bad timing, have been blaring, with recent increasingly breathless excitement, Canadian Dollar strength. I use the Canadian Dollar Index at stockcharts to follow its moves.
http://tinyurl.com/ydjcz48
Granted it is bullish, and if it performs a successful test of its recent breakout above 97.79, is likely to push to the psychological resistance level of 100 (par), fairly easily. Breaking and holding that might be a bit trickier but if it does, it's got no serious/identifiable overhead resistance until around 101.80-102.00.
So, from a purely technical perspective, it has a few challenges ahead before it can achieve upside potential targets of 2% and further out 4%, from these levels - hardly a home run. What was a home run was catching this move when it began at around 76.00, last March. That's why I chide the paper's "bad timing".
Furthermore, there are probably more important non-technical issues which will provide significant resistance to achieving the last 15% of this potential move (76-98-102). First, C$ is a risk play, so if the animal spirits turn globally, look out below! Second, part of this strength is due to US:EURO relative strength. If the wind starts blowing the other way on that one, look out below! Finally, as the fiscal scrutiny news fads swing from PIIGS to UK to Japan to US, around and around, I doubt it will be long before someone notices that Canada, for all its perceived fiscal superiority is projected to incur some pretty nasty deficits over the next few years and might also be in the throes of a housing bubble.
So, how can one capitalize on C$? Short? Why? C$ has potential support at 97.79 and then really strong likely support at around 93.00. And I doubt we need worry about the monstrous support at 77.00, which will only likely be needed if financial Armageddon hits again. So, a nimble investor might find a 1:1 risk: reward short on a break of 97.79 with a target of 93.
Bill has alluded to the correct procedure for exploiting this strength in this environment a few times this week (at least I think it hasn't been done tongue in cheek). Mention of snowbirds and buying US assets and such. Myself, I'm using this as an opportunity to diversify my portfolio globally.
It really struck me today (again), right between the eyes, that when looking at the C$ chart you are actually looking at a chart of the relative performance of a hedged position in a US$ asset vs. an unhedged position in that asset. The math is simple, of course: e.g., SPY:(SPY:FXC)=FXC.
So, if you are like me and basically buy stuff, like S&P 500 index on a fairly regular basis, there are mindlessly simple risk controls one can take just by observing the TA of C$. Studying the literature of hedging US investment for Canadians, the conclusions suggest some benefit, but the conclusions are in debate and the implementations are far from clear. Well not for me, anymore. It's simply going to be a matter of shuffling from, say, 80%-20% hedged:unhedged up to the other extreme, 20%-80% hedged:unhedged depending on where we are in C$, technically. Of course, all the preceding TA discussion of C$ suggest that it's the right time to be considering the timing for a rebalance to something like a 20%:80% hedged:unhedged position for my US stocks, which I think is consistent with the ideas that Bill has mentioned a few times this week, and I've been concerned with for months.
Apologies, again, for the triviality of this post, but this community is so generous in teaching that I'd like to throw this out for your criticism.
Want to see the Quants at work ?
Look at price/volume action since yesterday morning in MOS ... It has been awhile since I have seen so many 100 - 300 share lots move an equity down so fast...
Re: Spot gold? Why the extreme move down?
dr.cosa.
I'm with you on the demise of the suburbs issue because of peak oil. It *could* happen rapidly, but only if the dollar were to seriously crash - bringing us right back to $140 oil. Not because of oil geology. Peak oil will affect the suburbs, but it will probably take 20 years. The housing crash and the shadow inventory is a much, much more immediate issue, and I'm guessing condos will take a much bigger hit than houses will once all the chickens come home to roost.
I was not aware of the improvements in coal use and extraction. My last information said we were gradually moving down the BTU content curve - from anthracite, to bituminous, to sub-bituminous. Progressively lower energy content, because we have mined out the high energy stuff already.
I agree that hybrids (and/or electric cars) might slow the problem down, but it will take longer than you think. There are 200 million cars on the road in the US. To replace all of them with hybrids (even if there was enough lithium out there to do that) would take 20 years given our production rate of 10 million cars per year. In 2009, there were 300k new hybrids registered in the US. Clearly, all cars produced today are not hybrids. At best its 3%. So it won't be 20 years - it will be more like 40. Fast enough? I'm thinking probably not.
Oil discoveries - even the fantastic new Tupi fields in deep offshorre - are not keeping up with production. 2009 was the best year for discoveries since 2000, 10 billion barrels. Of course, we consumed 31 billion barrels, and that was a slow year because of the recession.
Last point. Technology involving physical things do change, but slowly. The Model T Ford got 25 miles to the gallon. Now a particularly advanced car can get 50-60. Contrast that with computers, where the changes are crazy fast. If we could apply computer technological advance paradigms to physical systems, in 30 years our cars would get 320,000 miles per gallon. We can only count on technology in physical systems for minor improvements, not revolutions.
We can't replace oil with coal without a massive infrastructure investment - which we aren't making. We may make it eventually, but the longer we wait, the more expensive it will be, and the larger the shock will be that causes us to build it. We recovered from the 70s oil issue, but it took us years, and years to do it. During that time, oil was a very good investment. But its all about timing. If we listen to HB&B, we'll miss the boat. And I think the dollar/forex moves will probably trump everything in the short to medium term.
Gad, this is becoming oil drum again. Well at least we're polite about it, that's good. :)
Re: C$
Mackinaw
Densa here. Could you please explain how you are actually hedging the currency risk? TIA
Re: C$
Mackinaw, your comments are only trivial if one is based in U.S. dollars. For the rest of us, far from trivial, it has been a major factor in whether trades are profitable or not. The past year and a half I've made good decisions on trades, only to see them wind up as losses as I didn't hedge the currency properly. And don't get me started on gold!
Re: Gas & Oil "Goldrush" On In Pennsylvania
ALOHA!!
BH-That same "gold rush" is going on in Louisiana and Texas now as well, especially in the Haynesville Shale. I even went and took a look myself in the Red River Parish region of Shreveport, Louisiana and its all drill rigs and pipelines galore. As I drove through the region the side of the road was lined with pipelines. I stopped at a truck stop for gas and had to dodge all the rigs and service trucks flying in and out. While there may be 10% unemployment in America I know there is one truck stop where there is 0% unemployment!
A lot of the big players on these gas fields have subsidiaries who offer up services for exploration and production drilling and transportation and testing, etc. These two companies I have direct relationship with as they are also going gangbusters over at the Haynesville Shale in Louisiana.
Chesapeake Energy(CHK:NYSE) and their subsidiary NOMAC Drilling Inc.
LINK: http://www.chk.com/Subsidiaries/Pages/Nomac.aspx
PetroHawk(HK:NYSE)
Both of those companies are major players in the Louisiana and Texas oil and gas production.
Then I have the following companies I also have a direct relationship with as well and can recommend.
EnCana Oil & Gas(ECA:NYSE) a Canadian company that split last year offloading its heavy oil component Cenovus(CVE:TSE). Now EnCana is a bigger more focused natural gas play.
Spindletop Oil & Gas(SPND:OB) out of Dallas, TX.
LINK: http://www.spindletopoil.com/
In terms of trading I would stick with CHK, HK and ECA in the gas sector.
Why I like these companies(CHK & HK) and the Haynesville Shale play is that they are focused in the southern region of the USA where I believe has fared much better through this economic crisis. I believe it was NYU Grad who pointed out that a lot of Fortune 500 companies are based in Dallas, Texas. Most of America's refineries and oil and gas operations are based in the south as well, especially Louisiana and Texas where the US government's strategic reserves are.
Encana(ECA) is more diversified in Canada and the USA, a great company to boot, eh?
Re: Spot gold? Why the extreme move down?
dr. cosa -
"if higher oil prices were met with increased suburban development, why would it suddently reverse?"
But the housing market is in free fall and condos always lead housing in weakness. Reversal is in place and will not recover until residential units match incomes at least a decade from here. Suburban development is kaput, my friend.
Are we talking about U.S. energy policies or investment? In regards to investment, secular trend in oil, coal, nat gas, and railroads look strong from a hard asset perspective for safety along with likely pricing benefit of consumer inflation/fading $USD. That's two certainties. Furthermore, when the inevitable war erupts in the Middle East to kick start an idle U.S. economy to maintain political power, it'll be a lotto winner in these assets, not that I want more war. Make that three. Also consider Putin controls gas pipelines into Western Europe and the U.S. and China is locking in massive long-term energy contracts with Brazil and Russia using their own monopoly money outside the Comex. There may be an energy surplus but the fact that the Saudi mega fields are over half-century old with opaque production data out of OPEC for decades, my guess is production is on the wane. A huge tell is the centralized gov'ts are eagerly positioning themselves to diversify away from Comex trade and own long-term energy resources and their delivery. It all simply means higher prices rather than managed prices.
Re: Spot gold? Why the extreme move down?
davefairtex,
With all due respect, a few observations:
"Progressively lower energy content, because we have mined out the high energy stuff already."
U.S. strip mines vast amounts of coal from the Powder River Basin out West and this coal is lower btu than the deeper tapped out Appalachia and other Eastern coal sources. Even so, the U.S. is the "Saudi Arabia of Coal" and it is a cheap and major energy source. Go visit the Black Thunder Mine and find out! U.S. Military is agressively pursuing coal-to-liquid to fuel its aircraft but cannot get Congress to allow more than a short-term contract with producers. That's coal in oils pocket, ya know.
"To replace all of them with hybrids (even if there was enough lithium out there to do that) would take 20 years ..."
There's an abundance of lithium out there. See SQM. Hybrids are merely a way to get consumers into partially non-combustible mean of personal transport. I believe small (sub 1.5L) highly efficient turbo diesels, as found all over Europe, is a brilliant solution to high fuel costs along with clean, fast, and efficient trains. Hmmmm. Hybrids are a fad as will be the electric car which along with steam lost out to combustion a century ago.
"The Model T Ford got 25 miles to the gallon."
I own a 1929 Model A Roadster and mileage depends on the position of the fuel mixture knob on the dash along with proper use of the spark advance setting. Mileage may vary ...
"We can't replace oil with coal without a massive infrastructure investment - which we aren't making. We may make it eventually, but the longer we wait, the more expensive it will be, and the larger the shock will be that causes us to build it."
Go to page 3. Coal is on the rise and the leader as a U.S. energy source.
http://www.eia.doe.gov/emeu/mer/pdf/pages/sec1.pdf
Just sayin' ....
Re: BIDU
IMHO - It was interesting to see -
* GOOG recovered all the >10 pnt loss yesterday AH, this morning before open. This could be an OPEX effect. GOOG has gotten a lot of bad press lately, reminding me that of GS just a month ago. It could be a positive for GOOG once the final decision is out, go or stay. GOOD should be a better long play than BIDU on valuation and growth.
* BIDU sold off both times with vol. when the news broke and price spiked. This feels like the market is pricing in the top ($580-590). The news yesterday has little credit considering the source. Today's action is either basing or an OPEX fix. Basing at 570-565 level isn't good for da bears as it erases oversold condition. Today's candle looks bearish as of now, but we need follow-through on Monday with vol. BIDU could rally higher if it pulls back first to trap more bears and kill some retail bulls.
* Tencent - Interesting that it pulls back after earning, and in the face of GOOG's fall out. I think they have higher revenue and market cap than BIDU, but only traded $20+. They issued an warning on limited rapid growth.
http://tinyurl.com/yjyuhpe
In my limited experience in trading, I'd be hard press that the news haven't baked into both stocks by now.
(discl. short BIDU, thus biased)
Re: Spot gold? Why the extreme move down?
Dr. Strangelove (so many doctors here)
I agree we can do coal to liquids. Are we? No we are not. As I said previously, we can't convert our coal into transport fuel without a massive infrastructure investment that we are not making. Constructing a CTL plant doesn't happen overnight. Peak oil is a transport fuel issue. Coal will not help, until we spend that money on CTL. Which is not happening.
Regarding electric trains. I agree, they would help a great deal. Well they won't help suburbs, but thats another point. Are we making train infrastructure investments - that take 10 years to bear fruit? No we are not.
Turbo diesels will help too. Of course it would take the usual 20 years to replace the transport fleet with turbo diesels if 100% of our production was tooled up and ready to go. Are we building them? No we are not.
Likewise, natgas for vehicles would help also. We aren't doing that either. Honda is the only company that makes a natgas car for the US. I think total production was 6000 units.
Interesting points re: lithium. I haven't looked into it. I just assume there will be lithium production bottlenecks if we really want to go from 3% of production to 100% of production using them overnight - same way there was for silicon for a while with solar cell construction. The problems can always be fixed -- given time. It's always about time. But people want to drive today - not 10-20 years from now.
My point I think still stands. Lots we can do to help, but it all takes time - 10-20 years to take effect - and we're doing none of it. When the next oil-related shock occurs, the amount of money that will change hands will be enormous. We'll start doing all the things you talk about, which will bear fruit many years down the line. In the meantime, certain people will make a truly incredible amount of money.
You know, saying all of this, it's almost as if someone or something is setting this situation up. If I were conspiracy-minded, I might think that this is being done deliberately. Avoid a US strategic response to a very clear transport fuel problem coming in the near future, entice folks to live in suburbs where they absolutely have to have that fuel to survive, and the opportunity to make money on that situation will be ... astonishing.
Think HB&B might be interested in such a setup?
As a trader, I'm seeing opportunity. I'm just waiting on the timing.
As an American, I'm not happy at all.
Quick setup example - PALM
Chart shows what many will recognize as DBI setup; second screenshot is actual execution of a trade for so-called scalp type I - big shares, smaller movement. SS means Sold Short, B for Buy (in this case cover short) in the Side column; Price and Shares is self-explanatory, P/L is profit/Loss of course.
the consumer
Even on a down day like today, retail, financial, & discretionary are still outperforming the S&P. Meme of the consumer's return is still in place, from what I can see.
Re: Spot gold? Why the extreme move down?
davefairtex -
Thank you for the response. Generally agree with your thoughts. I believe after the mid-term election, Congress will be more aligned with U.S. Air Force in setting up CTL 25-year contract to supply this fuel to all its jets for energy security. Pilot plants are all over with emissions being the new tech there. All the jet fuel for the U.S. Air Force is huge supply demand and make CTL the David to oil as the Goliath. It's coming with the shift in power within Congress.
"Turbo diesels will help too. Of course it would take the usual 20 years to replace the transport fleet with turbo diesels if 100% of our production was tooled up and ready to go. Are we building them? No we are not."
Ford makes a great little turbo diesel for decades ... in Europe.
Gotta go.
question for Bill re IMF bailing out Greece causing $USD crash
Bill,
From yesterday's blog:
"If the IMF is forced to bail out Greece, and in turn other members of the EU, the Euro will strengthen and the US Dollar will collapse, causing asset prices to soar in the world."
I have a hard time seeing a mechanism whereby the $USD collapse would come about?
Sure, the IMF would spread the grief around outside of the EU, depending on which countries it could shanghai into funding the bailout(s), and the US would likely take a hit from this, but why much more than other participant countries?
For now it does look like the IMF will get the honors, if so today's market gyrations ($USD up, assets down), aside from opex churn, could be the head-fake before the major move?
The S&P has so far not even broken down out of it's uptrend channel from the Feb. low, and nothing else I watch has given indication of a significant trend change yet. Admittedly the Chaiken moneyflow indicator is showing the potential for a trend change here, but that could always be worked off by a bullflag type of sideways churn.
Regards,
William
One blogger's take on Connacord's $0 target price for Palm
http://jessescrossroadscafe.blogspot.com/2010/03/c...
The VIX stochastic
looks like a rocket ready to launch. A breech of about 27.60 would be a big red flag.
Re: question for Bill re IMF bailing out Greece causing $USD ...
cobben,
I spent today in meetings explaining my position that a failure in the $USD would follow a near-term run-up, which would knock down the gold price maybe a further -$100. That's when I anticipate buying those Gold babies being thrown out with the bathwater because I anticipate a later weakness in the $USD, which I anticipate would push gold to new highs, probably above $1500 by year end. The latter would be caused by a stronger Euro, initially. Later on, nobody knows for certain, but my take is that all currencies will weaken as the debts against many good assets in many countries cannot be repaid and must be written off.
Re: One blogger's take on Connacord's $0 target price for Palm
Les,
Did you mean Canaccord, which is the correct name of the firm I was associated with many years ago, or 'Connacord'?
Btw, I hold the firm of Canaccord, and their Chairman, and my former partner, in high esteem. There are days when I look back and wish I never left.
Re: Quick setup example - PALM
Vad did you use a limit SS order to fill those shares? And do you have a limit buy to cover when you moved out of your position. How much volume do you need to scalp 5000 shares. What other parameters do you have before you are willing to scalp a stock with a large number of shares. Float, Average volume ect.
Thanks, ahead of time,
Bob
Re: Quick setup example - PALM
Holy moly I just looked at the volume on Palm. 125 million traded today the float is 154 million. That is quite a turnover. Scalpers paradise.I think I already answered a lot of my questions.
Bob
Re: question for Bill re IMF bailing out Greece causing $USD ...
Bill your views on a near term dollar run up followed by a big move down puts words into my vague feelings of late. The euro is looking really squirrelly, I'm not sure why - the Greek thing seems contained. Yet the dollar looks like a rocket ship right now, and I don't know why but I certainly don't want to get in the way. And I've been getting this bad feeling about gold too. I'm not tempted to buy here at 1100. I don't think we'll get buying support this time from euroland, so I suspect if the buck rises, gold will get hurt this time around.
Perhaps people in euro-land are thinking the Fed will raise rates 0.25% and the recovery is happening and the consumer is coming back and all is well here in America. A clear case of "grass is greener elsewhere" yet that's my gut sense. Who is least-worse? That's the buck.
Yet the whole debt default thing is waiting in the wings, chickens waiting to roost while the cows come home. I feel like we're on the deck of the Titanic, we've hit the iceberg, yet people are listening to the band playing, having a nice night out, and not quite believing that such a nice ship could ever sink trading euros for dollars, etc.
Hows that for four metaphors in one paragraph? Probably enough for now.
I'm going to happy hour, its 70 degrees outside for the first time in months - time to go.
Modern Day Magic
Illini- Recall this post from 2009?
Modern Day Magic
Submitted by 2nd_ave (4229 comments) on Thu, 06/11/2009 - 18:32 #32286
http://tinyurl.com/mcysx3
If anyone knows where I can find this album in digital format, it would make my day.
Marie Cain's 'Modern Day Magic' was the theme song for WMJC in Birmingham (Michigan) in 1976 when they first went on the air.
The most I can recall of the opening verse/refrain:
"I sit myself down
And put a piece of plastic on a round revolving tray
I turn up the sound
And suddenly you're singing out to me forever..."
"Modern day magic keeps you with me even though we're apart
I wish there were a modern day magic that could mend a broken heart"
http://boards.straightdope.com/sdmb/showthread.php...
Scroll down to 6.21.08 1234am and click on Modern Day Magic, which will open your media player. I don't think it's the original version. But close enough.
Enjoy.
Re: Modern Day Magic
Thats one nice song 2nd.
I have a few years over you and when I was at Illinois in early 60's the most played artist on the Juke Box was Dave Brubeck. Listening to "Blue Rhonda a la Turk" still brings back memories. One up and coming folk singer that I remember had a concert in Champaign was a young Joan Baez. I still like her voice and style.
Re: Modern Day Magic
Every time I play "Blue Rhonda a la Turk" I remember a time when a disk jockey was asked to play... "the Brubeck piece about the Turk on a blue Honda" ;-)
Another comes to mind: "Play something by The Loneliest Monk."
Re: One blogger's take on Connacord's $0 target price for Palm
linguistic slip o' the tongue there Bill. My error mirrors a rather nasty word in French. My bad.
What is your take on PALM getting the short end of the stick like that? Is there any importance in it, apart from the fact that investing in quality stocks make a difference, as the following link suggests?
http://www.tickerspy.com/newswire/?p=1778
Saturday Morning Coffee: Just Charts
http://ronsen.blogspot.com/2010/03/saturday-mornin...
Re: question for Bill re IMF bailing out Greece causing $USD ...
Dave,
When you say "the Greek thing looks contained" do you mean the jawboning has temporarily put it off or it is really solved?
Seems to me the EEU is in a no-win situation with a single currency and extremely diverse national economic data (coupled with an unhappy history and memories).
This makes me think Bill's outlook for all currencies weakening is right on. As for European economies, Germany looks like a front runner and ultimately may cause them to bolt from supporting the internal excesses of other members.
Note that I'm almost always looking at medium to long term effects rather than short term trades. So my opinion on this may be irrelevant.
In the long run, when the cows come home to roost, even the most stalwart may turn tail and fly the coop :-)
Robert Prechter
Is there a subscriber of the Robert Prechter newsletter on this forum?
I was keen to now is positon on commedities and corn in particular.
Any subestions about interesting blos/sites about commodities?
I've tried Google but didn't find anything interesting.
thanks
Re: question for Bill re IMF bailing out Greece causing $USD ...
Dave, I strongly believe that 2009-2010 is a replay of the 2003-2004 script. If you compare the charts, you will see the striking correlation. Not surprising, as the Fed is playing the same reflation script. If so, dollar can keep going up till summer 2010 and then plummet again. Gold and PM should do a reverse play. This is consistent with Marc Faber's call for 20% stock correction in equities.
BTW, it took centuries for the Roman empire to die the inflationary death, it could take at least a couple to several decades for the same in Western World. Europe is in much worse demographic shape than USA.
FD: mostly in cash and small long in U$D.
Re: Quick setup example - PALM
Bob,
1. "did you use a limit SS order to fill those shares?"
Yes, limit to enter, hitting the bid
2. "do you have a limit buy to cover when you moved out of your position"
Yes, and since it was planned exit point, I bid those 5K shares allowing a seller to hit my bid. Nice additional benefit of this way to fulfill the order is getting rebate for added liquidity (you know, that same that is allegedly available only to some sinister entities). Makes serious difference when you play big shares.
3. Volume and other parameters of liquidity for playing big shares.
Just look at level 2... I am confident a single glance on it will answer your question :)
Re: Quick setup example - PALM
Thanks Vad,
Sorry to pester, but more questions come up every time you answer. Here it goes.
How much does trading costs factor into winning ratios. I assume a round trip on 5000 shares cost $50 or 10% of your profit. Then you pay 40 to 50 % on taxes. Net winnings on a 500 dollar profit is about $225. On 1:1 trades it would seem that a winning percentage of 75% would be minimum to stay profitable.
Not trying to depress just trying to figure out what it would take to make a living scalping/daytrading.
Bob
Re: Quick setup example - PALM
Sorry, taxes is something beyond the scope of my expertise, too many variables here. Also, taxes apply to any kind of income, so I can't accept point of view of activity being profitable or not depending on taxation. You flip burgers for $80 a day, or you flip 5K shares for $450 in 5 min - and then you pay taxes on both... :)
Re: question for Bill re IMF bailing out Greece causing $USD ...
It does seem like a sea change has occurred in the narrative over there. It's no longer about the stimulus not being big enough. Now its about how much they have to cut back so those bond vigilantes don't make borrowing costs too high. I think that's euro positive.
While there does not seem to be much of a will in the euro government to check their member countries that violate the budgetary restrictions, perhaps the hedge funds are stepping in to perform that function.
Yet I think its probably in the interests of Germany and France to keep the pot bubbling, but not boiling over, so the euro does not get too strong. Its quite a fine line and I think they're playing with fire, but I think my earlier bet on the euro recovery goes against the desires of the export powers to devalue - which is unfortunate. Will the exporters or the german people win? I'm just not sure.
My main concern with europe is their banking system, and the fact Austria/Germany has made so many bad loans to eastern europe that probably cannot be serviced. I don't think they'll have a sovereign default - I think their banks will have renewed trouble first from all that bad debt. Or maybe bank defaults will happen first, and the sovereign defaults will happen second. How long will that take to play out is anyone's guess. Credit Anstalt failed May 1931 - 17 months after the 29 crash. Is that how long it takes for defaults to make it through the process? And how much better (willing) are we now at pretending all is well? Do we have a date with destiny May 2010?
Bad debts are still the issue, like Bill said. A recovery would allow the banks to work down the bad debts over time, and thats what the governments are hoping for. If a recovery doesn't materialize, what then? Will they all be like Lehman, marking assets to fantasy and only when confidence snaps and creditors (and large depositors) finally pull their funds will we know just how big the holes actually were.
FIrst rule: don't panic. Second rule: if you know a panic is imminent, its critical that you panic first. Prisoner's Dilemma suggests at some point, something will crack if a recovery is not in the cards.
Re: question for Bill re IMF bailing out Greece causing $USD ...
ALOHA!!
"BTW, it took centuries for the Roman empire to die the inflationary death ..."
The Romans never had the "mouse click" and neither did the US Treasury until modern times. Shortly after Nixon went off the gold standard was about when the modern computer age was born ... not a good combo. Also the Romans did not have to worry about such a huge rise in population and advanced medical technology that extends the life expectancy of its citizens by double the years. That was the mistake all global governments made when they first adopted Social Security as a "tool" to retain power. Little did any doctor know back in the 1940s that we would be doing stents and open heart surgery and dna. All these technical advances in money printing and medicine have had huge negative impacts on global government Treauries over the past half century. Then when you add in the huge impacts of global and regional warfare, especially on the US Treasury(World Police) then it is no surprise to see that the US Treasury is overwhelmed each and every day.
Here is what I see every day at the US Treasury.
If you took away the "tool" of DEBT from the US Treasury you would have left the following in terms of "real" revenues(receipts):
- Taxes(of all types)
- Foreign military weapon sales
- Fees from government programs
None of the above amount to much in terms of daily revenues except "taxes", especially "payroll taxes". With less jobs there is now less daily "payroll taxes" coming in. Not hard to comprehend unless you live in the Washington DC debt pod.
Now we get to the other side of the revenue(receipts) coin which is expenditure(outlays). There are too many to list here and in fact the US Treasury Statement has so many that they have created one line item that they put all the ones they have no room for they call "OTHER". So you know and get an idea as to how big that line item is, on March 18th, Thursday,(FY 2010) "Other" was at $616.5BIL YTD. Just so you have a measuring stick on that amount of outlays it is more than double the current total YTD outlays for Social Security that day of $274.1BIL. Yet no pundits or CNBC or 60Minutes ever mentions the OTHER line item in terms of "size and transparency". I mean here you have a line item double the size of Social Security and nobody, not even Geithner, knows where those expenditures are going on a daily basis. I mean on March 18th the US Treasury listed nine line items under "Other Withdrawals" totaling $1.25BIL yet the total for that day listed under "Total Other Withdrawals" is $2.91BIL, where is the "other" $1.66BIL? Is it moved under the line item "Unclassified"? I am not sure as some days those two line items do not jive either. Then my Banking Committee Senator from Hawaii Sen Akaka tells me "Unclassified" is a "clearinghouse". He never tells me what is being cleared exactly, mainly because on any given day he doesn't even know ... and he's a US Senator sitting on the Banking Committee! Some lowly computer data processor over in the bowels of the FMS sees that stuff but its never fully accounted for in such a way that is transparent. How do I know on a daily basis that billions are not going to bankers or environmental groups or foreign governments or some other unauthorized pet project of the CIA or FBI or BlackWater??? I guarantee if you and I turned in a 1040 tax return that looked like the US Treasury Daily Statement we'd be audited.
SAMPLE TAX RETURN FOLLOWING US TREASURY REPORTING
WAGES-$1,000
INTEREST-$20
OTHER -$60,000
Hummmm ... red flag?
At least the Romans had "physical" breaks on their monetary system. They had to mine the gold and silver and copper and bronze and then mint a coin and then transport all those coins and store and distribute all those coins. All we do is "mouse click" trillions, no mining, no transport, no minting, no storage.
The Ceasars only had to feed and clothe some 4.9 million people, which about 1 million lived in Rome. Look what modern governments need to feed and clothe now in order to stay in power. In 1790 the population of the USA was 3.9 million and now it is near 309 million, a 7,900% increase in 220 years(average of 36% increase per year). Rome would have burned much sooner under similar conditions, yet sadly we Americans with all our advanced technology still make the same monetary and military mistakes that ancient superpowers like the Roman Empire made. I guess there is no real way to make the human condition "hubris proof"! We suffer from the same hubris the citizens of Rome and the citizens of London and the citizens of Moscow suffered from prior to their collapse. In my mind basing one's currency on the human condition, which is what we have, is a formula for disaster. Simply put we have no monetary "brakes". Any one who studies the US Treasury Statements for a week can see that. If you believe the "sky is the limit" and that America is the only superpower that will beat the historical odds against empire, then by all means hoard paper dollars and the debt they are derived from. Then in November vote Republican(the other half of the monopoly).
Re: Quick setup example - PALM
Well if you don't count taxes in figuring cash flow then you are going to make Kamiu mad at you.:)
Also I had a flashback to my gambling days. To overcome 10% vig on straight up 1:1 bets you would need about 52.5% winners to losers to break even so if you can keep trading costs to 10% of profits on winners you could figure it to be statistically insignificant. Well nevermind. I can't always ask intelligent questions :).
Bob
Re: question for Bill re IMF bailing out Greece causing $USD ...
kaimu!?
That's some funky math there :) Not sure what you are trying to communicate when you say "average of 36% increase per year". Of course, you did 7900/220=36, but I don't quite see the relevance of that number. According to your figures, the U.S. population has simply been growing at a quite reasonable-sounding 2% p.a. for the last 220 years. That's a number many nations today would kill for, demographically speaking!
A few days ago I posted the following link to a series of videos which are entirely relevant to this kind of thing. I think it really is well worth watching, although no one commented as such. It's highly relevant to the issues we discuss. Give it time - it get's really good when he starts talking about population, oil, coal, etc.
http://www.youtube.com/watch?v=F-QA2rkpBSY
Re: question for Bill re IMF bailing out Greece causing $USD ...
this is why I ended the sentence:
"it could take at least a couple to several decades for the same in Western World."
Re: question for Bill re IMF bailing out Greece causing $USD ...
Thanks for that link Mackinaw, I watched all of it(excellent) and frankly it endorsed what I have thought for the past 30yrs. I remember debating this topic with a friend in 1980 or so and she could just not fathom the planet would run out of anything(space included)
Meanwhile, I attended a chamber of comerce meeting this past tuesday that stated the town had grown from 22k to 35 k in 4 yrs, which is pretty much on track with the entire link you provided. (notwithstanding ebbs and flows of growth within community's)
The bottom line of sustainability seems very clear in the big picture.
Re: Quick setup example - PALM
Well, two things... first, if you spend $8 on transportation to the place where you flip burgers for $80 a day, you are back to 10% expense, with no upside. And second, in case of trading you can also short 1000 shares CAT at .45 and cover at .00 (another trade done yesterday), for a)much better expense/profit ratio and b)another trade on top of that first one. Of course there are downsides as well - even more taxes (Grin) and yes, potential to lose money which is not a factor in a case of flipping burgers. But then again, no one thought bigger potential could come without accepting additional risk, right?
LEAPS Put/Call Ratio question
My sentiment indicators are reaching again extreme bullishness conditions similar to that seen in mid January 2010. However, Leaps Put/Call Ratio is out of sync and registers extreme fear levels. I don't understand why, but perhaps equities will not roll over until Leaps Put/Call Ratio goes back into extreme bullishness range?
Any takers?
The charts is at the bottom of http://www.market-harmonics.com/free-charts/sentim...
Strength of CDN Loonie
Bill,
Your theme from Friday's "morning call" should be of concern to all Canadians, when you write "If the Bank of Canada was run by someone other than the former Goldman Sachs Canada managing director who appeared on the radar a week before being handed the job, I might not be so concerned this Loonie:USD play is not part of a scheme."
I fear I quite agree with you. Indeed, a strong Loonie:USD would slowly strangle Canada's manufacturing exports, especially in eastern Canada. At the same time, the US is on track for hyper-inflation to monetize their excessive debt. The solution ? Why of course a common North American currency (Amero) backed by Canada's resources and Mexico's cheap labor. That would save Canada's manufacturing and solve the US' debt / currency / hyperinflation crisis all at once.
Thanks for your dedication in writing the daily market morning call and week-in-reviews. I can't start my day without it !
Re: Quick setup example - PALM
No No, I want to be on the risk team. Flipping burgers sucks and the job makes my skin greasy. Also I would love to pay a lot of taxes. Lord knows the powers that be could sure use it.
As always thanks for your help.
Bob
P.S Not only will I not flip burgers, I don't want to work on Maggie's farm no more. Amazing quality on this video. I love "You Tube". http://www.youtube.com/watch?v=rVQOlkN-MHU&feature...
(The booing at the end is amusing. You know the people that were there rave about the show now.)
.......
http://www.aastrom.com/corpFAQ.cfm
The Big Short> Michael Lewis on Wall Street Outsiders
http://moneywatch.bnet.com/economic-news/video/60-...
The above 60 Minutes clip is probably old news for most of you, but I just got around to watching it.
I want to be the next guy to make 725m exploiting a weak link in the market. Recent action has most traders so off-balance, there has to be one, no?
Sell alerts
I'm curious if anyone has checked the RSIapp lately. Sell alerts all over the place on Friday, most notably SPY,QQQQ,IWM. Friday was a high volume sell day, the highest the 2/5 bottom. Seems to be warning of a further pullback.
I like the post-close report, it is a useful format that helps with learning from pro traders.
Re: question for Bill re IMF bailing out Greece causing $USD ...
ALOHA !!
Yes Mac you are right all I did was show that the US population has grown 79 times since 1790 and I did just a plain average, not per annum.
I did not watch the video series because my internet service is in constant buffering mode and would take hours to see it all.
From 1790 to 1880 the US grew to a population of 50 million in a 90 year time span. From 1880 to 1970, the next 90 years the US population grew by 150 million, three times faster than the prior 90 year time span. Then from 1970 to 2000 the population has grown by 80 million in 30 years. So the "curve" steepened.
LINK: http://tinyurl.com/yloram2
But is the US population growing due to extended life expectancy or is it purely massive immigration? Which is my point in terms of financing entitlement programs that were originally designed to cope with much shorter life expectancies and lesser populations with lesser taxation and benefits. All this at a time when a USD purchased much more than it does today.
Life expectancy in the USA is not as high as we might think and in fact we are ranked at #49 out of 224 countries. Australia is #5 and Canada is #6 and in fact all the PIIGS are ranked higher than America. Even a lot of Asia has a higher ranking, whereas Africa and South America is lower.
LINK: http://tinyurl.com/yrq7l8
In 1910, 100 years ago, the average life expectancy in the USA was 54.6 and in 2009 it was 78.1 In 1935 when the Social Security Act was signed the US life expectancy was 61.
Social Security tax rates in 1937 for employee and employer were originally 1% each, now its 6.2% each. In 1937 the maximum taxable wages subject to the tax was $3,000(1% of $3,000 = $30) and now it is $106,800(6.2% of $106,800 = $6,621.60). Not only do we Americans live longer on average, but we pay more taxes for less benefits, which are now taxed.
One of the many flaws with Social Security was even apparent right from the start of the first benefit check ever paid in 1940 ...
"The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92.
Hence the word "entitlement" ...
The US Treasury is in a constant state of fiscal deficits no matter how much debt is issued and no matter how high taxes are increased.
"If the practice persists of covering government deficits with the issue of notes, then the day will come without fail, sooner or later, when the monetary systems of those nations pursuing this course will break down completely. The purchasing power of the monetary unit will decline more and more, until finally it disappears completely.Ludwig Von Mises, The Causes Of The Economic Crisis(1933)
Re: question for Bill re IMF bailing out Greece causing $USD ...
Dave,
Perhaps, since I really know zip about Greece first hand, I'm superimposing too much of what I see here.
One recent US poll asked people if they had lost their job, house or were seriously affected economically. Amazingly to me, 80% said they were OK and did not have a family member or acquaintance drastically hurt by our economic malaise.
Apparently too many feel no bind and this is why Illinois continues to fund (promise to) projects like a "River Walk" in my city.
Our city council borrowed $10 million in "Tax Anticipation Bonds last summer to fund basic city services through May 2010. We've lost over 10,000 manufacturing jobs since NAFTA in 1993. A telemarketing job ad draws hundreds of applicants. Last week it was announced we hit 20.3% unemployment. Houses are not selling. My son who has lost two jobs, used up his unemployment benefits, and after finally getting full time work has been cut to 32 hours. He paid 20% down on his house and, like so many others, cannot simply walk away to where there may be better work.
The state has a $61 billion pension fund deficit, has not been funding our local schools ($100 million behind) and we are cutting school programs, fire and police, the public library.
Maybe the Greeks have more sense than I see here and will actually stop frivolous spending.
I guess we will not wake up to how bad it is until 80% have been pinched hard.
"Will they all be like Lehman, marking assets to fantasy and only when confidence snaps and creditors (and large depositors) finally pull their funds will we know just how big the holes actually were."
I heard a rumor the Fed was going to buy the toxic bank mortgages at face value and with recent history as a guide can accept they may do so.
Realization of situations always take far longer than I expect and change even longer.
I am past panic where the government is concerned and willing to believe the worst possible action will continue until we see some kind of grassroots revolt. Tax withholding? Total removal of all incumbents? (Get 'em all and let God sort them out!) Maybe even rioting like the 1960s? The upside may be a uniting of races against the elite takeover. The Greeks may give us a few pointers on such.
Sunday Morning Coffee is Served
http://ronsen.blogspot.com/2010/03/sunday-morning-...
Is it all about the dollar?
Has your city applied?
Gyrm
A number of cities similar in size to your area have put together a plan and applied for Google’s super high-speed fiber network. There will be winners and losers no doubt.
Came across this example earlier today of how one city (which also has the challenges many cities face today) responds. Their choice was to commiserate with all the layoffs, debt, etc. or try to be creative in dealing with issues. Not saying they’ll win, but it appears they haven’t given up trying.
Why try? If successful it would make the area more attractive to new business and technology.
http://tinyurl.com/yh8bs73
Re: Has your city applied?
Seamus,
Yes, we have applied. I would imagine there will be hundreds of cities doing so. Everyone will be trying to put their best foot forward and it would be interesting to see what kind of presentation is done.
I am afraid they will go with what has been the main thrust lately — tourism.
We have a few unique attractions, but not something anyone would be likely see more than once, plus we are near a lot of natural attractions in Wisconsin (12 miles away)and man-made ones in Chicago 985 miles).
There have been a lot of people volunteering to help others (600 families being served at one of several food pantries) groups who went to Katrina and Haiti, and many others, maybe they can make something from that.
Re: question for Bill re IMF bailing out Greece causing $USD ...
Mackinaw - I did not realize the link you had initially provided was Dr. Bartlett. I have heard about this series, but I have never actually had a chance to see it. Chris Martenson credits Dr. Bartlett as a major inspiration to his work, and I'm a big fan of Chris and his message. Thank you so much for sharing it. Its entirely relevant and extremely valuable to watch.
The series is as good as you (and Chris) have said. Although I'm aware of exponential functions and their implications overall, repeated applications of the lessons they have to teach us cannot be applied too often because humans aren't well equipped to really grasp what it means when "we still have half the bottle left to grow in." Somehow our brains just don't get it.
This series is especially relevant to my discussion with dr.cosa this week, where he stated how peak oil was just a fad, and that all would be well. I had the sense he was not correct, but struggled with how to put it into words.
Now I would say, I think we've gone through half the oil reserves in the world right now - and we've gone through the easy half. Now we have the difficult half to go, and - how do we think that's going to play out? In the parlance of Dr. Bartlett, what time is it? 1 minute to 12.
And even if we DOUBLE oil reserves what will that do? It makes it 2 minutes to 12.
Is it possible this recession happened to enable the informed order flow to pick up energy resources for pennies on the dollar?
Re: question for Bill re IMF bailing out Greece causing $USD ...
"Social Security tax rates in 1937 for employee and employer were originally 1% each, now its 6.2% each. In 1937 the maximum taxable wages subject to the tax was $3,000(1% of $3,000 = $30) and now it is $106,800(6.2% of $106,800 = $6,621.60). Not only do we Americans live longer on average, but we pay more taxes for less benefits, which are now taxed.
One of the many flaws with Social Security was even apparent right from the start of the first benefit check ever paid in 1940 ...
"The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92.
Hence the word "entitlement" ... "
The problem isn't specifically Ida collecting $22,000 for the $22 she paid in, its the millions of people that have likewise been overpaid since then. Such is the very nature of all Ponzi schemes. The first to exit say how great it is, and the last to try to exit lose everything because it was all a game of smoke and mirrors.
New WIR is up. Please refresh.
When I first hit the upload button, I didn't know at the time I had left in a lot of text from the prior week's template. That's now fixed so pls hit the refresh.
I am not using my usual equipment, while traveling, so tools like multiple monitors and screenshot software and so forth I don't have. Makes the task a bit challenging. Anyway, I'd do it in hieratic script on papyrus if forced to, but then I like to do whatever I can, if it's a help.
Tia Sillers
Thanks Bill for the Tia Sillers story and quotes.. The dance of life..
Of course, thanks for everything else you do with this blog.
GS: Goldman Sachs Going South
Here's what I think.
American brokerage houses are going down.
I wouldn't rush out to buy SKF/FAZ next week. Wait for the brokerages to begin toppling. I would then have no problem betting my entire portfolio on their collapse.
Why do I think they're going down? Obama. This man who came out of the shadows to become President, and then lambasted for failure to deliver, is going to deliver.
We have to be the most short-sighted populace in the world. If not in history.
Entry opportunity into small gold producers - question for Kaimu
Bill said: "Gold is likely headed much lower as the euro weakens for a few weeks, but this is the time to be looking for small gold resource company stocks that get over-sold, but have no debt, valuable properties and good management. There are many out there. Later this year, the Euro will soar as America tries to dig out of its debts and deficits in California and many other States."
Happy to hear this, as IB should be unlocking my account soon after I broke daytrading rules last year. I will happily look around for a long opp even as I develop the skills for and look to fund a daytrading account.
Kaimu - should the outcome eventuate as Bill remarks, how do the Australian miners play out? Euro weakens, dollar strengthens - I assume the Aussie dollar listed PM miners suffer as well? I will happily cue into the understanding you have of your juniors as these forex events play themselves out over spring.
excellent TA on PM
I found the author on Kitco.
His analysis aligns 100% with mine, even though I use different methods.
His previous articles are spot on.
This is his most recent: http://seekingalpha.com/article/194715-are-preciou...
2-year treasuries yield more than 2-year Bershires
http://www.bloomberg.com/apps/news?pid=20601087&si...
O.k. so what's up with that? My take, after reading this, is that there is a fundamental misalignment here. I mean, really, is there more risk in US Treasury bonds than Buffet Bonds? Plzzz. That doesn't even make sense! If the US defaults, where do you think that's going to put Buffet's holdings?
So, 1) why the misalignment? and 2) how does it correct?
1) why the miasalignment?
- corp spreads over treasuries went ballistic during sep '08-dec '08. There's been a ton of money flowing into corporates since that time and the momentum is strong. Just might be that the panicky search for yield is getting a bit overdone.
- we all know the game that FED/Treasury/HB&B is playing to rescue the US banks. It's "we'll lend you money at zero %, you buy the big treasury spread, we finance these god awful defecits and you get your books in order in the meantime. Oh, by the way stop that crappy lending and just hoard your new found cash so that you can weather the next shock, or two, or three, ...". That's a game that put an unnatural upward pressure on treasury prices. But the recent discount window raise slowed that action. There hasn't been such a drag-chute on the demand for corporates yet because Joe six-pack had no discount window to game and his alternative was essentially zero % in cash.
2) how does it correct?
- Not to worry banks, how about a fabricated diversion of attention to the PIIGS, with it's accompanying strength of US$, and there'll be a perfect storm of enticement for that hand-over of these overpriced treasuries to foreign suckers.
- tough luck, joe six-pack, if you bought near the top in the correction of these corporates, cause after the treasury hand-off, the yields on treasuries and corporates are both going up and it'll be worse for the corporates because that's how it should be.
appreciating exponential function
Macinaw, Thanks for that youtube link. I was just researching the relevance of social media (expanding exponentially) so this stuck a cord. After my hiccup of someone on Facebook hijacking my friend list to send out porn (egads!) I am certainly rethinking the exponential damage of being 'out there' even in forums like this.
You might enjoy this update to 'shift happens'. Certainly makes one rethink the potential for shifts happening exponentially faster as we grapple with equity markets.
http://www.youtube.com/watch?v=6ILQrUrEWe8&NR=1
vxx
An interesting number: The VXX RSI 7 for the monthly is 1.78. It has been in the accumulation zone for 22 days. Seems fear is an endangered species.:)
Bob
Note: this is not an endorsement to buy VXX.
Question for you option guys.
I don't know greek. but it seems like with the utter lack of fear this would be a good time to buy 6 mon puts on consumer discretionary stocks. They must be cheap. In addition you might get a premium for selling calls. Am I off base on this assumption?
Bob
Re: GS: Goldman Sachs Going South
I don't know about GS going down but Obama's stock is going up after tonights health care vote. Very interesting TV.
Health Care Bill Has Passed, Now What??
are we finally heading for a reversal or Will those computer generated trades of the FEDS and HB&B continue taking this market higher to the moon and maybe farther than that??
http://finance.yahoo.com/news/Congress-clears-hist...
http://news.goldseek.com/PeterCooper/1269183900.php
Re: Question for you option guys.
Cheap depends. I agree with a certain pullback in many consumer stocks, especially around Q1 reporting. Of course premium can hurt you.
Rather than a lot of lottery pick puts, I would do a bear call spread for example.
Or perhaps short the worst in a sector and go long the leader as a good hedge. This strategy seems exceptionally strong because we do have some very damaged companies on world record tears.
Re: Question for you option guys.
Navid,
Thanks for your reply. I do fancy pair trades, but as you pointed out the crap has the trend on their side. I look at it as a short seek and destroy mission. If I recall from your posts you mostly sell option contracts right? Would you be selling put lottery tickets now at their current premiums? For Example a F or a WHR.
Bob
Evans-Pritchard suggest Germany not going to pony up
http://www.telegraph.co.uk/finance/comment/ambrose...
still, following the money as we are taught here suggests otherwise, unless we see forex changes in the coming days.
Seems insider selling on this rally as strong as ever
Insider buying and selling trends remained very poor for the week ending March 19th. Total selling spiked to $1.3B from $858MM last week. Buying picked up a bit to total $59.8MM, but remains very lopsided when compared to selling. All in all, the buying remains low historically.
http://pragcap.com/insiders-remain-sellers-of-the-...
Cara 100 Ratings Changes
Good morning.
BA - Upgraded to Outperform @ Oppenheimer. PT = $80
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Analyst Reports From Zacks:
WHR:
Momentum
Whirlpool Corp.
By: Michael Vodicka
March 22, 2010 | Comments: 0
Whirlpool Corp. (WHR - Analyst Report) recently jumped above a key level to hit a new 52-week high at $89.40 on the company's strong Q4 results from late February that included impressive international growth.
Sales for the period were up 13% from last year to $4.9 billion. Earnings also came in strong at $1.64, 26% ahead of the Zacks Consensus Estimate. Whirlpool has surprised in each of the last four quarters by an average of 76 cents, or 239%.
The company's results were driven by strong international growth, with Latin America up 52% to $1.2 billion and Asia up 34% to $188 million.
Estimates Up
Analysts raised estimates on the solid performance, pushing the current year 63 cents higher in the last month to $6.94. The next-year estimate is up 4 cents in the same time to $7.18, a modest 3.5% growth projection.
Valuation
In spite of recent gains, shares of WHR still look reasonably valued, trading with a forward P/E multiple of 12.5X, a sizeable discount to the overall market.
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Value
Royal Bank of Canada
By: Tracey Ryniec
March 22, 2010 | Comments: 0
Royal Bank of Canada (RY - Snapshot Report), Canada's largest bank, continues to see an increase in net income as the global economy and credit conditions improve.
On Mar 3, the company reported first quarter 2010 results which met the Zacks Consensus Estimate of 96 cents.
Net income jumped 35% to $1.5 billion from $1.11 billion in the year ago quarter. It was also up 21% from the prior quarter.
All of its segments saw year over year improvement. Capital Markets saw the largest year over year gain, rising 154% to $571 million from $225 million.
"Once again, we benefited from the strength and diversity of our Capital Markets businesses," said Gordon Nixon, President and CEO.
"Compared to last quarter, we had stronger investment banking activity driven by improved equity and credit market conditions and while we experienced moderating trading revenue in our fixed income and money markets businesses, this was partially offset by higher trading in equities," he added.
Wealth management also saw a hefty gain, climbing 71% as market conditions improved significantly during that time. Canadian Banking, its largest segment, rose 12%.
Insurance grew 5%. International Banking continued to take a loss, declining $57 million but this was improvement from the year ago period when it lost $100 million.
Zacks Consensus Estimates Rise for Fiscal 2010
Given the strength in the first quarter, analysts moved to raise estimates for the fiscal year.
5 estimates moved higher in the last month and 1 moved lower, but the revisions pushed up the 2010 Zacks Consensus by 14 cents to $4.19 per share.
Analysts expect 29.76% earnings growth in fiscal 2010 and another 17.4% in fiscal 2011.
Value Fundamentals
Royal Bank of Canada is now a Zacks #2 Rank (buy) stock. The stock is trading at a similar valuation as it was when I last reviewed it in Sep 2009, at 14x forward earnings.
It has a price-to-book ratio of 2.37, well within the value stock parameters.
Royal Bank of Canada also pays a dividend, currently yielding 3.3%, which is above the industry average of 2.2%
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Bull of the Day
SanDisk Corp. (SNDK)
By: Zacks Equity Research
March 22, 2010 | Comments: 0
SanDisk (SNDK - Analyst Report) has a strong product portfolio and is a significant player in the U.S. flash memory market. The company posted very encouraging fourth quarter 2009 results, exceeding the management guidance.
SanDisk witnessed major gains in the OEM business and higher product revenue and has provided a decent guidance for the first quarter. The company has reduced its cost of production significantly, which in turn has improved gross margin substantially in 2009. SanDisk is cash rich and is aggressively reducing capital expenditure outlay, while reducing convertible debt. In order to reduce inventory level, the company is slowing down in-house NAND supply.
Although SanDisk is showing signs of revival, its customer concentration risk is a factor. We are optimistic about the long-term growth story of SanDisk and upgrade the stock to Outperform.