Bill Cara’s Blog for Sept 10, 2010 [See post-close report]

"...and voila here is the reason. It’s called dilution"

Also expalins why we are hearing so much chatter recently about a return to dividends and share buybacks in financials. Lipstick on pigs.

What great insight Bill, I wish I had the talent. At least I am mostly cash today.

In this scenario, wouldn't gold and oil and commodities be dumped as well?

Forex is a bit different this time. During the 2007/2008 crisis the Euro was not as shaky as it is now (correct?), also now the Yen is at all-time highs. More ammo for the USD perhaps, reinforcing stocks and commodities going down?

Good morning.

BCR - C.R. Bard downgraded to Market Perform from Outperform at Wells Fargo citing tougher macro conditions and valuation. The firm lowered its valuation range for shares to $75-$85 from $90-$95 and finds shares of Covidien (COV) more attractive.

CSCO - Cisco downgraded to Outperform from Top Pick at RBC Capital based on uncertainty regarding enterprise network upgrades and carrier visibility. Target to $26 from $28.

NOK - Nokia upgraded to Buy from Hold at RBS after the company named Stephen Elop as CEO.

NOK - Nokia upgraded to Outperform from Sector Perform at RBC Capital based on valuation, reduced execution risk on software development, and potential catalysts from new devices based on Symbian^3. Target to $14 from $12.

Futures just pop'd. All I see is news about Japan's stimulus and better growth. If the yen stays strong I don't see growth keeping up.
J

EDIT: That was over quick! I saw FINWIZ jump DJIA into the 90's, now it's back to +27. Probably Kramer's fat fingers ;)

PAAS - Pan American Silver upgraded to Outperform from Sector Perform at RBC Capital.

America’s biggest industrial labour union has increased pressure on the US administration to step up action against China for unfair competition, calling for an investigation into Beijing’s support for its renewable energy industry.

The United Steelworkers union, which represents about 700,000 workers in the US, has urged the US trade representative’s office to confront China over what it says are unfair subsidies and other distortions in products such as solar panels and wind turbines.

The petition, a so-called “Section 301” request, will not seek to impose tariffs on imports of goods from China, but could pressure the US into bringing a case against Beijing at the World Trade Organisation.

MORE HERE:
http://bit.ly/c1WydE

Perhaps explains the relative stasis in the forex market. Considering one's position and jockeying for place in the move to come.

TLT and Uncle Buck still got some life in them then before the next cycle begins?

Willem Buiter proposes Gesell notes.

The second approach, proposed by Gesell, is to tax currency by making it subject to an expiration date. Currency would have to be "stamped" periodically by the Fed to keep it current. When done so, interest (positive or negative) is received or paid.

http://bit.ly/97K6aS

PAAS - Pan American Silver upgraded at RBC Capital. As noted earlier, RBC Capital upgraded Pan American Silver to Outperform from Sector Perform with a $36 target. The firm cited what it sees as the steady output of the company's mines, its solid management teams, and likely catalysts in upcoming quarters as reasons for the upgrade.

http://finviz.com/futures_charts.ashx?t=GC&p=m5

2nd.... I submit this for the sound track.

http://www.youtube.com/watch?v=GG3qL1KAxqs

Jack,

Thanks for the link. Amazing insight. I'll put him up there with Aldous Huxley's "Brave New World," vision from the 1930s.

Too bad we don't learn from such visionaries in time to prevent the opportunists who do and manipulate us.

"Make no mistake, we are headed in the right direction." -- Barack Obama

"I don't want to be a product of my environment- I want my environment to be a product of me...No one gives it to you. You have to take it." -- Frank Costello

Bev- Not bad. How 'bout this one?

http://www.youtube.com/watch?v=G9bt3bmnsPY

http://www.screencast.com/t/M2NiNGY1

http://finviz.com/futures_charts.ashx?t=ZB&p=m5

[Stop @ 130.11 if a trade is place]

bigwad- OK, I took the 10 cents. Off @ 12.30.

ALOHA!!

If you look at America as a UNION of UNITED STATES, much like the EU then you see the USA has a number of Greek tragedies waiting in the wings. Much of the burden of austerity has been shouldered by the private sector as the public sector flourishes during this Great Recession. As an example here are some statistics according to the BLS.

AVERAGE COST OF EMPLOYEES
PUBLIC - $39.83/HR
PRIVATE - $27.49/HR

The breakdown is state and local government employers spent an average of $39.83 per hour worked ($26.24 for wages and $13.60 for benefits). Total employer compensation costs for private industry workers averaged $27.49 per hour ($19.45 for wages and $8.05 for benefits).

Wage increases from 2006 to 2009 are as follows ...
PUBLIC - 9.8%
PRIVATE - 6.9%

When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000. Nearly a 1700% increase.

This is no surprise to many here and I am all for disbanding the government employees and privatize government services and prevailing wage rates that have been a fiscal nightmare for the US Taxpayer since DAVIS-BACON came into existence in 1931. That was the "shovel ready stimulus" of the FDR era that has been stimulating union wages and union boss salaries for decades now.

I just want to offer this "real life" experience here from someone who has operated in the Public Works sector of California for decades. When I started my electrical contracting business in 1993 we started as non-union contractors. We started our business in my partners spare bedroom with a phone and a fax machine. Within a couple years we were taking major projects away from union contractors. We would get regular visits from the IBEW to harass us and try to catch us doing something wrong. They never did. Then in 1996 we bid and got four major projects all in a row. A couple were rebid but we kept the other two and got contracts. On the Pittsburg Elementary School project the IBEW management(union bosses) came out to the jobsite one day and point blank told myself and my partner they would pay us each $80,000USD to become a union contractor. In other words, since the union contractors in Contra Costa county could not compete against us the IBEW management decided to try and "buy off" the competition. Well we accepted the offer and became union contractors. Within four years we went back to being non-union, because the promises the IBEW bosses made did not pan out. When I sold my half of the business to my partner in 2002 we were non-union doing electrical contracts in Silicone Valley of $2MIL and generating on average 30% change orders. To this day I wonder if the union membership has any clue that their union bosses are out buying off the competition, handing union dues to non-union contractors. This is how corrupt the system has become and how unions have become way too powerful politically. I felt that being in the contracting business in California was par with corruption in Mexico. The bribes and graft that went on not only with the unions but with school officials and architect and engineers and equipment suppliers is legendary. Heck to even get a job as a subcontractor you have to jump through this incredibly corrupt bidding process with general contractors where numbers are passed around like condoms at a Gay Pride parade! It's just obscene. Who gets the "bill" in the end? The US Taxpayer. The fact that contractors both union and non-union are forced to pay a "prevailing wage" adds billions of dollars to the cost of Public Works projects. So long as prevailing wage exists the fallacy of "competitive bidding" and the corruption that goes along with that system will be one of the many nails in our monetary coffin.

While corruption is legendary in California it is beyond legendary in New York state. We have all read about the Wall Street scandals and Bill reminds us today of our beloved ex-Tres Sec Hank Paulson and the never ending corruption that emanates from the offices of Goldman Sachs.

As I mentioned America is full of states that are as bankrupt as Greece. So the question of "austerity" rises up. These state governments will have to cut spending, but HOW? Here is an outline of proposed austerity in New York. These proposed austerity measures mainly hits the public services. Take a look here ...

From the Manhattan Institute
LINK: http://www.empirecenter.org/CMS/Media/bp_t2.gif

Notice that a lot of it is what I have predicted before here, what I call "technical renege". Now politicians know there would be rioting in the streets if they just announced one day that all welfare and Social Security and Medicare is officially ended. So they do the next best thing, they "technically" renege. It is starting with the states, but now the US Government will be forced to step in and shore up the State budgets to keep citizens from taking to the streets. Also notice that they propose to start emptying prisons.

So as New York proposes to cut some costs by 50% the US Treasury will have to pick up the slack. That will mean more DEFICIT and more DEBT. A New York public service "deflation" transfers to a US Treasury "inflation". I still call that PRICE FIXING 101 ... On the road to total currency destruction.

Here is the BLUEPRINT for deflation of public services.
LINK: http://www.empirecenter.org/Special-Reports/2010/0...

A lot of "doesn't" is coming to America, the other half of the "It works until ..." part!

By the way, I had to pull a gun on a guy tonight who literally opened up my gate and drove his car onto my property at 1:00AM Hawaii time. I am here alone as my wife is in San Diego visiting family. I was awakened to a very bright flash light and a loud car motor. I could not believe my eyes. I live in this very remote rural jungle that is pitch black at night as there are no street lights at all here. The guy said he was a tourist and got lost. Hummmm??? So he got lost by opening both of my gates and driving his car half way to my house. That is why I have these things called NO TRESPASSING signs on my gate. I told him I had a loaded 9mm Glock in my hand and you are making me very FFFFFin' nervous. I chambered a round and showed him the gun. I did not point it at him I showed it to him. He got back in his car and tore out of here like a bat our of hell!

I am constantly surprised at how brazen some people can be. I honestly do not know how it is some people have been able to stay alive as long as they have. Must be sheer "luck"!! Here at this blog we talk about protecting our wealth, but there are times in the real World where you have to literally protect your life. Last night was one of those times. I have no idea who this guy was or why he was on my property at 1:00AM. All I wanted him to do was leave very quickly. I did not want to debate him or "talk story". It was 1:00AM ... DAMN!!! I am still adrenalised! I detest using guns to cause harm to a human being or animal, but I reluctantly acknowledge they have a place in society and that a well armed citizenry is more preferable than one that is not armed at all. Unreal ...

“Among the many misdeeds of the British rule in India, history will look upon the act of depriving a whole nation of arms, as the blackest.” ~ Gandhi’s “Autobiography,” Part V, Chapter XXVII

31.39...

Wow. That's quite a frightening story, kaimu.

As 2nd started the gangster quotes today, how 'bout:

“You can get much farther with a kind word and a gun than you can with a kind word alone.” --- Al Capone

Regards,
BH

Interesting goings on there in China and Russia as they flex their world shaping powers. What kind of effect do we think this will have on currencies and or currency more toward a weakening role for the dollar?

One more:

SLB - Schlumberger upgraded to Overweight from Neutral at HSBC (pre-open).

-------

Have a great weekend, everyone. Don't try to buy orchids from kaimu in the middle of the night. ;>)

gforce- Smart move, waiting for prices to come to you.

In the short term, I would exit longs while the indexes are still green. When the light turns yellow, everyone rushes for the exit(s) at the same time. When it turns red, we can reenter our longs.

As of last night you can see negative divergences [distribution] still on the 60 min charts which is reflective of the longer term and not day to day.

http://2.bp.blogspot.com/_gGhyx-JKKA8/TIl1zRVxOXI/...

http://3.bp.blogspot.com/_gGhyx-JKKA8/TIl16_ScY1I/...

http://2.bp.blogspot.com/_gGhyx-JKKA8/TIl1_4m_zII/...

Swiss gun law:
http://tinyurl.com/755e4

Swiss crime rate:
http://tinyurl.com/3yr8d7j

In Georgia, in the 80's, a county encompassing one of the suburbs of ATL (I can't remember which) began requiring that all household owners have a gun on the property. Crime dropped precipitously in that county. To the dismay of neighboring counties, it rose noticeably...lol...

I also had a mid-night encounter with an intruder who had broken into my residence while at college. Alone, I grabbed my weapon, chambered a round and snuck downstairs to find a young man rummaging thru my living room. After assuming stance and targeting, and drawing in breath to calm down, I yelled at the young man. He took one look at me and ran back out the way he had forced his way in. The police told me that had I lawfully decided to defend myself, that I should have unloaded the gun into the man to make certain he was not around to drag me into the courts... go figure.... they also advised that placing a kitchen knife in the man's hands prior to calling them as this would more clearly define my case when and if the AG sought prosecution of me for any grounds. I was just glad the guy ran.

What a great world we live in.

short @ 65.50

From Jeff Saut, Raymond James Monday August 30 "Investment Strategy":
quote
". . . this quip was recently scribed in the always observant “Dines Letter”:

“Labor Day: If the market declines in the four-day week following Labor Day (starting and including Tuesday, September 7th this year and ending on Friday, September 10th), one should postpone buying for one month. It worked splendidly in 1994, 1998, 1999, 2000, 2001, 2002 and 2008, when postponed buying provided buyers with prices near a bottom in all seven Octobers. On the other hand, if there is a gain in that four-day week, the market will probably keep going higher; true in 1993, 1995, 1996, 1997, 2003, 2005 and 2009 when the market posted a gain in the week after Labor Day and continued to rise in subsequent months. This did not work however in 2004, 2006 and 2007. No Indicator works every time, but those are the latest odds.”
end quote

Bull Hunter, 2nd,

"Make no mistake, we are headed in the right direction." -- Barack Obama

I think we can assume the "we" is a literary one — meaning "Obama's" direction.

More government, less individual freedom, more "no-read legislation". I expect he has a much longer Czar list than we've seen so far.

BH
“I'm one of those guys who believes what he sees, rather than what I read.”

Me too!

No doubt, these are tough times in a lot of places. PA has it challenges and I recently saw where Harrisburg is going to skip a muni bond payment and may default.

Chicago and Illinois have its challenges too. Note past comments from Grym about Rockford.

However, I see a lot of mixed messages out there.

Maybe it’s stayvacations, but I’ve noticed large, increased crowds from Chicago, Indy, St. Louis and other areas visiting the West Michigan lakefront communities when I travel there. And they’re spending money. A local West MI restaurant owner told me he’s had the best month ever in the 23 years he’s been there. And I remember the activity he had back in ’06 & ’07. Maybe it was the hot weather? There were long waiting lines at local restaurants over the Labor Day weekend. Now this isn’t saying everything is picking up, but it appears housing has bottomed at least in that area. Overall things there are better than 2009.

Another observation comes from a friend who visited from D.C. over Labor Day. She sold her condo 5 days after listing! She had a lot of traffic. Her pricing was reasonable, but still quite profitable. Perhaps it’s increasing gov’t workers, although I thought there was a cut in the last Labor report (unverified). Maybe it’s lobbyists!

My niece who recently graduated from college had 4-5 job offers. Granted, she’s single and willing to relocate. (She took a position out of state).

Yesterday’s USA Today had an article about trucker driver shortages. Allegedly a number of young people are turning down starting pay of $39K and staying on unemployment benefits. Maybe they don’t want to travel. My experience is the doors of opportunity open, the doors of opportunity close. Just like trading! Sometime a little risk taking with a change in life, in location, can bring some positive outcomes. But for some, it may be difficult to cut those strings and take a chance. Or maybe they expect things to get better where they are.

Another observation is Midwest farmers appear to be doing very well. Don Coxe recently commented on this too.

I’ll be visiting Boston and the Cape in October. I’m interested in seeing how things are there.

Bottom line: There are a number of depressed areas, but pockets of daylight here and there. Just what I see out there.

BH, thanks again for the daily updates BTW. Have a good weekend!

Highlights
Evidence is building that a major inventory build is underway in what is not necessarily good news at all. Showing their largest increase in two years, wholesale inventories surged 1.3 percent in July in a broad-based increase across the sector. Factory inventories for July, data already released, surged 1.0 percent. Last week's ISM data hint at a significant manufacturing inventory build for August, not the best of news given the slowing underway in both new orders and backlog orders.

Sales at the wholesale level did rise in July which is good news. But the 0.6 percent increase is slower than the inventory increase, making for a one tenth gain in the inventory-to-sales ratio which comes in at 1.16 for July for the highest reading since February. Pressure has been evident for several months with sales declining 0.5 percent in both June and May while inventories rose 0.3 percent and 0.5 percent.

Inventories are rising relative to sales, the result of perhaps intentional restocking but also the likely result of slowing economic growth. Higher inventories will add to GDP rates but that's a factoid.

"Unless sales pick up new steam, businesses will begin to work down inventories which is bad news for employment. Retail inventories for July will be released Tuesday with the Business Inventories report".

Definition
Wholesale trade measures the dollar value of sales made and inventories held by merchant wholesalers. It is a component of business sales and inventories. Why Investors Care

ToddinFL....Nice charts. I like the DZZ chart with your positive divergence on the RSI 7. I added it to my DZZ chart. Thanks!

If Bill wakes in the middle of the night with an epiphany, it's worth acting on. Thanks all for tipping me into liquidating most US techs that were green from the past 10 days. I was having a tough time pulling the trigger until i browsed thru these comments. I think the selloff continues. I did add to CNQ with oil up and gold fund hasn't hit sell price yet.

I caught it...and it cut. Stopped out of my positions (stock/option) at a loss of around 8%, but position was small. I re-entered today at $48.6 and $47.6. Still willing to wait on this one as I suspect I will be rewarded in due time.

right here.

Seems to be a spike up at 1126 and 1257 unless I am seeing things.

gforce... not very well correlated % wise. By that I mean if the VIX jumps up 4pts that doesn't mean VXX will.

http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=1&mn=0&dy=0&id=p01670653584

My friend Brandt just sent me this.

http://1.bp.blogspot.com/_gGhyx-JKKA8/TIppnP1UdGI/...

thanks; will look at this chart.

2nd, was there something about the 15- and 60-minute charts that made you play this, or was it your instincts, or did you just think this bull run isn't going to last too much longer?

Could be playing loss leader. Cramer is big on this one as a pied piper. Will an oil expert please opine because RIG has been an out-lier of late I think.

Grym,

I have no qualm with the idea of recognizing and seizing opportunity. Isn't that what we are all here learning to practice? It's the manipulation part you mention that bothers me. That's when opportunism becomes theft.

That's an interesting juxtaposition you make, Grym: Clarke and Huxley. The Utopian and the Dystopian. They anticipated many of the same developments but with very different results.

Jack

As planned this AM. 10:15 was better entry but I missed that. This should be a good one though as VIX is hitting BB on 15 min chart, just like it did in AM. I'm holding this over the weekend thus position is small.

FD: I'm 50% allocated in the LT accounts: GDX, OIH, TNA.

stuck a buy limit order above 3 PM price. See if the big boys will nibble. Sept opts max pain 57.50 so there's some upward pull.

Now long at 48.67

do your own homework.

Heller lays it out for us over at Liberty Coin. Hearings next week. If U.S. gov't confiscates, expect the VIX to dry up and die.

http://www.libertycoinservice.com/images/stories/l...

Why pay off foreign debtors with gold when you can transfer the debt obligation to the domestic plebeians? Just beware the pitch forks!

Strategies, anyone?!

nice kangaroo tail reversal. No position.

Schaeffers:

On the sentiment front, we've noticed an interesting development in the Association for Individual Investors' weekly survey. Specifically, the bullish percentage jumped from 30.80% last week to 43.87% this week. This bullish reading represents the highest percentage since the week of April 15, or just before the SPX and DJIA set their highs for 2010.

by Joseph Hargett (jhargett@sir-inc.com) 9/10/2010 7:52 AM

Closed at 2.78.

set that stop as well...good trading!

I did set a stop, but this has now in my mind become a hedge for my longs mostly because it is behaving well in as the $VIX goes lower. I have moved my stop down to allow some breathing room. The RSI (7) is supportive as well.

Good trading all. Have a wonderful end to the week!

gforce- Yes, thanks to Vad + seemingly endless practice in 2009, I stop out quickly when I'm wrong.

I actually ended up with a loss for the day (including several trades I didn't post), but due to (a) proper position sizing, (b) letting the one winner (TZA) run, and (c) taking losses quickly on misplaced bets, the loss comes out to -0.04%, or -0.0004*(total port)> I can live with that.

I agree with TOF, TLT looks like a possible bounce bounce - right off its 50 DMA. And with SPX bumping up its 200 DMA, I put back on my SH hedges again and trimmed some of my long positions today, and sold half of my TBT.

I'm taking even less risk than usual right now. I see market risk increasing the longer the consumer metrics numbers continue down. I still think the analysts are lagging behind what's going to happen this fall. Folks are still seeing positive GDP numbers, and consumer metrics seems to say otherwise.

This latest bounce may be approaching its expiration date.

I just took a call after hours from my local Scottrade Broker giving me a heads up that I am being forced to close a short position that I have had since AUG 31 on SSO. That is the ProShares Ultra S&P500 ETF. Must buy it back by Monday afternoon or else they will do it for me.

He says this rarely happens and is directed by the SEC. I am wondering what the heck this can mean for Mondays market if conditions are such that SEC must do such a thing.

This reminds me early march 2009 when I held a big short position in TZA or FAZ (forgot which) and it was underwater. Ameritrade forced me to close it at a big loss. At that time I didn't believe in stops (wrongly so and I a convert now), but it would be an immensely profitable position if I held it a few more weeks.

Coming back to the topic at hand, is this some conspiracy by HB&B to squeeze the shorts?

I'd rather take a 100 lashes then be forced to cover a 6-7 dollar a share loss...
The price an American has to pay for freedom?????????
Are the 403,279,100 shorts on C going to be forced to cover by Monday afternoon!!!!

I rarely post but this blog and Mr. Cara have taught me much.

That is why I went in with my 401k around S&P 1040 (using RPMGX) and closing that position today as the 1115 resistance hasn't been broken (I typed 1130 previously) and volume is so low. I closed an underwater SSO position as well. Yes, that was before I read Scottrade was advising short holders to close SSO. I wonder what that is about. I also sold some long term hold stock I buy through my company at a discount (must hold for 1 year).

I am trying to contribute now when I can.

I eliminated all of my easily convertible long positions. All remaining longs are through the company discount plan and are still profitable.

I wanted to position myself to either go short or watch and wait to see if this rally has a chance or what happens if and when volume returns.

Thank you all.

On a personal note:

Kaimu? Remember that free flower to readers deal you did? Thank you for sending some lovely orchids to the Lady I requested when you made your offer. She and her daughter are now living with me and all our lives are much better.

Money isn't everything.

Maybe it would be wiser to put your money on the long side of an inverse if you think that's the way things are going.

I do have positions on the long side and the short was designed to counterbalance them while collecting dividends. It is done that way precisely because I do not know which way the market is going except for sideways.

This protracted sideways market has resulted in the ST, IT and LT EMA's of SPX being all scrunched around 1090, meaning it doesn't have far to drop before we could be back to bear for all 3 time frames. Does not give me much confidence that the bullish uptrend has actually resumed for the longer time periods.

to 93 tonnes ( 3 million oz's )with the latest sell of 10 tonnes to Bangladesh... per Fleckenstein capital tonight

But it begs the questions:

Isn't Bangaladesh one of the very poorest nations on earth?

Purchasing 10 TONS of gold is their highest priority?

Why would that be?

They had nothing better to do with the money?

Where did they get the money, anyway?

I plead ignorance. It makes no sense to me unless they expect the dollar to really collapse soon, and they are absolutely desperate to have something of real value to back their currency.

Note that not one ounce of that 400 tons has been minted into coins for anyone to buy...

She knows who she is but more important what she wants; really refreshing to see a young lady take decisive action other than voting for her favorite American Idol:

http://dailypaul.com/node/144227

Speaking of public services: Today I received a letter from the State of California Depatment of Justice, Attorney General Edmund Brown's office. It was dated June 2, 2010. (3 months ago) Acknowleding my letter of May 13th (4 months ago). Essentially this letter--all two pages and 4 months late--said what they did about complaints and what they don't do.

I had taken my own private $27.40 hour and written to dob in a California company fraudulently advertising loan modification services to citizens in my state as a 'non profit charitable trust' while illegally taking a hefty fee up front. Their average take $3-5,000. Our own Attorney General is pounding such companies in other states to get the money back for individuals who received no benefit from this 'service'.

The kicker sentence of the letter I received today:

"Unfortunately, we lack the staffing to enable us to investigate all of the thousands of complaints we receive, and must limit ourselves to those few which we believe to be the most significant. We do however review all complaints submitted to us."

So this $39.83 per hour state employee is saying that they don't have time to do their job and put highly paid criminals in their state out of business? Perhaps they prefer to keep the ill gotten taxable income rolling into their state by bilking senior citizens in mine?

Sidebar: This month the sector with the greatest decline in employment in my region: government employees!

When the Bulls are over 60% I begin to worry. Sometimes the Bulls are right.

Squiggly lines are good things. I won't deny it but sometimes when the mood from Cara's Clan is so overwhelmingly negative, I get this itch to go long.

If I could script it, we would plow through 1115 and pause around 1130. We would then back and fill til the mid-terms and then do a moon shoot to 1300 by year end. One thing I think I know for sure (wishful probabilities) is that we should see an engineered S&P close to 1500 by the next Presidential election. Dead but perfumed roses and fried bacon flavored soylent green will satiate the sheeple long enough that the 'Boy' presidente will enjoy a second term. He has a lock on the black vote, union vote and the cry baby liberal vote. All he needs is a few lessons in espanol and a few million jobs created and he's a lock...

Prying the purse from the King implies risk. But in 1215 we got the English Magna Charta. The Spanish 'General Privilege of Saragossa' in 1283 ensured a quaisi Republic of nobles ruled by its Cortes. A few decades earlier, the great vassels in Germany made the election of Kingship dependent upon themselves as Electors. The calling of the states general (the baronage and clergy) in 1302 forced the purse from the French King. I'm not trying to give a history lesson but there have seemed to be past times where inflection points were prelude to much progress.

My question is simple. What will it take to rest the monetary control from the Imperium of central banks??? My two answers are; I haven't a clue and time will decide.

To use ranch parlance, you make geldings out of stallions so you can work them. You make steers by cutting bulls so you may eat them. Seems to me that our Imperial government needs only geldings and steers. The geldings work the steers and at the end of the tragedy the 'players' emerge on stage and we are all invited to the beach for a picnic but 'Never On Sunday.'

I'm too old for this game since I've lived it twice before but I'm an addict for finance. It has been my master and mistress and there is not a calling in the world that can give you the rush of being right. There is no quick or easy cure. Suffice to say that if you are willing to be a student, you will never be happy but you will also never be disappointed. If you are not sure of yourself, always gamble with other peoples money. It's called 'mutual' fund management.

Back to squiggles and the entrails of owls. They are both correct half the time. Bon Chance.

Jack,

My thought process was effected some recent local stats and stories I had just heard.

When I referred to opportunists I was thinking of the Big Boys like those who pushed trusting clients into tech stocks without earnings or triple digit PEs or the Goldman Sachs alums who worked the system to remove restrictions and created the housing bubble or those who sold our best paying jobs — people without national loyalty, but with the insight to see where the macro market can be to their personal advantage.

In my own experience I avoided the tech bubble by staying with my 30 year history of either Buy & Hold or long swing trades on high dividend stocks. In the fall of 2000 I gave up my no longer working strategy and switched all into three mutuals — 1/3 small cap, 1/3 mid cap, 1/3 large cap. I lost over 30% in three months and found they ALL had the same major techs in their portfolios. All had Intel, Cisco, Microsoft, etc. — so much for "Managed Accounts".

I had time available since my business had already begun to shrivel due to my local manufacturing clients jumping on the globalization bandwagon. I sold all and made back my losses day trading for the first time.

Shortly after that I was told by a 20-year plus client that I must tell my suppliers to cut their prices if I wanted to continue doing their annual report. I refused to do so (realizing of course the inference to also cut mine) and pointed out they were destroying the local economy and eventually the national by firing people and moving operations to Mexico, China and South Africa. He and others in management were making out big time while dumping hundred of jobs and ruining lives. The company is gone now, they retired with $millions and our unemployment is officially at 18%.

He said his responsibility was "to increase shareholder value above all". I think there are more important values.

A fresh batch of people here have just lost their jobs and I made the jump to that while watching the Clarke video.

I agree with seizing opportunity in general, but opportunities come in a variety of choices — some beneficial and some destructive.

End of sermon. Cheers ;-)

http://ronsen.blogspot.com/2010/09/technical-toolb...

Most people probably know of these, but they are really game changers for individual investors...

Grym,

As you likely found, not that it mattered long term, but you might have placated the guy somewhat short term and kept the business that year if you could have done so profitably.

In most sectors, there is no possibility of competing with foreign competition and surviving. No amount of cost cutting can make up for wage and overhead rates at 20 times your competitor's unless the product he's selling is literally garbage. Eventually, like Japan in the 60's, they will improve their quality, too, so that can't be counted on long term, either.

The problems are the trade deficit, budget deficit and debt, and the comparative value of the dollar. Our leaders ALLOW and ENCOURAGE the trade deficit by borrowing the money for the budget deficit instead of forcing them to TRADE. Warren Buffet's "Import Certificates" idea from 2002, if implemented, would end this depression within a year or two, I think, and without further dollar debasement. Yes, it would cost more at the store to buy things made in America, but we would have jobs, and a future for our children again.

Jack,

"That's an interesting juxtaposition you make, Grym: Clarke and Huxley. The Utopian and the Dystopian. They anticipated many of the same developments but with very different results."

I learn a lot at the sight. "Dystopian" must have been part of our vocabulary on a day when I was absent, so I had to look it up.

While I see the difference, it seems perhaps it is too soon to tell if the long term results will be much different for the masses. Clarke's optimistic view seems to ignore the personal intrusion and possibilities to manipulate and control.

For example: We have no idea who or how many are monitoring this discussion. Any connection to the internet makes one vulnerable — even affecting people who have no computer (The VA, Social Security and other data releases.)

A friend sent me an email a week or two ago joking about an antenna recently placed on a pole about 75 yards from my house. "They're on to your an all your complaints about the government."

It is said to be a method of monitoring water pressure from some remote location. I had noticed a series of water dept. diggings in front yards in about a 10 to 20 block radius of the huge, month long excavation and construction of an underground facility
by the antenna sight.

Next it may be my blood pressure they are checking ;-)

cheapy... GREAT IDEA... ! Scottraders in the group should give a post when they get a notice or in my case it actually happens. For the time being we could keep some stats on it. If it proves to be true then that would be an "edge".

If/When you seem to get lemons every time, learn to make lemonade, LOL.

Grym and Cheapy,

I was also in the advertising business in the 80's when clients were facing these decisons. I heard from more than one CFO that they were concerned about the bottom line given the lowering costs people expected in the high tech world. One such Canadian client (we were representing their product in the USA, their main target) promised they would keep the business of making their product 'at home'. We advertised on that premise of local built and higher than required industry standards. The demand rose which they could not meet...they fell behind or orders and quality dropped due to pressures in the Canadian plants. Within a year they had a plant in China making their products and put their Canadians out of work. But it saved the company. Hard success to take. Did saving the company bring prosperity to the Canadian stockholders while eroding the employment opportunities of some of those same people's families? Did those acts equal out? That company was sold a few years later. I have a feeling the stock price was pumped by their surge in sales, they took their profits by selling and the new owners got a pig in a poke. I'll never know. (FOOTNOTE: the Candian company sold to a Swedish company so now all their profits go overseas.)

What are the long term effects of such decisions? At the time, the only options for this company were either to appropriately brand and charge a premium for their better product or get into the price war of their lesser quality competitors. They took the latter and that's what took them down. Unfortunately, CFO's are only looking out for number one. This model is broken. We are seeing more companies take a triple bottom line approach to business that suggests sustainability: people profits and planet may be held in balance. Companies that actually make this their vision are getting ahead. http://tinyurl.com/tbline

People see this. They feel it and they prefer to buy from companies who keep their plants running and their rivers clean. They want a decent return--not a killing. It's a sea change in this country that is long overdue. It's why events like the current "Gulf Oil Crisis" underscrore why a new accountability and transparency is way overdue.

Off the soapbox now.

Over 50, unemployed, but not poor. Been trading/investing since 2002 when things were getting bad for my business, full time since 2005 or 2006. I am just trying to stay ahead of dollar debasement/devaluation net of taxes. Not an easy thing to do.

Loannetter,

I'm sure there are degrees of opportunists and loyalists.

We have some companies who successfully maintained their production here. These are virtually all locally owned, small companies, one of which I know had a hard time until they streamlined and upgraded equipment and processes.

The ones who were quick to say "it pains us to do this", but did it anyway and stuffed their own pockets had all been headed by non-local "new blood" hires with MBAs and no community ties. People who knew little or nothing about the products and would be as at home selling horse manure as toothpaste — everything was strictly by the numbers.

From what you said I'm wondering,

"We advertised on that premise of local built and higher than required industry standards. The demand rose which they could not meet...they fell behind or orders and quality dropped due to pressures in the Canadian plants."

Why didn't they simply expand to meet the demands here or outsource to local subcontractors?

Well over 50 and (swing) trading to stay even with my lifestyle and to be able to help my kids who are in precarious job situations.

Also, the lack of foresight by those in management and political positions combined with my lack of confidence in the likelihood of an economic recovery anytime soon — makes me think I may need more than I have saved.

Poverty is obviously a serious possibility to anyone who can read numbers.

Cheapy,

"I'm not saying it was right. I'm just saying that the companies that DIDN'T move, ended up bankrupt because customers and sales plummeted down to only those who were willing to pay the higher price."

Everyone is doing it, so my choice has no effect. It's the same thinking that pollutes our rivers and trashes our cities. Sometimes Nancy Reagan's, "Just say no!" is appropriate.

I remember about two dozen people here who went along and were telling me they had to, but I just can't accept the idea that "Because everyone else is doing it we must too." Sounds like a grade school kid's alibi to his mother.

These guys made a lot of money by putting their fellow workers and fellow Americans out on the street. The CEO at what was the city's largest employer (at a company where I worked when I got out of the army in 1960) made $25 million and 1500 people lost their jobs. Words cannot express my disgust with him. He had to hire body guards until he could sell his house in 1999 and clear out of town.

Several others did likewise and now we have 10,000 manufacturing people out of work here and a record number of people relying on food pantries

I can see no situation which justifies putting profit over people.

The only people who have profited by this are those who least need more of anything.

If I had told my suppliers to cut their prices I would not be able to live with myself. Is there no shame anymore? Is more money that important.

What makes it worse is this was the official policy from our legislature and the White House through multiple administrations. Now each party tries to blame the other when it spans at least two decades and still there is no real attempt to slow it. Government owned GM is going to build assembly plants in China.

I just watched an hour TV show of firefighters going up the stairs on 9/11. These people know the real values in life. These are the kind of people I would like to be able to vote for. I doubt it will ever happen.

Usually such a spike of bearishness means a tradeable bottom, except for the one in mid August 2010 and mid February 2009, but those were false bottoming signals and this time looks like there is a massive shorting trying to predict a top in trading range. I'm guilty myself with my small puts left over the weekend. Note to myself: close them on open on Monday if it wont be too late.

Edit: On closer examination it appears like the spike is mostly driven by $CPCI, which is supposed to be smart money. I'm not sure anymore and I'm glad than I'm more or less neutral and hedged (short ST and long LT).

Grym, the company I mentioned was strained by the requirements of actual tooling and expertise necessary to maintain the quality...having underestimated demand for their product. As the product was extremely high tech there were no local contractors with tooled up plants. So management moved to resource skills and existing plants in Taiwan. Which lowered costs but also quality which took them down eventually. We did too good a job promoting a superior product they could not consistently deliver...and given their products were for massive systems... quantity was the killer. A very hard lesson. Scaling their entry into this market via beta test cases or city by city rollout would have been more prudent but they blew their wad and it backfired.

Cheapy,

You're right, not all managers are bad guys. Some managed to hang in there, but these were mostly smaller, privately owned companies where the boss really cared about his people. One of the TV shows (60 Minutes, I think.)came here and was given a tour of our former heavy manufacturing areas.

When they got back to the local host's office the interviewer said, "Well, it looks pretty bleak, but at least the president's (Bush) tax break will help." (paraphrased)

The owner's reply, "He and you don't get it — When you have no profits tax cuts are meaningless, since you pay NO taxes. I haven't taken any salary for over two years in order not to lay off more people."

Some trimmed down and automated more production processes. Still not good for jobs, but does preserve some.

The bigger companies' CEOs who had stock in play were the worst. Anything to boost the bottom line — no loyalty to employees, community or country. These are of the =same mentality as the big bankers like Goldman — all for themselves and to hell with the rest. They have congress in their pockets.

I eventually went out of business due to virtually all of my clients closing or going overseas. The government pushing it caused much of the pain. And the other big factor the computer. My second Mac cost me over $10,000, was maxed out in less than two years and was sold to the school district for $175. It took five years back then to write it off. In 1993 RAM upgrades cost me $45.50 per MB and a price quote was only good for one hour.

Although I went through hardware and software rapidly to keep up, much of my work went to secretaries or, in one case, the boss's 12 year-old daughter. $40 years of ad experience was nothing when price was IT. Although my specialties were illustration and design I became a photo retoucher, typesetter and pre-press production service when all those guys went under ahead of me. Eventually all the major printing companies were gone and my CDs were simply mailed to China.

I think we are approaching a point where manufacturing will return here. Much will require so little manual labor that it won't pay to send the jobs away. There is really no reason to send printing to China today — the latest equipment is just a giant computer printer which operates directly from a PC and is cheap enough that any company can do it in house immediately as needed.

Everything I learned between 19 and 60 — design, art, photography, dark room, stripping, plate making, press operation — I can do on my home computer.

Trouble is there is no need right now.

We are still in the midst of a global readjustment which will not be good for the ordinary people — anywhere.

The cost of those $45.50 chips in 1993 went to $0.03785 by my last purchase in 2009. The demand is high, but the manufacturing process is nearly all automated now.

The world has too many people, but a perpetual war or a big one will take care of that issue.

Loannetter,

I'm sure it was painful to see happening for you and the company who wanted to keep on doing business as usual.

My biggest complaint is of the government expediting the transfer of our best jobs. Given time the company you mention could have made adjustments as could individuals.

------
As an aside about my other "job destroyer":

Talk about the speed of change...

I bought my first computer for my business (June 1990) thinking, "I'd better get some knowledge of these things in case I ever need to buy services from someone who uses them."

Within one year I was finding few places where the old tech processes could do the job and I had three Macs for a one-man operation. What a gold mine for computer manufacturing pioneers. I needed to keep early ones in order to operate my laser printer and scanner which had no upgrades to run from the newer, faster Macs.

In my first ten years going digital I spent over $100,000 on software, hardware and 27.3% more non-billable time at work learning software changes and how to fix these demanding and unreasonable monsters.

One weekend a power outage damaged my largest HD and I had to start over to meet the Monday deadline. It would cost $600 to attempt to recover the data and I could get a new one with 3x capacity for that.

I took it to a gun club and shot it with my 1873 rifle. Boy that felt good! (It sits in the corner of my office as a "warning" to my current Macs ;-)

I've been investing since 1966. Now retired for several years and spending much more time on my portfolio.

Over the last few years, the markets have changed so much that my old approach of buying and holding diverse investments in a variety of products and market segments no longer works.

I now concentrate my investments in a few areas and trade more often going both short and long, mostly with puts and calls. This has been working and is providing me with enough value added to maintain my lifestyle.

Bev,

try this site.

http://www.optionpain.com/OptionPain/Option-Pain.php

bsi87, I have that link and I had already looked up the VIX and it has it at 26. But I am seeing option traders talk about a much higher number for the VIX. To be honest my knowledge of option trading is very limited but I remember seeing a discussion once by traders about this max pain site and if I remember correctly they didn't seem to put much stock in its usage. Again, my experience is very limited in this area. But thanks for posting.

well, I like to have the max pain opts expiration number at my back. To be honest, not much that is posted on this board has been backtested anyway.

GL

Mokat,

I know what you were up against.

"We branched out into audio video presentation.... slide shows. Technology slowly destroyed that business as well."

For years I did the annual meeting slide presentations for a client of over 25 years. Then, in 2003 they had the CEO's secretary do it using PowerPoint. The Monday after the meeting the VP & Controller called and asked me what I thought of the presentation. Attempting to be more diplomatic than my usual self I said, "Oh, it was OK." She followed with, "No, tell me what you really thought."

"Well, it looked like crap — you spent a lot of time and money establishing a corporate standards book limiting the logo to black or a special blue — She used gold, green and red. Apparently someone said I want photos of our three business segments on a single image — so she squeezed them in PhotoShop and all your products looked like telephone poles. In addition she used copious amounts of condensed type which was impossible to read in the short time on the screen..."

This brought the following: "We were wondering, now that computers have made it so easy to do graphics, why you couldn't do our presentations for what we are paying her?"

I quickly got off the phone and promised a money saving idea the next day at a previously scheduled appointment.

My offer: "Since apparently initial talent and forty years of experience doesn't mean anything — I would be willing to be your CEO for half of what he is getting."

"I might have expected something like that from you." She took it in good humor, but I'm sure never recommended me for the position — neither did I go back to doing the presentations — frugality rules;-)

-------
I hadn't heard about the light bulbs, but nothing restrictive surprises me anymore. I installed seat belts for our kids in the back seat of our 1955 Chevy, but still resent the legal requirement to buckle up. It entirely goes against the genetic selection process which would do away with idiots.

I figured a way to override the "belts buckled or no start" feature on my 1974 VW Super Beetle. I always buckle, but needing to do so when backing out to wash the car was just too much. Maybe there is a How to Make Your Own Light Bulbs blog somewhere.

Washington needs a wake up call. Instead of all this needless babying listen to the people out here in the real world.

Seems that if you make the laws you are exempt from paying your income taxes. This article about govt employees who owe back taxes will make your blood boil. No wonder it seemed like every one of Obama's nominee's had tax issues.

"And 41 employees at the Executive Office of the President owed $831,000 altogether - about the same amount as during the last year of George W. Bush's administration."

http://tinyurl.com/24unvf5

Brussels has broken our power to rule
The EU has become a lumbering, unaccountable mess, says Christopher Booker.
http://tinyurl.com/2g3t28z

"The latest findings of Eurobarometer, the EU’s own polling organisation, show that less than half its citizens now believe it is a “good thing”. In many countries, its popularity is at record lows, and only 19 per cent see the EU as “democratic” (in Britain, Finland and Latvia this is as low as 10 per cent)."

ALOHA!!

"Tell me that's not a ticking time bomb ...

Its NOT ... If you compare that $250,000 per "working adult" in Greece to just the "external debt" per capita for Switzerland then "each Swiss citizen" owes $176,080. That is just the "external debt", which is what is owed to creditors outside of Switzerland. It does not include the internal debt. Switzerland is ranked #10 with the World's highest external debt of $1.339TRIL, but ranked #95 in world population, only 7.6 million people. Swiss external debt per capita is four times higher than the per capita external debt of the USA, which holds the #1 spot of the largest debtor. Maybe Les can tell us why the "frugal" Swiss have so much debt. Those two factors(external/internal debt) account for most of the sovereign credit ratings. In fact S&P and Moody's put more weight on external debt than internal debt for obvious reasons.

The FIAT WORLD is doing what fiat does best ... destroying economies by destroying currencies. I could only stomach to read the first three pages of the article and the complete immorality that is depicted in the public sector of Greece. The public sector of every country in the World has turned into a GM(Government Mafia). If you belong to the Mafia you prosper, if you do not then you do not ... Under such widespread circumstances of debasement there can be but one cure which is a monetary collapse.

People know they are immoral when they live beyond their means ... they know.

I thoroughly enjoyed reading this. Thank you!

Hi Bill - Ditto from me / maybe the buy & hold has run its course. Might want to book a flight. Looks like Igor is winding up & heading your way. Happy Trading

Bill, you walked on sacred Bay Street Ground, and stood up for social equity. A most necessary comment that had to be made, and you hit the end zone with that commentary, no wonder the banker had to leave.

Will we ever see you on BNN, if we do I hope it is with Howard Green a hard hitting financial journalist, who replaced Jim O'Connell,as the main anchor after his death.

ALOHA!!

The desire of banks is here ...
LINK: http://research.stlouisfed.org/fred2/series/DRIWCI...

And here ...
LINK: http://research.stlouisfed.org/fred2/series/DRSDSP...

Yet here we see banks have no desire to do this ...
LINK: http://research.stlouisfed.org/fred2/series/DRTSSP...

Or this ...
LINK: http://research.stlouisfed.org/fred2/series/DRTSCL...

So after bailing out banks due to loose lending standards it seems banks care even less today about lending standards than they did prior to the credit bubble bursting. Why do we continue to prop up the least productive sectors of American finance and business? There is no incentive for banks or business to be honest, because there is no honest money.

No offense to bears but did you really think Basel III would be a reason to sell/short stocks?

Public debt:

40.5% of GDP (2009 est.)
country comparison to the world: 64
41.3% of GDP (2008 est.)

https://www.cia.gov/library/publications/the-world...

As a percentage of GDP I am not stressing over the above figure. This small population is able to leverage GDP per person to an extent that puts individual debt levels into another perspective.

I dunno, maybe debt is related to so-called productivity and competitiveness in the global economic stage? Clearly infrastructure and spending of other economically beneficial usage are paying some sort of dividend. Don't ask this layman more:

http://www.swissinfo.ch/eng/business/Switzerland_r...

I admire the high value engineering projects which are being carried out for the future, no doubt using high levels of debt:

http://www.swissinfo.ch/eng/swiss_news/Tunnelling_...

NOW, stop picking on the Swiss!

S&P +16.40 / +1.49%
Level 1,114.00
Fair Value 1,104.47
Difference 9.53
Nasdaq +22.75 / +1.21%
Level 1,906.00
Fair Value 1,890.20
Difference 15.80
Dow +135.00 / +1.31%
Level 10,473.00

Asia all green, and US futures pumped by the positive action.

"Fear Monger Blogger" - I like this expression. Stupid stupid people, still trying to insist that the world is flat. Welcome to the new world pal!

$ plunge to the bottom of the recently formed range. Is a premarket short position the ticket to today's session?

A couple of interesting articles in Germany's English version of The Spiegel online -

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

Saving the Euro:
http://www.spiegel.de/international/business/0,151...

The Greek problem has been in the press since around March, but I think they (the EZ) are very concerned about Spain's budget deficit and Italy's debt.

Man, you're an early riser. Showing S&P500 futures now up 11.50 to 1121.15 (+1.04%), looking to me that a good short entry may be possible today, at least that's how I'm looking at it.

http://www.futurespros.com/futures-indexes/us-spx-...

gb58-

(a) As you know, my time frames are now mere fractions of what they used to be. Were I to play SPY puts today, I would let the market tell me when and which strike.

(b) You realize, of course, that my sentiment reads can (and almost always do) change on a dime. The structure of a bull trap can crumble and be reassembled into a bear trap as quickly as an intercepted pass can change the likely outcome of a game. Another way of putting it would be to say that any take I have (which may in fact be [quite honestly] stated using terms such as '1200 by December' or whatever- it is, after all, exactly how I feel at that moment in time) comes with a short expiration.

(c) To be honest, I have no plans to trade today. My main goal is to stay alive, and after a decent streak, experience sidelines me for a day or two.

Okay, capital preservation, sounds good; will be watching the action today from sunny (at least today it is) Germany.

removed