Bill Cara's Blog for Apr 8, 2011 [See Post-Close report]

And so on the eve of potential shutdown in DC, investors make their choice

bonds down
dollar down
real stuff up

One of the reasons I chose to reenter $GOLD into close, support was holding and it's the big day for Circus Congress. One had to have an inkling that a vote of no confidence would resolve around the $ at such a juncture, but never did I imagine it to be so powerful a move overnight.

Now let's see if the miners follow. Looking to buy FCX and SLW calls today if the price volume action kicks in following the rest the sector had after its first monster move.

starting to get the impression that we're seeing important breakout/breakdowns in currencies. I don't take anything for granted in FX, but these moves look like the real deal.

But as Patrick or Geoff suggested, large sudden drops in the $ could cause a market panic. This debt ceiling circus may be such a trigger for a sudden $ drop. Hold your stops and be prepared for potential rapid market deterioration.

Thanks for the gold paper critique yesterday.

Good call on GOLD.

You are right on dollar breakdown tonight. I was afraid it could happen but was not sure as the previous shutdown (1995) has no measurable effect.

I may need to add to my GDX allocation.

Good morning.

NO POMO Injection On The Schedule Today.

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10:00 - Wholesale Inventories

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COST - Goldman downgraded Costco to Neutral from Buy. The firm cites valuation for the downgrade. Price target raised to $81 from $80.

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“My choice early in life was either to be a piano-player in a whorehouse or a politician. And to tell the truth, there's hardly any difference.”

- Harry S. Truman

Which is to say 6% of the portfolio, of course.

Is Chinese copper demand faltering? For the hundreds of miners, smelters, fabricators, bankers and hedge fund managers gathered this week for the industry’s big annual conference in Santiago, that is a market-moving question.

After an impressive bull run that has taken copper to all-time highs of more than $10,000 a tonne, inventories of the red metal are piling up in Chinese warehouses.

FULL ARTICLE:
http://on.ft.com/i7zzLe

TGT - downgraded at BofA/Merrill from Buy to Neutral, Bank of America/Merrill Lynch said. $55 price target. Core comp sales could remain weak.

TGT - price target reduced at Goldman to $60, according to Goldman Sachs. Cinoany is seeing weaker sales. Buy rating.

TGT - price target cut at Credit Suisse to $54 from $58. Potential sale of TGT's credit card business and expenses related to its entry into Canada, Credit Suisse noted. Maintain Neutral rating.

I dunno Mark. I see copper futures rocking and FCX gapping up. Just waiting to see the daily trading range form and some volume propelling it higher.

Great analysis. You're the ultimate sentiment trader.

HPQ 40.83 (-0.26)

On the server side, it's nice to see Intel has got its feet under Facebook's table.

He said a little more then this; (On CNBC this morning, Mark Faber stated that for the gold market to be in a bubble, everyone would be trading it). He pointed out that all the wealthy people in this country (10%) are out voted by 50% crack heads that demand a hand out not hand up (no, he didn't use those words) so they counter this by printing dollars to push the theiving hords back down and at the same time run up the value of the market since it's a store of value the masses can't participate in. That's what I took away from his comments.
Earl

"Could be" looking a little interesting.
http://stockcharts.com/h-sc/ui?s=ung

http://stockcharts.com/h-sc/ui?s=UNG&p=60&yr=0&mn=...

regards,
Earl

Japan investors net sellers of overseas bonds
http://bit.ly/hNMJBU

TOKYO (MarketWatch) — Currency strategists remain divided on the yen’s mid- to long-term direction, but weekly Ministry of Finance portfolio-flow data released Thursday gave some fodder to yen bulls.

Japanese investors sold a net 1.2 trillion ($13.8 billion) in foreign bonds in the week through April 2, turning net sellers on a weekly basis for the first time since the March 11 earthquake and tsunami. See latest Ministry of Finance weekly Japan fund-flow data.

“This is the largest weekly net sales since mid November of last year,” said Tohru Sasaki, head of Japan rates and foreign-exchange research at J. P. Morgan Chase in Tokyo, and a former Bank of Japan official.

Flows from last week “could be a forerunner of a coming wave of risk reduction from Japanese investors who have now had enough time to re-asses the amount of risk they prefer to hold after the earthquake,” he said in emailed comments Thursday.

A large part of the net sales is suspected to have been done by banks, Sasaki said, and most lenders hedge some portion of the foreign-exchange risks on their overseas bond investments. Therefore, the sales shouldn’t have had any significant impact on foreign-exchange markets, he said — and indeed, the Japanese yen was the weakest currency among the Group of 10 currency pairs last week, despite the net bond selling.

But that could change going forward, said Sasaki, if Japanese life insurance companies and retail investors were to sell unhedged-overseas-bond investments.

The latest fund-flow data showed that Japanese investors were net sellers of overseas stocks for the third consecutive week after the quake, unloading some ¥23.8 billion worth. But Sasaki called the net sales “quite small so far,” averaging ¥53 billion per week, and said they “could accelerate in coming weeks.”

After the Kobe earthquake in January 1995, he said, net sales of foreign stocks didn’t reach their peak until March, two months after that temblor.

“It is natural for repatriation to start with some time lag after the disaster, as it takes some time to reassess the risk and to decide how much risk to reduce,” he said. “Therefore, we still expect that a wave of risk reduction by Japanese investors triggered by the earthquake should increase upward pressure” on the yen from now.

While the dollar could rise as high as ¥87 in the near-term, J.P. Morgan forecasts it will break ¥80 “in the next few months,” Sasaki said.

this must have given the bernanke serious gas. fisher is prob being punished as i type this

This is crazy, on one hand they are destroying dollar as fast as possible, on the other hand they are jawboning every time dollar drops a bit much.

Do they know that dollar crash will be a disaster?

To me dollar lost all kinds of technical support.

Not sure what you mean but I added to my positions opened yesterday.

Hi Jack,
I think the RR here is very good - industry will correct inventorys to help manage price which will probably overcorrect to the other side slightly. I'm buying some calls here.
regards
Earl

Earl, what an enlightened, egalitarian worldview.

Ciao, Z.

In addition to the longer-term holding.

why buy at $19.6 when you can buy at $17.6?

Just testing to see if anyone was looking... Thanks for the correction.

http://www.telegraph.co.uk/finance/currency/843726...

Grym, excellent points!

For the majority currently, its this:

http://www.youtube.com/watch?v=f1pzXJuvdAY

Long live the wisdom of elders.

IMO, the Fed just doesn't want it falling too fast all at once...

I'm watching AAPL trade these past few days. It's been getting pounded mid-day, only to be pushed higher by the end of trading. Then, the following opening it's been gapping up and selling off again. Just seems to be a well-controlled program going on right now while the Funds reallocate.

bought 1 sept 55 call for a trade over the next week. I don't think Comrade Ben will tank the market when other then farm land and your 'self' stocks are the only store of value out there at this point.
regards,
Earl

Very nice 2nd.

This is funny. Cramer pimped WY yesterday. I appreciate what Cramer does and you can make money off him.

Fidelity shows "orders by Fido customers" the WY buys out number the sells 1110 to 60. A lot of independent thinkers here. Ha Ha

Anyway a good look into other traders actions which sometimes provide clues.

http://www.favstocks.com/lennox-international-inc-...

FD:
short LII since a couple of days ago.

Sell as in short or sell as in get out?

Nikkei is doing pretty good so far thanks to the Yen being 10% lower since the peak shortly after the disaster happened. Automobile sector does not look attractive to me though.

14:05:52Rubicon Minerals Corp Updates Delineation Drill Results From the F2 Core Zone, Phoenix Gold Project, Red Lake, Ontario

- Update on its underground delineation drill program being carried out on part of the F2 Core Zone, at its 100%-owned Phoenix Gold Project located in the heart of the prolific Red Lake Gold District of Ontario. A total of 16,000 metres of the planned 27,000-metre delineation drill program has been completed. New delineation drill results are shown in Table 1 and 2, and Figures 1 through 5.

- The delineation drilling will test a total area of 150 metre (horizontal) x 200 metre (vertical) area within the F2 Core Zone (Figures 1 and 4). The delineation drill results presented are from an ongoing four drill fence program covering approximately 90 metres of strike length and are focused within +/-100 metres of the 305 metre level (some results extend beyond this area as shown in Figure 2 and 3). In addition, Rubicon is carrying out approximately 40,000 metres of exploration drilling to continue to expand and infill the F2 Gold System.

Which version do I prefer?

One says trend is intact and other says trend is weakening unless it breaks the resistance line. I am a little surprised by that one. Maybe I should be less schizophrenic and just choose one of them, preferably the positive one?

The new nominal highs in gold are still not fueling any new high in my local currency either. Just a question of time? Those boring gold coins in my closet sure are underperforming my portfolio, but it feels good to have some value "being out of the system" so I guess I will keep them.

YONG under attack by short syndicate.... buying in

Per the SPX.X chart daily and hourly

http://content.screencast.com/users/Telestar3d/fol...

http://www.screencast.com/users/Telestar3d/folders...

Plus is the price of oil what's capping SPX?

Waiting for a break out or a double top to form?

ballena, I do not know. I will let the market tell me and if I did have a bias it would not listen to me.

Personally, I would prefer down. But, using the axiom, "Joe do not trade what you think trade what you see." I'll do my best to wait for its tell and try to act accordingly.

May the powers give me wisdom.

SAN FRANCISCO (MarketWatch) -- Toyota Motor Corp. (TM 77.74, +0.53, +0.69%) said Friday that it will suspend production at all of its vehicle plants in North America on April 15, 18, 21, 22, and 25 to conserve parts as the auto maker continues to assess the extent of the damage from last month's quake in Japan. One exception is the Georgetown, Ky. plant, which will build vehicles on April 21. Toyota said most of its North American engine and component plants will follow the same schedule. The company explained that about 85% of the parts and materials for the 12 North American-built Toyota and Lexus models are sourced from 500 suppliers in North America. U.S.-listed shares of Toyota added almost 1% to $77.76 in midday trades but are still down more than 11% since the quake first hit.

That is a very good idea.

Just watched this which was OK:

http://finance.yahoo.com/blogs/breakout/macke-purp...

Reminds me to look at Gartman´s trading rules again!

JMO.

INTC made a lower low while the market rebounded from the earthquake lows. Not what I call a strong chart. Right after the quake it quickly filled the fresh gap and turned down. 20,66 has to be beaten to show any kind of strength.

Fair enough. We all trade differently. My bet is prices gap over 20.66 like a hurdler.

tof- that's right, man. We just need to kick the ---- out of those hallway punks.

ballena, I think it depends on how you want to approach the market. There is really two ways to approach price, anticipate or react. "Joe do not trade what you think trade what you see," fits the react model. In truth, I do both since trading is very intrinsic endeavor and intuition very useful if you trust it.

Of course the above is irrespective of time horizon.

Gonna watch your macke vid now.

long RWT, I see the boys took the bid on the close with vol of 15307 at 15.56 for $233.97k

Great weekend all.

Android is open source, so there is no money to be made off it. That's why it is widely used and customized across multiple brands of phones and now tablets.

As for office suites, GOOG is already offering fully integrated hosted "office suite" type applications, again, for free.

Google Docs, Google Voice, Google Latitude,etc etc etc etc etc are all offered for free.. With the caveat being being you are turning all your information over to them which they then mine and turn into ad/click generating dollars.

just my two cents.

Yeah, Macke is ok, the best thing he said to me are the exits. I think everyone can become better traders if they focus more on exit strategy.

I know this sounds simple but with respect to phases; when I'm making money I'm in alignment with what's working in the market. When I'm losing money I'm
mis-aligned with what's working in the market.

It is my job to adjust and be in harmony with what's working.

I have blogged way too much these last few days, going to play tennis. FWIW

If dollar breaks down some more, there could be one huge final spike up before crashing down (a la 2006).

FD: no position in silver but long GDX.

IMHO, more dangerous situation is in oil. There could be a short squeeze coming pushing oil parabolic just like in 2008 and we know how it ended. I'm afraid it's a likely scenario.

USD is a foreign currency for me (just as EUR) so a falling USD is not a reason for me to go long. Good thing that it goes down since I plan on going to the USA just to do some shopping this year. "Low" USD and no VAT creates bargain prices. A pair of decent Levi´s cost about 180USD here.

Buying silver today is not exactly like buying silver for ten bucks and let it double, triple and so on. Did you buy at single digits just 2,5 years ago? To make a double from here we need to see 80USD on the screen. Triple? 120. Buying Semafo today is not like buying it for 1 (one) CAD and see it go up fourteen times. I do not treat silver differently from cotton, AAPL, FR.to or South African Rand. I (try to) buy fear and sell greed. We are closer to greed than fear.

Yes, the metals have staged another break out. Trend is up. There are gains to be made! I still have some positions. I even own my fair share of gold bullion (18% of portfolio actually), but I am far from being a gold bug. I think it has doubled (more than that in USD), but underperformed the rest of my portfolio. Very boring and very good.

My sense of danger is highly important and not misdirected since I trade the way I trade and that is my edge. Basta! I hope silver goes to whatever target you have.

Have a nice weekend!

Ballena,

Are you in England?

We were in London in 1919 and they were $90+ at that time. I expect the dollar has dropped to about half over the 20 years.

Grym

We were in London in 1919 and they were $90+ at that time. I expect the dollar has dropped to about half over the 20 years.

Grym

Grym you are much older then I thought!

Ballena wrote: Are participants getting emotional yet? I think so.

This silver participant is getting wealthier which leads to positive emotions.
Bear E

toby.. if you are out here, i just sent an e-mail..

thought I'd share a few images from my little vacation. Just 12 of them, which meant serious cull (out of 700 or so, LOL). "Kill your darlings," as writers say.

http://photography.realitytrader.com/2011/04/olymp...

jack black -

"And if it does, deflation will eat you silver too (remember 2008?). It's only a matter of time with these killer oil prices."

Deflation will be halted when the next president resets the price of gold and silver to back up the worthless FRN.

Have a good weekend, my friend.

If I was reading this right today there was this guy. . .

PUDA Coal China, a coal mining company with no coal mine. It had It's IPO and screams to around $17 today $6. Now the shareholders are discovering long before the IPO the CEO took half and sold half off to others. PUDA went to market to sell the company that was not there anymore. The same cooperate watchdogs and US regulators missed that there was no coal company in the corporation manifests so to speak.

Notorious contrarian Alfred Little, who recently made a splash in the alleged Chinese fraud basket, by issuing a scathing report against Deer Consumer Products (Nasdaq: DEER) which has since cut the price of the stock in half, yet gotten the author in hot trouble with the company which decided to sue both him and Seeking Alpha which hosted the report (even as shareholders of DEER should be thanking him for issuing the report when the stock was still at $11) is out with his latest report, taking on the next in a seemingly endless sequence of potential frauds (check the Nasdaq halt list and find the most recurring word): Puda Coal, Inc (NYSE: PUDA).

http://tinyurl.com/3ho4a44

Interesting read about how we operate the exchanges and what we give for nothing. Makes one think about things like paper storage of unseen goods. Some one wrote recently what is it that makes us go to great lengths to dig up something that was already out of sight move it and rebury it somewhere out of sight once again.

The iShares COMEX Gold Trust (IAU) continues to gain ground on the Gold SPDR (GLD). IAU saw $310 million in inflows last month compared to just $25 million for GLD. Both products offer exposure to gold bullion, but IAU charges 25 basis points while GLD comes in at 0.40%

Read more: http://www.businessinsider.com/march-etf-stats-ano...

In my week in review UXG continued to climb with it's news of it's ever growing silver find down in Mexico. The company set a new high today on the rise of silver over $40.

Claude Resources paused to unload $50 million in new shares with the proceeds to be used to help get the other mines up and running. Look for news from The Madsen Properties which comprise six contiguous claim blocks totaling approximately 10,000 acres (4,000 hectares) located in the Red Lake Mining District of northwestern Ontario. The Red Lake Mining District has produced over 30 million ounces of gold according to grand view gold dot com. Posted: Jan 25/11

Wendell Zerb from Canaccord Genuity initiated analyst coverage on Claude Resources Inc.

Rating: Buy

Catherine Gignac from Northland Capital Partners initiated analyst coverage on Claude Resources Inc.
Dec 13/10

Rating: Buy

Target: $3.00 (CDN)

Posted: Dec 09/10

Paolo Lostritto from Wellington West Capital Markets initiated analyst coverage on Claude Resources Inc.

Rating: Buy

MAG/MVG silver continued to climb with the record price of silver Friday. MAG silver added 22.71% this week alone. Silver Wheaton Corp. in contrast added 9.53% for the last 5 days. Checking IShares Silver Fund I found the pure silver play lifted only 8.14% for the week. There are some big names in the big holders club for this one with an expanding silver strike here also.

MPG my craps play is renegotiating it loans on the tallest structure on the west coast. MPG Office Trust (NYSE: MPG), announced that its mortgage loans on US Bank Tower and Wells Fargo Tower in downtown L.A. have been placed in special servicing as the office landlord continues to part with non-core properties and unload and restructure debt in a defensive bid to shore up its balance sheet.

The 54-story Wells Fargo Tower at 333 S. Grand St. and the 72-story US Bank Tower at 633 W. Fifth St., both icons of the Los Angeles skyline, are each nearly 1.4 million square feet. The company also delivered a notice of imminent default to the master servicer for the loan on Gas Company Tower, MPG's 52-story building at 555 West Fifth St, requesting that the 1.3 million-square-foot be placed in special servicing. David Tepper has had a hand in this one for some time, last report was 8.5% with a 12% increase on the last report. Current holding for him is 4,176,280 shares. Last report at 12/2010 showed George Soros holding a position here also.

My US Steel (X) is in a short vacuum I should have known to sell when Goldman Sachs rated it a buy and raised it target last month it has fallen ten bucks. However I expect the government to intervene in steel prices fundamentals are firming up but the auto industry has been put back to sleep for steel. Don't need the cash and don't want to pay taxes from the low 30's where I got it. Has been dead money for a year.

Finally another I picked up from David Tepper's holding a big chunk is NCT a real estate mortgage holding company ran by Fortress the hedge fund. It was so low that ScotTrade made me call in the order and pay cash for the shares back then. Newcastle Investment Corp. (Newcastle) is a real estate related investment and finance company. Newcastle invests in, and actively manages a portfolio of, real estate securities, loans and other real estate related assets. The Company conducts its business through four primary segments: investments financed with non-recourse collateralized debt obligations (CDOs), investments financed with other non-recourse debt, investments financed with recourse debt, including Federal National Mortgage Association (FNMA)/ Federal Home Loan Mortgage Corporation (FHLMC) securities and unlevered investments.

In all fairness I believe David has lightened his load from this company with it's having had a low of 29 cent in February 2009 to $8.85 in February of 2011. Doing some quick math in my head that looks like a winner if you got in after the crash. Now it has fallen back down with a stock offering to buy more toxic debit that might not be all that toxic. It's current holding include WFC loans a sign that they were not tampered with by the mortgage brokers. I expect it to due fine and have it as a core holding also.

My WFC from October 2008 to now has almost returned to that value. Oldest position of 20 years a great story. Split and split grew and grew then the bank oopsie thing. Not being a trader and having a hard time reading the stock quotes in the newspaper I just forgot about it.

Bill blogging that the banks were up to something and propping up the markets to unload made me sell a small chunk in 2008. With that money and the sound insights I got here I have had a ball growing that chunk by going after elements in the earth.

I was a geology student when I started college. I loved reading science fiction about the future and space travel. Became a Trekkie when I did not go to work for NASA. Was offered a job by JPL in education but turned it down due to to much traveling. Putting it all together I believe elements will remain strong beaten by only food a complex combination of many elements.

Have a great weekend, hope the government has made a payment on the internet spy thing, would not like it to go unmonitored at midnight.

The Tea Party does not want a government shutdown if it involves our military relatives to go without pay!

Earl

Fox news just reported an error, that the government waited to the last minute since that's their nature - wrong! The corpus of the Tea Party had to agree and that took some time. BAM
Earl

"Tell me it ain't so, Joe" as the kid said to Joe Jackson of Black Sox baseball infamy. How about an occasional post on weekends at least?

Earl,

When it was announced Obama was starting his campaign I said to my wife, "How can they tell — he's NEVER, EVER stopped campaigning in his life.

With Obama it was, is and always will be about... OBAMA!

As for the shut-down: I see this as simply penny ante diversion from the immense problem — TRILLIONS, misspent mostly by the people we see grabbing face time on TV. Shumer, Hoyer, Dubin, Reid, Boehner and of course (drum roll) His Nibs, Obama.

When they "agree on this piddly amount, they will take bows and be declared competent and watching out for our best interests. Some will believe it but most know we are getting screwed again and can't do anything about it. That's why so few vote anymore.

Meanwhile "Financial Experts" like Kiplinger and others pass on the government spin that, "Nearly all states are now out of recession." — The Kiplinger Letter,
April 1, 2011 (I see the date as significant — they didn't.)

IMO, half the folks in Congress don't know what's going on out here in the sticks. The other half knows and is dodging though delay and obfuscation — after all most are lawyers and that is a standard tactic, wait them out and let them give up.

Unless we can get Constitutional change which limits Congressional powers — term limits, reduced control by committee chairmen, pay and benefits in line with their constituents — we will continue to be ignored and oppressed by these elitists.

Grym

On March 16, 2011 TLT's closing price was 93.53 and its P&F chart indicated a preliminary bullish price target of 107 showing as an explanation "traditional, 3 box reversal chart".
http://stockcharts.com/def/servlet/SC.pnf?chart=TLT,PLTADANRBO[PA][D20110316][F1!3!!!2!20]&pref=G

The day before, on March 15, 2011 TLT's closing price was 92.49 and its P&F chart indicated a revised bearish price target of 78, again showing as an explanation "traditional, 3 box reversal chart".
http://stockcharts.com/def/servlet/SC.pnf?chart=TLT,PLTADANRBO[PA][D20110315][F1!3!!!2!20]&pref=G

The price of TLT has fallen since the P&F chart turned bullish.

My guess is that the P&F chart is either a contrary indicator or a meaningless indicator.

Terry C,

I guess to say he is "corrupt" I would need to point to some criminal behavior. If he is indeed a natural born citizen (I think the Donald is tilting at windmills there.) I can't think of anything he could be convicted of. Ethical is a whole other item.

He was my senator ("My" is due to a regretful fact, since I checked his name — although actually against one I thought at the time to be worse.) He did less than nothing while in that office, so I am not surprised at his current performance. He set a record for answering "Present" rather than declare for or against anything which may in any way be used against him. Example: Gun control = Present. It was his wife, I believe, who accused people of "clinging to their guns and Bibles..."

IMO, he came on the scene at an opportune time — Black, but not "too black" (post 1964 Civil Rights Act quota time), intelligent, and worked as a community organizer which furthered his grasp of how to work the system. He has a brilliant way with words. He can talk for an hour, saying things people want to believe and make them believe he will do them. I think at times he actually believes if he said it it has been accomplished. On the surface he seems deep, but down deep he is shallow.

In my view he is self-centered, amoral and one of the most dangerous and most destructive to the American way of life of all politicians we've ever had. And we've had some real disastrous presidential and legislative examples.

4ever,

"This is why we are in such trouble. Everything is about keeping the game going – not about making society better."

I can hardly bear to listen to the news anymore there is so much wasted effort, meaningless talk and outright distortion it is sickening.

2ndAve,

Earnings — yes. Recovery — not.

"16,000 new jobs" but approx 125,000 new people in the job market per month.

Manufacturing jobs added, but not anything close to the $40/hr they earned in the 1990s and before — not even considering the dollar shrinkage.

4.6 applicants for even telephone harassment jobs at $9/hr here.

All gov't data is phony! All media is ignorant or saying what told without question.

So, IMO, money can be made by playing their game, but the longer term outlook for most is still bleak.

jack black -

"BTW, I checked the most recent COT data and commercials don't seem to be squeezed by silver now (unlike oil). If you have data showing otherwise, please share."

From Harvey Organ: "Rumours were abound that there were huge purchases of May in the money calls and this forced the seller of these calls to delta hedge because they were deeply in the glue. The writers of those calls were rumoured to be JPMorgan. Gold closed at record levels and silver is now at a 31 yr high."

http://harveyorgan.blogspot.com/2011/04/silver-bla...

Looks like JPMorgan and friends still have 125M ounces to cover! Pucker factor: 11. Good luck with that delta neutral using an asian vault full of phantom silver, Blythe. Whhhhoooooohoohoohaahaaahaaa.

Looks like the outsized paper silver market is getting overrun by physical demand sooner rather than later (still in backwardation) Three words for you jack: Commercial Signal Failure.

Cheers.

show me the money!

"Trying to learn from the accumulative knowledge of all generations that went before us is something the manipulators are not interested in at all. They want to keep the public, government, and the press barefoot, stupid, and pregnant with false information."

Above is from article in the link by Armstrong post# 83497
Excellent reading. Thanks Dr.Strangelove.

Bearfoot but not pregnant, Bear E

I predict a new form of subprime lending emerging. When modest homebuyers realize nobody will fund a loan under $150,000 (under the new Federal LO Compensation laws just enacted fixing loan origination fees) where will these folks go? Underground. Waiting will be the Blankfeins and friends ready to pounce on their need compliments of the Fed looking the other way. So much for Consumer Protection.

Loannetter - I have no knowledge of the new laws you address but I would add that the affects may be felt most adversely in Mid-America where home prices are lower compared to the coastal regions. Actually it sounds like a law to lock in the higher rates modest homeowners may have, preventing them from refinancing at todays advertised lower rates.

ALOHA!!

since it's a store of value the masses can't participate in.

My internet service has been out for the past three days. I watched a movie from the late 1960s by the name of BULLITT with Steve McQueen. Probably a lot of the young kids here never even heard of it. Fast paced action, cop movie set in San Francisco. In one scene McQueen was walking on a sidewalk down on Embarcadero and he stopped on a street corner and behind him was a sign advertising the DANIEL HOTEL right on Embarcadero and it had a price listed of $1.75 per night or $7 per week. Obviously not the Marc or the Fairmont but still it was not so bad and it was along the wharf which today is a pricey area. Okay, so a 3 star hotel was $1.75 a night so what was a pricey hotel back then? Well our family took a vacation to Hawaii and we stayed at the Outrigger Reef right on the beach at Waikiki and the cost was $18 a night, oceanview. I know because I still have the bill!

BULLITT LINK: http://www.youtube.com/watch?v=0bTOgBXV5gY

Back in those days I was doing part time work for minimum wage of $1.30 an hour at a hardware store in California. So you work one and a half hours and you make rent of $1.75 and still have change left over for food. How many hours do you have to work today to pay one day hotel or one day mortgage payment? Well I do not know about mortgages because I do not have one, but to pay for one day hotel at the same $18 a night Outrigger Reef in Waikiki in 1969, which is now $325 a night, you would have to work 18 hours or 2.25 days and you would not have any change left over for food!

Without a store of value your labor becomes more and more worthless in terms of dollars and your lifetime of savings dwindles to nothingness while you're still retired or even before. Its the MONEY STUPID!

The global irredeemable currencies are following the same script of Weimar Germany in terms of value and the void in quality money. Never mind hyperinflation or any of those labels, just think of "value" and the storage of value. Where can you go today to get the best storage value for your labor and savings? Isn't "savings" one word that describes your dollar pool of your total life's labor? These are political issues which create the debt and spending. Essentially politicians of today borrow from your kids future in order to convince you that if you vote for them you will somehow get a free lunch when you retire. Politicans have absolutely no skin in the game since you and your taxes and you kid's will carry the debt burden.

What sort of HUMAN ACTION happens when money no longer serves the purpose as a store of value for savings and labor? Human action dictates that the masses will attempt to fill that void with whatever they perceive as "value". In Weimar Germany that value was a stock certificate, since the company stock had PP&E backing its paper, which was perceived then as much more valuable than cash or government bonds paid in cash that continually lost purchasing power. This same recalibration of "value" will occur globally now and this is why you are seeing "real assets" without counterparties rise. Real estate has too many counterparties in the form of debt and property tax and/or association dues. Add on the high inventory and real estate becomes too illiquid. You cannot sell a house with the click of a mouse like you can XOM stock. I mean XOM has billions and billions worth of Property, Plant and Equipment(PP&E) backing each stock certificate not to mention oil in the ground, oil in storage and oil in refineries as well as all oil based products. Same could be said of junior explorers, especially gold and silver ones without DEBT with a few million ounces in the ground. The less debt the better.

You will read that it is those damn "speculators" that are to blame, but aren't speculators just people who realize there is no store of value and they move their deteriorating purchasing power into leveraged plays in an attempt to recoup store of value and stay ahead of the lost value that is created by politicians and bankers who pedal monetary and political corruption. They always attempt to deflect their corrupt practices by blaming others like speculators and gold hoarders and the rich. This plays well to the Lower and Middle Class who want something for nothing and are angry at their lot in life. Truly though the one most to blame is in the mirror. Isn't it always like that in life? Aren't we all our own worst enemy? I certainly made a mess of my life from time-to-time, but the difference between success and failure is how you handle your messes. What do you do when you're down and out? Generally politicians and bankers deal with their failures by making other people pay for their mistakes. At some point "enough is enough".

Every government in the World suffers from a Liability Bubble. The cure for excessive debt is seen as more debt. This is a mistake by design. To think that world leaders do not understand that excessive debt cannot be cured by more debt is ludicrous. There is an "end game" here and these people in central banks will make sure they hold the right cards in the end. They read the same history books we all read. They read the same blogs we all read. They see the same Tea party stuff on TV we all see. These people did not get where they are by being totally ignorant buffoons, yet neither will they volunteer to give up their power any time soon. Somehow we all sit around agreeing with Faber or Armstrong and we call those central bankers scam artists and dumb pretty much like we sit and play armchair quarterback every Monday Night.

In my mind you have to take care of the "basics" first because since you are not a global central bank insider you will not know exactly how the "end game" will play out. My strategy has been to get out of debt first, then have the basics like food and water supplied, preferably year round. After that diversify into real assets and leave behind any assets with debt counterparties attached. We Americans must get back to basics morally and financially and politically. To me this means adopting a more Constitutionally based direction for our moral and monetary compass. Less government is desirable and a more sound monetary system are key to having long term and lasting quality of life. To continue down the same road of "corruption as usual" is useless. Corruption is how "they" win!

Loannetter,

Scary. The herd is so slow to learn and the wolves are so quick to regroup.

No government agency will guard us like an individual who watches out for himself, his family and friends. Elizabeth Warren may mean well, but her revelations regarding the TARP debacle went about as far toward justice as the warnings of David Walker.

When it sounds too good to be true...

Some of my best business decisions were the clients I avoided.

Grym

kaimu- Mahalo!

Bullitt went way beyond 'a fast-paced action, cop movie' to become an indelible image of the late sixties in America. And McQueen remains the ultimate working-class hero, always attentive to behind-the-scenes players, both on location and in daily life. I would bet the line in the film where he acknowledges the nurse who brings him the sandwich/glass of milk was his idea.

Buckling in for the chassis-pounding chase down Nob Hill and the anti-climactic crash on Guadalupe Canyon Road? That's a trading treatise with analogies to emotional control, one-upmanship and bold moves in every scene.

Watch the full chase scene here:

http://tinyurl.com/y4plshv

You can't tell me you don't experience every emotion encountered while day trading. The combination of Lalo Schifrin's score + the throttle of a Mustang- does that not define a long entry into a short squeeze?

ALOHA!!

Mahalo-back at ya!

Buckling in for the chassis-pounding chase down Nob Hill ...

Totally agree ... Its all about the emotional ride when you "pull the trigger"! Finger on the mouse eyes on the charts. Risk does that. You put yourself and your ego on the line every time, both going long or short!!

I equate executing a trade to taking off on a 20ft wave and the heart-pounding high risk drop at the takeoff, knowing full well if you do not make the bottom turn you'll get hurt for sure. Who guaranteed any of us we would never have to risk anything in life?

Mustang 2+2! Hummmmm ... Things in the World have really gotten "lesser than"! Imagine that same car chase scene only with a Toyota Prius! HA!! Although for what a new Prius costs today you could have bought four Mustang 2+2s back then. I am constantly amazed by the lost value of "things" and the complete silence in which we accept the suffering.

"Aren't we all "speculators"? Corrupt money forces it on us."

Yes, isn't that the truth? I went to the bank and was depositing a check for $125k, and I always go to the head teller (who recognizes me) if I can. She said that I should consider a different type of account to put the money into. Well, the reason I have that account is because it pays 3% a year interest. It turned out that its now been changed to pay 0.09% per year, now, meaning essentially you get no return on your money by putting it in a bank. Anyway, they suggested I talk to their "wealth management" experts, who currently are recommending putting the money into precious metals and commodities, the paper versions, I'm sure, to get a return.

Its not a safe world at all when even the banks are betting on currency debasement.

2nd,

Thanks for the link. That has to be one of the greatest of all chase scenes.

Grym

Cheapy,

This is a very telling message. Someone should tell Bernanke — he needs to know things like this ;-)

That was awesome Dr. S. The wife comes out of the bedroom and asks if I'm watching the Indy 500 and says its annoying.

Turbo Tax for real this time.

I have only one question for Steve Queen. Where are the machine guns?

http://www.youtube.com/watch?v=BsBd9tPK4uE&feature...

definitely too young for San Fran cop flicks.

yeh SLW often gets the blood racing, but not with Friday's action.

Trade The News Weekly market update: Market Week Wrap-up

- Central bank tightening and surging commodity prices were at the front of every trader's mind this week. After telegraphing its intention to step away from ultra-low rate policy, the ECB raised key rates on Thursday, and left the door wide open to more hikes. Earlier in the week China's PBoC increased interest rates for the fifth time in the current policy cycle, this time opting for the more meaningful hike in the one-year deposit/lending rate.

Now that the ECB has embarked on what many believe could be the beginning of a tightening cycle, there is a sense the Fed may be falling behind the curve. After some hawkish Fed speak was heard last week, the doves were out making their case. Atlanta Fed President Lockhart insisted that the long-run inflation outlook for the US is stable, a combative Fed Governor Lacker commented that the ECB hike did not "show the way" for the US central bank, and Cleveland Fed President Pinalto said the outlook on growth and inflation warrants keeping rates at very low levels for an extended period.

Crude prices remain elevated as the Libyan conflict settled into stalemate and Gaddafi forces attack rebel-held oil infrastructure. On Friday, front-month crude closed just shy of $113 a barrel, spot gold hit fresh all-time highs above $1,470/oz and silver marked 31-year highs above $40/oz (the nominal all-time high is around $50). In Washington, Democrats and Republicans played a game of chicken over the FY12 budget.

Negotiators from either side of the aisle whittled away their differences, with Democrats largely agreeing to the demanded spending cuts and Republicans conceding grounds on their demands for EPA regulation changes, but by time of writing on Friday the talks were deadlocked over $300M in funding for Planned Parenthood. The deadline for an agreement is midnight, and if no deal is reached the Federal government will shut down for the first time since the epic budget battle of 1995. Equity trading was choppy all week long on thin volumes; the NASDAQ and S&P500 each lost 0.3%, while the DJIA gained 0.3%.

- In earnings news, Monsanto's profit was in line with expectations and revenue was a bit soft, but the company merely reaffirmed a FY11 outlook that was shy of expectations and on the conference call warned that its loss in Q4 would be the firm's largest since 2007 due to pricing issues. Troubled homebuilder KB Homes widely missed expectations in its Q1 report, with revenue way below par and quarterly losses higher than at any time since the height of the financial crisis. Rite Aid racked up some brief gains thanks to strong full-year revenue and comp guidance, even though it continues to expect a loss for the year. Bed, Bath & Beyond crushed expectations in its Q4 report, pushing its stock up about 10%.

- Apple traded off this week on reports that a Nasdaq 100 rebalancing would reduce the heavy weighting of its shares in the index. Cisco was back in the spotlight this week after CEO Chambers admitted in a staff memo that his firm had lost its way. Chambers was thin on details about what he intended to do to revamp the flagging network equipment firm's fortunes, warning employees to prepare for crucial changes in the weeks and months ahead. Samsung reported Q1 operating profits at their lowest level in almost two years thanks to tumbling flat screen and TV prices.

- In deal news, National Semiconductor agreed to be acquired by Texas Instruments for $25/share in cash, in a deal valued at $6.5B. The acquisition extends Texas Instrument's lead in the market for analog chips, which are essential for in regulating power consumption, a crucial ability for smartphones and tablets. French daily Les Echos raised a ruckus mid week by reporting that NYSE Euronext was preparing a counter-bid for NASDAQ in response to the joint NASDAQ/ICE bid for NYSE.

The report was quickly denied by NYSE Euronext, and its board is said to be meeting this weekend to consider the bid from NASDAQ. Cephalon rejected Valeant's unsolicited $73/share offer after deciding that it fails to fully value the company. Google got government clearance to acquire ITA Software, after agreeing to maintain competitors' access to the airline reservation firm's products.

- The March same-store sales reports were better than expected, even as retail gasoline prices flirt with $4.00/gallon. Last month many companies had warned investors to expect softer sales in March due to the unusually late Easter holiday, although this caution was apparently unwarranted. Warehouse retailer Costco and apparel name Limited continue to strongly outperform expectations; both firms reported big double-digit comp gains, crushing estimates.

Comps at high-end department store Saks were up more than 11%, far above estimates. Sales at mid-market department name Macy's stayed in the black even as analysts expected a decline. Target's comps slipped into single digit declines. Note that discount chains Ross Stores and TJX reported comp declines.

- US Treasury yields continued to rise this week as investors fretted about the eventual impact of from inflation in the face of commodity prices and the declining dollar. The TIPS 5-year breakeven rate moved above 280 basis points, suggesting medium-term inflation expectations have reached their highest levels in more than two years. Not surprisingly inflation concerns led to particular weakness in longer-dated maturities.

The Treasury also announced another $66B in scheduled coupon supply for next week which will include 10- and 30-year reopenings. By Friday the 10-year yield topped 3.6% for the first time since February before backing off as stocks declined on continued consternation surrounding the looming US government shutdown.

- Currency markets continued to take their cues from widening interest rate differentials and ongoing reserve diversification, as Europe's latest sovereign bailout failed to weigh down the euro. The ECB's 25 basis point rate hike had historical implications in that it was the first time in its history that the ECB moved rates ahead of the Fed, which necessitated officials from both central banks to say they must follow their own mandates, regardless of other banks' policies.

The euro zone rate hike hit the USD- and JPY-related pairs: After making weekly lows around 1.4150 on Tuesday, EUR/USD had moved above the 1.4400 handle by Friday, as traders gambled that the ECB would increase rates at least two more times before the end of 2011. Early on in the week EUR/USD maintained the prior three-week price consolidation range, but key technical levels finally gave way ahead of the ECB rate decision. The move above 1.4300 broke a key technical point that corresponds with the post-financial crisis downtrend line and could ignite upside potential for the euro. Traders more or less ignored the Portugal bailout story, which did very little to stir volatility.

- Reserve diversification broadly weakened the greenback this week. Asian central banks initially bought dollars to curb strength in their respective local currencies and then sold off the USD in exchange for EUR and GBP. A Chinese think tank best summed up the situation, predicting that dollar depreciation would remain a long-term trend and would impact the value of China's foreign exchange reserves. The weakening dollar has been complemented by higher commodity prices.

- In other currency news, the Swiss CPI data out this week could be a game changer for Switzerland's monetary policy as imported inflation begins to make its mark. The Swiss Franc surged on expectations that the SNB would not be able to stay on the sidelines for much longer and may be forced to tighten policy at its next meeting in June. Carry-related sentiment weakened the JPY during the week as Japanese funds put their money to work overseas, but the price action was more muted in Europe.

- The Bank of Japan did little to dissuade the currency markets from shifting its focus on the Yen as the primary carry-funding currency. Facing the increasingly likely prospect of a double dip recession in the wake of the March 11th earthquake, Bank of Japan downgraded its assessment of the economy for the first time in 4 months to one of "economy is under strong downward pressure" from the prior "expected to emerge from deceleration phase" statement. Japanese Yen, remaining under severe pressure ever since the March 16th coordinated FX intervention, fell to multi-month lows across the spectrum of currency majors with USD/JPY rising to ¥85.50 and AUD/JPY as high as ¥89.90.

- In China, the PBoC's 25 basis point hike in the one-year deposit/lending rate generated only a temporary knee-jerk reaction in risk-on trade. More importantly, the rate hike also preserved the pace of every-other-month 25 basis point increment moves observed since PBoC began its core interest rate policy adjustment last October.

Expectations for continued policy action from the central bank remain entrenched ahead of next week's monthly economic data. GDP data for Q1 is on tap, while consensus sentiment for March inflation is pointing to a 32-month high figure of 5.2%. Note economists from UBS forecast March inflation as high as 5.5% because the rise in food prices does not appear to be moderating as quickly as expected.

- The Australian Dollar continued its impressive run for much of the week, extending its gains to a new post-flotation 30-year high of $1.0550 all despite the dovish tinge to the RBA policy meeting. The Aussie central bank reiterated policy remains "mildly restrictive," but also paid no heed to Australia's first monthly trade deficit in nearly a year.

Instead, much stronger than expected employment data trumped all other developments, with unemployment falling to 2-year low 4.9% and job creation at a 4-month high of 37.8K. Even more impressive and somewhat overlooked, labor participation rate in Australia ticked higher to 65.8% - a trend we are yet to see from the improved labor data stateside.

Ran accost a must read on gold and silver and Comex deliveries. Includes inventories, shorts, in the money calls and much more. Makes me miss Bill that much more to have to go out and find the stuff yourself.

http://harveyorgan.blogspot.com/

Commercials like JPMorgan who have been short from the beginning of time,
decided that it was best to continue to supply the unbacked paper. This week: they added a humongous 16,794 short positions.

Claude Resources Target Raised To C$3.30 From C$3.05 By Desjardins >CGR

Posted this to keep up on the community pick I submitted.

http://www.hussmanfunds.com/wmc/wmc110411.htm

Federal Reserve has already pushed its balance sheet to a point where it is leveraged 50-to-1 against its capital ($2.65 trillion / $52.6 billion in capital as reported the Fed's consolidated balance sheet ). This is a greater leverage ratio than Bear Stearns or Fannie Mae, with similar interest rate risk but less default risk. The Fed holds roughly $1.3 trillion in Treasury debt, $937 billion in mortgage securities by Fannie and Freddie, $132 billion of direct obligations of Fannie, Freddie and the FHLB, and nearly $80 billion in TIPS and T-bills. The maturity distribution of these assets works out to an average duration of about 6 years, which implies that the Fed would lose roughly 6% in value for every 100 basis points higher in long-term interest rates. Given that the Fed only holds 2% in capital against these assets, a 35-basis point increase in long-term yields would effectively wipe out the Fed's capital.

Silver is screaming up Sunday night at the start of the Asian trading week. It has gained over half a U.S dollar before 7 PM here on the west coast.

http://www.cx-portal.com/metal/silver_en.html

Dr Joel Fuhrman has provided a research based guide to nutrtion, including an oil called DHA purity, which is plant based. You can mail order, not expensive. I'm back on it along with gentle care, and osteosun, although I think gentle care and DHA purity is all I really need.

http://www.drfuhrman.com/default.aspx

Joel Fuhrman M.D. is a board-certified family physician who specializes in preventing and reversing disease through nutritional and natural methods. He has been practicing for more than 20 years and established the Center for Nutritional Medicine located in Flemington, New Jersey.

Dr. Fuhrman is a renowned speaker and author. His work has been acclaimed as "a medical breakthrough for weight loss, disease reversal and prevention". His signature book Eat To Live: The Revolutionary Plan for Fast and Sustained Weight Loss, first published by Little, Brown & Company in 2003 spawned multiple foreign editions and over 20 reprintings. Due to it's enduring popularity it was updated and revised for 2011. Dr. Fuhrman's first book, Fasting and Eating for Health: A Medical Doctor's Program for Conquering Disease was published in 1995 by St. Martin's Press. His other books include, Disease-Proof Your Child, published by St. Martin's Press in April 2005, Eat For Health (a two volume set) published in 2008.

Siberia is a vast sacrifice area and there are others including portions of Nevada, New Mexico, Utah and several Pacific Islands. Now portions of Japan and the surrounding sea. How much can the Earth stand? That is the question.

Hi Grym;
I hope you've had a good weekend; I'm now trying to catch up with all the post this weekend.

(Unless we can get Constitutional change which limits Congressional powers — term limits...) I could not agree more! I think we should re-commit to a republic and allow the states to be more creative with less federal government involvement. Let the best managed be realized, but you know even between the states it's dog-eat-dog so I can see a role for the federal government, maybe 1/2 to 1/3rd what it is today – and could be done by attrition over the next 20 years. But no it won’t be done logically or rationally, it’s going to be done by internal and external fighting of all forms because logic takes a back seat to peoples emotions. Emotions and the play on emotions is the name of this game. Truthfully Grym I’m more convinced that people get what they deserve and what we have is what we’ve asked for, in general. It’s like 1/2 the male population has much too low testosterone levels… or have been overdosed with radioactive emotions... most of which are attorneys working in washington:-)

Earl,

Over time people have come to think we need money from the federal government. that we need government uniform regulation to insure "fairness". That such money is free and such regulation is better than what we closer to the problem can come up with.

IMO, except for the guaranty of freedom and national defense, most of these are not really benefits, they are restrictions and attempts to force dependency.

I once served on a board which helped kids who had been in trouble with the law get straightened out. We applied for a $40,000 government grant. To get the money we would be required to hire a person with a masters degree to take over. Tom, the man who began the program, had no degree, but had been jailed when young and knew the problem personally.

Our schools keep kids in school to get the state dollars based on attendance. We used to expel trouble makers — now we have cops in the halls.

Today we have millions of citizens living on state and federal welfare programs in virtual slavery.

Do we see a pattern here?