Bill Cara's Blog for Aug 31, 2011

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

Glencore, the world’s largest commodities trader, said that so-called bonded warehouses stockpiles had seen a “significant drawdown”. It estimated that stocks have “at least halved” since the beginning of the year.

The strength of demand by China in the past four-to-six weeks has been buoyed by a jump in the strength of the renminbi, which makes importing commodities cheaper for Chinese traders. Western traders said that some large Chinese buyers had been able to access credit more easily, enabling larger purchases – although they cautioned that credit is still tight for smaller companies.

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

Yep, they have their own agenda. Who's running this country anyway?

Vince Cable, UK business secretary, has criticised banks for using the eurozone crisis as a pretext for delaying structural reforms in the sector, claiming their tactics were “disingenuous in the extreme”.

Mr Cable accused the banks of “special pleading” ahead of a report by Sir John Vickers’ independent commission on banking, which is expected to propose ringfencing of banks’ retail and investment operations.

Stop gambling and start investing.

Liberal Democrat MP John Thurso said immediate banking reform was “absolutely essential” for the economy.

“One of the core problems is the complete lack of competition at the moment and the failure of banks to actually offer finance; that small and medium enterprises either cannot get the finance, or the finance that they are offered is at a price they cannot afford.”

“And we are haemorrhaging, and part of that is because banks can make so much money playing the capital casinos that they don’t have money available to deploy in the traditional commercial and retail banking sector.”

"According to provisional estimates from consultancy Hedge Fund Research, the average hedge fund has lost 4.1 percent during August – making the month the industry’s fourth worst ever." (more)

http://www.cnbc.com/id/44320998

So, was Bill right? Market playing rope-a-dope and that was the bottom and hedgies need to chase performance? Curious to see the market's next step. Gotta love the game.

Grym;

"The auction of US jobs which occurred simultaneously, was merely touched upon, but the biggest Ponzi scheme in the history of the world is very clearly portrayed in great detail. This double blow to our nation's economy is something we will not recover from soon — never if we don't make massive changes to our system of governing."

The complexity of motivation for these Nationless 'people' posing as capitalists is not easy to dissemble and not apparent without persistent study. This challenge to our patience and understanding must be met with an unrelenting force of compassion.

Perhaps you will benefit from more of the efforts to weave together the deceit, destruction and results;

http://emsnews.wordpress.com/2011/08/30/jobs-will-...

Cheers,
pulse

http://tinyurl.com/3sm9kd
Baltic Dry Index (BDI) jumped to 1619 +82
31 August 2011
The culprit was the 'big boyz' the CAPE INDEX up $2,942.00 in one day!
SPOT 4 TCE AVG (USD) 19610 +2942

CAPE Index YESTERDAY (USD) 16668

Cape Index YEAR AGO (USD) 35935

That is the largest one day jump I recall ever seeing. But I don't watch this every day anymore. It makes me want confirmation that this is not a misprint.

EXCERPT:

In a report released on Wednesday, five Chinese non-governmental organisations said the US technology company was using suppliers with public records of environmental violations and taking “advantage of the loopholes in developing countries’ environmental management systems”.

The accusations escalate a standoff between Apple and Ma Jun, director of the Institute of Public and Environmental Affairs, a co-author of the report, which is threatening to damage Apple’s image.

Pulse,

Bill mentioned today...

"If only the SEC would require Financial Entertainment TV to archive all videos for students of the market to use for an eye-opening education. "

One of the segments in the movie pointed out how the SEC had staff cuts so deep that one category of oversight had only one (1) person left.

It is pretty obvious three or four years after the crash their compatriots are still in charge and this will not be change by another election without systemic change. So many people were in on this for so long that I have virtually no hope of seeing a correction in my lifetime.

It is apparent that this was a very well orchestrated plot (still is) and nearly all the bases were covered.

Grym

Bill,

I think the IPEA is independent of the Chinese government, but it must have its blessing. Ma Jun is a high profile environmentalist and I agree with you that the organisation he represents is looking to put pressure on big global brands to clean up their acts as they are the ones most able to influence suppliers.

Isn't it far easier to embarrass someone like Apple who's customer base is predominantly in the West?

The Chinese people aren't as easily pacified today and the mainstream media has found its voice too.

all key levels. 61.8 retrace from the beginning of the drop = approx 1152.

What strikes me is the lack of relative volume, and precision flying up to expected resistance levels.

This is all still simply a bounce, off of destruction we saw a few weeks ago.

good luck folks.

Disclosure: long since the open.

wait for it....you shall hear more about roads, bridges, tunnels, renewable energy.

oh oh oh and possibly even an extension of unemployment benefits and food stamps.

Bill,

If you've watched "Inside Job" I would be interested in your opinion.

A couple of examples:

Merrill Lynch CEO Stan O’Neil pocketed $161 million in severance pay after the company reported a $2.24 billion loss for the previous quarter, but king size compensation based on title rather than performance is only part of the problem.

Angelo Mozilo of Countywide received hundreds of millions of dollars over the years as Countrywide became the biggest supplier of CDOs. The SEC sued him for misleading investors after he sold $140 million worth of his shares while publically touting the quality of the company’s loans he knew were doomed to fail.

A year ago Mozilo and the SEC reached a setlement. Bottom line, he won't pay a dime courtesy of Bank of America's sharehlders and customers and will be immune from civil and criminal litigation.

Grym

Most recent piece by Martin Armstrong on gold, always makes for good reading:

http://www.send2web.com/files/Gold%2008-27-2011.pdf

A recent news release:

Silvercorp Metals says pursuant to its normal course issuer bid announced on June 17, it has acquired a total of 2,027,167 of its common shares at an avg price of CDN$8.112
8:02 am ET 08/31/2011- Briefing.com

I have purchased 1000 shares this morning. As chance would have it, my bid was filled at $8.88.

Thanks to all for the guidance on this company.

Also, there was a highly speculative junior that Rui was directly involved in, also exploring in China. Can anyone refresh my memory, as there is room in my current plan to insert some more risk.

TIA,
pulse

I opened long YCS calls position in case yen goes down and/or dollar up.

I'm also opening positions in nursing home stocks. Me thinks there should be a demand for those soon and they seem to be recovering after the sell off.

Pendulum will swing before long... watching for the trade ' agreements ' next year... guess CNBC will gear up for a China Special !.... Have already taken starter positions in companies where US Financials are investing in recently...

Still looks like Russell 2k is trailing SPY during this rally.

http://stockcharts.com/h-sc/ui

within minutes of the open I had sold SVM at 9.05 and shorted TNA at 50.52 (50 shares for risk control). Charts were telling me a pullback in both were coming.

Neither happened as planned. TNA popped and I was stopped out and SVM leapt to the upside and I chased it for 500 shares (reduced from 1k yesterday given the additional risk). I can see both were crowd teasers and smart money is now fading me.

Happily SVM remains strong. TNA I've admittedly been practicing a couple of times this week in preparation for a return to daytrading. IB sub $25k is not the account to be doing it with though.

Attached is what I was looking at in TNA at the open. If you'd like to be able to construct this sort of trading worldview for yourself I recommend you get in touch with Vad.

Perhaps you won't trade like Vad after 1 year - I know I couldn't. But the way I look at the market is improving and whereas in such a trade I would have given up after the initial stop out in TNA when I was working with Vad, now I'd hit it again as I see the new setup around 10:45. See how TNA slides under the 8MA at the top in the 3 min. chart and heads lower.

losses are worth their weight in gold if I can learn from them. Of course Vad would tell me that the trend is my friend, but reversals are a personal bias I enjoy.

Bill,

That was probably a supermarket loyalty card which often results in much lower items on sale items. Though I'd be surprised if you hadn't seen them as I use them not only in the USA but here in Thailand.

But, yes, huge numbers would also be on Food Stamps in L.A. and Las Vegas but instead of the old coupon booklet now use government issued plastic.

For those above the poverty line, why would anyone use cash instead of a rewards credit/debit card? I now use the PerkStreet card which kicks back anywhere from 1 to 5%.

The store loyalty cards here only kick back half a per cent unless there's a promotion. But like in Mexico, every peso counts.

http://read.bi/ofD1TO

Disclosure: i am not a fan of the one who wrote this article. but he agrees with me BAC is still screwed.

boughtmypoints;

"For those above the poverty line, why would anyone use cash instead of a rewards credit/debit card?"

I am one of those who rejects these methods (not always.) Due to my education in the markets, I see this as the introduction of another bloodsucking little counterparty to the transaction involving the disposition of my labour. I also do the odd thing of choosing to line up for a cashier rather than use the swipe your own aisle. If they offer no such option, I often leave the items I was going to buy and walk out of the store (evidence of my action, on camera, of course) - I like the interaction with other humans and perceive a threat to that continuing.

pulse

Yay! that 100 inch 3D LED tv will become cheaper shortly! But can you imagine how many layoffs with this merger are coming?

http://huff.to/qDEW3t

Bill-
Any thing current news-wise Bill. Holding a fairly large core position still that is underwater.
Thanks for your time as always,
PZ

This interesting take is exactly what my thoughts have been for some time now. Under-reserved, with foreclosure bombs just waiting to go off. And the stock price is now (finally) showing it. I don't think BAC will make it above its 50 DMA. If it touches the 50 dma, its perhaps a good shorting opportunity. (No position)

I've maintained for the past while that BAC is eventually a zero. Things won't go just straight down, but eventually this beast will either get bailed out with our money (oh goodie, again) or it will end up resting on the bottom. The Fed strategy of feeding BAC easy money so it can "earn" enough to pay for all its fraudulent loans (and the executive team bonuses too of course, don't want all that talent walking out the door) only works if the housing market bounces back before they have to take those foreclosure losses. I don't think we'll see a housing bounce that quickly.

Boy that Countrywide purchase sure is looking like "Blunder of the Century" right now.

Its interesting that Meredith Whitney hasn't weighed in (that I know of) on the whole BAC asset pile story.

Chris Whalen, whom I think is a pretty solid bank analyst, said recently he feels BAC should file Chapter 11 due to the costs of litigation claims in all these different areas. Of course that's not going to happen, but its an opinion for sure.

http://www.streetinsider.com/Trader+Talk/Chris+Whalen+Said+BofA+(BAC)+Should+File+Bankruptcy/6742548.html

According to the USDA, you CANNOT use SNAP benefits to buy:

- Beer, wine, liquor, cigarettes or tobacco.

Lobster seems to be fair game.

See: http://www.fns.usda.gov/snap/retailers/eligible.htm

Jeff -

I had dinner with a hardened Londoner just last night and reminded him of the senseless violence to which he suggested was nothing more than scum acting out. I concurred that we were bearing witness to our droogies' random ultra violence fueled by milk-plus to a score of the lovely Ludwig Van.

"We were all feeling a bit shagged and fagged and fashed, it being a night of no small expenditure." - Alex

http://upload.wikimedia.org/wikipedia/en/2/23/Cloc...

Welly, welly, welly, welly, welly, welly, well. Cheers as we lift a glass to a post-empire mutinous droogy reality.

U.S. Moves to Block AT&T Merger with T-Mobile

The Justice Department filed a complaint on Wednesday to block AT&T's proposed $39 billion acquisition of T-Mobile, a deal that would create the largest carrier in the country and reshape the industry.

The complaint, which was filed in the United States District Court for the District of Columbia, said that T-Mobile "places important competitive pressure on its three larger rivals, particularly in terms of pricing, a critically important aspect of competition." The complaint also highlighted T-Mobile's high speed network and its innovations in technology.

http://finance.yahoo.com/news/US-Moves-to-Block-AT...

FD: As a customer of T-Mobile, I thoroughly applaud the DOJ and hope they squash this merger like a bug. With TM's new network, awesome customer service, decent pricing, and clever use of WIFI hotspots to make calls, I absolutely don't want them to be swallowed up by the Death Star, thank you very much.

AT&T off -3.6% on the news.

one can only hope that the internal escalation process within UXG IT dept is working and they are on it.

Unbelievable that the W.H. would consider this all okay.

http://tinyurl.com/4x3j4to

thx for the post Dr.!

I suspect Londoners are tougher than we give them credit for!

Considering what New York survived through on 9/11 and the aftermath, one really must wonder if the entire "civil unrest" concept that journalists love to tout as the greatest threat to urban life is a fatal fantasy....

George,

Good. Nielsen Ratings can act as a straw poll. Good for a laugh.

I plan to watch/listen to — neither.

The last six months, or so, is time enough to put up with all the B.S. Even then, only when someone begins to address the bankers, mortgages and criminal acts they will get my full attention.

Grym

Meredith Whitney said BAC doesn't need to raise any more capital. She's a pretty tough cookie and has taken some unpopular positions in the past. Edit: She didn't specifically bless the Buffett deal.

sinking like a rock ...

(GR) Greece Finance Ministry has denied earlier press reports that the Govt had hired a law firm to evaluate an exit from the Euro - world press
- An earlier report in a Greek newspaper stated that the govt had hired a US law firm (Cleary Gottlieb) to advise the country on how it might restructure its debt and take other measures in the event of a Greek exit from the Euro Zone.
- Clearly Gottlieb has previously advised Uruguay and Argentinia on debt restructuring efforts.

sorry

Thought it was unusual just because of the steady and persistent decline over the last half hour or so, before which it seemed to be going higher or holding ground.

I showed how oversold we were prior to market. The market chooses to pull back, which is entirely normal. Those traders shorting SVM have not necessarily covered after the stock having only risen during one day.

This is my answer to those in the buy and hold forever crowd. One must actively trade their portfolio. I was out at 9.05 and by an act of my own stupidity, put myself in a corner after buying back in again - I cannot sell without being labelled a pattern day trader and getting locked out of my account 6 months. Thus I am forced to eat substantial losses today.

Choose your time frame. If you're looking to next year, you eat this reversal today. Unfortunately for me I see a failed breakout and potential selling off in GDX and SLW about to occur. I cannot act before tomorrow.

Admittedly the bullion is sitting bullishly above the 5 day moving average, but it is the miners that lead up and down and they are testing the 5 day moving average for support. Let's see how they close. FWIW.

I agree Les, I am moderately concerned that SLW has had its run for a while. Today after SLW tried and failed to break 40.54 the second time intraday, I sold my SLW. I also wrote some covered calls on my GDXJ. But who knows, really. I often sell too early.

I've got some studies (I use TOS trading platform, which lets you build your own studies) that shows me the intraday ratio of one instrument vs gold, silver, oil, and SPX. Today, SVM was absolutely not trading based on the price of silver (or anything else really) - it was moving all on its own. It might have been nudged down by silver and SPX, but the drop it experienced was way out of alignment with the movement of anything else.

Les - here's an idea for you. Perhaps instead of selling something you've already bought, perhaps you can go short against the box to hedge your position. In other words, when you see SVM break 9 support, perhaps just short an equal number of SVM to that which you own, leaving you perfectly hedged. It will use your margin, but it should work.

Cannot sell before tomorrow dave, cannot buy anything until Friday. I've decided what my Christmas present will be. Enough of this nonsense.

The bars are gonna be poppin tonight!

Prices did not like 1230. and it just reversed off 1220 too. Anemic volume everywhere on the BOUNCE.

i am in show me mode.

NYU,

A couple things I noticed today - SPX topped out today at 1230.7, which is almost exactly the 45-day EMA which I watch on my preferred chart settings:

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=5&g=0&id=p02481303947

I am looking for a pullback to SPX 1195-1200 which corresponds to the 22-day EMA. I do think there is a possibility that today brought in a lot folks on the short side and so the market may work its magic to flush them out here by retesting the 45-day EMA around 1230 or even pushing above it 1240.

I do think that the easy money off of the bottom has been made here between SPX 1100-1220. I am staunchly in the "this is/was a correction in a bull market" camp rather than the "sky is falling camp". With that said, I think we are probably in for some more volatility as the 1255 and 1290 levels that we broke down from won't be all that easy to get back above.

In the long-term account, I unloaded a lot of recent purchases made around 1120 SPX over the last three days (unloaded mostly small cap funds as they strongly outperformed Mon/Tues and unloaded a lot of SPX today) and parked it back in PIMCO total (with the one and only Mr. Gross).

I am also in wait and see mode on SPX. I'd love another solid 5% down day for a buying opp. Some values on individual stocks are great (IMHO) but must be conscious of the erratic swings of the market in the shorter term.

Bottoms in the investment world don't end with four-year lows; they end with 10 or 15-year lows. - Jim Rogers in SearchQuotes 8-31-2011

Well, not sure what Rogers was getting at or when the quote was made, but the SPX March 2009 low of 666 was about a 13-year low going back to September 1996.

- Secular Bull Market, 1982 - 2000, (18 years)

- Secular Bear Market, 1966 - 1982, (16 years)

- Secular Bull Market, 1949 - 1966, (17 years)

- Secular Bear Market, 1929 - 1949, (20 years)

- Secular Bull Market, 1921 - 1929, (8 years)

- Secular Bear Market, 1905 - 1921, (16 years)

Secular Bull Market, 1982 - 2000 (18 years)

Our Secular Bear market started in 2000 maybe it's over as of March 2009 but the jury might still be out.

Exerpts from:
http://tinyurl.com/3rd78xp

westcoaster,

Great solution for our problems:

Since most of our middle class jobs have been exported to China let's make it a clean sweep and send our executives there as well. Let the Chinese deal with the Mozilos, Blankfeins, Paulsons, etc. — no more repeats.

Grym

I wonder if this tells us what Ron Paul's thinking is on where the economy might be headed?

http://tinyurl.com/3k3zjkx

If there is room on the gallows;

"The Fruits of Elite Immunity." .... basically profiting from his crimes, and at the same time normalizing the idea that these kind of policies…are perfectly legitimate choices to make. And I think that’s the really damaging legacy from all of this,"

49 minute video linked below (taken from Jesse's Cafe)

http://www.democracynow.org/2011/8/30/ex_bush_offi...

Watching now.

European banks all very strong today (between 1.7-5.9%), Canadian Banks all did very well today. Asia looking very strong in early trading tonight.

For a highly concentrated portfolio, this sits very well with me, since the Global Gold Index from the Toronto Exchange closed very strongly with fairly impressive volume into the close this afternoon. This was mirrored on the Venture Exchange Index and makes me very eager to wake in the A.M. (though gold seems to have stalled in a six dollar range since about 2:00 P.M)

Bill's 'tell' for the day was Freeport-McMoran; opened with a roar (premarket), faded for most of the day touching yesterday's close and rallied into the end of the day for a gain of 50 cents.

pulse

but this selling that hit closer to the end today and took indices into red briefly looks alarming to me. It's not even the fact of selling itself - it's how it happened. You had to watch it real time to get this feel - it was very easy for the sellers to take the courage out and kill the market; they did it effortlessly, not meeting much of a fight. The bounce that followed did not feel to me at all like bulls taking charge - it rather felt like bears deliberately taking the paw off the throat for the time being. If this gut feel is right, the market is very vulnerable and can reverse on a dime.

I can't put much technical read to it - it's, as title says, a subjective feel.

interesting. Ambrose speculates on the "borrow from tomorrow until there's no tomorrow" (which the BIS roundly rejects), which fits in nicely with the credit contraction cycle discussed by another author I linked to yesterday:

http://www.financialsense.com/contributors/brian-p...

Perhaps what is most perverse of this understanding is watching Europe, or more precisely Brussels, attempt to inflate the debt balloon in order to wrest power from democratically elected national sovereigns, with the aid of the banking sector I might add.

Daniel Hannan, a former Brussels MEP for England notes that Eurobonds are likely on the way whether Merkel says so or not:

http://blogs.telegraph.co.uk/news/danielhannan/100...

Unsurprisingly, Europrat members are on record calling for stronger economic control from Brussels 6 months ago in response to the fiasco that began last year. Whereas a sane person would conclude that the Euro is a failure that should be swiftly dismantled, Brussels is funnily enough asking for more:

http://blogs.telegraph.co.uk/news/danielhannan/100...

...and wouldn't you know it, Deutsche Banks is speaking up in the FT with its own proposals for debt issuance that sidesteps EU treaties and offers 0% risk-weighted Euro denominated debt! That would be like the 0% risk weighted individual sovereign debt pre-2008 I guess.

http://ftalphaville.ft.com/blog/2011/08/30/664611/...

Poking around Youtube for some soundbites from Daniel Hannan in Brussels, I thoroughly enjoyed this one and pass it on. Very simple and straight-forward logic:

http://www.youtube.com/watch?v=0JQqJj69OEs&feature...

Sales of American Eagle gold coins by the U.S. Mint posted the highest monthly increase for seven months in August, a sign that record high gold prices have done little to deter retail investment in bullion.

The volume of sales of the coins rose by 74% on the month in August to 112,000 ounces, the highest increase since January, according to figures posted on the Mint's website.

"Demand for gold remains very strong despite the high prices, as shown by coin sales," said analysts at Commerzbank. "The need for security among small investors especially still appears to be high."