Bill Cara's Blog for Dec 6, 2010 [See post-close report]

Thanks for the link to the report. I remember some of their prior advice:

Year: 2007
Warning: Impending US Equity Market Sell-off
Media: Bloomberg XM Satellite Radio
Source: RBS

December 2010: They have my attention.

He looked and sounded like an absolute nervous wreck.

He seems terrified beyond the capacity for rational thought.

This man does not instill confidence.

The over-arching message between the lines: keep pumping the banks full of cash to buttress them against the coming tsunami of losses they will eventually be forced to recognize in both the residential and commercial housing sectors.

The greatest fool is the man who lies to himself.

stop under 14.50.

http://caracommunity.com/content/bill-caras-blog-d...

Bill is interested in small value growth stock, this could be one of them. I'm liking it technically and am interested by its fundamentals. with 40% of the float short, a green light to its proposed drilling program could send the shorts covering.

I disagree. He acted more like someone that wants to be honest, but had to lie, and knew it was a lie, but for the greater good, no different than his previous horrible forecast "misses".

Yuan backed by gold and silver could work like this:

"The gold reserves of China have risen from 17 tonnes in 2008 to 143 tonnes in 2010. If China were smart, it should take half of its Foreign Exchange Reserves of $2.4 trillion and buy gold IN NEW YORK! This will help them in two ways.

(1) it will reduce their trade surplus helping to politically sterilize the criticism
(2) it will help China make its true destiny to transform into the new financial capitol of the world.

CHINA - THIS IS YOUR TIME" - Martin Armstrong 'Indirect v Direct Stimulus'

Armstrong helped Japanese ease trade friction with USA this way before being imprisoned by the NY gang.

Shortly after he published the quoted essay, Chinese officials announce they are ramping up gold reserves. Jim Rickards suggests this is curious timing and was announced to counter Bernanke's QE II. Rickards interview at KWN:

http://tinyurl.com/2f58anc

Popping a regionalized real estate bubble in China will be a short lived blip in GDP growth unlike the U.S. systemic financial sector FAIL due to decades of Fan & Fred unintended consequence.

Got gold? Got silver?

Edit: China could also demand silver delivery on the Comex and take down JPMorgan with its monster short position in the mother of all squeezes and leave Sec of State Hillary in the waiting room.

Ironically, that is part of their job.

Seriously, eh ... for all the money that the Bank of Nova Scotia scams, sucks, gulps and nickels and dimes from its customers, you would think they could run an investment online service that actually works. iTrade now down since shortly after opening. Did manage to get through on the phone after 20 minutes (this is their definition of 'customer service'). Basically, their response was, "Oops! Sorry! Never mind!" I'll be voting with my feet ... ANY other online broker will do just fine.

Thanks for that info. I have an iTrade account with a buck in to keep it active. I just never bothered to transfer any real dollars in. One of my other accounts is with Qtrade. I like them a lot and I think they just came in #1 again in a Cdn survey, as I think someone on the board mentioned a few weeks ago.

... just topped $30 in NY trading. Chock that one into the record books.

Cheers.

HUI has broken out as well. It is now the king's turn to break out (Aurum) and make this an unforgettable run.

Interesting to see a stock acting bullishly after the CEO agrees to step down (somewhat unexpectedly)........

QLewton, Jock,

"Can someone explain to me Bernanke's statementon 60-minutes that the Fed wasn't printing money but only buying government bonds in this $600bn Quantitative Easing cycle? Please? How does that work?"

"He meant to say that the money supply had not expanded, because the new bank reserves (mouse clicks which buy the treasuries from the banks) are just sitting in the banks and are not circulating as new money."

Which is based on the Clinton approach that, "It depends on what is, IS." (Formerly known as a lie now it's just spin.)

As a matter of fact having just watched the interview I didn't notice much a a lip twitch, but I'm quite sure I did see his nose lengthen a couple of times.

1. "We're not far from where the economy is not self-sustaining."

IMO if not for things like Social Security & Medicare, unemployment pay, temp agencies — all things which were not around in the 1930s — we would be seeing an economy at least as bad as the Great Depression. In some ways we are obviously more precarious: far fewer able to raise their own food and a greatly diminished manufacturing sector.

2. When asked how confident he is they can prevent massive inflation, "100%!"

He may be totally sincere in his overall belief that his Grand Experiment will work, but sincerity and certainty are not guarantees we can take to the bank. Like all economists he is quite confident in numbers and models and has apparently little contact with people who are feeling the lack of results from his plan.

We should never have allowed this unregulated, unelected position to evolve. It has become for some a nearly religious belief that the Fed is necessary and possesses a fount of wisdom.

I think Vad just has it right. The 'whys' behind the price really don't matter. Our opinions of Bernanke don't matter. The Xtranormal 'bear videos' don't matter. You can say Jayson Werth isn't a 126MM/7 year player, but it doesn't matter. Price and price structure matters.

P.S. when banks have started sending me 'cold call' letters about Massachusetts Municipal bonds (they are)...that might matter...LOL

QLewton- this video explains QE2 well.

cynical - but hilarious none the less.

http://www.theburningplatform.com/?p=7400

On Canada: Mentioned on survey as "scrappy competitor". I've used them for 3 years. $4.95/trade, maxing at $10. Pretty good execution. Occasionally the system melts down but it seems to get fixed promptly.

Grym -

you wrote: "When asked how confident he is they can prevent massive inflation, "100%!"

that WAS the pinocchio moment! When bank reserves DO start to circulate (and become part of the money supply) he is 100% confident he can SELL the treasuries (and toxic assets) on the FED's balance sheet to take in money, and thus reduce the money supply.

But what if the market is FULL of sellers of debt at that moment (interest rates spiking) and there are no buyers? Whom will he sell to? the ECB? the JCB? LOL

Globe and Mail reports today: Rio Tinto discussing $3.5 billion bid for Riversdale.

http://tiny.cc/rqycf

Other bidders lurk. I believe Tata Steel already owns a share of Riversdale and is a possible competitor. Vale may have a particular interest in Riversdale's Mozambique coal as they already mine there. Other possible bidders are reported as Xstrata PLC, Anglo American and Peabody. So the Rio expression of interest is probably the opening shot. Riversdale shares popped today.

Although Lysander has been quiet today, both Colorado's Cline (CMK on Toronto) and Alberta's Grande Cache (GCE on Toronto) have moved up on the day after offering buying opportunities a week or so ago. I reckon the Riversdale news has buttressed the tendency to bid up met coal companies. Kaimu noted that LYM is operating in a sometimes problematic area; however, both CMK and GCE, among others, are boringly stable. Today's news, coupled with recent Western M&A activity, and underlying competition for steel making supplies (e.g. coking coal), disposes me to these coal miners.

FD: closed positions on LYM last week for profit, GCE and CMK today for a very tidy profit. Looking for a quick re-entry on all three. No position in Riversdale.

Down quite a bit on low volume (~9%).

Looks like a buying opportunity.

Strangeove - Is there really a good reason to think that the silver short position is the liability of JPMorgan? That would mean that this is a speculative position taken by the bank.

My guess is that the position is held in a JPM account/accounts on behalf of JPM client/clients and thus the position losses are a liability of those clients. That gives JPM only the credit liability of those clients.

Presumably the clients are various central banks JPM's stock does not appear to be ill and is in fact nicely green today.

Jock,

Anyone who claims to be 100% sure of ANYTHING to do with investing should not be allowed near Wall St. with OPM.

Too many people will have watched the 60 Minutes interview where the difficult questions were allowed to be answered like this one with no follow up.

In my view he is playing out his fantasy with our dollars and the future of the country. However, I have little doubt he will be able to escape behind the veil of the media stupidity and live to write a book, "How I saved the U.S. from Ruin".

Well, you know... when a big player trades in our direction, he has finally come to his senses, recognized the truth, admitted we have been right all along - and he is late to the party on top of all that. When he trades against us, he is manipulator distorting the free market flow. Our opinion is correct by default; any move against it is sure sign of manipulation. Our win is evidence of our genius, and our loss is caused by that darn manipulation.

Oh, and we always know what direction he actually takes.

"The national average for a gallon of regular gasoline hit $2.951 on Monday, according to AAA, Wright Express and the Oil Price Information Service. That's nearly 10 cents higher than a week ago and 32 cents more than a year ago."

http://tinyurl.com/2eq4wfe

Terry -

I've used this tactic as well, and virtually every other silly scheme I could think of. Why should it be necessary to 'trick' a service organization to get them to talk to you? Note that they are happy to take your money whether or not they fulfill their side of the contract?

iTrade was down most of today ... it was impossible to enter any trade. As well, the phone lines were (understandably) constipated all day. They came on line briefly in the afternoon, for about five minutes. I managed to take decent profits on a couple holdings, but then site then shut down through the end of trading.

My point here is that when we use a service, whether an airline, cable company or bank/broker, we enter into a contract. If we deliver (pay), we have every right to expect satisfaction from the other side. If we have to complain that service is not given, or provided grudgingly, it is a certain tip-off that we should take our business elsewhere. Case closed.

BillyS -

As I understand it, JPMorgan inherited the massive silver hedge book when it took over Wells Fargo. Perhaps it was WF that was doing the Fed's dirty work since that hedge is said to exceed all the physical silver in the world today. I believe JPMorgan recently hung its chief silver trader out to dry and, it is speculated, that it took on a huge copper position as a hedge to its silver short last week. All's not well in JPM paper Oz land.

Cheers.

Shamblin,

It has been a very long time since I was able to consider a bank or it's brokerage arm a "service organization" but your points are well taken. This is why I have always tried to hold stocks and/or bonds and avoid other inventions of HB&B that are only as good as the counter party, custodian or whatever of these so-called securities. Liquidity is a huge issue when the blades on the fan turn brown in difficult markets - and the little guy never gets the trade made in a timely manner. The prop desk, insiders and those at the top of the book get taken care of first. By the time your trade is done on the exotic stuff you are toast and a telephone won't save you from a loss.

Terry -

It's tongue-in-cheek to use the term 'service organization'. A better term might be 'carrier', as for cable companies and airlines. None manufacture products. So, their bad service is equivalent to auto brakes that don't work, nails that bend if there is a breeze, razor blades that dull after a single shave, ground beef containing the E. coli bacterium, and so on. Phooey!

I was amused to see news items this afternoon detailing the Bank of Nova Scotia's purchase of an Uruguayan bank and financial services company. At least I now know why iTrade can't afford to provide timely customer assistance, or a computer system that actually works ... the bank is too busy extending its good works in S. America. So I'm really ashamed to have been critical that iTrade was offline virtually all day (not).

Thank goodness my holdings were pleasingly up on the day. If it had been the other way 'round, I'd need a general anaesthetic at this point!

I work for a defense contractor, so the concerns here are a little more interesting. We are required by law to protect classified information. If I used my work PC to go to WikiLeaks, and viewed a classified document, my PC would technically be "tainted" and have to be scrubbed (usually involves destroying and replacing any parts that can store data) before it could be used normally again. And they'd have to make sure that information didn't leak onto any other machines on the network. It's hilarious in a way...destroying a PC because it was touched by information freely available on the Internet!

I can't imagine the government having too much of a problem with a student reading that information, however. There's a big difference between reading publicly-available classified information as a normal civilian and the obligations that come with being given access to classified information. Seems like a scare tactic to reduce the spread of that information. I suspect a pretty ineffective one.

I...same as 'westcoaster'...use QUESTRADE (not to be confused with QTRADE).
I have been using it for parts of 3 years. Yes...there were some frustrating moments as I was 'signing up' and initially it was hard to reach a human interface. However things have improved, and as 'westcoaster' states, trades are $4.95 through to $9.95. Also if someone refers you...they get $100.00 worth of free trades, and you get $50.00 worth of free trades.
Later.

duplicate

NYTimes is reporting that "the charges involve sexual encounters that the women say began as consensual but became nonconsensual after Mr. Assange was no longer using a xxxx".

Relax, America, relax Swedes, I'm sure the only virus Assange could have had was a computer virus!

Korvus -

Interesting. Yes, I think the Snake Dept. is just trying to frighten future diplomats into not reading heresies.

But if a worker in a defense contractor "went wiki" and his PC had to be scrubbed, mightn't the replacement parts might come from a supplier in China with nastyware already inserted?

There's just nothing simple about digital technology and security when it's hacker vrs. hacker !

...and everyone kicks the can down the road a bit further. Reminds me of the 60's song "When Will it Ever End".

www.nytimes.com/2010/12/07/us/politics/07cong.html...

So the banksters get a 2 year extension of low taxes such that their bonuses even if modestly reduced will yield more after tax than before. That warms the hearts of Porsche dealers everywhere. Revenues to the Federal coffers will remain reduced as Treasury must sell more debt in replacement...

In kind, taxpayers will now shoulder extended unemployment benefits and a REDUCTION in collections for Social Security for a like amount of time while the deficit reduction commission fiddles with each others genitalia by recommending the exact opposite of what will be inacted...

Constable. "It seems your husband committed suicide by shooting himself in his right temple."

Wife. "But Marvin was lefthanded."

Constable picks up gun and shoots dead victum in left temple. "There madam, your husband committed suicide twice. Case closed."

If China implodes as I suspect it will, in order to keep prices for 600 million Ding Dongs and families in the western provinces from spiraling out of control then the 'Yawn' will appreciate and we will be the beneficiary of imported inflation.

QE 3-4 and 5 is in the offing. Mr. Shalom is at war with himself and both sides lose in the end, widows and orphans be damned. ZIRP screws savers and rewards the institutions (banks) that should have been nationalized recapitalized and sold back into the private sector with severe oversight.

The sovereign funding crises is begining. I can feel it. Every uptick in gold or rice is another dart in the heart of profligate central banks everywhere.

Serial monitizers will be viewed by historians hence as the 'John Laws' of our era who financed a $500,000 outhouse in California because money was there and they could......

To be somewhat crass, we the people didn't get a 'tax' deal that makes any sense for the plebians. We got a brokered suicide pact with a petty government that can only count to 20 with their socks off.

Ross

Yes Ross I'm right there with you.

These days in America, a "Tax Compromise" means more deficit spending for everyone. Luckily the Fed will print money ad infinitum to monetize the debt. while keeping interest rates at 0% so the banks can retain that fat spread of theirs to keep the big bonus checks flowing in to the crack executive teams running the TBTFs. Nice work if you can get it.

Isn't it interesting how Obama gave Bernanke exactly what he wanted? More "fiscal stimulus".

I'm beginning to think that the government should seek to become more independent of the Fed, rather than the other way around.

I'm guessing Europe will be the first on the list. The poor helpless bondholders will get haircuts at some point - when one of the PIGS finally chooses debt freedom over debt slavery for their taxpayers - and once that default cascade is sorted out, the chickens will come home to roost in the US.

Then again, its possible some blowback from the default cascade in europe will end up hitting US banks, and things will come to a denouement more rapidly than that.

I'm quite tired of all of it - the whole corrupt mess. Its so astonishingly immoral.

Paste this into a google portfolio. Similar to advfn, you can track world markets and companies (20min delayed) but easier to setup. I tried putting a mix of companies from all over the world. (Korea and Brazil are not currently supported in Google, I used ADRs and IWY, IWZ instead)

INDEXEURO:PX1 NYSE:EWQ EPA:FP EPA:RNO EPA:UG EPA:MC EPA:CA EPA:OR EPA:SAN EPA:ACA EPA:BNP EPA:CS EPA:ALU EPA:FTE EPA:VIE INDEXDB:DAX NYSE:EWG ETR:BAS ETR:TKA ETR:SIE ETR:MAN ETR:LHA ETR:BMW ETR:DAI ETR:VOW3 ETR:MRK ETR:CBK ETR:DBK ETR:ALV ETR:SAP ETR:IFX ETR:DTE INDEXBIT:FTECP NYSE:EWI BIT:ENI BIT:F BIT:BEN BIT:ISPR BIT:UCGR BIT:G BIT:STM INDEXFTSE:.FTSE NYSE:EWU LON:BG LON:BP LON:RDSA LON:TLW LON:JMAT LON:AAL LON:ANTO LON:BLT LON:KAZ LON:RIO LON:XTA LON:RRS LON:LMI LON:BA LON:BAY LON:CCL LON:IHG LON:SAB LON:DGE LON:ABF LON:ULVR LON:BATS LON:IMT LON:AZN LON:GSK LON:BARC LON:HSBA LON:LLOY LON:RBS LON:STAN LON:EMG LON:SDR LON:PRU LON:SL LON:AV LON:HMSO LON:CW LON:VOD LON:NG INDEXASX:XJO NYSE:EWA ASX:WPL ASX:GMI ASX:SRL ASX:ANZ ASX:LYC INDEXNIKKEI:.N225 NYSE:EWJ TYO:9437 TYO:5401 TYO:6301 TYO:7751 TYO:7203 TYO:8306 TYO:8316 TPE:.TWII NYSE:EWT TPE:2498 INDEXHANGSENG:.HSI NYSE:EWH HKG:0857 HKG:0941 HKG:0005 HKG:3988 HKG:1398 INDEXBOM:.BSESN NYSE:IFN BOM:532174 BOM:500209 BOM:500325 BOM:500570 NYSE:EWZ NYSE:PBR NYSE:VALE NYSE:TSP NYSE:GOL NYSE:ITUB NYSE:EWY

I was a little disconcerted to note the following commentary from the blogger mentioned in my last post:

"During the Value Investing Congress earlier this year, China’s largest hedge fund manager, Lei Zhang, stated that about '200 of the 350 Chinese companies traded in the U.S. are frauds or have significant problems.' From my own research, this may not be much of an exaggeration. While many Americans are captivated by the idea of ‘endless growth opportunities’ in China, the fact of the matter is that many of these companies will merely destroy your capital in the long-term."

http://seekingalpha.com/article/230754-the9-a-spec...

Caveat Emptor to the max. But I was admiring the Chinese company that he did find attractive and what their investment path is. Do you like games? I love 'em. Rediscovering World of Warcraft 3 with my kids, which is funny given that this company lost out the rights to WoW in China last year. I was admiring what they've invested in for release next year in online gaming:

http://www.firefallthegame.com/
http://vimeo.com/15031368

I remember that someone in this room is a games developer in his spare time. As Vad remarked the other day, forget buying a blu ray player, everything will be online shortly. Probably why the blogger also has long dated puts on NFLX.

http://caps.fool.com/Blogs/ten-thoughts-for-2011/4...

Jock,

"But if a worker in a defense contractor "went wiki" and his PC had to be scrubbed, mightn't the replacement parts might come from a supplier in China with nastyware already inserted?"

Sure, it's got to be time to upgrade all the stuff inserted during the Y2K panic by "contractors" under the watchful eye of some guard who had no clue what was being done.