Bill Cara's Blog for Feb 7, 2011 [See post-close report]

I'd like to offer something which I see as encouraging which I ran across at WSJ Opinion Page just now.

This has been touched on here before, but lately my mood has been in the dumpster due to the financial maneuvering and regulation ignoring by the government/HB&B alliance.

What Dan Henninger alludes to here for the Middle East, surely must also apply to all communication and manipulation.

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Stability's End, by Daniel Henninger

http://tiny.cc/m1en9

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I find the title particularly significant in view of Bernanke's assertions a couple of years back.

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February 24, 2006
The Benefits of Price Stability
(He uses the word 44 times in his speech. Pssst...Wanna buy a house?)

http://tiny.cc/jlmdt

Is this the "Wall of Worry" being talked about?

Brazil joining India in a primary down-trend, increases the chance of the contagion spreading to other markets. Inflation is already a problem in emerging economies and rising US treasury yields indicate that the market is anticipating its spread to developed economies, which will force the Fed and other central banks to close off the liquidity pump.

ACPW (Active Power Inc.) out of Austin Texas. Founded 1992.
This is my pick for 2011. I’ve read their white papers on their technology and am comfortable they have solid patents to protect their technology. This is a small scale but very mature company in my opinion.

http://www.activepower.com
Active Power, Inc., together with its subsidiaries, designs, manufactures, and markets critical power quality solutions. It provides various products that deliver continuous clean power, and protects customers from voltage fluctuations, such as surges and sags, and frequency fluctuations, as well as offer temporary power to bridge the gap between a power outage and the restoration of utility power. The company offers CleanSource UPS, a battery free uninterruptible power supply system (UPS) that integrates UPS electronics and flywheel energy storage system into one compact cabinet. Active Power, Inc. also provides CleanSource DC, which is a battery-free replacement option for lead-acid batteries for use in bridging power; CoolAir DC; CoolAir UPS; and GenSTART, which is a battery-free, starting modular system. It offers continuous power systems that comprise UPS system, switchgear, and a generator under the PowerHouse brand name. Active Power, Inc. also provides services, including engineering, installation, start-up, monitoring, and repair for its products. The company serves data centers, manufacturing, technology, broadcast and communications, financial, utilities, healthcare, government, and airport industries. It sells its products through direct sales employees, value added resellers, manufacturer’s representatives, distributors, strategic IT partners, and original equipment manufacturer partners in the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company was founded in 1992 and is headquartered in Austin, Texas.

http://stockcharts.com/def/servlet/Favorites.CServ...

Earl

I have seen Bill refer to the Cara 500 several times over the past couple of weeks but can find no reference to it on the site, only the Cara 100. Can soneone point me in the right direction? Thanks.

Yes , I believe its true , this article in Vanity Fair covers the subject very extensively . http://tinyurl.com/4lxdgzx

Does anyone have the symbol for East coal . I have the symbols ECX.V and LYM.V , but they not being accepted by my broker . I need the over the counter or Pink sheets symbol. Thank you . Bob

with FAS breaking out here.

http://tinyurl.com/sector-performance

ECB remained out of bond markets for second week
2/7/11 | Marketwatch
LONDON (MarketWatch) -- The European Central Bank announced Monday that it settled no purchases of euro-zone government bonds last week, marking the second straight week the institution has refrained from intervening in the markets. The ECB has purchased a total of 76.5 billion euros ($104.1 billion) since launching its Securities Market Program last spring in an effort to calm distressed peripheral euro-zone credit markets. Markets have seen little volatility in recent weeks.

sucks, but minimal loss as UNG had little volatility lately.

I rotated some of my money into FCX and TCK puts (small position as they are volatile lately).

IMHO, both struggled to make any higher highs in 2011 despite copper skyrocketing.

Also, VIX dipped below 16 again, should it go higher soon?

I just sold 2/3rd my position so now I have 1000 shares (core holding) which now has my avg down on those at .59 or 50/50 market/me. Working to pull off the same on CGR but need another 20% move or $3.00
best regards,
Earl

On Jan 10th the company reported in part, as follows:

The Paymaster West resource estimate includes a cut-off grade of 0.51 grams gold/t. High grade assays above 34.29 grams gold/t were cut to this value.

I assume this means that the grades under .51 grams gold/t are not being counted. But what is meant by the statement that "high grade assays above 34.29 grams gold/t were cut to this value."

If anyone can supply the answer, thanks

Earl - This pick could give you bragging rights. See this:
http://seekingalpha.com/article/246099-energy-stor...

If it interests you, and you have the time, the comments are as useful as the article.

FD: no position yet but thinking about it

Oops... don't pay attention to the date on that penny....!!!!!!!!

How did you dig that up? that's just too funny. Now that's something my wife will plaster on her MB.
Got to run and get some real work done - take care.
Earl

It can (almost) happen.

Pure luck I assume.

It's interesting how some commodities are weak today and dollar raising yet US indices are making another high. Is this a rally on cheaper oil? We haven't seen that correlation in a while.

FD: no positions in US indices.

Me think so.

Anything is possible, but I doubt you scenario will play. Why? Averytime VIX made a similar jump down, stocks consolidated or sold. IMHO, smart money are leaving stocks for at least since early January. Besides, global equities are selling for a number of weeks or months, will US decouple this time?

FD: no skin in the US equities play, instead shorting EEM, USO, and FCX (since today), besides some positions in gold miners, dollar, and bonds.

http://read.bi/gfQgBm --------- Will FAIL --------- because "BofA and Wells fargo" will classify offenders into Sub-Prime and Alternate-A's and lend liberally with "alternate sources", while Larry Summers and Terrific Timmy pretend to sleep at the switch.

http://huff.to/eY2Zfi ---------- Will Fail ---------- as well because "Goldmansachs and JP Morgan" will create a New Derivative Market with unregulated " PUTS & CALLS" , while Alan Greenspan and Ben Bernanke blow the bubbles bigger, right at the source.

*(US) DEC CONSUMER CREDIT: +$6.1B V +$2.5BE (4TH STRAIGHT MONTH OF CREDIT GROWTH)
- Prior revised higher to +2.0B from +$1.35B
- Revolving credit +$2.3B ; +3.5% annual rate (first rise in revolving credit since Aug 2008)
- Non Revolving credit +$3.8B; +2.8% annual rate.

Is it totally unthinkable that VIX breaks down below 15 sometime this year? I am not trying to predict that it will neither that it is going to its long-term support of 10 if it did (see chart). Just a thought.

Lastly: the year of the rabbit just started!
"The chinese believe the rabbit brings more tranquil times, with wild peaks and troughs replaced by gentler hops, together with better luck for investors."
http://tinyurl.com/4v958sj

it is very thinkable, yet these things don't like to go in straight lines, but prefer to ziz-zag instead.

Merval (Argentine stock market) is up 350% since late 2008. A tremendous run even if you correct for their inflation that is just about to go crazy and head for the sky (30% y-o-y most ppl say). I think they even could surpass Venezuela this year and become NR1 in the world. Hurray! Zimbabwe inflation was running at about 5% late last year.

I am careful of anything Argentine right now. Love the country though.

There is an argentine election coming up in November. Cristina started fishing for votes last year by public works (restoration of important buildings, more schools, big 200 year celebration, etc). Some workers got 40% pay increases. Public sector is ballooning thanks to high taxes on goods and especially farmers products (mostly soy beans, less on meat).

The country is firing on all cylinders. Unemployment is sinking rapidly and budget deficit is max 2-3%. How come? They are still bankrupt since 2001! They have enough reserves to pay back creditors (that already have gotten one haircut), but they are trying to negotiate a better deal. In 2008 they nationalized the private pension plans due to the financial crisis. Only country lending them money today is Venezuela. How will this end? I do not know, but I will certainly continue to follow the story closely.

Most people exchange their Pesos for USD as soon as they get them. Nobody trusts their banks so wealthy people keep their savings in banks in Uruguay (a tax haven stronger than Switzerland?).

Catching a nice after-mkt bounce.
J

In the commentary at the top of the page.

Hi Bill – their not shy about making a claim, staking a claim…
http://www.usgold.com/
(US Gold’s goal is to qualify for inclusion in the S&P 500 within the next 4 years. US Gold explores for gold and silver in the Americas, has an exciting silver discovery called El Gallo in Mexico, and is advancing its Gold Bar project in Nevada towards production. The Company’s shares are listed on the NYSE and the Toronto Stock Exchange under the symbol UXG, trading 1.3 million shares daily during the past twelve months. US Gold’s shares are included in S&P/TSX and Russell indices.)

best regards,
Earl

Hi Ballena - it just looks like it's tired of being above 15 - http://stockcharts.com/h-sc/ui?s=$VIX&p=M&yr=20&mn=0&dy=0&id=p25304101103
regards,
Earl

Illini -

I've got to have some financial history to trade on and I reckon AGRO will have it in a few years. One to watch.

Speaking of a dearth of financial history: How about OC, Owens Corning, the cash machine with the patent on Fiberglas, based in Ohio with an amazing history of success coming out of WWII. The company controls very high market share of many building materials including roof shingles, composite decking, and the ubiquitous pink insulation. It went into bankruptcy after the lawyers took control over asbestos litigation not too many years back and then emerged with an IPO and now has enough financial history again to start me trading in it. Insulation and roofing are what we in the commercial real estate business call short-lived items with economic life far shorter than the building structure itself. There's the rub. Cha ching. As you know, when the roof fails, you can't wait for the market to 'recover' to fix it. As you know, when the heating bill goes parabolic due to the Ben Bernanke dollar policy, insulation will be the best way to save on that bill with a green gov't subsidy to help make some jobs. As you know, when that new deck made of fast growth South American lumber splinters, cups, and rots in the harsh North American climate after two years, the far more expensive composite board will last decades and is the smart way to go. The boys running the daily operations are savvy too with an acquistion of the top insulation manufacturer in Europe about two years ago.

I hereby nominate OC to the list. A good ol' American manufacturer BACK FROM THE DEAD.

No position at the moment.

Cheers.

Illini -

"PBR was my pick but I sold it last week at $37.73 to lock in profit from my purchase in mid-Nov at 32.51."

I hold some PBR. It's almost like owning a Brazilian country ETF since, as the Trading Wizard has pointed out, the company is important to the success of the country. It's an extra large cap with a big and expanded gov't ownership so there's the rule of big numbers thing and unlike the metals, when oil gets too high, economies tank and OPEC gets nervous and opens the spigot to calm dependent sovereign nerves ... for now. Anyway, nice scalp. I'm still holding a small position at a 4.4% loss since mid 2010 because I like Brazil's economic future and the offshore discoveries story with a new radical president that used to run the energy department! Brazi's soccer team, beaches, carnival .... what's not to like? It's the B in BRIC for heaven's sake.

Earl -

Thanks. It's had a run. Wait for the pull back and make the trend your friend. I had it at around $5 and sold at $11. Hold your winners!

Short term market fluctuations are noise in a trend. Get the trend right and you need not be frustrated. How often has it been mentioned to 'not trade against the trend.'

Of course time estimates for trends vary. My 'trend' is multiple months if not years. When I believe the markets have gone super stupid silly, I simply withdraw. One investment decision is not to play. I've gone cold turkey on the equity markets for years at a time. One may always 'work' money in real estate or 'park' money in cash equilivents until you get the fat pitch.

I've heard the refrain from money managers off and on for 40 years....'I'm paid to manage money. No one will pay me to own cash.' That is the classic Grantham definition of 'career risk.' Stray too far from the herd and you might get picked off by a lion. This has always been the mantra of sheeple people and they always wind up with the typical social herd returns of Baaah,
and quack quack! Bill Miller comes to mind!!! His game was over when he purchased a $100,000,000 yacht. Ole nemisis finally hooked Mr. hubris in spades!

Marc Faber is talking more and more about a 'crack up boom.' To an Austrian like Kaimu, this should not be surprising. A 'crack up boom' is simply endless boxcars filled with gigamongous amounts of colored confetti that passes as money and has no where to go! All this digital trash cash circulates the globe seeking a return at least equal to the depreciation of the purchasing power of this increasing liquidity monster monitized as DEBT.

Equities are the first derivitive of the assets of corporation. Equities can become a safer haven during periods of spiraling monatery destruction when the alternative is non % return on cash balances. Better the devil you can sidestep. Krupp Stahl shares were better than Weimar treasury notes.

'Crack up Booms' are fickle because each has it's own pre ordained outcome which is only revealed in the fullness of time. It could be DOW 30,000 and gold at $10,000/oz but rest assured that Western Civilization loves BIG numbers. It's in our genes. But always weigh those big numbers against the cost of a loaf of bread.

Never check your briefcase at the door. To question your beliefs or say 'I'm sorry' is a sign of weakness. Hold fast with the prudence of a master pirate and wait for the Prize.

I've always measured the extent of 'holdings' as wealth. Digital dollar amounts on a balance sheet only measure what might be had today if converted to real world goods and services.

My briefcase holds only my valuations of markets against time. I may be wrong but I can continue to wait til the casino implodes and I can buy value for my 'chits.'

Last day of Golden Week holiday, today.

(Reuters) - China's central bank raised interest rates on Tuesday, its second increase in just over a month, intensifying its fight against stubbornly high inflation.

Although annual inflation slowed to 4.6 percent in December, it is set to pick up again in January with food prices on the rise.

Benchmark one-year deposit rates will be lifted by 25 basis points to 3 percent, while one-year lending rates will also be raised by 25 basis points to 6.06 percent, the People's Bank of China said. The rises take effect from February 9.