CTA Trading Desk Morning Report
[7:00am ET] Good morning.
In downgrading their sovereign debt rating from AA to AA- minus, “The S&P ratings agency said the Japanese government had no “coherent strategy” to address its ballooning debt.” What pray tell is Obama’s?
The WSJ has reported that hedge fund manager John Paulson personally earned more than $5 billion in 2010, mostly trading gold. Since Paulson Advantage Plus Fund earned +17% for the year, including +13% in December, it would be easy to conclude he sold his gold position in late November at the peak. But, Kinross Gold (KGC), one of his big holdings, as well as the Gold future ($GOLD) did not fall until January, so I don’t know what to think.
But I do know that somebody big is accumulating KGC this month as the Accum/Dist line in this chart (at the bottom) shows:
Same thing is happening for Newmont (NEM):
And look at the A/D divergence (bottom of chart again) in Goldminers Index GDX vs price. Somebody is accumulating as the prices drop.
With Zacks, like me, pumping Silver Wheaton (SLW) as it stumbled, I also don’t know what to make of their latest note:
Jobless claims popped higher on Thursday...yet no one cared. Durable Goods report was on the weak side...yet no one cared… Everyone on Thursday was just holding their breath waiting for Friday's GDP report. The consensus calls for 3.5%. Here is my guess of what the reaction will be.
3.2% or Below = Market sells off 2-3% over next week. Will take more time to fight back to 12,000.
3.3% to 3.7% = Market bumps around at Dow 12,000 for a while in consolidation mode. Breaks decidedly above mid to late February.
3.8% or Above = We blow through Dow 12,000 on our way to 12,300 to 12,500 before we have the next correction…which could be back towards 12,000…
That's what my crystal ball says for now. Let's see if I am right or need to trade it in for a better one.
I too am extremely cautious here. Trading in the currency markets this morning – Pound Sterling and Japanese Yen, in particular – has me sitting back in awe.
Once again, I have to say TGIF.
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
| Symbol | Name | Last Trade | Change | Related Info |
|---|---|---|---|---|
| ^ATX | ATX | 2,901.34 |
 3.49 (0.12%) |
Components, Chart, More |
| ^BFX | BEL-20 | 2,673.63 |
 4.60 (0.17%) |
Components, Chart, More |
| ^FCHI | CAC 40 | 4,062.76 |
3.19 (0.08%) |
Components, Chart, More |
| ^GDAXI | DAX | 7,169.65 |
14.07 (0.20%) |
Components, Chart, More |
| ^AEX | AEX General | 364.33 |
0.00 (0.00%) | Components, Chart, More |
| ^OSEAX | OSE All Share | 480.51 |
0.89 (0.18%) |
Components, Chart, More |
| ^SMSI | Madrid General | N/A | 0.00 (0.00%) | Chart, More |
| ^OMXSPI | Stockholm General | 370.15 |
0.46 (0.12%) |
Components, Chart, More |
| ^SSMI | Swiss Market | 6,584.82 |
22.46 (0.34%) |
Chart, More |
| ^FTSE | FTSE 100 | 5,923.06 |
42.02 (0.70%) |
Components, Chart, More |
http://finviz.com/futures.ashx
http://finviz.com/fut_chart.ashx?p=m5&t=ES
http://finviz.com/fut_chart.ashx?p=m5&t=ZB
http://finviz.com/fut_chart.ashx?p=m5&t=DX
http://finviz.com/fut_chart.ashx?p=m5&t=GC
http://finviz.com/fut_chart.ashx?p=m5&t=SI
http://finviz.com/fut_chart.ashx?p=m5&t=CL
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara on Trends & Cycles
Vad's Catch of the Day
Kaimu's Sound Money
Stephen Wellman
IT’S THE DEBT CEILING STUPID!!
I have decided to publish this letter from Timothy Geithner, the US Secretary of the Treasury, for all to read. This letter to Senator Harry Reid, the Majority Leader in the US Senate, is intended to warn the US Congress of the huge implications of having a long drawn out debate over the US DEBT CEILING. I have been warning that I think this time there will be more “desperation”, more “urgency” and more “dangers” with regard to the DEBT CEILING issues. We now live in a World where sovereign default is seen regularly in Europe and we now regularly see food riots and even student tuition riots on TV. The issues of DEBT are all around us at every level. Now we see cities filing bankruptcy or near bankruptcy. We regularly see regional banks collapse almost every Friday. We live in a Nation where on average 11% of student loans are delinquent over 90 days. In some States the delinquency rate is closer to 30%. We have 43.5 million Americans on food stamps (EBT/SNAP). We have record unemployment at persistent levels above 9% based on the official U3 rate, 20%+ based on the past official(now unofficial) U6 rate.
Many here know that I have been watching every move the US Treasury makes because I think the first red flag of a currency crisis began in the last quarter of 2008 when the US Treasury first reported a REVENUE BREAKDOWN that was later confirmed in the first quarter of 2009. By no coincidence that signaled a buy for gold and silver and PM stocks. It is also no coincidence that tax revenues would fall so dramatically when real unemployment was running closer to 17% rather than the 9% reported rate then. The severe “revenue deficit” was telling us that the official unemployment rate was a lie.
I am going to focus this entire KAIMU SOUND MONEY REPORT on this one US Treasury letter because I have never seen such a desperate letter come from a sitting US Secretary of the Treasury ever before. I think that we need to take this letter seriously and make our trades and investments in wealth preservation accordingly. I doubt that Tim Geithner would send such a letter out if he was not concerned the whole World was watching this. I have never seen such a warning in the past and not one so desperate sounding.
In this letter you will see where Geithner predicts that the US Congress has until the end of first quarter of calendar year 2011 to enact an increase in the US DEBT CEILING. He also reluctantly shows Congress ways he can stall the debt ceiling off for a couple weeks at best by moving debt between statutory limits in and out of trust funds and intergovernmental debt series. Still that only adds another two weeks or so in his estimation. I think what Geithner wants the US Congress to do most is to perform in a professional and unanimous manner for the entire World to see in order for the C WORD to be forestalled. He wants the US Congress to put aside bitter debates between party lines so that the DEBT CEILING increase will have as little time in the global spotlight as possible.
Timothy Geithner and the US Treasury are fearful of how America and more importantly how America’s debt reputation will be viewed during this event. I have shown how the US DEBT issuances that effect the debt ceiling are rising at a rate five times faster than the Clinton/Bush 1 era. The largest single one time increase of the debt ceiling occurred last year, under the Obama and Democratic controlled Congress, at $1.9TRIL USD. They will have to raise the debt ceiling at least as much this time and given that I have shown in past SOUND MONEY reports that based on Q1 FY2011 line item outlays (spending) has increased not decreased compared to FY2010. How much more of an increase is up for debate, but I am saying $2.1TRIL will be a realistic low ball number. Anything too low and Obama and Congress will be faced with debt ceiling circuses twice a year. They tried that already in FY 2009 with a tiny $290BIL increase and it only made the US Congress look even more incompetent than they already do. READ ON …
Geithner writes, “Never in our history has Congress failed to increase the debt limit when necessary”; he makes that seem like he is proud of that fact and that it is somehow our patriotic duty. Did our Founding Fathers fight Britain to secure our independence so we could be enslaved to private bank debt? This is the mentality of the LIABILITY BUBBLE in action. This is government action …
The following part is very important and insightful as Geithner spells out what he thinks would happen to America if the US Treasury defaults.
http://www.treasury.gov/connect/blog/Documents/Letter.pdf
It will be interesting to see if the US Congress abides by Geithner’s request and limits debate significantly, especially by the Tea Party candidates who are now in Congress. I think the US Congress will pretty much make a compromise because none of them, even Tea Party loyalists, will want to jeopardize the US Treasury’s ability to issue debt at current rates. There will be some dissenters, but even they will be muted, as realistically even they must know we are beyond the point of no return on this issue.
Let us re-read this section again …
If I did not know this was an official letter from the US Treasury Secretary I would swear it was some newsletter from Marc Faber or some other “gloom and doom” tin-hatter! Hummmmm???
Look at the first paragraph as it warns we are facing a worse collapse than the 2008/2009 financial crisis if we default. Then read the second paragraph that adds a “tax” to all Americans due to a debt default. Yet have I not been saying all along that we are all being “taxed” more whether we have personal debt or not? Our own elected Congress has been indebting you on your behalf. Also have I not pointed out that real tax rates would have to rise 600% - 800% in order to just break even with current annual US Treasury debt issuances and US Congress line item outlays (spending)? So here is Timothy Geithner making similar warnings now.
Now look at paragraph three. Here Geithner lives in DEBT WORLD simply because he refuses to mention that the US Treasury and its debt issues along with the USD are already losing “confidence” and have been for some time. Essentially every USD that moves into GLD or SLV or into physical or PM equities and commodities is a vote against the USD purchasing power and the US Treasury debt. This trend started right after the TECH CRASH in 2001 and has not abated since. I doubt that Geithner would agree with that outlook.
Now we move to paragraph four. This paragraph speaks to our standard of living, our lifestyle that we have become accustomed to thanks to decades of debt accumulation. This paragraph is meant to frighten Congressional members by reminding them that a lengthy bloody debate on this issue could cost them re-election. Read between the political lines …
Here it is …
The above list covers every constituent, both union and non-union. It crosses all demographic boundaries from age, sex, color and income. This paragraph screams out that America depends on DEBT … that America is addicted to DEBT! A few past SOUND MONEY reports I posted what would have to be cut from the US Treasury Statement line item outlays if we no longer could depend on debt to fund government and our standard of living. Most of the entire list above would have to be cut, which would include 43.5 million Americans would not be able to eat. If these hungry Americans no longer could eat do you think they would still sit on their sofas watching re-runs of Hawaii 5-0 and betting on the Super Bowl and praying that their favorite American Idol contestant would win? The only two things that separate Timothy Geithner from the “tin-hat squads” are time and CONFIDENCE.
I would take this upcoming DEBT EVENT more seriously than it has been in the past. This event is not USD positive and I think it is being discussed in spades by the US FED FOMC Meeting members and the US Treasury right now, but then we will not see evidence of that until 2016 when the white-out transcript is released to the public in its semi-entirety. Just beware as these “debt events” are increasingly scrutinized by the global community, especially the bond vigilantes and the dollar traders. So many people’s livelihoods depend on these debt dynamics. As US Treasury hubris rises so do the risks … It is too bad we cannot trade HUBRIS like we do the volatility (VIX)! If we could chart HUBRIS it would be at all time record highs …
Each debt ceiling increase has stayed stubbornly close to $1TRIL every time since 2003(Iraq War). Last year the increase was $1.9TRIL, which broke the $1TRIL level by a large margin. Here is the list of increases since 2002. Prior to 2002 the increases were mostly below $500BIL and the time duration was much longer than now.
June 11, 2002 $6.4TRIL +$450BIL
May 27, 2003 $7.34TRIL +$984BIL
November 16, 2004 $8.184TRIL +$800BIL
March 20, 2006 $8.965TRIL +$781BIL
September 29, 2007 $9.815TRIL +$850BIL
June 5, 2008 $10.615TRIL +$800BIL
October 3, 2008 $11.315TRIL +$700BIL
February 17, 2009 $12.104TRIL +$789BIL
December 24, 2009 $12.394TRIL +$290BIL
February 12, 2010 $14.294TRIL +$1,900BIL
March 25, 2011???????
I have chosen March 25th, 2011 as my best guess for the deadline …
Look at the list of all those “billions” and “trillions” which only 20 years ago would have been unthinkable; trillions in one year or less? It is so because our government has the ability now to expand as fast and as much as its money. No “brakes” and certainly the “debt ceiling” is broken, yet Congress will debate it endlessly and come to the conclusion it is a patriotic success, the likes of GM brakes and Fred Flintstone’s feet!
Suffice to say Washington DC is nervous about this upcoming debt event. Timothy Geithner himself has tipped their hand in this letter to Congress.
“Credit is a system whereby a person who can not pay gets another person who can not pay to guarantee that he can pay.“ - Charles Dickens 1870
“Economics is extremely useful as a form of employment for economists.” - John Kenneth Galbraith
“The one thing sure about politics is that what goes up comes down and what goes down often comes up.” - Richard M. Nixon
“What governments call ‘international monetary cooperation’ is concerted action for the sake of credit expansion.” – Ludwig Von Mises, Human Action, 1937
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report
Good evening. Patrick here.
While the Talking Heads will no doubt blame the vicious sell-off Friday (S&P-1.79%) on civil unrest and rioting in Egypt, the seeds for a correction were sown long ago – traders chose to ignore them until today. Selling was widespread (decliners 5 to 1 over advancers) and volume was relatively heavy meaning institutional liquidation (larger timeframe participants) was moving prices lower.
Rising prices, waning momentum, and tepid volume has plagued this advance for two months; while the technical indicators have deteriorated price action was stubbornly and persistently constructive until last week when hundreds of buying climaxes occurred. When stocks hit 52-week highs on good news and the immediate price rejection is strong enough to cause these stocks to finish lower on the week, the market isn’t just talking to you, it is screaming, “Danger Will Robinson!” – potential trouble is dead ahead.
We have highlighted several specific stocks careening lower after stellar earnings reports as a warning to tighten up (or trail) stops as market averages have trudged higher.
We have pointed out the sudden underperformance by the small-cap sector (IWM-2.48%) was a warning sign large operators were unloading high beta, less liquid stocks under the guise of a rising Dow. Both the Russell and the Trannies (TRAN-2.73%) recently broke below multi-month uptrend lines even as the Dow and S&P hit 2-year highs, revealing deterioration in two leading indexes.
We have been worried the reluctant stock buying by money managers intellectually concerned about structural imbalances around the globe but forced to add to equity exposure as prices rose (performance anxiety) could quickly end if the broad market began to stumble.
As the CBOE Volatility Index meandered to lower lows we suggested cheaply lowering your risk profile by replacing long stock with cheap calls. Today the cost of insurance soared (VIX+24.09%) so hopefully the hedges are already in place, portfolios are insulated if further turbulence unfolds.
Even with all this handwringing we could be wrong and the market might be ready to blast off on the first trading day of the month as it seemingly has done for months and months.
No one knows for sure what will happen in the future despite what those high profile newsletters proclaim in their marketing brochures.
Wearing a forecasting hat while trading is hazardous to one’s capital; it’s great to make a good call, but it is even better to adapt to the unfolding situation, able to eke out a profit even though your preferred scenario didn’t pan out.
If you haven’t figured out your “bail out” level before you take a position you haven’t properly developed your trading plan. Using stops takes most of the stress out of trading, ensuring you objectively assess the risks associated with trading before the dreaded directional bias prevents us from effectively managing risk.
A glance at the hourly chart reveals a break of S&P 1270 will lead to a test of important short-term support at 1260. If 1260 is taken out expect a quick trip down to the April 2010 highs of 1220 which should lead to a rally attempt.
Wasn’t it just yesterday we were longing for more intra-day volatility? Ask and thou shall receive.
Have a great weekend.
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Comments
Of State budgets and health care cost
I live in Massachusetts, the state that was the model for our national health care reform bill. The Governor just put forth his fiscal 2011 budget with an increase of 5.8%. Last year we had a sales tax rate increase of 25%! Why is the budget skyrocketing you ask. In a press release from the Statehouse News Service, under the heading "The health Care Puzzle" they state the following facts: "Patrick described plans to renegotiate deals with health insurers to constrain costs. Even if the expected savings are realized, the health care programs will consume nearly 40 percent of the total state budget, including $10.34 billion for Medicaid services, $822 million for Commonwealth Care – a taxpayer-subsidized program for low-income residents – and $50 million for legal immigrants without access to Commonwealth Care."
Now I work in private industry as an Electronics Engineer and my health care insurance has gone up ALMOST as fast as the states health care expenses. Wasn't this plan supposed to contain the rise in cost? It just continues to support my belief when the government artifically throws money at a problem the costs for all go up.
Cara 100 Ratings Changes For POMO Friday
Good morning from Pennsylvania, home of the AFC Champion Pittsburgh Steelers.
7-9 Billion Dollar POMO Injection Today.
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8:30 - GDP/Chain Deflator/Employment Cost
9:55 - Michigan Sentiment
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Cara 100 Earnings: CVX
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AMZN - PT Lowered from $163 to $154 @ Kaufman Bros. Hold
DEO - Diageo downgraded to Underweight from Neutral at JP Morgan.
MSFT - PT Lifted from $28 to $30 @ FBR. Market Perform
MSFT - PT Lifted from $32 to $33 @ IDI Group. Buy
NOK - Upgraded to Market Perform @ Morgan Keegan. PT Lifted from $9.35 to $11.50
SNDK - PT Lifted from $31 to $35 @ Auriga USA. Sell
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"How does it become a man to behave towards the American government today? I answer, that he cannot without disgrace be associated with it."
~ Henry David Thoreau
RE: on state budgets
The economy hasn't digested the previous comment's implications - considering
the recovery expectations that seem to be getting baked in the market.
Small Gold Trader Makes Big Splash
A huge trade by a tiny hedge fund has sent shudders through the gold market.
Thanks to the nature of futures trading, Daniel Shak's $10 million hedge fund held gold contracts valued at more than $850 million, more than 10% of the main U.S. futures market, and the equivalent of South Africa's annual gold production.
But as gold prices started falling this year, the trade, which was a combination of being long and short gold contracts—bets that prices will both rise and fall—started going bad. Monday, he liquidated his position, and is returning money to clients.
As a result, the number of gold contracts on CME Group Inc.'s Comex division plunged more than 81,000, to about 500,000, the biggest single reduction ever. While his trade didn't account for all of the contracts, an average daily move is about 3,000 to 5,000 contracts.
http://on.wsj.com/ersygG
Good morning all
Bill, I like your crystal ball! I believe as soon as we all turn bullish the market will correct. That's my 8 ball message. It would not surprise me if we hit 1310 on S&P today.
Jobless claims popped higher on Thursday...yet no one cared. Durable Goods report was on the weak side...yet no one cared… Everyone on Thursday was just holding their breath waiting for Friday's GDP report. The consensus calls for 3.5%. Here is my guess of what the reaction will be.
3.2% or Below = Market sells off 2-3% over next week. Will take more time to fight back to 12,000.
3.3% to 3.7% = Market bumps around at Dow 12,000 for a while in consolidation mode. Breaks decidedly above mid to late February.
3.8% or Above = We blow through Dow 12,000 on our way to 12,300 to 12,500 before we have the next correction…which could be back towards 12,000…
That's what my crystal ball says for now. Let's see if I am right or need to trade it in for a better one.
Re: Good morning all
ea32da32,
As my crystal ball has clouded over, it's hard for me to see past my nose today. On balance, I think there are more positives than negatives for today at least, but the SP1305 seems to be a very high hurdle at the moment.
Cara 100 Update
AMZN - Downgraded to Hold @ Hudson Square citing concerns regarding near-term costs and investment spending. Price target lowered to $182 from $186.
AMZN - Amazon.com downgraded to Market Perform from Outperform at William Blair citing uncertainty regarding the size of the company's infrastructure spend.
AMZN - PT Lowered from $188 to $180 @ RBC. Outperform
CAT - PT Lifted from $108 to $120 @ RBC. Outperform
CELG - Downgraded to Hold @ Morgan Joseph.
MSFT - PT Lifted from $32 to $36 @ Oppenheimer. Outperform
POT - PT Lifted from $170 to $204 @ RBC. Outperform
POT - PT Lifted from $175 to $190 @ Stifel Nicolaus. Buy
Just to elaborate
on what Bill has already alluded to in his morning report or possibly drive the knife in deeper then Paulson already has to the retail gold investors!!!!!!!!!
NEW YORK (CNNMoney) -- What recession? Hedge fund honcho John Paulson profited more than $5 billion in 2010, possibly the largest haul in investing history, according to a news report.
This means that Paulson was making $158.55 per second last year.
In 2010, more than $4 billion of his profits came from fund investments. Most of his funds contained bets on gold, due to Paulson's wariness of the dollar's long-term weakness, based on the Wall Street Journal's report. He placed much of his own money in gold-focused funds, which rose as much as 45% because of gold's meteoric rise last year.
Paulson's take from last year exceeds the $4 billion that he raked in from short bets against subprime mortgages in 2007, according to the news report.
The founder and president of investment firm Paulson & Co. achieved fame and notoriety, for betting against subprime mortgages on the eve of the market crash in 2007. His funds scored gains of as much as 590% from this subprime wager, the news report states.
Other elite hedge fund profiteers in 2010: David Tepper, founder of Appaloosa Management; Ray Dalio, founder of Bridgewater Associates; and James Simons, founder of Renaissance Technologies. Each made between $2 billion and $3 billion last year, reported the newspaper.
Re: Good morning all
LOL "but the SP1305 seems to be a very high hurdle at the moment" yes but I'm going to have to take the other side of the doom - not that there's great reason to, all things considered. The sun is out so that's enough for me. Have a great day,
Earl
Egypt erupts again in violent protest
One Million people expected to demonstrate today in the day of anger..
http://www.cbc.ca/world/story/2011/01/28/egypt-pro...
Egyptian Gov't has ordered a blackout on reporting any scenes of the ongoing unrest and people protests in their local Media in addition to shutting down INTERNET since yesterday to block and silence the voice of the PEOPLE but I doubt this will work. In fact I expect this to backfire. Some are reported already being killed and many are wounded. Keep watching the events as they unfold, at the end, democracy, freedom and social Justice will prevail.
http://www.cnn.com/2011/WORLD/africa/01/28/egypt.p...
One question, how do you think such events would impact world markets? (hint, stock market was closed in Egypt yesterday for part of the day after a huge sell off was taking place and news about people cashing out and withdrawing their money and savings from national and private banks have been reported.).
CALM - just throwing it out there
Anyone interested in Eggs? This one pays a little d 3%. has a EV/EBITDA of 4.39 - little debt - huge short interest...
Earl
Re: Good morning all
Earl,
Not to get tripped up by a hurdle, I'm just taking it one step at a time. :-)
APA Re: Egypt erupts again in violent protest
APACHE (APA) per Credit Suisse morning report
APA has a long history in Egypt, over 20 years and has an "excellent relationship with the host government."
APA gets "21% of its production and 20% of our gross asset value estimate" from Egypt.
CS currently has outperform rating.
(FD: no position)
Centamin Egypt - CEE:TSE
Hi All - This one is off recent highs, but most of this happened before the people took to the streets. Not a bad deposit (~7.0 mm oz Au), and in production. I am not currently holding, but have been in and out over the past 3-4 years. Happy Trading
Ford
Massive volume on Ford's earnings miss this morning. 9x relative volume on declining prices.
Analyst65/ democracy,freedom, & social justice will prevail
The cynic in me gives the Moslem Brotherhood, which has long been embedded in Egypt, a better chance of prevailing in Egypt than Analyst65's team, remember Al Quedas #2 man was from that country..... an even money side bet is in order here. Before people jump all over me I will state uncategorically that I would rather not see my scenerio play out.
Re: Of State budgets and health care cost
The issue is, at least in Ohio, ALL insurers are raising premiums, deductibles, and co-pays...
My increase this year forced me to make a huge change... to find insurance outside of what my employer offered... with the new increase I would pay ~12k premiums, 4K deductible, and $50-$300 co-pays... I can't remember the last time I spent 16K for healthcare or exceeded my deductible... now I pay $80-$100 cash for an office visit, instead of the $50 co-pay...
The reason for the increase is to prepare for the govt mandate/regulation...
I will add my spouse manages the largest pediatric practice in our city, the docs will cut staff in March, revenue/office visits down substantially, and she is seeing more "cash" patients...
Re: Analyst65/ democracy,freedom, & social justice will prevail
Toby, I think you nailed it regarding the Muslim Brotherhood; I'm not trying to get political here but 'revolution' typically results in great bloodshed, is appropriated by radical groups and the result is often far worse then the former. I feel for the Egyptian people - ideas of all kinds tend to gravitate toward like minds - cycle up and things get out of control quick lacking somber perspective. I hope it does not become another Iran.
Take care,
Earl
correction starting today?
The sell off in US equities is mild but other equities are selling sharp (I follow EEM closely).
FD:
puts: EEM, GLL (I started this one this AM)
calls: UUP, UNG
Also long EDZ, UUP and TLT
Gold is finding buyers on high volume trading
Zaydac, your MA150 is still holding(!).
Volume on the GC (Nymex Gold) is very very high, actually a high of the month has been set. Looking at the trading hour 10:00-11:00, 30000 contracts have already been traded which is the high of the month even though 20 minutes still remain of the hour. We are seeing a great battle today, but it is still far from over.
EDIT: Actually volume is even higher since about 27% of all trading still is being done in the February contract and I just used data from the April contract (which is now considered spot). 42500 contracts were traded in total during that hour, which is 40% higher than any other day this month.
Cara 100 Update (Final)
One more:
POT - PT Lifted from $185 to $190 @ UBS. Buy
Re: Egypt erupts again in violent protest
Today is a good day to buy EGPT.
Market picture (and crystal ball) starting to clear
http://www.marketwatch.com/story/gold-futures-turn...
Yes, I did think the economy was growing, but that traders were getting ahead of themselves, and that SP1305 was proving a difficult hurdle. And, I did think the sell-off in pm's was far over-done as traders switched from pm's into growth equities. Now we are seeing equities softening and hard money showing some strength.
Opening CSCO @ 21.17
ST trade.
Re: Egypt erupts again in violent protest
tanks are rolling in. police are retreating. military taking over for police
Re: Opening CSCO @ 21.17/ ADD 21.08 + BAC 13.74
Still bullish for the ST.
Re: Market picture (and crystal ball) starting to clear
Precious metals have firmed intraday, but is it a sustainable change in trend from the weakness of the last 4 weeks ?
Is it more a reaction to the unrest that's happening in Egypt ?
Re: Market picture (and crystal ball) starting to clear
Sentiments are low on gold. This is why I started a short term trade betting on a pop. But, oversold can easily get more oversold, especially since silver sentiments are just neutral and I count on a spike in dollar.
Coxe call working today
westcoaster
Coxe call site working today
Re: Opening CSCO @ 21.17/ ADD 21.08 + BAC 13.74
You are a courageous man. Both have lower highs formation for a long time (since april 10).
lex
Lexam is finding support and volume at .80
Re: Market picture (and crystal ball) starting to clear
So far, HUI and silver is UP for the week and gold is flat. Volume is through the roof in the metals trading and that is the one I am watching for guidance. Give us a good close and the pain will be forgotten pretty soon, but a trend change? Show me a higher low and we can start talking.
December 7 2010 (=TOP) traded 123000 contracts of 100 Oz gold on NYMEX. 117000 contracts have been traded in the most active contracts since 09:30 today. FOUR hours remain. Good? -Good!
Still holding the positions I bought when the sheep were fleeing the field earlier this week. No guts - no glory. Stop at the lows of this week.
pnp
Pinetree, have a look at the chart of pnp then check the insider buying
Looks like Mr. Inwentash has been the major buyer from 1.50 up..Doubling the stock price. Last time he did this, he made a small fortune from 06-07
highest intraday VIX jump since May 2010.
Flash crash anyone?
USO going up vertical together with UUP and TLT
that would explain the pressure on stocks.
Traders positioning for a war?
live video feed from Cairo
http://bit.ly/emlFz3
7pm in Egypt right now
Nice shakedown> Close higher
jack- Not Captain Courageous by any means. Just picking up loose change on the ground.
Re: Egypt erupts again in violent protest
nyugrad
The blogs are saying the police are joining with the protesters, now the military has joined to stop the protesters from reaching Mubarak.
No doubt the US taxpayers will be sending riot gear, rubber bullets, and tear gas at any expense.
HAL is up today. HUH!
Re: Good morning all
EA,
You either read Dack's or write for them. which is it?
Re: Nice shakedown> Close higher
OK,
you convinced me. Sold my EEM puts. Will look to reload later.
I also noted that EEM stopped the free fall, so there is some resistance at this level.
Re: Egypt erupts again in violent protest
http://www.telegraph.co.uk/news/worldnews/africaan...
"Egyptians staging anti-government protests on Friday vented anger at the fact that the tear gas security forces are firing at them is US-manufactured, probably part of a massive military aid package.
"'The American taxpayer should know how their money is being spent,' shouted one young male protester who declined to give his name, brandishing a spent tear gas canister marked 'Made in USA.'
"Dozens of the canisters made by Combined Tactical Systems in Jamestown, Pennsylvania, were fired at crowds on one Cairo street on Friday, littering the road surface along with rubble and spent shotgun cartridges."
This stinks!
Re: Market picture (and crystal ball) starting to clear
was asking myself same question until I could see this range was going to be broken. long slw .23. higher low in hourly time frame hopefully matched by higher high into close. We shall see. Daily stochastics look good however.
TZA was sold for +4% following buy signal generated yesterday. I'm back in again and presently flat and await the EOD before deciding to hold or not.
TLT was entered yesterday at 90.96 or thereabouts - thank you Patrick for the idea earlier in the week. Buy signal also generated yesterday. Small shares = small risk and thus small profit. Averaging in will happen if the descending trendline is broken.
Happy to have ideas for keeping the account working while waiting for the precious metals trend to reassert itself.
Re: Coxe call working today
Thanks for the heads up.
Re: Egypt erupts again in violent protest
ALOHA!!
The first headline I read on Yahoo Finance is all about how the Egypt riots have crashed the DOW! Or should I say "concerns" did it! So let me see. The riots in Greece and Iceland and even Tunisia didn't move the DOW down 150 points but the riots in Egypt did.
If you look back to when Israel invaded and bombed Lebanon the POG barely blinked an eye and the DOW just skittered along as if it was another sunny day in Egypt, but somehow some internal strife in Egypt tanks the DOW and send the POG skyrocketing ... Hummmm???
Lets get specific here. On July 12th, 2006 Israel started bombing and invading Lebanon, a Middle East country. The POG was $650 on July 12th. The conflict lasted until August 14th, around one month. By time markets closed the following trading day the POG went up $11USD. By time the "conflict" was over a month later the POG was at $625. So gold went "ho-hum" when a for real Middle East War broke out not just some street riots.
What did the DOW do during that time? On the day of the Israeli invasion the DOW was at 10,868 and at the end of the "conflict" the DOW closed up at 11,381. We can conclude that the DOW loves WAR since it went up nearly 1,000 points!!!
"The conflict killed at least 1,200 people, mostly Lebanese citizens,severely damaged Lebanese civil infrastructure, and displaced approximately one million Lebanese."
THE DOW LOVES WAR ... Maybe that should have been the headlines when Israel invaded Lebanon in 2006.
Eject the NOISE!
Riot
Riot's in Greece, France, Spain, Tunisia, Egypt. It seems the rest of the world is fed up, it's a shame the US populace is bought off so easily, complacency reigns supreme. This is what I thought might happen here during the so called Lehman crisis, but no, we're much too civilized, or just maybe we have become so used to being soaked and wrung out with taxpayer bailouts for mainstreet becoming another day in paradise. Or maybe we only like to pick fights with those outside our borders, it takes the attention off of the screwballs that run things here. Maybe someday the Thomas Pains, Franklins et.al. of this country will get reincarnated. The media is screaming for gun control, and it looks to me that the control that is needed avoids their attention. Oh hell, it's all propaganda. Added to short position, EEV.
Re: Egypt erupts again in violent protest
A sell signal meets an event - an excuse - to sell off.
reviewing Wall St pm forecasts
I have noted this past month that Wall St investment banks have been (i) very positive on pm price forecasts for 2011, and (ii) surprisingly mute during the recent sell-off. So I reviewed their research again today.
Last Friday, Goldman Sachs forecasted the London price of gold in $/troy oz 3, 6, and 12 months out at $1480, $1565, and $1690. Should that forecast be close to being accurate, the share prices of the goldminer producers are vastly over-sold (under-bought) here.
Interestingly, GS is not so bullish on silver, showing a 3, 6, and 12-month forecast at $24.70, $26.10 and $28.20. I wonder how they square that?
Re: Egypt erupts again in violent protest
Maybe it was/is time for a correction. If that is the case this is just the beginning.
Re: Egypt erupts again in violent protest
Maybe it was/is time for a correction. If that is the case this is just the beginning.
Re: reviewing Wall St pm forecasts
Bill -
"Interestingly, GS is not so bullish on silver, showing a 3, 6, and 12-month forecast at $24.70, $26.10 and $28.20. I wonder how they square that?"
Could mean GS is going long the silver paper market with the mother of all short squeezes on JPM. The vampire squid enjoys eating its own.
well....
as Clint and Jim would ask, " do ya' feel luck... well, do ya', punk ? "... ride her till she bucks..orex....http://www.youtube.com/watch?v=vkqnAh_5ODw&NR=1
Re: Egypt erupts again in violent protest
All roads lead to "ROME"
http://bit.ly/gtikGS
Re: Egypt erupts again in violent protest
So, I guess Egypt rioting is just a pyramid scheme.
Sorry, couldn't resist ;-)
Hey, the media must keep it simple. Real analysis would be too taxing.
State of the world
http://www.c-span.org/Live-Video/C-SPAN/
Re: Egypt erupts again in violent protest
Kaimu ..
Noise or not, for the last few days people here in the blog were wondering what would be the event that will trigger this market to sell off after reaching multi-years highs and I guess they just decided to use Egypt’s story today as the event and the excuse to do so, perhaps to correct maybe 5% to 10% before they take it up again.
I said before earlier in last night’s comments that whatever happens in that part of the world will soon come to affect us all and I specifically mentioned OIL and Commodities. And sure enough look what happened today. OIL is reaching $100 already and GOLD over $35 at one point today. So what is next, should we still keep our heads in the sand and ignore these events in some Euro lands, Middle East and elsewhere pretending it's not going to affect us??. I think NOT.
GOT GOLD!!.
Re: State of the world
they are all hypocrites. U.S Govt too, would declare marshal law if everyone on unemployment, underemployed, foreclosed on, graduate who has no job, etc were to march to the white house.
oddly the air seems fresher outside today
here ya' go, NYU
like to pop this one on every little space in time .>http://www.youtube.com/watch?v=jzrUqAtUcpU
Re: Riot
We must also be careful what we ask for; things have a way of getting out of control. Sometimes hard landings involve much bloodshed.
Best regards
Earl
Have beans, rice, amo... No need for gold at the extremes.
VXX money pump update
I have been faithfully buying 100 shares of VXX for each 50 cent drop and was placing sell limit orders $1 higher. Today was the second day when the VXX spit out some money at me, around $500 (the first time was on Jan 19-20, when it also gave back around $500 in profits). To be honest, however, the 1K profit I made from trading VXX so far was probably just enough to compensate the decay in the VXX futures. On the other hand, that was my plan in the first place -- try to stay flat on the VXX core position (1000 shares) through trading while waiting for a big market correction during which VXX should rise 30-50%.
market thoughts
First, I think we'll have a big move down in the market soon (today could have very well been the start of that move), rather than a simple 5% correction. Have you seen the chart of new 52-week highs on NYSE? The chart just made a 4th lower high yesterday as S&P made a 4th higher high since early November. That's some divergence. The leadership in the market is really thinning out, and its strength is running out.
The sector that led the market to new highs yesterday was SMH, and today SMH is down hard. That's some money rotation -- metals into tech, then back into metals... Increased volatility and investor nervousness after a large rally is always a sign of a top, and so it is just a matter of time before the hot money decides to flow to $USD for a few days, and equities will collapse hard without any bids during those days.
Alternatively, it shouldn't take long for investors to figure out that TLT has bottomed and that it is a much safer investment for the next month than the overbought equity market that is showing signs of topping out. If hot money flows from equities into TLT for a few weeks, we'll have some nasty correction.
For those who think that we can't have a large correction now because the economy is finally growing and the corporate earnings keep rising, here are a couple of very plausible scenarios IMO for what the media will be saying if the US stock market plunges 20%:
1. The market keeps going down on concerns about growing national debt that will inevitably lead to higher interest rates and government austerity measures, with the US government seriously considering to follow the CBO advice about raising taxes.
2. The market keeps going down on concerns about deteriorating state finances, which will force state governments to raise taxes and halt the recovery of our fragile economy.
Both of those headlines will seem very believable at that time. My point is that there are always "reasons" to explain a sudden market correction, and the bulls should be happy that the market has been ignoring those reason for a while now. But it only works until it doesn't, and we never know when the market decides to focus on these obvious concerns. To me it looks like investors have already been reducing risk over the past couple of weeks, with previously hot metals and small caps lagging the market and not making new highs yesterday.
See Kaimu's Sound Money
In the commentary at the top of the page.
Re: VXX money pump update
What I am really licking my chops about is for VIX to rise to 30, at which point I'll start buying in LARGE quantities 6-month out 40 strike puts on VIX. I think there is ZERO chance that VIX can stay above 30 for 6 months, and so this will be a GUARANTEED way of making money.
NOTICE: April 1 housing screeches to a halt
The Dodd Frank overseers have promised lending reform but they have yet to adequately 'define' compensation rules as per Regulation Z (the Truth and Lending Disclosure laws) for mortgage bankers and brokers. Currently HB&B don't have to disclose their fees and this has applied to mortgage bankers who fund loans themselves. We still have to compete with pricing... which clearly limits what we can pay ourselves.
It appears the Fed regulators are attempting to appease the oversight folks by handcuffing smaller lenders to fixed fees. The suggestions we are hearing suggest that bankers will have to declare one method: all borrower paid origination or all lender paid margin but not both. Plus total control over how much is allowed either way. Have you ever had anyone dictate what you could charge in a competitive fee driven environment where different levels of service and overhead determined the cost of doing business?
The Office of Advocacy has attempted to get clarification to no avail. So we don't know what will happen April 1 on loan applications we are taking today. We want reform. Consumers want it. Without a realistic solutuion, can expect underwriters and banks without clear guidance will simply stop lending.
The crux of the matter is limited fee structures. On face value that sounds like a great idea. However, many limits already exist detemined by specific loan guidelines and bank rules. Currently, lender margin (known as ysp or yield spread premium) is a way to pay the originator which may also assist borrowers like Veterans and first time byers with low funds to pay closing costs. For example: I just priced a VA Refinance featuring a 3.3% MI fee added to the loan which goes straight to the Veteran's Adminstration. Yet the person who closes the loan is supposed to pay nearly 1% of borrower costs from our 1% fixed broker fee? No way. In fact many say the new rule will cause LESS transparency because lenders will be forced to figure out a different way to pay originators.
I will venture to say anyone crazy enough to be closing home loans who has been fingerprinted and background checked twice, learned a raft of new laws on the run and passed their state and national licensing hoops (less than 20% in our state remain) deserves to make a decent living.
I'm sure the Fed will cushion the HB&B landing just fine and you know what that means for rates and service...right?
LOL. Egyptian Pres. says paraphrasing 'i am not going anywhere'
...'but i have asked the current govt to step down and i will place a new govt as of tomorrow morning.'
lol. Who is this guy? He just laid off all the govt politicians, and i guess is currently interviewing new "regime" via skype from a remote bunker.
My best guess, this will escalate.
in actuality, i wish his teleprompter was traded with Obama's when he did his SOTU.
have a nice weekend everyone.
Re: market thoughts/ Minor Pullback or Major Sell-off?
David- Damned if I know.
I remain bullish. If the sell-off continues, I'll continue to scale into longs. If it moves up from here, I'll add to the positions I opened today (40% of allocation in CSCO, 20% of allocation in BAC).
[edit] Actually, to be honest, if we rally let's say 1% on Monday, I'll probably sell the positions I opened today ;)
I've been following/trading a short list of (mainly) DJIA stocks (AA/BAC/CSCO/GE/INTC/JPM/MSFT/V/WFC/XOM), and opening/closing on weakness/strength during the rally has more or less worked.
There wasn't enough of a pullback to reopen either FSELX/OAKBX in the buy-and-hold, but I probably will if the indexes sell off another 2-3%.
See the post-close report
In the commentary at the top of the page.
Re: VXX money pump update
David- Let me congratulate you, however, on today's move in VXX. Every vixen has her day.
Egypt needs their own Martin Luther King
Fat chance islamic lunes can do that.
'Returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars.... Hate cannot drive out hate: only love can do that.' –Where Do We Go from Here: Chaos or Community - MLK
Earl
Re: NOTICE: April 1 housing screeches to a halt
Hi Loannet - Us mortgage pukes don't get any respect. The congressional house staffers who made this nonsense up need only to look within the office building for the true culprits of this mess. They pushed Fannie who, independently of course, suggested to their banking buddies how to make the rating agencies complete the rating system to ease disposal to eager investors, empowering the liberal electorate and elected. Happy Trading
Egypt tonight
In the 1970's, at a point in my life when I was a young man with aspirations -- remember the Canadian Medical Association had asked me to deliver their address to the Club of Rome -- the father of one of my closest friends, a doctor, a man who had recently been one of Egyptian President Sadat's closest advisors at the time -- taught me a lesson I have never forgotten. I spoke then as I sometimes write today. He reached across the table and said to me quietly, "Bill, there are Egyptians and there are Arabs". It was like a bullet going through my brain. The thought of my naiveté in that moment has never left me.
Noront Resources - NOT
NOT closed today at 0.82. The stock price has drifted down from around 0.9 at the start of the week. The price movement looks like it is moving due to news. Would like to hear your comments since NOT has not received much attention here in a long time. This looks like a good short term buying opportunity.
NORONT WILL CONTINUE EXPLORATION DESPITE WORK STOPPAGE NOTICE
1:28PM ET on Thursday Jan 27, 2011 by CNW Group
Noront Resources Ltd. ("Noront" or the "Company") (TSX Venture: NOT) advises that it has received a notice on January 25, 2010 from the Marten Falls First Nation ("Marten Falls") seeking the immediate termination of all exploration activity by all companies currently operating in the Ring of Fire, James Bay Lowlands, Ontario.
The requested work stoppage apparently results from a dispute between Marten Falls and KWG/Fancamp on the consultation process required prior to the construction of their new exploration camp located on Koper Lake. Noront has no relationship with KWG/Fancamp or the new camp.
To date there have been no protests interfering with Noront's exploration activities. Noront has 50 people currently working in our Esker Camp, 20 of whom are self identified members of First Nation communities from Northern Ontario. We intend to continue with our activities and providing employment for our staff and contractors.
The Ontario government has been informed of our decision to continue work on site. In addition, Noront has offered to participate in negotiations with any combination of Government, Marten Falls and Industry in discussions that would help resolve this dispute.
Elmir
Noront Resources - NOT
NOT closed today at 0.82. The stock price has drifted down from around 0.9 at the start of the week. The price movement looks like it is moving due to news. Would like to hear your comments since NOT has not recieved much attention hear in a long time. This looks like a good short term buying opportunity.
NORONT WILL CONTINUE EXPLORATION DESPITE WORK STOPPAGE NOTICE
1:28PM ET on Thursday Jan 27, 2011 by CNW Group
Noront Resources Ltd. ("Noront" or the "Company") (TSX Venture: NOT) advises that it has received a notice on January 25, 2010 from the Marten Falls First Nation ("Marten Falls") seeking the immediate termination of all exploration activity by all companies currently operating in the Ring of Fire, James Bay Lowlands, Ontario.
The requested work stoppage apparently results from a dispute between Marten Falls and KWG/Fancamp on the consultation process required prior to the construction of their new exploration camp located on Koper Lake. Noront has no relationship with KWG/Fancamp or the new camp.
To date there have been no protests interfering with Noront's exploration activities. Noront has 50 people currently working in our Esker Camp, 20 of whom are self identified members of First Nation communities from Northern Ontario. We intend to continue with our activities and providing employment for our staff and contractors.
The Ontario government has been informed of our decision to continue work on site. In addition, Noront has offered to participate in negotiations with any combination of Government, Marten Falls and Industry in discussions that would help resolve this dispute.
Elmir
Re: Egypt tonight
Bill; "there are Egyptians and there are Arabs" absolutely!
best regards,
Earl
Re: Egypt tonight
Bill, an excellent lesson.
The jihadist from the middle east that arrived in Kosovo were appalled that their brothers there were pork eating, alcohol swilling irreverent 'moslems' that didn't give a twit about religion. It was and is a centuries old feud very akin to the Hatfields and McCoys. Blood feuds are difficult to staunch. It has mostly been cultural.
The Balkins are aptly named. For 1200 years, there have been 'balk' lines there that only change by force.
Egypt is another matter. They are muslim peoples by default but like Turkey after Kemal Ataturk, they have tried to adapt to Western ways.
A point of fact. If Egypt falls to the Muslim Brotherhood, then kiss your oil supply lines goodbye. The Persian gulf will also be ripe for revolt at the lowest levels. Perhaps they can survive as a client state of the West, but only with our bullets and bombers.
Measuring 15 Junior Gold Miners
Interesting article from Seeking Alpha that measures 15 junior gold miners by their cost per ounce of gold resources. SA (Seabridge) comes out on top, but for smaller caps Jaguar Mining (JAG) and Great Basin Gold (GBG) fare well. Both of these trade in US and Canada. Currently hold a bit of JAG but have been considering GBG recently - held up a lot better this week than most juniors usually discussed here.
http://seekingalpha.com/article/249047-measuring-1...
Re: Measuring 15 Junior Gold Miners
Dave M,
Not to rain on your parade, but there is an explanation. Of 48 goldminer stocks, the three you refer to here are #1, #4 and #8 leaders, respectively, in the percentage of the float that is short. In fact over 14% of the SA shares that are traded by the public, i.e., non-insiders, is short, a number btw that is far higher than any other of this list. What that indicates is that the public is less trusting of the company data and/or management. I avoid holding shares in such companies, although once the prices are over-sold they are a trader's delight as the shorts get squeezed in every market rally, i.e., the prices snap back the quickest. So, the relative price action you refer to is much less to do with cost per oz data than it is an indication the gold market is over-sold and possibly ready to rally.
Re: Egypt needs their own Martin Luther King
Earl,
What I getting from the MSM is that "we" need to stay avoid any major criticism of Hosni Mubarak seeing him as possibly being replaced by someone less US friendly.
Actually our "friendship" has been due to Mubarack support to the tune of $1billion annually.
We are repeating the same old policies of the Cold War communist takeover theme. The names have changed, but today it is the idea that unless we do something Egypt will go radically Muslim and become a threat to the US.
Sometimes a threat is real, sometimes not. But the people themselves must decide — for themselves — not us.
Hey, one of the guys involved in 9-11 came from there in spite of our pay-offs.
We need to get over the idea that "we" must/can buy a better, more peaceful world. We should, IMO, limit our military to defensive strategy and use our extra dollars (today's oxymoron) for humanitarian purposes only.
While we are spending $ billions on jerks like Mubarak we ignore uninspected imports every day. Homeland Security with harassment of old ladies is another boondoggle. Financial aid to dictators has been a PR disaster leading to hateful results. Will we ever learn?
Re: Egypt tonight
Ilya,
We had 30 years to adapt to the facts of life — someday we will have the oil shut off. Whether by using it up or having it controlled by those who hate us.
Since 1922 the West has pretended the Arabs have become a group of nations and can be dealt with accordingly.
9-11 should have dispelled that idea, yet we invaded a "nation" with the idea we could mold it to our ways.
If we don't tend to our own problems our democracy may soon see riots of our own.
Obama SOTU speech showed a complete administration detachment from the present US condition.
Statements like these only make him look callous, stupid or both.
Obama Quotes:
• We are poised for progress.
• We measure progress by the success of our people.
• Thanks to the tax cuts we passed, Americans' paychecks are a little bigger today.
• The competition for jobs is real. But this shouldn't discourage us. It should challenge us.
• The future is ours to win.
• We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world.
Promises of fast rail in 25 years? Jokes about TSA pat-downs?
This was a major insult to our intelligence. Somebody please tell him It's time to "organize" THIS community — NOW!
Inflation Week In Review
U.S. Debt and food prices are in the news this week.
A short video from the NIA:
http://tinyurl.com/c2m34v
Re: See Kaimu's Sound Money
Kaimu,
Thanks for posting Treasury Secretary's letter. It's just one more piece of the puzzle that is "trying to get your arms around all of it" to be able to make investment decisions. You were in good form today - I think I learned a lot from today's comments.
4ever grateful.
Re: Egypt needs their own Martin Luther King
Good morning Grym,
I agree with all your points and that's a good question 'will we ever learn?'
(We need to get over the idea that "we" must/can buy a better, more peaceful world... Limit military... use oxymoron extra dollars for humanitarian purposes) - We happen to be a very giving nation. We are a nations of entrepreneurs, not used to living under repressive systems that limit our potentials. I believe it's natural for us to want this for the rest of the world - or to expand our capitalistic system = growth. My thoughts are pretty simple - either you are growing or you are in decline.
I'm glad I never took the public service route and got into politics - what a difficult job to 'do the right thing' when you have so many different interest tugging on you. It's hard for me to pass judgment on the past although it's easy for me to see the results after our government decides any issue one way or the other. But we can look to the past for good examples;
Some positive things I’ve herd-
The American flag is not being burned in Egypt!
Ragan supported the Polish Peoples right to reform, then was ‘there for them’ when they did push for reforms. The US needs to take the same approach, be there for the next government when reforms do take place.
WHAT NOT TO DO;
What we can’t do is what happened to the Iranians – Carter turned his back on the Shaw of Iran and then turned his back again on the reforms – which allowed Islamist radicals take over.
take care,
Earl
Re: Egypt needs their own Martin Luther King
"What we can’t do is what happened to the Iranians – Carter turned his back on the Shaw of Iran and then turned his back again on the reforms – which allowed Islamist radicals take over."
A day before yesterday's events in Egypt I opined that an Egyptian regime change was very negative. Not everyone agreed. I hope I am wrong.
In my view, the regime change forces in Egypt have reached critical mass. The US experiences in Iraq and Afghanistan have demonstrated that in spite of our overwhelming military superiority we are not able to effect the changes we desire in the area of the world that is dominated by Islam. In other words, I doubt that we have the power to save the Mubarak regime. If that regime falls, it is not possible to predict the effect on the rest of the world.
Hard Rain, No El Nino> Headed Higher
http://tinyurl.com/23brnyw
We finally got a decent pullback, which cleared the air like a hard rain. A few more showers over the next week or two, perhaps. But I see no end to the bear drought. Certainly no El Nino. The problem with thinking we sell off hard is I can't think of any reasons not to hold stocks right now. Sure, I try to open on weakness and take profits on strength, but that's within the context of playing dips/rises on a road that leads higher.
The first rain tends to wash rusty nails onto the streets, which can flatten a few tires. I would view the pullbacks in stocks like CSCO/GE/INTC/MSFT as flat tires. Patch 'em and get back on the road.
Re: Egypt needs their own Martin Luther King
What a great statement by MLK, I never saw that one before. He was truly a legend in his own time. I do view the market from turning from a buy the dip to sell the blip within the next several months.
Traffic Tickets
visit San Diego, CA two or three times each year. This time I found policemen are everywhere to issue the tickets. local people said that they (policemen) are required to issue 30% more tickets to generate the revenue.
on top of gas increase, how do average Joe survive?
Re: Traffic Tickets
California needs to rein in its spending, and unfortunately that includes emergency services. Personally, I don't agree with priorities in cities like Oakland, where cutbacks in the police department were quite dramatic.
I don't have a problem with the focus on traffic tickets. It's really no more than a tax levied on citizens who most deserve to pay one.
Re: See Kaimu's Sound Money
ALOHA!!
4ever-Much appreciated. I love researching the puzzle pieces and many times the "officialdom" provides the biggest pieces, unintentionally .. or not? HA!!
You hit the nail on the head with that jig saw puzzle comment. As if life is not a big enough puzzle!
The thing that is most disturbing as a life-long US taxpayer is that I am paying for a product that has a management core philosophy that the "customer is always wrong"! If the US government were a jar of peanut butter there would be no label listing the ingredients or the nutritional values. I would take that further and say that the US government peanut butter jar would advertise "peanut butter" with a photo of some luscious peanutty nuttiness, but when you opened the jar its empty! It then becomes our task as customers to figure out if the peanut butter was in the jar at one time but got eaten at the factory or if there wasn't enough peanut butter for that one jar or if there never was a peanut butter factory in the first place. We know its all fraud but we just can't figure out where the fraud is at any given time of day. Congress has 25/8 and 366 days a year to devise new and innovative ways for fraud, but us taxpayers are too busy working to keep up! We're lucky if we have 1/7 and 12 days a year ... HA!!
THEY DOETH PRETEND TOO MUCH!
Re: Traffic Tickets/ The other city by the Bay
Speaking of Oakland, I've never seen a major city head downhill as fast. 10-20 years ago, I used to dine/shop in the Grand Lake area around Lake Merritt, or meet friends for dinner at Jack London Square. In contrast, here's a story printed in today's Tribune:
http://tinyurl.com/475lx47
I can't remember the last time I took an Oakland exit.
Hi Earl,
don't know if you had to chance to read this.. makes sense.. best to you...> http://seekingalpha.com/article/247568-a-look-at-o...
Saturday Brunch: Egypt - Lessons Learned
http://tinyurl.com/6fqek7o
A few thoughts and a few weekly charts, you be the judge.
Re: See Kaimu's Sound Money
kaimu -
I second 4ever's gratitude for sharing your thoughts on Geithner's dictum intended to terrorize members of the lame duck 112th U.S. Congress. The threatening tone and disrespect of this letter illustrates the HUBRIS of the Goldman Sachs boys running the NY banking cabal. I wonder why he didn't address this to the 113th who are now going to vote on the cap. Was he attempting a quick vote. Kind of reminds me of Mohammed Saeed al-Sahhaf a/k/a Baghdad Bob ...
http://www.youtube.com/watch?v=TrXhxmQJSS0
I wonder if the Ben Bernanke feels any remorse for the Egyptian deaths in the wake of his ignorant inflationary policies? Dumb and dumber.
Re: Traffic Tickets
ALOHA!!
One of the crazy things the police do here in Hawaii that I never saw in California is they dispatch two police cars to watch over road construction. Most of the time the cops are not even directing the traffic, but simply observers or guarding against any driver misbehavior.
For instance. I saw a trench being dug across a two lane road. On one side of the road was a cop leaning on his car watching traffic from his direction and on the other side of the road was another cop leaning on his car watching traffic on the other side. They couldn't have been further apart than 100 ft. Neither were doing anything as the contractors provided flagmen with STOP/SLOW signs that were directing the traffic flow. This is typical Hawaii waste in plain public view.
Contrast that to the days when I was working for the City of Costa Mesa in Southern California back in the mid 1970s on the STREET DEPT crew. I myself drove a ten wheeler dump truck towing an Ingersoll pneumatic hammer behind. Once I got to the street area that required jack hammering I parked my truck on the side of the road got out, put up barricades and cones, put on my orange glow-in-the-dark safety vest and hard hat then went out in the street with my jackhammer hose and all and went at it. The chunks of concrete and asphalt I would dislodge I piled up and then I would have to throw them in the back of the dump truck myself. When the dump truck was full I drove it to the dump myself. The entire operation had ZERO cops, ZERO bosses and ZERO helpers! And never an incident. When I worked the streets of Costa Mesa the California taxpayer got 125%! Well, let me just say 125% when I was actually "working". After we left the yard with our daily assignments we all met behind the bowling alley for breakfast and bowling for an hour and at the end of the day we all met behind the ROADS END bar for billiards and beverage! We actually only had a five hour "work" day ... but those five hours were an intense 125% all out workfest! I loved it because I viewed it as getting paid to "work out"! HA!! Ahh ... youth!!! I don't see that work ethic out in the streets any more. I think it is due to politicians, lawyers and unions that produce too many regulations, too many legalities and too much apathy.
Re: See Kaimu's Sound Money
ALOHA!!
Dr-Thanks ...
That last section got reversed, the part with the "bullet points". The three paragraphs should come after the sentence "Let us re-read this section again ..." and the list of obligations to be discontinued should come after the sentence "Here it is ...".
Hummm????
Re: Hi Earl,
Hi Baz,
SA is driving me nuts - short/buy... I bought the March 11 calls so if this does get approved GREAT! I only risk $320 dollars... I might even add a few to my calls Monday, will have to wait and see at how the price shakes out at the time.
I asked myself this implied question many times...
(We would consider it curious to approve bupropion for depression and seasonal affective disorder but not Contrave for obese patients otherwise taking bupropion.)
It's a grandkids weekend with me - we've run out of new 'G' rated movies to watch.
thanks for the link.
Earl
Re: Traffic Tickets
Too funny, kaimu. We all know Five-O is 0-3 when it comes to portraying reality, but I didn't think it was that bad.
If we define 100% as what the average dude on a street crew accomplishes these days, I think you need to go out to 4-digits for an accurate 'contrast.' No joke.
Re: Traffic Tickets
ALOHA!!
If we define 100% as what the average dude on a street crew accomplishes these days, I think you need to go out to 4-digits for an accurate 'contrast.' No joke.
2nd-You just defined "labor inflation"! HA!!
Re: Measuring 15 Junior Gold Miners
Thanks Bill - always good to look at all angles. I have positions in PMV, LEX, and GIX that I am patiently holding onto. While most juniors and majors started turning down in early December, a few have bucked the trend including Paramount Gold & Silver (PZG, PZG.TO) which has doubled since early December. Iamgold (IAG, IMG.TO) is also up 20% since December.
Re: Noront Resources - NOT
Elmir,
Entering NOT at over $2.00 and averaging down over the past year and a half has been an exercise in anxiety management as I have substantial ( five figure ) losses appearing on my account. However, I may have some advantages that allow me to hold when other speculators walk away. Being located in NWO I am very aware of the socio-economic and political realities of making the ROF move to production. I see Cliffs making a visible presence with their office prominently located in my city. They put out PR the media eats up that would suggest that they are the only operator and will be pushing a railroad to the area, building a smelter etc at a time and place of their own choosing. Cliffs are using the methodology not unfamiliar to operators who come from south of the border to exploit the resources of the far north. They may get a surprise! They bad-mouthed NOT bidding against them during the acquisition of their property and stated that NOT claims would never be developed because they were not near the surface as theirs were. Again, they may get a surprise in finding that the natives, government and environmentalists will be more favorable to an underground mine than an open surface operation that despoils the environment in a more obvious way. Because Cliffs are a force to be reckoned with and have deep pockets, many speculators fled NOT when they appeared on the scene and the price has suffered. But NOT has been doing the drilling and the development work in the area that brought the resource to the point of prominence in the mining world. I believe it is a buying opportunity for those who want to speculate in junior miners and are prepared to wait a few years. I believe the effort that NOT has made over the years to engage the native community and it's leadership will be crucial in how the ROF gets done and by whom. We could very well see the natives working with NOT and the Government to develop the mines, create the rail infrastructure, and choose the smelting facilities - with or without Cliffs. I'm banking on it.
Small Cap Candidates
FN is going to report its ER on Jan 31. Last quarter it reported more than 70% growth in revenue and 140% growth in net earning, its annualized earning per share was about $1.6,and having $3 cash/share and very little debt. I do not know how market is going to react to its next earning announcement, but since not many analysts are following it, so there would be less "expectation" built into its price. It is trading at $24.00, still good value even without the growth. Many of its competitors such as JDSU,CIEN are actually losing money. I do not have any position on this stock (I wish I still had, looking for opportunity to buy it back).
BVN is interesting, pretty weak among gold miners. It seems, just based on some observation,that miners with properties located in developing worlds like Mid and South America,West Africa, were very weak compared to the North America, Europe based miners. Not sure about the conclusion is right, just a feeling that investors are concerned about national risk. I withdrew bid order on BVN.
Good luck.
Further Comments on the Ring Of Fire
While Cliffs may have brought their money and left their brains behind, NOT is not without it's faults in moving their plans ahead. While they have done much to appease the locals by bringing experienced native leaders in management and operations on a small scale, they need to improve their PR. They put far to little information into the public domain and seem to only be reacting to events rather than causing them. I recently contact NOT to remove from their web site and boilerplate in PR the reference to holding the most land in the area. They own claims, while land-holding implies ownership. Land ownership is a very hot political potato so they need not offend those they need to have on their side. They also seem to lack ingenuity in doing financings but that is perhaps because they do not have access to the big players who do this in ways that enhance shareholder value rather than dilute it. In any event, I don't see a disappearing act that is so common to venture-traded mines. Based on all I have talked with who have some experience in this, either Cliffs will buy out NOT, they will partner in some way, or NOT will move ahead on it's own - but the ROF is a reality, and it will happen with NOT participating.
lesson from John Paulson
John Paulson marked another stunning number last year. It is not what hits my brain. He made it from trading gold. But it is still not what hits me. He made it from trading gold when its price was above $1000 per ounce, that is what hits me. Why? Because I was bullish on gold since it was hanging around $500, but I did not make a dime overall from "being right" on gold. and this guy came to gold so late and made so much out of it. I do not know what are other people's experiences, but I am sure I am not alone. "It is not if you are right or wrong, it is how much you make when you are right and how much you lose when you are wrong." Trading is an definitely an art,so simple yet so difficult. I just want to encourage myself a little bit today. "Yes We Can."
Re: Traffic Tickets
Crazy things.
In Illinois they place signs near interstate construction and repair sights...
"HIT A WORKER — $10,000"
There are no details on where to collect the prize money.
Re: lesson from John Paulson
SmallCapFan -
"Because I was bullish on gold since it was hanging around $500, but I did not make a dime overall from "being right" on gold. and this guy came to gold so late and made so much out of it."
Sounds frustrating. How did it happen and perhaps others can suggest ways to capture profits from an initially good call.
Based on your identity, I would start by avoiding small cap unless you have the resources and background of someone like kaimu (Stephen Wellman) or the Trading Wizard (Bill Cara) who know, for example, the precious metals mining business and its key players around the globe and can visit the operations or go to industry conferences. Small cap equals high risk in my book. Stick to the base metal or mid to large caps in the miners and you may do better.
In 2009, I made a cool 105% on my wife's account (fearless), 53% on mine (fearful), and 21% on a large family account (safe) primarily holding the base metals and swing trading a mix of currencies and miners. Much of that return comes from following this blog and its lessons as well as reading up on the economy. Cara is a gem.
Paulson uses OPM and huge leverage with an army of traders and researchers to execute his strategies but, with returns like that, he will someday return back to the median just like Buffett and that buffoon Munger in their dotages cuttin' deals to save GS and talking smack about the metal of kings. It's all relative.
Re: Traffic Tickets
I live in San Diego. I don't see policemen everywhere issuing traffic tickets. Been here over 5 years and have never gotten one. However, I did see that they raised the average parking ticket from $40 to $52.50 just this past year. I know because I get a ton of those.
Oil, Saudi Arabia, OPEC, Suez Canal
Watching APA and CEO for a technical turn with RSIs and money flows but this feels like a lit fuse with the Egyptian revolution underway in the wake of Tunisia.
Any thoughts on strategic oilers for when Saudi Arabia or other oil rich emirates show signs of unrest after the closure of the Suez Canal next week?
Here's a history lesson from 1956 to consider:
http://en.wikipedia.org/wiki/Suez_Canal_Crisis
Cheers.
Re: lesson from John Paulson
ALOHA!!
He made it from trading gold when its price was above $1000 per ounce, that is what hits me. Why? Because I was bullish on gold since it was hanging around $500, but I did not make a dime overall from "being right" on gold. and this guy came to gold so late and made so much out of it.
I think the devil is in some of the details over at Paulson & Co. How is it his fund is so large and others are not?
The secret to the spectacular returns Paulson and his employees reported for 2010 is due to their keeping much of their money- $14.9 billion or 42% of the total assets under management($35 billion)-- in the funds. That's called putting your money to work alongside your clients. That $14.9 billion commitment is revealed in Paulson's yearend letter to investors.
Then there is this ...
The Paulson funds made gross gains in 2010 of $8.4 billion before fees. So, 42% (their share) of the $8.4 billion meant $3.5 billion in gains for Paulson and his employees.
Add to that a 2% fee on $20 billion of capital from investors-- $400 million-- and then the 20% fee on the total profits made adds another $1.7 billion to the pot shared by Paulson and his team.
None of us here have $1BIL of OPM to play with much less $20BIL or $50BIL or $3.4TRIL like Blackrock does and the major global banks. All we have is our own nest eggs and profits from trading much smaller volumes.
Then there is this from Paulson & Co. ...
Last year, for example, Paulson made a 43% return or over $1 billion on Citigroup-- buying shares at $3.20 a share and selling them for $4.60 a share later in the year.
The Paulson Gold Fund was up over 35% on the year, as positions in Anglo Gold, Osisko and GLD, the giant gold ETF all paid off bigtime. Paulson is optimistic that gold will outperform for the next 5 years and is "the ideal vehicle to hedge against the risk of the U.S. dollar."
So he made more off his Citigroup trade, percentage wise, than he did off gold and gold miners. I did not see any junior explorers on his list.
In terms of the PMs Paulson & Co. missed the boat on silver. Last year gold bullion had a 25% gain and a 78% gain on silver bullion.
Just my junior explorer/small producer portfolio had a combined gain of over 250% with some high flyers that pegged 1300% gains in 2010.
My guess is that a lot of people here at Bill Cara beat Pauslon & Co.(on percentages) with just their UXG trades for 2010 or practically any other juniors mentioned here. In fact I guarantee you Paulson made a lot less than long term shareholders of ANGLO & OSK and even GLD. The beauty is that you as a little guy do not need to hire a ton of researchers and staff to run billions and make a measly 35% return. I look at buying into gold and silver back in 2001 as a "savings account", which is exactly what took place. I closed accounts at Morgan Stanley and Bank America and instead just bought PM all those years. Those funds sat there since 2001 being managed by a staff of one and trades totaling an average of 3 per year! My PM holdings followed roughly the gold/silver ratio at the time of 66:1. For every ounce of gold I bought 66 ounces of silver. Paulson & Co as well as Warren Buffet and Soros all missed the boat on that strategy. Buffet would have killed Paulson & Co. on his silver holdings had he not have been forced out of his trade.
The key to being ahead of the big guys is to get in to these companies before they do. I have managed to beat them (Sprott Assets etc) into SLR(ASX), SRL(ASX), PMV(TSX), LYM(TSX) and GRR(TSX). It has been a roller coaster ride this first month of 2011 but even with some of the current corrections in those companies I am still up at the minimal 200% at the maximum 1100%.
Here is where Paulson & Co. made a killing and got on the HEDGE FUND map!
In 2007, the funds run by Paulson were up $15 billion - a staggering investment return rate of nearly 600%.
That was his bet against the SubPrime. He profited off the fraud the US Congress created. And there you have it ... You integrate "politics" into your trading and you can win big. That is actually all an investment in gold and silver and the PM companies is based on. Its a bet against DEBT and the LIABILITY BUBBLE that the US Congress has created for all Americans. While Paulson & Co. has bet successfully against the SubPrime he now has a bet against the US Treasury(aka the USD).
You have to commend Paulson for being able to move billions of dollars into such profitable trades. I just wonder if those returns were all legal. Then again the definition of "legal" has fallen by the wayside over at Wall Street! Its now LEGAL IS AS LEGAL DOES ...
Re: NOTICE: April 1 housing screeches to a halt
Luggie, We are just the canaries in the money mine. Ignored until we are gone.
Re: lesson from John Paulson
Kaimu, Congratulations on your winnings to date. So the orchard farmer bit is just your cover and fallback food source?
Re: Hi Earl,
SA opinions don't really bother me... its the Number's chrunch I'm after. The ' views ' ( short/long ) only work for a day or so ( depends on the authors position ).. I like facts that back up the talk. This paticular article laid it out pretty good. Love the $ 5.00/day use. This would be Very appealing to those that are in need ( Big Mac/fries & drink - same price !) I think $ 25 pretty well nails it for now ( IF approved ) Even if turned down, with minor revisions required, I will try to catch the second down smoothed. I do not know too many other equities with this potential that are trading at these valuations ( except maybe MSFT, but with a gazillion share float ! ),,,
Egypt riots overshadow bankster bonus......preplanned or lucky?
http://dealbook.nytimes.com/2011/01/28/blankfein-g...
Re: Hi Earl,
Hi Baz,
10-4. When I sold my 500 shares I replaced them with 5 March 11 calls. I've compared the Feb/Mar 11s, 12s and 13s and will concentrate in this area, liking the March 13s.
Re: Egypt needs their own Martin Luther King
America needs our own MLK!
Egypt as a Sultanate
A little bit ago, about 1,000 years give or take, the Caliphate was mastered and made inferior to the Sultanate. Arab civiliation peaked then and over the next 1,000 years deteriorated back to the tribal bickering we see today.
Egypt and Turkey have very large populations and along with Pakistan probably represent 80% of the moslem world. Indonesia is a 'moonlight' reflection and probably shouldn't be considered in the same vein. Iran is the redheaded teen aged step child who rallied around a TRUE Caliph in 1979. He died and they have been rudderless to today. A willful Sultan will emerge at some point and the world will be better for it.
Sultans come and go. Sultans are the pragmatists that understand 'the possible.' In the end, politics is the art of the possible. Caliphs always practice the art of the impossible and therefore fail because for all their their incantations, they cannot get water from a stone or raise grain in a desert.
I have no idea what this means to price actions in the financial markets near term. I guess one might start by trying to discover who owns Egypt's debt and base a haircut from that.
I'll still watch the price of wheat and rough rice and lest I forget, Egyptian Pima long staple cotton to determine how severe global markets will react and be impacted.
Geo Politics is a fun game to handicap if you're not the one coughing from tear gas...
The youth in Egypt are having a good time twiking the nose of authority while their parents at home wonder what senseless evil spawn they accidently produced during a power outage 23 years ago!!!!!!!
Just look to the Brass in the Egyptian Army for the final outcome. Rancor in their ranks devolves to chaos. Solidarity gives you the next Sultan.
Re: Traffic Tickets
I am on the road today for six hours. I saw three traffic tickets case. typically I wouldnot see once. at least three individual San Diego local confirm my observation.
Re: lesson from John Paulson
thanks Kaimu and Dr.Strangelove for your replies. I think my problem is to swing between different trading styles and wanted to get the good of each one of them, and the result is always to get the bad of each one.
Thanks again for your posts.
Re: market thoughts/ Minor Pullback or Major Sell-off?
I'm also bullish, 2nd, since 1 December
[should have been since 1 Oct but I'm a stubborn, slow learner].
Surely I was not the only person here to notice the jump in OSG in Friday; it had been a falling knife for most of December; did not read any worthwhile news on it, but clearly must be related to the unrest in Egypt having an affect on oil prices and related shipping disruptions [?]. It's been selling near half of its estimated book value; I'd been watching it for a month or so and initiated a really small position at 32+ since it pays a 5% div.
I also like INTC and GE; holding July 22 calls on INTC; bought GE at 18 and change and added a little since then. In the financials I really don't have faith in BAC but also realize you're more of a ST trader these days; I do own Commerzbank but it trades in the pink sheets.
Have a nice weekend.
$100 per barrel physical oil? We’re already there.
"The Brent crude oil benchmark currently represents the pricing benchmark for over 65% of the world’s traded physical crude oil. The WTI contract represents a pricing benchmark for about 30% of the world’s traded physical crude oil, while physical supplies of WTI are quite scarce"
"$86 per barrel oil? Maybe in the paper markets – but don’t count on delivery."
http://www.screencast.com/t/1BlHVH4d8
http://www.zerohedge.com/sites/default/files/Poten...
Re: lesson from John Paulson
SmallCapFan said: "It is not if you are right or wrong, it is how much you make when you are right and how much you lose when you are wrong."
Permit me to put that in the context of the larger interview it was taken from SCF. The statement comes from the mouth of Stanley Druckenmiller, in "The New Market Wizards" by Jack Schwager and was made in 1991. The quote appears to be attributed to Soros, which is perhaps true but of no surprise as Druckenmiller was Soros' head trader at the time.
Schwager: "The US is experiencing a protracted recession and extremely negative consumer sentiment (this is during the 1991 recession). Do you have any thoughts about the long term economic prospects for the country?"
Druckenmiller: "In my view, the 1980's were a ridiculous repeat of the 1920's. We had built up the debt-to-GDP ratio to unsustainable levels.... I have never believed that the current economic downturn was a recession; I have always viewed it as a debt liquidation.... It's not simply a matter of a two-quarter recession. It's a problem where you build up years of debt, which will act as a depressent on the eocnomy until it gets worked off over a long period of time."
What has changed since 1991 I ask? Little, except the Fed and Washington continue to pile on the debt to keep the music playing. Debt liquidation has not been permitted in the last 20 years since this interview was done. But more important is what Druckenmiller has to say next.
Schwager: "Given your very negative long-term view of the US economy, are you holding a major long position in bonds?"
Druckenmiller: "I was long until late 1991. However, an attractive yield should be the last reason for buying bonds. In 1981 the public sold bonds heavily, giving up 15 percent for thirty years because they couldn't resist 21 percent short term yields. Now, because money market rates are only 4.5 percent, the same poor public is back buying bonds, effectively lending money at 7.5 percent for thirty years to a government that's running $400 billion deficits. They weren't thinking about the long term..."
Here's a chart showing yields from when Volcker jacked up short-term rates in 1980 to the year 2000:
http://www.sharelynx.com/chartsfixed/BondYield.gif
Attached is a picture of 30 year yields for the period of this crisis, which are substantially lower than the rates entering 2000, as illustrated above. As I understand it bond prices and yields are inversely correlated. So if Joe six pack had bought Volcker's rate hike in 30 year paper they'd be sitting on a 'home run' as yields have depressed to cyclical lows - huge capital gains.
Now this is where the future outlook gets interesting, and I'm putting this down on electronic paper to help my own understand of Druckenmiller's long-term outlook. Do creditors say to no to further US deficits - deficits which were being criticised 20 years ago and are so much worse today - or does Uncle Sam force all of its citizens to eat low yielding US paper in their IRS accounts, while continuing to monetise the debt - artificially pushing rates down to new lows in this bond cycle?
Rates up or rates down? The first one is a danger to precious metals as competition is created for an attractive store of value as Bill has remarked. Rates down through continued intervention? I like the prospects of gold in such a situation. Default on the debt and I'm guessing the home run is hit.
The philosophy of Druckenmiller is that of his mentor Soros - preservation of capital and hitting home runs to build long-term returns. I've preserved my capital by reducing exposure to gold miners to a 17% weighting while this pullback occurs and finding the right plays as the market twists and turns - presently TZA and TLT.
But I've managed to keep one foot in the junior gold mining sector, even as they come under pressure. I wish I had Kaimu or John Paulson's account so I could stay fully loaded in the sector but I don't, so I preserve capital and continue to view gold as the 'home run' that is going to get my account up and running in a meaningful manner during this deflationary cycle.
I think we are in a deflationary 'super cycle' of sorts - a need for debt-liquidation as Druckenmiller calls it, despite the fact that Washington and the Federal Reserve would deny this natural rhythm to play out. Heck traders were saying these things 20 years ago. So the game hasn't changed - the long-term outlook remains. Just depends on how long these interventionists require to fall on their own sword.
I thoroughly recommend Schwager's interesting collection of interviews with top traders:
http://www.amazon.com/Market-Wizards-Interviews-To...
It's JMO. Please don't hesitate to correct me if I've misunderstood or opinions differ. cheers.
THE TUNIS THEORY
ALOHA!!
I mention TUNIS THEORY because this is a repeat of the food crisis of 2008 that was short lived and threatened emerging market governments. The current 2010/2011 strife with food prices and shortages seems to have started with TUNISIA and what is the capital of Tunisia? Contributing factors though were grain shortages across the globe from Pakistan and Ukraine to India and Australia. No matter the cause it could have been "weather" or government export restrictions or ethanol quotas. It has all combined to form a perfect storm effect on prices.
So one byproduct of all this that needs to be watched is "foreign reserves" in the form of US Treasuries. If I was a government in Egypt or Algeria after watching what happened to the Tunisian dictator I would make a concerted effort to lower food prices by either un-pegging to the USD or selling off USD foreign reserves in order to buy food supplies. Algeria alone has $150BIL and of course we all know what China has in US Treasuries. The elite governments in these countries will not voluntarily relinquish their power to mobs in the streets rioting over food prices. They know that riots may start with food prices but can morph into a power struggle easily. Selling off US Treasuries would not be USD positive and would export more inflation to the USA via costly imports, especially where oil is concerned, which the USA is a dependent.
Food riots are a serious matter to most of the World because they are on the receiving end of Western exploitation via monetary and IMF issues. Income levels in developing countries are not as high and there is no social "safety net" like there is in Western countries. This all depends on just how long these food prices remain high, which are totally tied to the cost of oil. Shortages are another matter as there is no way for governments anywhere to "print more food" with a mouse click! Agriculture is so dependent on so many variables.
Food for thought(no pun intended)...
Re: THE TUNIS THEORY
Kaimu,
you are such a treasury for all of us. I am wondering why Goldman has not hired you or paid you to shut up?! You are a threat to them or those elites. Why don't you run the election?
Re: Egypt needs their own Martin Luther King
Earl,
I heard a Catholic priest on Fox this AM. He has been in the Middle East and seems pretty knowledgeable. He says both Muslims and Coptic Christians are cooperating in this attempt to oust Mubarak. Christians stated they will defend the Muslims during their prayer times.
He says this is unique in his experience an sees this as an Egyptian rather than religious revolt. If so, the US needs to be ready to give legitimacy to any democratic leaders. My objections were to the $1.23 billion annual military support of an obvoius tyrant, but I don't know enough about the alternatives to speak with authority.
We can only hope for a better outcome than their recent history shows.
Re: Egypt needs their own Martin Luther King
Good morning Grym,
There's been some good discussion here - I can only hope the worst does not happen in Egypt. If it cost more for me at the pump so be it, can't do anything about it anyway. I can't speak with authority on any of this, only pray for the best outcome and example to the rest of the world.
I’m a Christian first, Catholic by birth. “I heard a Catholic priest on Fox this AM” what a rare occurrence; I’m a closet radical preferring the sward dealing with jihadist and can’t understand ‘what’s happened to my church?’ “the US needs to be ready to give legitimacy to any democratic leaders” my personal view is the US government in general have a pretty good understanding of our past mistakes (lots of books on the subjects from Viet Nam to Afghanistan) and it’s my hope we will do the right things. I think (& pray) Mrs. Clinton is striking the right tone http://www.latimes.com/news/nationworld/nation/la-...
Egypt as a Sultanate; I found Ilyas comments to be very interesting. I have little knowledge of Egypt other then some casual reading about Cleopatra many years ago. And Bill Cara had a profound comment that there is a difference between Egyptians and Arabs – something I need to keep in mind. If Bill has this understanding I’m sure Hillary Clinton and company does too.
I said Egypt needs their own Martin Luther King because that’s how good thing happen for a nation. I look at what Nelson Mandela was able to achieve in South Africa (disregarding his youthful ANC involvement) multi-racial democracy in 1994. It stands to reason that ‘One’ leader needs to emerge that the Egyptian population can eventually rally around – this made Ilyas comments very interesting.
Best regards,
Earl
anti-riot insurance
I guess we see now why the leaders in the west are so enthusiastic about keeping the anti-riot insurance premiums up to date. Kaimu used to talk about the various SNAP etc programs being in place to avoid riots, and now we see what happens when you don't pay your premiums: you get Egypt-ed from office.
Or as Gerald Celente has said, "when people have nothing left to lose, they lose it." I think he's a bit eccentric, but proven correct in this instance for sure.
Re: Egypt needs their own Martin Luther King
http://tinyurl.com/66n363y
News circulating that Mohamed Mustafa ElBaradei will replace Mubarak.
"Sunday, 30th January 2011 - 15:19CET
ElBaradei hails new era on sixth day of Egyptian anger
Updated -
Top dissident Mohamed ElBaradei told a sea of angry protesters in Cairo this evening that they were beginning a new era after six days of a deadly revolt against embattled President Hosni Mubarak. Nobel peace laureate ElBaradei, mandated by Egyptian opposition groups including the banned Muslim Brotherhood to negotiate with Mubarak's regime, hailed "a new Egypt in which every Egyptian lives in freedom and dignity."
------------
http://en.wikipedia.org/wiki/ElBaradei
"Mohamed Mustafa ElBaradei (Arabic: محمد مصطفى البرادعي, transliteration: Muḥammad Muṣṭafa al-Barādaʿī, Egyptian Arabic: [mæˈħæmːæd mosˈtˤɑfɑ (ʔe)lbæˈɾædʕi]; born June 17, 1942) was the Director General of the International Atomic Energy Agency (IAEA), an inter-governmental organisation under the auspices of the United Nations from December 1997 to November 2009. ElBaradei and the IAEA were jointly awarded the Nobel Peace Prize in 2005."
J
Egypt turmoil rattles Middle East stock markets
Now the slide may continue for few days as a result of Egypt story and will affect the world's markets including here at home. I guess those who bought inverse Ultra short ETF's, excluding inverse of precious Metals ETFS, such as TZA and EDZ on Thursday or last week will be happy campers for the next few days if not weeks since GOLD and SILVER ETFs will also do well in this evironment too.
Too bad that such an event which has caused so far huge loss in life for the sake of freedom, democracy, free speech, social justice, improvement of economic standards and employment ...etc would enrich those who benefit financially from this whole ordeal. That's the unfortunate but TRUE irony in this whole mix.
http://www.cnbc.com/id/41336319
Re: Oil, Saudi Arabia, OPEC, Suez Canal
The son of a work associate is a young petroleum engineer who ran a couple of production sites in Yemen, first with Schlumberger, then with Nexen. Having several hundred thousand US$ salary banked in Switzerland each year plus 2 weeks out of Yemen every two months to go anywhere on the planet was just the ticket for this adventurous lad. They were pulling oil out of the country for well under $10 a barrel and this was only about 5 years ago when I was told of this. However, a bomb went off in the compound, despite their having armed guards for protection. His Land Cruiser was shot up by machine gun fire when his driver refused to be stopped by bandits who only wanted the vehicle ( which they took and left him and three others to walk back to their base). The risks exceeded the rewards, as high as they were in dollar terms. He is now back home with a fat bank account and I believe he is teaching for a living. Now if you can pay the Yemeni leaders $10 a barrel for oil while the people are living in mass poverty how long will it be before the whole region collapses under the weight of it's own corruption. The Saudi royal family should be concerned about what is going on around them and start making an exit strategy.
Re: Egypt needs their own Martin Luther King
All I can say simply, those who speak and love to live in a free democracy exercising their rights to free speech, choice, freedom, enjoying a fair legal system, better social justice system and better living standards should not merely give a lip service encouraging, only by words, other oppressed regimes in other parts of the world including Middle East to make changes and do reforms. Instead, they should help and take substantial actions to enforce such calls and support the people and leadership who call for such a change and bring in such democracy to those nations allowing people the right to choose and elect their own democratic leadership and live their life freely with no fear, no oppression, and no lack of justice. You simply can't preach democracy and freedom for yourself and your people and practice it at home yet at the same time prevent or forbid other nations/people from doing the same or enjoying the same RIGHTS. Simple and Clear!!. I am sure many Egyptians and others in those parts of the world would love to see the day where they can openly with a loud and united voice repeat the same words of Martin Luther King. "Free at last! free at last! thank God Almighty, we are free at last!"
THE BATTLE AGAINST EXUBERANCE
ALOHA!!
Greenspan used to say the markets are overly exuberant. He always talked about the dangers of "irrational exuberance" on the DOW. Buffet used to mention the term during the dotcom days to describe the NASDAQ.
Now we can apply this to our daily lives ... This would be good for those day trades when you need less emotion! Or for those juniors you get too long on!
LINK: http://www.youtube.com/watch?v=jd4tugPM83c
Re: Egypt needs their own Martin Luther King
There is a big difference and wide range of options between, "...prevent or forbid other nations/people from doing the same or enjoying the same RIGHTS." and taking "substantial actions to enforce and support" their achieving such freedoms.
I am all for moral support, political support and a multilateral peacekeeping force, but hope the US does not see this as another crusade to "democratize" a foreign country.
Egyptians may need someone less peaceful than a Martin Luther King to bring this off. So far I've heard over 100 have been killed.
My fear is our Big Dog Oil may play a role in this fight yet. Some may see this as a time for a war to end our economic malaise once again. Even though Egypt has little the location is such that we wouldn't want it to go to those who are perceived to be openly anti-US. Hence our $1.3 B per year "aid".
Re: Egypt turmoil rattles Middle East stock markets
Honestly while it seems like a really impressive struggle and I wish the people in Egypt all the success their courage deserves, I don't think the loss of life has been huge at all. Had this been a really repressive regime, such as the Soviets (or the Nazis) of old, the death toll would have been far, far higher. We've seen water cannon, tear gas, and what look for all the world like Roman Legionaries (though not so well disciplined and trained) armed with clubs and some shotguns facing huge groups of angry people. Net result: there are perhaps 1200 civilians with shotgun and blunt force trauma wounds, and the 15,000 riot police are nowhere to be seen, morale apparently gone, either routed from the field or deliberately withdrawn. In a world where current military technology would allow a very small number of armored vehicles with automatic weapons make short work of the crowds we saw, I think things have gone remarkably well.
For that, I think we have to thank modern media with its video cameras, ubiquitous hand-held cameras, satellite links, the internet, and the light of publicity. I would suggest that old ways of state rule by gunfire only works when it happens in darkness. We really do live in a more civilized world, and for that I'm profoundly grateful.
Re: Egypt needs their own Martin Luther King
analyst65 -
An eternal debate in America has been almost from its founding whether or not we should actively go out and encourage other people to "become free like us" or stick to our knitting (having more than enough problems to solve of our own) and simply provide an example - "the light on a hill" - giving inspiration to others by the awesome way we live.
Folks were having debates like this back in the 1800s, and its not surprising to see that this issue is still unresolved.
I for one am a "light on the hill" sort of fellow. Actively running around chiding the neighbors for their bad behavior seems like hubris at best, and a dangerous and expensive luxury at worst.
Armstrong's latest ...
... on China written from a dank room with bars with a view of Gotham. Armstrong used to advise the Chinese gov't on money policy before the NY elite removed him from the game.
http://tinyurl.com/62o3vvf
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double post
Negative Headlines Calm The Bulls
http://tinyurl.com/693nmuj
Bulls probably had a hard time sleeping last week, wondering how much longer indexes could rise without a pullback. Friday's sell-off + tonight's headlines may be the sedative they've been waiting for. I think they rest easy tonight.
baz22/OREX
OK you sold me, bgt some this week ($9 or so) and sold the Feb 11 calls for over $1..........think this will be a long term position...can't resis a 12% return unchanged for 3 weeks....thanks
Suez is not so important
If threatened, Brits, Americans, French and others will 'Internationalize' the Suez canal. Troops will land and that leaking sand trap will be secured at both ends. Call it goalies with guns! It shouldn't come to that. Egypt is not a suicide case. Anyone who seeks money/power in Egypt would not be so foolish as to cut off access and tolls to a Dutch vessel carying cheese and wooden shoes to India...
The true pinch points in world trade are the straits of Mallaca. Less so for the Bosphoras. Not so much for Suez. Which brings me to the Panama canal.
The port authority of Long Beach and LA must be trembling at the thought that the expansion of the Panama canal will divert hundreds of millions per year in loadings from California to Texas and beyond. Adios longshoremen and crane operators and truckers and the rail providers that have been sucking at the tit of Asian commerce for oh so many years.
Trade routes have always been important to the rise of civilizations. They are the commerce tracts that historically have allowed wool to be exchanged for pepper and silver for iron. If one route is blocked, another will emerge. Think a circular blood system that can be fed from an artery but diverted to veins.
The markets needed a reason to sell off. It was time. Egypt fits the bill or it could have been a dire warning from Eskimos concerning the declining blubber content of Alaskan seals. Global cooling? GM is finally going to share their 50 year locked up 100 mile per gallon carburator technology!!! Gotta love urban myths and conspiricy rat holes.
Everyone has a reason why markets do what they do. 'They' cannot admit that 'they' do not know why but 'they' will still charge you a percent of your assets to play 'the game.' Dealers never go home broke.
Egypt is a sideshow for now. Men thurst to be prudently ruled by enlightened despots and there can always be another found who has hopeful words and the keys to the 'corn bin' such that none will starve.
In the end, the price of governance is the cost of food.
Re: Armstrong's latest & COMEX options expiration January 26
Thanks Doc.
Bill said in Commodities Review in WIR:
"As I opined two weeks ago after a commodities sell-off; Ultimately this price trend, should it continue, will work itself into price inflation… Then Bernanke will have to deal with it. Until then, he has a job of protecting his banks, and that will benefit the commodity trade. Of course the government is trying to get you to back off as they introduced a discussion paper on their CFTC lifting margin requirements in 60 days.
At this point, the US authorities are desperate, and will pull any intervention stunt they can to support their cause."
Rosenberg, quoted in Muldin's latest said:
"There is no doubt that there will be rejoicing in Mudville because real GDP did manage to finally hit a new all-time high in Q4. The recession losses in output have been reversed (though what that means for the 7 million jobs that have to be recouped is another matter). But, before you uncork the champagne, just consider what it has taken just to get the economy back to where it was three years ago:
· The funds rate moved down from 4.5% to zero.
· The Fed’s balance sheet expanded by more than 1.5 trillion dollars.
· The printing of M2 money supply of around 1 trillion dollars (the illusion of prosperity).
· Expansion of federal government debt of 4.8 trillion dollars.
All this heavy lifting just to take the economy back to where it was in the fourth quarter of 2007. As they rejoice in Mudville, the memory is conjured up of Billy Joel bellowing out those famous words ‘Is that all you get for your money?’"
There is definitely a link between the two commentaries posted above.
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Thank you for your remarks in the precious metals review Bill - they are a valuable big picture and tactical outlook for me. I held SLW friday into close after noting the bullish engulfing candle in $silver and the consolidation evident in SLW.
I also averaged in to PMV.V for a second slice after noting its drop of 10 cents (albeit an important % drop) after this pullback in the $POG. Average price now .57 or thereabouts. So if the $POG pulls back further I'll buy another slice in the low .40's to get my cost basis under .50. If the $POG goes up again I'll buy higher. Getting my daughter in on the act too with 100 shares as she starts to hoard pocket money.
Last thing Bill, Jesse noted the weakness in the precious metals market leading up to COMEX options expiration July 27 last year. Although I would never blindly buy using previous chart history, the daily chart action leading up to the COMEX options expiration January 26 does share some similarities. Will be watching to see how it progresses from here. Am eager to keep the shares of SLW I've bought and average in here if the price action continues positively.
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Focusing on the markets and not each political event that transpires to pull at us in the desired direction that the powers-that-be desire has been a great aid in my trading and understanding how the world functions. Much thanks again for this blog these last 3 years that I've been privileged to access.