Bill Cara's Blog for Jul 14, 2011 [See Post-Close report]

http://bbc.in/nPW6uY

http://on.ft.com/qcgAAy

http://bloom.bg/oC5dst

"Meanwhile, sales growth slowed worldwide as buyers shifted to smartphones and tablets

The iPad was the elephant in the room as Gartner and IDC reported that worldwide PC sales in the second quarter of 2011 were even worse than their modest expectations.

Shipments grew only 2.6% according to IDC and only 2.3% according to Gartner, well below the 6.7% Gartner had predicted and a fraction of the 12% IDC reported in Q1.

Apple, by contrast, registered an 8.5% or a 14.7% bump domestically, depending which report you believe." (more)

http://tech.fortune.cnn.com/2011/07/14/pcs-apple-j...

but as FT reports, seems it went ok. Market may be breathing easier now in response to the successful passing of this event.

Ha-ha, Jim Rogers is spot on. Cupcake indeed.

Good morning.

08:30 Initial/Continuing Claims
08:30 Retail Sales
08:30 PPI
10:00 Business Inventories

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CTSH - Needham Initiates with a Buy. Target $100

POT - POT is up ahead of the open after being added to Citigroup’s Top Picks list.

TXN - PT Lowered from $40 to $37 @ Stifel Nicolaus. Buy

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"A billion here, a billion there, and pretty soon you're talking about real money." ~ Everett Dirksen

BH,

Ah, good old Ev. His comments were like the crooning of Bing Crosby. His mellow tones could put you to sleep while announcing the building is on fire ;-)

Grym

(US) S&P warned US lawmakers privately that it would cut the US sovereign ratings if Treasury was forced to prioritize payments - financial press

I totally agree with you when you say that war is inflationary. I don't totally agree with you that the leaders are stupid. I think they are Machiavellian. They know precisely what they are doing. Paying off bonds with inflated dollars and bankrupting the U.S. while making their campaign contributors rich. Look at the considerations being given to the corporations and disdain with which the general population is treated.

If a coke costs $2.00 and it makes more money for the bottlers they don't care. The syrup makers and the bottlers show more total dollars on their income statements and the valuations of assets, based on current dollars, increases. The executives get the perks for increasing the value of the companies, even though they are shown in inflated values, and increasing the income. Then the corporations give larger contributions to the political parties.
In the next presidential election take a look at how many millions of dollars are going to be spent on getting a job that pays $200,000 a year for 4 years. Then ask yourself why.

Long time followers will recognize the setup and type of entry easily on this milk trade:

http://tradinglog.realitytrader.com/2011/07/july-1...

http://web.mit.edu/newsoffice/2011/printable-solar...

There is light at the end of the tunnel.

will be from our own population... as jobs dry-up and people get hungry and desperate, more will own firearms... 'nough said.

Dupe withdrawn

Bill , I also remember coke at 10 cents . Even more important though is the loss of Nasa , and importantly THE QUEST FOR KNOWLEDGE . When in Cork Ireland or Reading England as I drove though the streets you could easily see satellite receiving dishes . Around the world Nasa raised the standard of living . Battery powered drills , screw guns , computer chips in our cars and planes , Cat scans MRIs , drugs , new forms of insulation , Satellite phones . large screen tvs . The list is almost endless . Nasa was in reality , Americas successful Department of Education . Yes expensive but oh so successful . It created many new industries and raised the standard of living around the world . The decision to kill NASA was a decision to stop the quest for knowledge and stop or heavily curtail new industries and jobs . It reminds me of the decision earlier in history to burn the library in Alexandria . Perhaps I may be wrong but didn't that precede the Dark ages . Bob .

ALOHA!!

Just add NASA to the very long list of red flags caused by a corrupt monetary system spawned from a corrupt political system. What benefits the few never benefits the many.

President Wilson, when Governor, declared in 1911:
"The great monopoly in this country is the money monopoly. So long as that exists, our old variety and freedom and individual energy of development are out of the question. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men, who, even if their actions be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who, necessarily, by every reason of their own limitations, chill and check and destroy genuine economic freedom. This is the greatest question of all; and to this, statesmen must address themselves with an earnest determination to serve the long future and the true liberties of men."

This of course was said before he himself sold out to the Federal Reserve ...

McConnell’s plan to give Obama the power to raise the debt limit — more D.C. game playing and real work avoidance?

Here's what Robert Reich has to say,

"McConnell’s plan would allow the President to raise the debt limit. Congressional Republicans could then vote against the action with resolutions of disapproval. But these resolutions would surely be vetoed by the President. And such a veto, like all vetoes, could only be overridden by two-thirds majorities in both the House and Senate – which couldn’t possibly happen with the Democrats in the majority in the Senate and having enough votes in the House to block an override.

Get it? The compromise allows Republicans to vote against raising the debt limit without bearing the horrendous consequences of a government default.

No budget cuts. No tax increases. No clear plan for deficit reduction. Nada. The entire, huge, mind-boggling, wildly partisan, intensely ideological, grandly theatrical, game of chicken miraculously vanishes.

http://robertreich.org/"

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Our tax dollars at work! More like our tax paid representatives — shirking, not working.

It's not whether you win or lose... It's how you play the game.

Grym

I believe the President, under law, has the power to safeguard the financial health and credit of the country regardless. Of course he IS a politician and so far has failed to take even simple steps without the cloak of "bipartisanship" which is the code word for "chicken$hit".

However, since the debt ceiling is really about covering debt payments on previous congressional spending, it should never been falsely tethered to the budget discussions in the first place. The debt ceiling is past spending, the budget and taxes are the future.

This plan, if it is a plan, will put all the pressure right where it needs to be right when it needs to be there.....on CONgress right before the coming election.

I couldn't think of a more deserving punishment, although it means I will have to turn off my TV for a year to avoid hearing all of the insane hyperbole, lying, obfuscation and idiotic exaggerations of misplaced incompetent lawyers turned used car salesmen. They won't do it though, because in their little pea brains they think it will let the President off the hook, when in fact, it is *they* who are on the hook, at least for the argument. WE are the hook for the result, which isn't at all the place to be.

Bill,

Just a thought here. Any chance you might make this available to Kindle readers? You might increase some sales but also make it more accessible to a younger generation of traders who want to use their gadgets.

mayhem991 -

"I am old enough to remember 5 cent cokes, 20 cent packs of cigarettes and receiving $98.00 a month as a private in the Army."

If a Coke cost 5 cents back in the day and you made $98/month as an Army grunt (assume 40/hrs per week even though it was 168/hrs per week), you made 61.3 cents per hour which translates to just under 5 minutes to make that Coke.

Today, typical minimum wage is $7.35/hr for all our service industry jobs and a 24-pack of Coke is around $5 at Walmart or Kroger. That translates to just under two minutes to make that Coke.

Purchasing power and inflation are not the same.

When a local teacher asked his student from Zimbabwe if the $100,000,000,000,000 Zimbabwe note I gave him as a novelty could buy a Coke back home, he replied "No. Just the deposit on the bottle."

Purchasing power is relative to the value of local labor and a host of other factors. Currencies and gold are commodities as Armstrong argues in his latest essay. Just watch the most revered movie in Africa called "The Gods Must Be Crazy" to understand the mythical and hysterical value of a bottle of Coke to some. I've seen a truck fall over in Tanzania and dump its shipping container full of Coke converted into a store in the middle of the Serengeti Plain where the price was so damn cheap as to even to undercut that 5 cent price of yore. It's all relative.

Cheers.

Another angle to consider, that nickel Coke back in the day likely was made with cane sugar and came in a glass bottle. Nowadays you get some crappy high fructose corn syrup in an aluminum can or even worse, plastic bottle, and it tastes terrible compared to its cane sugar predecessor. Luckily I have a neighborhood grocery store and the guy just happens to stock the Coke in glass bottles imported from Mexico and sells 'em at a $1 a pop (no volume discounts however). What were we talking about again? :-)

NY Court Revives Ambac Subprime-Debt Suit Vs JP Morgan -Reuters

Jul 14, 2011 14:52:51 (ET)

DOW JONES NEWSWIRES

A New York State appeals court Thursday revived Ambac Financial Group Inc.'s (ABKFQ) lawsuit seeking to hold J.P. Morgan Chase & Co. (JPM) liable for losses tied to an investment vehicle that put money into ultimately toxic subprime-mortgage debt, Reuters reported.

Ambac, a bond insurer that has been in bankruptcy protection since November 2010, said it lost money on notes it had guaranteed for Ballantyne, a special-purpose vehicle formed to reinsure term life insurance policies.

According to Ambac, J.P. Morgan was the investment adviser for $1.65 billion of accounts that Ballantyne funded by selling the notes, which were supposed to provide reasonable income along with a "high level of safety."

But it said the big investment bank stuffed the accounts with risky subprime mortgages and home equity lines of credit. Ambac said the resulting loss left Ballantyne unable to make payments on its notes, obliging Ambac to make good on its guarantees.

In Thursday's ruling, the appellate division of New York State Supreme Court said a lower-court judge was wrong to dismiss Ambac's breach-of-contract suit in March 2010.

Not all old math gives us the same answers.

In 1971 I was a Journeyman clerk in the grocery industry making $5.75 an hour and on a good weekend gas was 25 cents a gallon to fill the Firebird. Reverse math engineering produces the following figures to think about. Gas is 4 bucks a gallon today and making 5.75 an hour I had a man hour value in gas of 23 gallons an hour.

At the pump tonight I put in 60 bucks to get 15 gallons I would need to be a 92 dollar an hour employee if measured in gallons an hour and not soda.

How many grocery clerks from the 70's are pulling in $700 a day now? Although I must say if we count stocks been there done that many days. Although some other days it seems to be missing.

Interesting only for patterns..

BOB 47 -

"If China has 8000 thousand tonnes of Gold that would indicate that those that can should stock remembi , for it IS the new gold standard world currency."

This thesis has a lot of merit if China manages to accummulate another 7,000 tonnes without exploding the gold price. It is already said to be purchasing all the gold it produces out of the ground on the mainland. But buying on the dips will take a long time.

The race is on to establish the next financial capital as NY gets dethroned and the next reserve currency as the USD devalues to zero. I believe an asian port city will take the throne but there are three contenders for the next reserve currency:

(1) Remembi if China can accummulate the gold in time and unpeg from the USD and start trading in the open markets. It's underway on both fronts from what I've read.

(2) Euro if Germany remains and the PIIGS get the boot from the EU. That would make the Euro a powerhouse of production controled by the ECB.

(3) IMF's SDR as a global trade currency under the central bank's central bank. LOL.

As an American, this situation makes me sick.

http://www.telegraph.co.uk/finance/comment/ambrose...

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Patrick said: "Apparently the Bearded One was quoted on CNBC proclaiming there was no need for QE III at this point in time"

I was reading over at the MHFT a similar story; John Thomas is quite adamant that there'll be no QE3 any time soon. As he points out:

"For a start, with the economy growing at a feeble, lethargic 2% rate, there is just enough growth to make QE3 unnecessary. All of the liquidity injected into the system by QE 1 & 2 is still there, but has yet to be used. It is the “pushing on a string” theory with a turbocharger. That is why the Fed’s balance sheet remains at a lofty $2.8 trillion. Bernanke has to wait for the existing liquidity to be put to work before he contemplates the creation of any more"

http://www.madhedgefundtrader.com/july-15-2011.html

If I've understood Bill correctly, this is not about helping the economy. Liquidity is and always has been about keeping the banking sector afloat. I think it's the same story in Europe.

So by that logic it's the write downs and reforms we need to see in order to believe that QE3 or cupcake or whatever is finished. Either way, the denial has worked and PM's rollover today. But after that massive run in gold, that's no surprise either. I understand why Bill would want to go investor with a long time frame, with all this whippy rumour and counter rumour action.

Would ideally like to see SLW hold above these trend lines of support. As always we shall see.

Uncle Buck continues to float around in a potential ascending triangle setup. I don't expect a clean break one way or the other. Something to continue watching.

"Traders are adding to bets Australia’s central bank will repeat its emergency interest-rate cuts of 2008 as the economy falters and concern intensifies that U.S. and European debt burdens will derail global growth.

The yield on December cash-rate futures was 4.345 percent as of 4:45 p.m. in Sydney. That implies the Reserve Bank of Australia will lower its benchmark of 4.75 percent to 4.5 percent by year-end, and a 41 percent chance of a reduction to 3.75 percent. Ten-year government bond yields fell the most this week since since December 2008." (more)

http://www.bloomberg.com/news/2011-07-15/traders-s...

I've been following Labor's proposal for a carbon emissions scheme and it sounds like a boondoggler of taxpayers money, taxing 500 big carbon emitting companies and passing on the money as assistance to 90% of householders. Another wealth transfer scheme. Nice propaganda as follows:

http://www.getup.org.au/campaigns/climate-action-n...

I've come to understand that energy must be taxed at the source if we want people to truly understand the price of carbon. Won't happen of course - showing voters the real cost of energy would have politicians losing their heads. And like Europe, which is implementing its own carbon emissions scheme shortly, I suspect that this new tax will be useful in re-implementing trade barriers and other protection in the name of a 'level playing field' as this unholy monetary and financial mess unfolds over the next 5-7 years.

Don't ask me why the biggest carbon energy resource economy on the planet wants to implement this scheme, I just work here.

Hey Bill,

Do you ever or actively trade Gold or Silver Futures? The volatility is crazy, but you seem to have a knack for predicting the short-term direction which can be quite profitable. It's probably not your game, but I was curious about your take on Futures as a vehicle to increase capital.

Thanks,

GH