Bill Cara's Blog for Mar 22, 2011 [See Post-Close report]

Submitted by Grym (3236 comments) on Tue, 03/22/2011 - 07:15 #82055 (in reply to #82046)

All of your comments are so disturbingly true.

Check out this article to see one of those 25 (GE) who control the US job situation with the aid of Congress's globalizing of America. Treatment of His Majesty, Jack Welsh on GE-owned CNBC makes me gag.

Where America's jobs went
In a globalized economy, American corporations are rapidly shifting their workforces abroad

http://tiny.cc/nw0qq

Les,

I think saying it is used as a starting point for wage negotiations is a bit anachronistic. Have they not heard of the deep cuts to public sector spending? These days you count yourself lucky just to have a job. Expecting to be compensated for inflation is a thing of the past. What planet do these journalists live on?

(US) Fed's Fisher: Does not believe that the role of the USD as a reserve currency will change, although US officials need to ensure confidence

unless by ensuring confidence you mean cutting dollar's valuation in half, yeah

- Reiterates danger of Fed monitizing the debt, warns would lead to economic destruction.

I thought they were not going to monetize debt anyway, why the warning?

- US housing to stay depressed for some time to come

but in 2007 your chief said... oh, never mind. As a traditional hero of Russian jokes, analog of Little Jonnie, ones said: And these people forbid me to pick my nose??

Sarcasm Mode Off

Vad, you've just highlighted the danger of telling too many lies - namely that to remain credible the lies have to be consistent over time. Those of us that have a memory better than the average saint bernard will recall that Bernanke said quite clearly in his 60 minutes interview, "we are not monetizing the debt" and now we hear that Fisher reminds us that there is a danger when we monetize.

In Egypt the government fell after enough people got disgusted. In China, they call it "losing the Mandate of Heaven" - one of those colorful Asian phrases that effectively places the stamp of legitimacy on a successful revolution. Clearly if you lose the revolution, that means you lost the Mandate of Heaven - an amazingly practical bit of spiritual practice.

http://en.wikipedia.org/wiki/Mandate_of_Heaven
"The Mandate of Heaven postulates that heaven (Tian) would bless the authority of a just ruler, as defined by the Five Confucian Relationships, but would be displeased with a despotic ruler and would withdraw its mandate, leading to the overthrow of that ruler. The Mandate of Heaven would then transfer to those who would rule best. The mere fact of a leader having been overthrown is itself indication that he has lost the Mandate of Heaven."

Someday, hopefully soon, the Fed will lose the Mandate of Heaven. They are already well down the road of monetary despotism, pillaging Grandma's savings while raising her cost of living all in order to provide their TBTF banks their shocking interest rate spread, massive executive bonuses for a job well done, perfect trading quarters, and the like.

Modest dollar rally off 75.50 causing some indigestion in gold & silver before NY open today.

You remember our last SPY chart with support at 125 and new resistance at 130, see the first attachment. Next chart - Current Battlefield Next Junction - shows nicely forecast bounce off 125 and hitting that resistance. It happened on lower volume vs. selloff's, so odds are slightly on the side of retreating, but not overwhelmingly - news events are still influencing market to the greater degree than normally. If SPY breaks 130, we are in very vague environment with no clear signposts.

PVM.AX, the Oz listing is down by 7% but I see the Venture listing up by a couple of cents. Fine, I'll take the 8% and buy back lower. After all, if the Oz listing drops so much without futures pressure, which have only arisen as the buck started strengthening at 8am, then the Canadian listing is probably gonna cop it too right?

So I sell at .72. No fill (I assume the exchange is open for trading premarket). Then the price drops to .71. So I cancel. Price returns to .72....

penny drops and I get the game. Someone wants to suck in buyers. They're not prepared to take my small offering.

Nice game fellas

http://read.bi/g9B25S

holding the SLW call and prepared to buy another if I see buyers regroup and taking it to higher levels. The $ appears to have competition for buyers interest this morning. Still holding USO puts.

Ready to change opinion on a dime if market dictates.

edit: USO puts dropped for 10+% loss on surging oil futures. long a second SLW call. long 100 shares of PSLV.

Portugal widening sharply (538bp, +41) ahead of tomorrow's crucial budget vote. Failure to pass will make things awkward at the EU summit

http://twitter.com/gavanNolan

Its weird to not see any opening gaps like we are used to.

Miners (BHP, RIO, etc.) are weaker this afternoon.

It's only AM where I live but I also noticed that FCX shows a true direction of the markets today as apposed to major indices that are hardly moving.

FD: FCX puts.

http://www.marketwatch.com/story/existing-home-sal...

Sales fell in all four regions-the biggest decline in the Midwest = 12.2%.
Median home price fell 5.2% to $156,100 the lowest since April 2002
Distressed sales rose to 39%
All cash sales rose to 33% (3X the average for 'healthy economy')
First Time Buyers of existing sales up to 34%

In short: a great time to get a few friends together and buy that distressed McMansion next to Rick Santelli and turn up the music!

"This store will take more from the local economy than it contributes. So much for economic recovery."

I guess I don't understand this comment. To me, that is called a profit and is necessary for doing business. I understand the part-time jobs aren't ideal, but it sounds like people were willing to take them just the same. If you put in more to the economy than you take, then it wouldn't it be called a charity? Maybe the problem is with people who would settle for $10/hr. instead of taking more initiative to find or make better income.

Tank fire has killed three Palestinians in Gaza.

Edit: (Egypt) Interior Ministry building has been set on fire.

Bluesky,

It's like this.

The big box stores require the absolute lowest price from their suppliers. 1/4 cent more on a package of screws back in 1990s kept my client from getting into K-Mart and Wal-Mart was even tougher. The company is gone from our city and so is the company who bought them.

With the possible exception of some fresh foods, virtually everything sold at Wal-Mart is cheap foreign labor imports.

As jobs leave Wal-Mart and other big boxes become the only place people on welfare or part time work can shop.

To top it off US manufacturing is still shifting jobs from here to China and others.

Twenty years ago we were a manufacturing center and a master machinist made $40 per hour. Now a manufacturing company has reported he can't fill jobs and some applicants have said, "Why should I work for you when I can make almost as much on unemployment?"

Now, you may choose to think they are lazy. Perhaps 99 weeks is too much "free money", but it tells me this company is paying about the same as McDonalds — or perhaps Wal-Mart.

For picture of Wal-Nart as an employer, read "Nickle and Dimed," by Barbara Ehrenreich and see what has happened to millions of Americans.

My son worked two part time jobs for over a year after using up his unemployment, finally found a full time job three years ago. Last year they laid off as many as they could without going out of business, cut health care to employees only — nothing for dependents — and cut his hours to 32 per week.

People are taking any kind of job just to eat. BTW, we have a record number on food stamps and at food pantries here in Illinois.

Grym

So what do you callit when you take out more than you put in? This is Wal-Mart and large mfg. like GE.

Where America's jobs went
In a globalized economy, American corporations are rapidly shifting their workforces abroad
http://tiny.cc/nw0qq

"Why should I work for you when I can make almost as much on unemployment?"

I just think there's a third option there. I swear we'd be better off by cutting unemployment down to 3 months. If people don't get tough, creative, and maybe even move if necessary, then how will anyone's situation get any better? People have to work to eat, and they have to do more than stock shelves in order to eat well. However, I would imagine the towns getting the new big-box stores are still doing better than those that the big-box stores decided to pass over.

I agree it's not Chernobyl, but it's not Three Mile either. I bet the severity will eventually increase to 6 with time. It's currently at 5, same as Three Mile incident.

Bluesky,

It's pretty clear you and nobody close to you — family or friends have been touched (yet) by the massive changes in the US economy.

"If people don't get tough, creative, and maybe even move if necessary, then how will anyone's situation get any better?"

I'll just give you a couple:

In my son's case he is buying his home. He started with 20% down. In 1993 he was earning $65k annually as a graphic designer. Last year he earned $23k.

The real estate sales in 2010 in his ZIP code were 19% bank repos. Houses are not selling and those people walked away. We are at 14% unemployment here. If you can't sell, have used all your savings just trying to survive, you can't even travel to an interview.

A lot depends upon personal circumstances. If you are young, single, well educated, have no house, and still have cash you may be able to do what you see as an out.

If you are 45 or older, have kids, a mortgage and have already used your 401-K (paying a 10% penalty — you have few options.

Big box stores are only a result of the job exports which I saw beginning in the mid 1980s. They have an advantage in a captive, clientele which grows as more jobs are sent off-shore. Job loss and decline in quality is the real culprit.

My own business evaporated with the decline and disappearance of my manufacturing clients. I went from a six-figure income to a low 5 and the last year before Social Security kicked in made 11% of the prior decade average.

My house is paid for, but increasing property taxes could become a problem.

Millions of people would rather be working who now have no chance and have used up the unemployment. Three months or 99 weeks — it makes little difference since there just is NO recovery.

Any job available around here draws many times the number of applicants. The guy looking for machinists is paying less probably because it's the only way to compete with cheap foreign labor. But qualified machinists were forced to take early retirement over a dozen years ago and there have been none trained since.

Grym

The boyz must be up to something...

"There is nothing inherently wrong and certainly nothing "illegal" about J.P. Morgan Chase (JPM) gaining a vault license for storing and taking delivery of gold/silver/platinum/palladium from the futures markets known as NYMEX/COMEX. However, the speed, timing and manner in which the exchanges just granted it troubles us."

http://tinyurl.com/4glkzvu

bluesky,
I know where MoKat is coming from. Last fall we motored down the east coast of Lake Michigan from Mackinac to Holland MI to take in the fall colors. What is distressing is realising the change from where it was to where it is now economically. Areas like Traverse City or Holland are looking OK superficially due to infrastructure spending, but beneath the veneer created by old ( retired people ) money, there is little productive activity ( i.e. wealth creation ) compared to 10 years ago. Places like Manistee and Muskegon are depressed rust belts with Main Street having as many shops closed as open. Vacant factories and shipping terminals abound. The high wage jobs have disappeared and retail looks like the only resort to find work....until the retiree money runs out. The Big Lie being put out by the administration about recovery isn't helping. Smart money is not going to invest in the future of America until the politicians come straight with the people, take back control of the Treasury, and start giving jail time to the banksters that brought us to the state we are in.

I'm flabbergasted. These guys just won't quit...

Sprott's silver fund (PSLV) just broke out to new highs today. I'm happy to be in just over $17. I've gone and taken what profits I made in the first 3 months and a few hundred bucks more and laid them in Sprott's redeemable fund. I'll keep that as a core holding now, unless the price of PM's shows serious signs of melting down.

SLW calls closing over 15% today. I don't expect silver shorts to just roll over and die, but certainly liked the buying pressure in futures as opex approaches.

JPM and its newly anointed vaults sounds really dodgey in this context.

I agree. The action today is similar to May 13 2010. Volume wise and otherwise.
While the story is compelling for buying the dip, I'm waiting for a second shoe to drop and produce positive divergence on charts.

FD: some assorted shorts in FAS, IWM, FCX, and EWJ with large long positions in GDX, INP and UNG.

Not that they did any good for America, but I don't think the lost 20 million jobs was caused by the bankers. The blame for that lies squarely at the feet of the politicians from both parties, who gave China all sorts of beneficial treatment, sending factory after factory, industry after industry, and even the machines from the shuttered factories, off to china. Add some blame for the likes of Wal-Mart, Target, Kohls, etc, who have virtually nothing on their shelves that is made here except food, and add to the blame list the great American consumer, who was so short sighted to buy those cheap Chinese goods, not realizing that the list of jobs lost would eventually include their own. Its an odd coincidence, don't you think, that if you took the monthly trade deficit of say $40 or $50 billion, and divided it by the 20 million or so Americans that would like a decent job, that you'd have $2000 to $2500 per month to pay each of them if we weren't sending that money overseas for imports instead.

Yes, it is a big lie. The paper money, the promise of Social Security and Medicare that we already paid for but will receive, TAXED, at a DEBASED value. The whole nation has become a big Ponzi scheme, dependent on the Federal government to spend money it doesn't have and can't borrow, and for the Fed to print that money to make it possible, and for America and the rest of the world to sit idly by, and still accept those paper promises, fully well knowing that the debts can NEVER be repaid.

I wonder how many years it will be before they admit the nation has been in a depression. I remember them announcing that the recession was over a while back, LOL. They might want to send news of that to the rust belt, somehow.

Thanks for painting that picture Geoff. It makes sense to me especially on the PM side of things.

In the commentary at the top of the page.

Ultimately it comes back to fiat money. When the only money was gold/silver coins, every time something was bought from another country, gold flowed from the buying country to the selling country. That reduced the supply of money in the buying country, and thus depressed economic activity in that country since the velocity of money was effectively fixed. This "depression" reduced prices and thus costs, thereby restoring competitiveness. I don't know how that discipline can be restored in a world of mouseclick money, but we see the same macro effect now with gold flowing from central banks of the west to those of the east, albeit cloaked in the accounts of the BIS.

Mentioned here, I think, and touted on Seeking Alpha by an ex-director with substantial stake, and now by me with a tiny stake. Its a new-tech battery company that's bought a factory and is doing contract manufacturing of old tech batteries to produce cash flow until the geewhiz stuff gets going. I think it has a pretty chart, moving up nicely from a long base, though it could still reasonably pull back to $0.80.

http://tinyurl.com/2fsabco

On a cloud of sound I drift in the night
Any place it goes is right
Goes far, flies near, to the stars away from here

Is there anyone not looking for a downside move? SPX 1350 sounds more like a magic carpet ride. Which is exactly where bear sentiment will take us.

It has been a rocky ride on PMI but worth it. It feels like a Rodeo stock. When it reaches 1 I feel I want to get off but it seems like it may be worth going long on. Having said that, IF Geoffs scenario above plays out PMI will take the dive along with everyone else.
Perhaps Kaimu has some thoughts on the volatile erratic price movements of PMI. Thats twice its jumped 30% in a single trading day and then shed alot of its price. Should we forget going long here and play the game as Les has noticed? Buy ay 0.6 region, sell at 1 region. Repeat.

Bill:
It was a great surprise to see your pink highlighted text. Welcome back to the world of trading. Hopefully I will be welcoming you back to the world of blogging in 3 weeks. Enjoy your "vacation", which probably means no more than 40 hours of weekly market research. I'm guessing you are many people's cup of Joe in the morning.

I don't want to play the game so much VB in that I would have been happy to play the price arbitrage in PMV.V had the bid of .72 been real. That would have been a near 10% gain and then buy back lower. Unfortunately the bid was a fake and the price arbitrage closed very quickly.

PVM.AX up .02 or 3% this morning. I don't want to be disturbed by the noise, just noting the games being played by the Canadian exchange.

Long 1k and deciding whether I want to be long more. I missed the all important dip to support at .55 recently. Another retest of that support would be great.

Dr.

Interesting to read how similar my experience is to others reporting here.

I see the taxpayers' revolt against public unions' extreme benefits as an encouraging sign. Michigan and Illinois (my state) along with others have been trying to balance the scales, but I see now that judges are intervening in both Wisconsin and New Jersey. (see Mish)
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Court Rules Gov. Christie's Budget Cuts Left N.J. Schools Unable to Provide 'Thorough and Efficient' Education
http://globaleconomicanalysis.blogspot.com/
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The issue is not that people are jealous of their cushy pensions (Well, not totally.) — it is quite simply what is impossible to support on part time or no jobs.

I'm stubborn enough to stay and wait for a tax revolt to emerge. Eventually, the realization that there is not enough money will dawn on enough people that change will occur.

Moving is a short term move which some must make, I'm sure, but wherever you go cannot hide the fact that the bill is now due for past utopian promises.

Before long I expect opportunities to invest in de-construction here in Illinois. Probably the same companies which where good during the building boom.