Bill Cara's Blog for May 23, 2011 [See Post-Close report]

Spiegel pulling no punches with an EU heavyweight.

http://www.spiegel.de/international/europe/0,1518,...

"In a SPIEGEL interview, Jean-Claude Juncker, the prime minister of Luxembourg and president of the Euro Group, argues that Athens isn't bankrupt and that is is still possible for Greece to emerge from the crisis. He also states that the "nervousness" of financial markets makes it difficult to adequately and correctly inform the public.

SPIEGEL: Mr. Prime Minister, you are a Christian Democrat and a Catholic, which is why we want to talk to you about the Ten Commandments.

Juncker: I already have an idea of what you are getting at.
SPIEGEL: Are you familiar with the Eighth Commandment?

Juncker: Of course. Thou shalt not bear false witness against thy neighbour.

SPIEGEL: Apparently you don't take it very seriously. More than two weeks ago, you denied a report by SPIEGEL ONLINE about a secret meeting of several European Union finance ministers to discuss the situation in Greece, even though the official limousines were already pulling up in Luxembourg..."

QE TO INFINITY & BEYOND

"Outstanding interview with one of the good guys – Jim Grant. It ultimately comes down to how long Bennie waits to implement QE3. Not if, but when. Bennie is the stock market. I think it will drop 10% by the end of June. It will drop another 10% by September. The economy will be back in official recession. I think Bennie will pull the trigger on QE3 by the end of September. Jim Grant sees 10% inflation on the way. Bennie will not stand for deflation, but he can’t control inflation."

http://www.theburningplatform.com/?tag=jim-grant

Grym

Wow, Les. What an interview. Thank you for the link...

SPIEGEL: With all due respect to your restraint on the question of restructuring, what happens if we're sitting here again next year and conclude that Greece is still not on a stabilization course?

Juncker: If the donkey were a cat it could climb a tree. But it is not a cat. Nevertheless, this is a question that worries many people. My answer to it is almost a little theological: I do not believe that this question will ever be asked.

If the donkey were a cat? Would he have long ears? Would his nose grow if he told a lie? Remind me what a male donkey is called...

Would like to learn more about Luxembourg. Here's a couple of facts from VisitLuxembourg.com:

Bank on It
• Luxembourg residents have the highest income per capital of any country in the world.

• Luxembourg has the greatest concentration of banks in the European community. More than 220 banks, along with the European Investment Bank headquarters, are here.

Interesting...

Along with the typical wipsaws and short term reversals that occur with expiry of options and futures this week, we have the G8 leaders meeting France and the upcoming Memorial Day long weekend.

Look at Cheniere Energy, spiking up again today (+20%) after Friday afternoons jump(+30%). Granted, US DOE approval for exporting liquified natural gas is a big deal, but 50% spike in a company whose earnings have fallen short for numerous quarters, significant level of debt and earnings from this approval five years out, makes one wonder....just animal spirits?

Les,
Many thanks for the advice. I would wait for a dip, but the charts are very constructive since a week ago. The ratios I follow (GDX:GLD, SLV:GLD, etc) and general sentiments ($CPCE) do seem to suggests we are are bottoming or bottomed already.

BTW, it hurts to see the UNG pop right after I was stopped out from UNG calls. Things like this discourage me a lot.

What pop are we talking about JB? The one today or the big sucker at the beginning of May? Just curious.

UNG is up 6% in the last 2 days.

I was stopped at 10.6 or so.

That's what I thought. Here is how I saw it. Your philosophy is right, just sounds like a mechanics-of-trading issue. In this case, buying the break out of the 5 dma might have been the go. But a check of this chart would have held my hand from selling had I been in your shoes, because of the bullish divergence at the stop price. Stops are good to keep but chart setups like this are good for exposing market rinses. Perhaps a similar chart could help you. Vad's got plenty of material to help out as well. FWIW

IPO lockup expirations for June 2011:

TICKER IPO Lockup Expiration Date
WITE 6/1
CTP 6/6
DANG 6/6
LEDS 6/6
TRGP 6/6
YOKU 6/6
BONA 6/7
LAS 6/8
MOBI 6/8
FLT 6/13
GCAP 6/13
ISS 6/13
RNET 6/13
WD 6/13
SWFT 6/14
FRF 6/15
QRE 6/15
VTUS 6/15
OSN 6/20

Insiders can sell.

Does that mean there are no shares available to borrow either before the lock-up period ends?

Lock up period ending is key to see if new IPOs will hold up after insiders can sell. You can short before then, but it is often hard to find shares to short. If it is a popular stock like dang often times you will see sell of two weeks before and the volitility on the day it is unlocked. Poitive price action after unlock period could signal the beginning of a momo stock.

Thanks Vad, Bobbyo.

Yeah, that's what I was thinking. Until insiders can sell it's going to be hard to borrow.

ALOHA!!

I wrote about farmland in Sound Money a few weeks ago ...

Now we have Shiller saying that he is only bullish on farmland over the next ten years.

With the exception of farmland, investors should keep their expectations for investment returns low for at least the next 10 years, according to Robert Shiller, an economics professor at Yale University.

Speaking during an opening session of the Investment Management Consultants Association's conference, Mr. Shiller said he expects stocks to gain a mere 2% to 3% annually over the next decade.

In his presentation, Mr. Shiller, well-known for his S&P/Case-Shiller Home Price indexes, illustrated how farmland participated in the real estate bubble from 2000 to 2005, but did not fall as much over the past few years.

“My only bullish call is farmland,” he said.

I disagree with stock market returns as I believe overall there may be lesser returns but specific corporate stock certificates will act more like money than a USD, so long as PP&E/Debt is better than 1:7 ratio and revenues are based on more global sources and do not have a business plan that overly depends on OPD(other peoples debt)like banks. Once again I also like to play the PM junior sector on a long term basis using the leverage from private placements, which has been outperforming the S&P since 2003 by over 500%.

"I have no idea where the price of gold is going, but for me it doesn’t matter. But if George Soros is selling while your grandmother is buying, you have to wonder who’s more likely to get hurt. The point here is that it (literally) pays to consider that the time to bet on gold was 2007. At this point if you are counting on the gold under your bed to fund your retirement, things could get very ugly."

I know, I know I am on an island to myself on this sight, but there is a few others like me. I guess us gold haters are just idiots.

http://bucks.blogs.nytimes.com/2011/05/23/gold-is-...

... toward confiscation.

"Make no mistake, the provisions of this Bill, under the pretense of supposedly helping to protect future retirement benefits, are really making it more difficult for people to gain access to what is supposedly 'their assets.' If this Bill becomes law, it will be one more step toward putting private retirement plan assets under the control of the US government." - Patrick Heller

http://tinyurl.com/3z5f4bu

Dagnabbit.

Edit: Sure would make the mutual fund industry COLLAPSE.

Chief? I'm not a native american and I am not in the navy. But hey I will take it. So you are saying I have two investment choices? A rock that sits in the vault and does nothing or a junk bond from an insolvent bank that is guaranteed by an insolvent government.If that were so I think I would be looking for some farmland.

bobbyo -

Okay, chief, are you using barter or have you got an alternate currency when yours goes hyper? Gonna starve waiting for the corn to grow in the dead of winter.

Chief, by the way, was not meant to imply you arwe a native american nor a Chief Petty Officer of the U.S. Navy. I'll just assume you're a Cajun gator hunter and call you out with a colloquial french term of endearment like boobyo. Wee golly!

I think Dr S is cranky because the value of his big pile of PM is not quite where it was a few short weeks ago. I could be wrong - but I don't think I am. :)

Interesting note. I wrote some SLW puts a few weeks back, after which SLW promptly went down. I bought them back this AM on first hour SLW strength. Even though SLW itself was down $2.50 from where I wrote the puts (and the puts themselves were $1 in the money), the decline in volatility over the two week period was so dramatic I ended up making a small amount of money. I really love put writes - if your call is only moderately wrong, and implied volatility is high, simple volatility decay and the loss of the time premium can often end up rescuing you.

Luggie,
Great article. Seems the stuff you flush may even have more usefulness than gold.

Dr S -

Hey pal I didn't say you were losing money. I just said you were cranky because you didn't get out at the top. :)

and probably the outlook for the stock either...

http://on.ft.com/lHVZO3

Chinese metal demand has already returned with the SHFE-LME copper arb opening again.

Renewable Bio-Batteries

Amazing! When buying the farmland we may also need to go prospecting around the outhouse ;-)

Grym