Bill Cara's Blog for May 26, 2011 [See Post-Close report]

but waiting for the jobs report, could be a fakeout/breakout for Uncle Buck.

http://www.finviz.com/futures_charts.ashx?t=DX&p=m5

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UDN is the Euro weighted dollar bear and it shows a head and shoulders pattern that is the inverse of the UUP inverted H&S I posted recently. Strong support and it doesn't want to follow through obviously. Paper beats rock.

Reminds me of one of the market wizards Schwager interviewed 20 years ago, who said that the normal breakout patterns/strategies are increasingly fakeouts. 20 years later, just as true.

Thank you for this comment. I find currency relationships intriguing.

"UDN 1.40 Euro corresponds with 28 UDN...Someone has orders to defend it"

increase from 409k to 424k

http://fidweek.econoday.com/byshoweventfull.asp?fi...

GDP estimates unchanged, still 1.8% for Q1

http://fidweek.econoday.com/byshoweventfull.asp?fi...

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took TZA while it was green and getting out. Market is pulling my chain. Got other things to do. 6eme kyu exams for Aikido tonight. $ continues to weaken. No setup here.

(US) FDIC's Bair: Worst is over on the economic cycle, very few firms will be labeled as systemically important
- Greatest threat to the economic security is the Govt's inability to control debt levels; Congress must raise the debt ceiling

http://www.heritage.org/Research/Reports/2011/05/S...

Euro vs US Dollar Euro off its session highs following Juncker comments that IMF might not release the next tranche to Greece in June

If that happens, will be a clear signal that Greece is a lost cause (well, at least for those who still believe it's not)

There is more in the store, Bill... comments take this increasingly ominous tone:

(EU) ECB's Gonzalez-Paramo: Feels Spain has some issues that must be resolved; Regions in Spain should aim to meet their deficit targets to calm investors

Bank of Ireland (IR) Ireland Fin Min could force losses on sub debtors in a junior debt for equity swap scheduled for tommorow - financial press
- Losses could be forced if some debtors refuse to take the offer

(GR) IMF: Affirms cannot lend without financial assurances from EU partners on the Greece loan program
- Discussions in Greece will center around fiscal adjustments and ensuring no financing issues

ALOHA!!

I agree with a lot of what these guys at the Heritage Foundation talk about, but I completely disagree when it comes to US Treasury numbers and human action. They want retirees to give up one of their main sources of income, one of their main sources of staying alive month-to-month, which is their Social Security and Medicare. Fat chance that 70 million retirees will vote to starve to death or cut back to cat food. The two party political monopoly have made their bed with all these "cradle-to-grave" promises so they have decided it is in their best interest to not only take the rod and reel away from citizens but to hand them a fully cooked sauteed fillet of tuna(ahi)! The system died on the very first Social Security recipient who made a 92,000% return on her $24.75 investment. Imagine getting a 92,000% return in the 1940s!! The day voters found out they could collect more money than they put into Social Security was the day the end game started for America. That was back in FDR days so the precedent is set.

The Heritage solution falters on their tax revenue assessment. On the next Sound Money I will show a comparative study which reveals that total US Income Tax revenues at the US Treasury have been fairly stable between 2001 and 2011 running at an average of $1.28TRIL on a third quarter fiscal year basis. So hardly any variation in tax revenues averaged over a ten year period, yet we see US DEBT rising from $5.9TRIL in 2001 to $14.3TRIL in 2011, not to mention outlays(spending) have doubled and quadrupled on almost every line item the US Treasury lists on its daily statements over that same ten year period. Total 3rd quarter outlays for 2001 was $3.19TRIL compared with $7.5TRIL in 2011. So US DEBT according to US Treasury numbers has increased 240% in ten years while outlays(spending) have increased 235% in that same ten year time period. Wow ... I think I see a correlation there! Clearly debt and spending rise at the same pace while revenues remain static. What tax payer will agree to an across the board combined tax increase of some 500% so we can just barely "pay-as-we-go"?

The real and only issue the Heritage solution bypasses is our monetary system. To try and solve economic and fiscal issues with a corrupt monetary system that has corrupted every US citizen's morals since 1913 is like trying to fix a leak at Hoover damn with duct tape! Come on ... even the data most economist use to conjure solutions is corrupt! Human action will prevail as every human on Earth seeks to fill the "monetary value" void of a corrupt global monetary system based on debt.

ITS THE MONEY STUPID!

I started a few positions a few days ago and so far so good. Am I the only one here?

BTW, here is a recent sound bit from Faber:
“You have to prepare for the next war, and, in war commodities go ballistic.” - in Ira Sohn investing conference, Wednesday

Edit: I'm thinking about adding to my positions.

Ok, the economy sucks. Will it continue to suck and get worse? Why is anyone buying 10-yr treasuries for 3%??? With inflation, you are barely breaking even (if you agree with the gov't stats). If you live in the real world with prices going up faster than 3%, you're not even treading water for the next 10 years. Can anyone 'splain this to me so I can understand???

How does direct deposit figure in to this?

What happens if "debit type, pre-loaded, reloadable salary cards" make physical paychecks obsolete?

Down over 2% this morning. Storage injection higher than expectations?

Keeping an eye on the LNG exporter-to-be(LNG):

On May 20, 2011, Cheniere Energy Partners, L.P., a wholly owned subsidiary of Cheniere Energy, Inc., issued
a press release announcing that its subsidiary, Sabine Pass Liquefaction, LLC, received an order from the U.S.
Department of Energy with authorization to export domestically produced natural gas from the Sabine Pass LNG
terminal as liquefied natural gas to any country that has, or in the future develops, the capacity to import LNG and with
which trade is permissible.

COST - estimates lowered at Morgan Stanley. COST estimates were cut through 2013, Morgan Stanley said. Company is facing higher LIFO charges. Overweight rating and $90 price target.

JNJ - numbers raised at UBS. Shares of JNJ now seen reaching $75, according to UBS. Estimates also increased, as the company can generate better organic growth in the coming quarters. Buy rating.

Vad,

"I am pretty sure the same chart will look very differently if created by left-off-center and right-off-center organizations."

I'm sure this is true.

BUT projections that are not biased to the left or right are most reliable.

"The CBO was created as a nonpartisan agency by the Congressional Budget and Impoundment Control Act of 1974.
With respect to estimating spending for Congress, the Congressional Budget Office serves a purpose parallel to that of the Joint Committee on Taxation for estimating revenue for Congress, the Department of the Treasury for estimating revenues for the Executive and estimates required for the Congressional budget process. This includes projections on the effect on national debt[2] and cost estimates for legislation."

http://en.wikipedia.org/wiki/Congressional_Budget_...

These government numbers are getting more and more fictional. I'm thinking that someone should make a FOIA request to see how the BLS selects its deflator for GDP and publish what they find.

Its a wonder the government ever reports recessionary numbers. Its so clear to me now why inflation numbers have to be minimized. The government can keep taxing the unsuspecting savers via inflation, and at the same time it makes the economy look much better than it really is.

But don't you try this Dave!!!
If YOU do it it's called fraud or a 'ponzi scheme' and you go to jail. When the government and their bankster masters do it it's 'inflation'.

The government ponzi scheme goes even further. It makes actual bankruptcy look like progress. We don't have savers! We have debtors and you've identified why. Why save when you lose wealth (purchasing power/value) saving? With inflation in some cases as high as 25% (gas/food/consumer non-durables) it's a bargain to borrow at whatever the CC's charge and use your 'income' to maintain the debt payments.
If you don't spend it now it turns to wooden nickels. And they wonder why we have so much private debt? Why? Compound interest is DEAD. Debt is the choice they give us, unless you have something to trade with, and you better be good at it, because even with gains you are swimming upstream against taxes and devaluation. And they have the gall to call Madoff the biggest ponzi scheme! Madoff was a pathetic amateur compared to our government, the US Fed and the banksters.

IMF: Sees $160B in external financing needs for Middle Eastern, North African oil importing nations in the 2011-13 period
- Sees Egypt's fiscal financing needs around $9-12B in FY11-12.
- IMF can provide $35B available to Middle East, North African nations.

The reality is that people have been calling for the death of checks for decades and that hasn't stopped people in the US from still writing them. Between birthday and occasional gifts, payments to handymen/house workers, wedding/baby shower/etc gifts, people are still writing billions of checks (approx 20 Billion a year still).

What are people going to do when they send money to a friend/family member for their birthday in the future? Do people really expect people to send a card with a picture of an email saying "money sent"..check your account? Maybe over time it could but I don't think it will.

Craig - I think that's already in existence between paypal / hallmark...

I had posted a while ago in 2010 about CAAS. China Automotive.

http://bit.ly/acMB7w

All the annotations are a yr old. I think it can go lower still. but has found some near term support here.

$4-6 range maybe?

Details Emerge Of Fed's Emergency Bank Loans In 2008 -Bloomberg

Three major financial firms -- Credit Suisse Group AG (CS), Goldman Sachs Group Inc. (GS) and Royal Bank of Scotland Group PLC (RBS) -- each borrowed at least $30 billion before and during the 2008 crisis from the Federal Reserve through an emergency lending program, Bloomberg News reported Thursday.

Details of the Fed program weren't previously disclosed to the banks' shareholders, Congress or the public. They were included as bar charts disclosed March 31 by the Fed in response to a court order in a Freedom of Information case that reached the U.S. Supreme Court. The high court rejected an industry group's attempt to block the disclosures, which had been sought in lower-court lawsuit against the Fed by media outlets including Bloomberg News' parent, Bloomberg LP, and News Corp. (NWS), which owns this newswire's publisher, Dow Jones & Co.

Single-tranche open-market operations, or ST OMO, was an $80 billion initiative that made 28-day loans from March through December 2008. That period was marked by declining confidence in credit markets worldwide, including the mid-September collapse into bankruptcy of Lehman Brothers Holdings Inc.

Units of 20 banks were required to bid at auctions for the cash, Bloomberg noted. They paid interest rates as low as 0.01% in December 2008, when the Fed's main lending facility charged 0.5%.

Congress overlooked ST OMO when lawmakers required the Fed to publish its emergency lending data last year under the Dodd-Frank regulatory overhaul law.

"I wasn't aware of this program until now," U.S. Rep. Barney Frank (D., Mass.) told Bloomberg. Frank was chairman of the House Financial Services Committee in 2008 and he co-authored the legislation enacted in July 2010.

Spokesmen for Goldman Sachs, Credit Suisse, Deutsche Bank AG (DB) and Barclays PLC (BCS) all declined to comment.

I wouldn't believe Frank, the SEC, CIA, or PAULSON for one nanosecond!
The corruption is so far out of control that people are helpless to even hope for any change.
Didn't people just finish voting for change?

Hi Team, I've been watching this since you first mentioned it a while back. The chart sure looks nice. Very interesting story.
Regards
Earl

For those who might be interested, the current I.I. reading, according to I.B.D. ( which might be deemed, by some folks, as the newsprint equivalent of Fox TV ) is 43% bullish and 19.4 bearish. Interesting that the bearish reading remains at a relatively low level. Anyhow, no interpretation here... just thought I would put it out.

http://www.youtube.com/watch?v=giKXKNqDaUM

We all fell for it. Barbra sings it loud.

Just wanted to let people know I made a few upgrades to the site tonight, so if you see any problems pop up in the near future, let me know so I can figure out what I broke! Thanks!

Jeff

GBP/USD, after Bill remarked on the UK banking downgrade. See attached.

http://www.finviz.com/forex_charts.ashx?t=GBPUSD&t...

USD/CHF, potential db.

http://www.finviz.com/forex_charts.ashx?t=USDCHF&t...

It's interesting to see that the commodity currencies like the Australian $ and the Loonie are still well off their may highs. It suggests to me that risk is still off in the global marketplace.

The four weak currencies are left jockeying between themselves, pouting and pretending to be something they're not. Unfortunately for me, Uncle Buck is getting the living daylights thrashed out of it at this point.

Gonna get my head served on a platter soon if I don't change my market position. Dropping the TZA trade premarket due to lack of setup was good. Taking up a new short position and fighting the tape all the way to market highs into EOD was not good. Doubling down at EOD and I'm putting my head in the noose. Let's see today.

JOHN DVORAK'S SECOND OPINION

BERKELEY, Calif. (MarketWatch) — The ludicrous action from LinkedIn Corp.’s initial public offering shows that investors want more small-company IPOs. Any company that can manage to go public in the face of onerous Sarbanes-Oxley regulations should do well, since there are not enough of these things to satisfy the market’s appetite... Unfortunately, this pent-up demand will exacerbate the nuttiness and create a mini-bubble that could ruin the tech sector forever. This wouldn’t be the case if there was a steady stream of IPOs rolling out all year... Let me first acknowledge the naysayers, who will point out that my vision of the way things ought to be is exactly what resulted in the dot-com crash of 2000-01: You are wrong... LinkedIn's bubble-icious deal was a treat for the company, its executives and investors. But the IPO also was welcome news for LinkedIn's would-be rivals. Digits take a look at the growing importance of the social graph to both established and wannabe job sites... The fact is that we’ve always had a healthy IPO market, and in the late 1990s the emergence of the Internet as a force resulted in the kind of fever that in turn resulted in the dot-com boom and bust. I think we are over that by now; I hope so anyway... I have to question the suggesting that there is a healthy IPO market in the US, although I am by no means educated on the subject. Armstrong suggests that US IPO's as a % of global IPO's is now only 5% - companies are going public elsewhere... But if this IPO is any indication, then punters are going to be fleeced 10:1 bidding ridiculous sums for soon-to-be-bankrupt networking sites for every 1 Amazon or Google that may turn out to be something bigger. And at the prices paid for LNKD on its first day you could be waiting 15 years to see some sort of return on your money... (more)

http://www.marketwatch.com/story/linkedins-ipo-cou...

Dvorak says this and yes another bubble is forming. To me it just sounds like a Wall St. scam. LNKD was massive, all IPO green lights go for hoovering up the sheeple's money. JMO.

"Ignore the 3%. I doubt v. many are buying for interest — buying out of fear, or like me, for the trade."

Yeah, agreed. It's just when you take a step back and analyze the fundamentals of the trade, it seems insane. Using it as a short-term instrument to make money is smart. One day, some day, maybe, it'll reverse the insanity.

Les,

Thanks for letting me know. I believe that is a harmless message, but I'll see if I can track it down this weekend. I skipped a few upgrades that looked unimportant and likely to break things, but it's possible one of those causes the message you see.

Jeff