Bill Cara's Blog for Nov 19, 2010 [See post-close report]

I've been out in the woods for a couple of days, returning to find the silver surfer riding a big wave. Would be of interest to see silver chart right above gold, as the leading indicator. Silver tsunami to > $90?

http://tinyurl.com/26hlfyv
China Hikes Reserve Requirement Second Time In November
Date : 11/19/2010 @ 7:53AM
J

AIB - whoda guessed it is still listed in the US!

All this Ireland hoopla made me think of AIB. I'm a week late to the party, but the vol. price action is getting interesting. What's even more interesting is the weekly picture - a double bounce - see attached.

Looking to see if it has got the juice to keep on going today. This is flying crappola - no two ways about it - but if the music is playing... (Ireland is saved, all is well, yadda yadda yadda). DYODD. No position.

In accumulation mode right now.

But lets keep in mind that major sellings have 2 legs. Will the second one start after the Holidays?

FD: currently long

It allows the market to-

(a) Work off negative sentiment, and
(b) Shake off weak hands

As soon as they remove those two wheel blocks, the plane can taxi out to the runway.

comments remind me of Jim Baker's about the Germans in '87.

We know how that turned out.

And a Fed chair using his bully pulpit. Wow!

Damnit to hell, Now I know why there are so many drunks !!!!! Lord, give me the strength to keep my wits ( and sanity !! )..

http://tinyurl.com/2ga598b
Zero Hedge post
"With everyone speculating what China's actions may mean, we go to one of the few true experts on the world's most populous country - CLSA Chris Wood (author of Greed and Fear)."

"The reality is that, for now at least inflation ex-food remains remarkably tame based on CPI inflation data. Still the political sensitivity of food means the PRC is making executive decisions, such as imposing price controls on specific food items or threatening to lock up commodity hoarders. This makes investors nervous. Such measures have put a policy risk on the commodity stocks in the same way that policy risk has capped the Chinese property stocks over the past year and more. Still GREED & fear would use this correction to add to positions in Chinese bank and insurance stocks which would seem to be the beneficiaries of higher interest rates in China."

A pretty good article, I thought.
J

Long, short and in the ionosphere, moving this , world wide, jello bowl filled casino, with algo fighting algo, via warp-speed' Hal 2010 '... You go boys !!> http://www.youtube.com/watch?v=K-wJNpWgss8&feature...

absolutely I took my little profits this morning until I get a better hand on this I'm going to concentrate on 'not loosing what I have left'. best regards.
Earl

The US House of Rep voted down another emergency 3 month extension of unemployment benefits 258-154.
I think there are about 2 million households which will be affected by a loss of these payments. Happy holidays.

Maybe the unemployment rate will decline as the BLS will no longer count them as they drop out of the system, making
it appear QEII is working.

Bill mentioned this in his opening comments. Here is an article from class notes on a lecture by Michael Price. I remember when he worked for Max Heine and subsequently bought the firm from Max. He is a value player.

Courtesy of Greg Speicher.

The following are my notes from Michael Price’s lecture at the Columbia business school in the spring of 2006. I thought his remarks on how he values pharmaceuticals, how he uses the newspaper to generate investment ideas and how he sizes his positions were noteworthy. He pays great attention to publicly disclosed data in acquisitions calling it a treasure trove of information for valuing companies.

His Profile:

Michael F. Price is the 271st richest person in the world, according to Forbes. A renowned money manager, he learned finance as a $200-a-week research assistant under Max Heine. Mr. Price earned reputation for buying undervalued companies, and raising hell. He has often tussled with management of companies held in his portfolios. He sold Heine Securities in 1996 to Franklin Resources for $670 million. Now, Price manages the private firm, MFP Investors, with $1.6 billion under management, much of it his own money.
Bruce Greenwald mentions that Price helped train Seth Klarman when he worked for Max Heine.

Price thinks that the capital structure comes down to two things: 1) equity, where you own part of a company, and 2) debt, where you lend money to a company. Everything, in Price’s view, else has been invented by Wall Street to rip you off and generate fees.

He tries to boil down a potential investment to these two components to help him evaluate the opportunity. He tries to simplify things and focus on the essentials.

He likes to focus on the balance sheet and the notes to the financials. He is not interested in complex securities such as CDO’s. It is hard enough to figure out what is cheap and buy it. He tries to focus on the steak, not the sizzle. He tries to figure out the worth of the steak and buy it at big discount – $.60 on the dollar. He doesn’t like to pay anything for sizzle.

He does not believe that Graham’s net-nets are generally available, but they do show up from time to time. In general, you will wait a long time – perhaps too long, if you limit your investments to net-nets.

If you can’t find cheap stocks, you wait.

He gave the example of 3M that was doing well in 2006, but the stock had been knocked down from $90 to $70 because Wall Street was focused on how 3M was going to keep up its performance. My takeaway was that Wall Street’s focus on this type of superficial headline risk can make stocks available at a bargain (Mr. Market).

He doesn’t mind style drift if you are pursuing the best value available. The context here was that he usually focuses on smaller companies and special situations, but, at the time of lecture, a number of large caps offered compelling value not usually available.

Proxy Statements Hold Value

You must read the proxy statements because they reveal the self-dealing and cheating. The merger proxies also give rich data that you can use to do comparables of other companies. Price likes to compute intrinsic value using what smart investment banks pay for companies after doing lots of due diligence. This is a lot more meaningful than Morgan Stanley saying a stock should be trading at 17x earnings and you can buy it for 13x earnings.

To Price, when a businessman buys control of a business using cash or securities, that indicates intrinsic value. He does not approach valuation by discounting a stream of future earnings which he views as much too hard to do, nor does he use price-to-book or price-to-EBITDA, which he views as awful. You have to go to where there are transactions and see what companies are doing with their cash flows.

Read the merger proxies and bankruptcy disclosure documents which are a treasure trove of industry data. Typically many buy and sell side analysts are not going to read these documents. As an analyst and investor, you must read these documents.

The real way to make money is to do original research. This is different from inside information. Meaningful data from original research are hard to find. It takes getting creative – reading trades, going to court, talking to reporters, etc.

His mentor was Max Heine who did not like buying shares without voting rights. Price is sympathetic to this viewpoint. Two classes of stock can become an issue if the company is an acquisition candidate. You can buy two-class shares if you have high confidence in the management or family that controls the company. He carefully considers the incentives of the controlling parties. Are there 4th generation family members who are creating pressure to monetize their holdings?

On How He Reads Newspapers to Generate Investment Ideas

He reads the WSJ, New York Times and Financial Times every day. He also suggests reading trade papers such as American Banker. He loves the Lex Report in the FT. He is looking for examples of change – new management, restructuring, restatements, acquisitions, busted deals, lawsuits, etc. Also, he looks at who is wasting money on large ads. He likes to look at the worst performing groups domestically and globally. He looks at tender offer tombstones and dividend cuts.

You need to do your work when a stock starts going down on news so that, if it opens down a huge amount, you are in a position to buy – preparation meeting opportunity.

On How He Sizes His Positions and Trades Around Positions

He won’t buy unless he can identify value. He wants 3-5% in his top five names. He wants 2% in his next ten names and then 20-30 positions with 1%. With the 1% positions he is looking to build larger positions, because if he bought them cheap and they go down he wants to buy more. With the 5% positions – which is his size limit – he is looking whether he should leave them alone or bring them down.

He trades around positions where he has done the research and where the stock will do well over time. For example, if he buys 500,000 shares at $10 and the stock moves up, he won’t buy more. If it goes to $20, he might sell 100,000 shares. If the stock drops back to $11, he won’t buy more because it is not cheap enough. He’s OK with that because he has confidence based on his research that it will do well over time. You need to constantly re-evaluate if you want to be in a given stock; that is why you don’t want to have 300 names – it’s too many to track.

How He Values Pharmaceuticals

Value investors never traditionally looked at pharmaceuticals because they sold at high P/E’s. Price bought Merck when its stock price declined under the specter of HillaryCare.

To value a pharmaceutical company, he takes all the drugs they are currently selling, assumes an 85% profit margin, and does a discounted cash flow projection based on the remaining life on each drug’s patent. Ideally, you want to buy the stock at a discount to these cash flows and get the pipeline for free; this, according to Price, doesn’t happen very often. He noted that pharmaceutical companies have good balance sheets, the prospects of consolidation – because the industry needs it, and strong dividends that provide a floor for the stocks.

The investment business is all about having a point of view, after having done the work, and acting upon it.

Courtesy of Greg Speicher.

FWIW.

Lots of opinions out there. Here's another:

On Don Coxe's conference call today, he "supports what he's (Bernanke) doing."

He believes bank assets as % of GDP (1995 @53%, 2000 @65%, just before crash @85%, now @80%) are an "overhang threat." Coxe believes Bernanke is the "only thing out there preventing a double dip." (He does not believe we will have a DD.)

Coxe thinks Bernanke's critics are "too narrowly focused."

Dave M -

I'm of the opinion that the first real panic is yet to come. Wall Street banking cabal is running out of options. Insiders and acute observers know the accounting standards have been lifted and that the financial sector is FUBAR. Next step is QEIII with Ben holding his breath yet again in hopes that Confidence doesn't turn to panic overnight. This will play over and over until it does.

http://tinyurl.com/24ce6nx

Cheers.

Of course – excellent. And what I read reported somewhere was that Wal-mart same stores sales in the US are down 5 months straight.

I swear these games being played between bank entities come straight out of a futuristic gangster game I played when I was young. How surreal.

Picked up a little SLW for long-term account at 33.82 this morn. I noticed SLW strength in the face of wishy washy market action.

Holding those gains - this I'm less sure of. This market is nuts.

I agree - I'm not cut out for day trading, it does get under my skin. thanks.

natgas is no longer in contango for the first part of 2011 (http://shockedinvestor.blogspot.com/2010/11/attent...), so UNG is now, for the time being, almost a real ETF.

A couple of months ago contango was 15-20%, now it's zero for the first 5 months of 2011 or so (UNG has just finished rolling over its contracts, so front month does not matter).

UNG has responded kindly to it, and HNU even more, +22% in 5 days ( to compensate a tiny bit for the -99% in the last 24 months ;-))..

ALOHA!!

perhaps Kaimu will see a rise in welfare payments.

Believe me neither the DEMS or the REPS have any intention of ever alienating 2 million voters, much less watching CNN reports of unemployed food riots in major US cities! It's not good for the World Reserve Currency's image ...

I have already noted in the past the flow of welfare from unemployed people who run out of benefits rolling over into other welfare entitlements like food stamps, Food & Nutrition(F&N), Health and Human Services(HHS) and Temporary Assistance For the Needy(TAN), all line items reported daily on the US Treasury Statements for decades now.

Let me show you the cost progression from 1998 to 2010, using a two year interval. All these numbers are for the end of fiscal year(FY).

FY 1998
F&N-$13.7BIL
HHS-$37.7
TAN-$13.1

FY 2000
F&N-$16.6BIL
HHS-$45.5
TAN-$15.4

FY 2002
F&N-$17.5BIL
HHS-$58.3
TAN-$18.5

FY 2004
F&N-$23.5BIL
HHS-$71.1
TAN-$17.5

FY 2006
F&N-$30.1BIL
HHS-$73.4
TAN-$17.2

FY 2008
F&N-$45.2BIL
HHS-$80.5
TAN-$17.7

FY 2010
F&N-$87.5BIL
HHS-$99.2
TAN-$20.5

As you can see those who have been chronically unemployed for decades have already been migrating to the other welfare roles. Notice the huge increase from FY 2008 to FY 2010. The Food & Nutrition(F&N) line item almost doubles. Prior to FY 2006 these line items have been slowly but surely increasing. The Health & Human Services line item has increased substantially nearly $20BIL. My guess is that this trend will continue as even in the "good years" when supposedly everyone had an ATM machine on their front lawn(1998 to 2007)these welfare numbers were increasing.

We have 42 million Americans who can no longer afford food, that's one out of every 7.4 Americans walking the streets. Imagine what sort of riots would be happening right now if our government quit feeding these people. This is how socialism wipes out productivity. Its the whole TEACH A MAN TO FISH in reverse! The US Congress not only operates under mal-investment it promotes its use in society. How can any country compete in the global markets when its citizens can't even afford to eat? Mottainai to the max ...

The former SoGen trader conviction story brings back memories of the Goldman Sachs Group Inc. computer programmer accused of stealing the investment bank's high-frequency trading computer code.

I remember the first press conference by an Assistant U.S. Attorney when the programmer was missing and a fugitive. He said it was urgent to get the code back. Why? If the code ever ended up in the wrong hands, that individual or group would have the ability to “manipulate” the entire market.

It begged the question: “If one could “manipulate” the market, what is Goldman doing with the code?”

Soon thereafter, the AUSA withdrew or watered down his statement, indicating he misspoke.

Granted, the thief would not have all the same advantage Goldman has. After all, the holder of the code would not have access to the room where Goldman finds out what the Fed is going to do ahead of time.

ALOHA!!

In the face of lost unemployment benefits and a freeze in COLA we have this ...

LINK: http://johngaltfla.com/blog3/wp-content/uploads/20...

Extension of the Bush tax cuts now becomes the next big headline. Its November 19th...do you know what your 2011 tax strategy is?

As news dribs and drabs out of DC and the hand-wringing continues, I'm looking for more volatility and not necessarily a Santa Rally.

Year end position squaring is going to get more dicey than usualy this year.

The tape feels tired and heavy...time for some shock therapy!!!!

FD: Long DEC SPXU $22 CALLS (at the moment....). GL all you scalpers.

The company I call Ooogle was doing very well penetrating a market of 500M PC's, providing search and ads, then harvesting and selling information about users. With Android, Ooogle will soon be inside the OS of a few BILLION smartphones. (As the price of smartphone "smarts" falls to zero, who would want a dumbphone?)

If Ooogle controls the OS, and the user manages to use another browser, can't Ooogle still harvest all the info they wish from that phone? and sell it to a growing global market?

Imagine a 3rd world general who wants to plan a coup. Won't the Ooogleplex be the place to go, in order to learn the browsing histories and personal transgressions of potential opponents?

Will it go this far?

Hello all. Long time lurker and I thought I might give something back to the community with a trading idea. I like JACK long here going into earnings. Why? Because the market value of JACK is only 1.29B and they own Qdoba, a chain of tex-mex restaurants similar to CMG, whose mkt value is 7.16B. What happens if JACK announces a spin-off? JACK shoots through the roof. I don't see big downside on JACK shares, even if earnings are underwhelming. Do your own due diligence. I'm long.

cheers to all

Thanks for the info!!! I planned to unload my UNG calls ASAP due to the contango issue, but I guess now there is no hurry. I wonder if short squeeze in UNG is coming. A few days ago I saw an unusual gap in GAZ, I guess it could have been short squeeze.

Mr. Buffett, his recent pen might look a little different.... http://www.ritholtz.com/blog/2010/11/dear-uncle-su...

In the commentary at the top of the page.

by Zacks.. (from Yahoo message board ).. worth the read to all holding..best to you all..> http://files.shareholder.com/downloads/ASTM/107030...

Yes, Ross, the problem is that they are unable to even consider the concept that Americans, left alone by their government, could produce as much as they consume, and given that, can see no alternative but to keep those presses running FOREVER. The longer they keep us all unemployed and printing money to import everything, the more of us become DEPENDENT on their handouts.

I guess it makes sense that waiting for the axe to fall is an "anxious" time.

http://ronsen.blogspot.com/2010/11/how-do-i-get-be...

Is there an answer? Maybe the will to prepare?

http://coachingtoolbox.net/blog/john-maxwell-leade...

This show puts the lie to "the independence of the Fed". Timmy spends, and Ben prints to support it, funneling the money to his pals the bankers so they can pump the assets of the top 5%. "It's good to be king!"

These guys will try talking to keep things going, but the market will have the last say. Let's watch to see what it says.

Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation, according to people familiar with the matter...

In another aspect of the probes, prosecutors and regulators are examining whether Goldman Sachs Group Inc. bankers leaked information about transactions, including health-care mergers, in ways that benefited certain investors, the people say. Goldman declined to comment.

http://online.wsj.com/article/SB100014240527487041...

ALOHA!!

Continuing the theme of "debt ceilings" that have been going on since 1940, when FDR and the US Congress put in the very first one set at $49BIL USD. Seems odd that FDR would want to put in a "debt ceiling" right before America got into WW2, but by time WW2 was over the debt ceiling was $300BIL in 1945 an increase of over 610%. Right from the start the "debt ceiling" was a farce.

Now OBAMA and his Congress has raised the debt ceiling to $14.294TRIL, a +29,000% increase since 1940. So as you can see "debt ceilings" really do WORK! Well, they must be working because the US Congress keeps raising them, so imagine a US Congress without a debt ceiling to limit spending?

Let's kind of guesstimate when Obama and the US Congress will have to admit they need to raise the debt ceiling again. According to the current November 18th US Treasury Statement for FY 2011 the Treasury has a net increase in Public Debt of $226.832BIL since October 1st, one and half months ago. Currently the US Public Debt on November 18th is reported at $13.737TRIL USD, so that leaves the Treasury only $556.94BIL left to go before Congress hits the debt ceiling of $14.294TRIL. By my calculations we would hit the current debt ceiling in 3.8 months if the net increase in the Public Debt continues on the same path. So that is somewhere around the first week of March give or take.

At the current net increase rate of the US Public Debt how much will the US Congress have added to the US Public debt by the end of FY 2011? The answer is $1.815TRIL USD. That puts the US Public Debt that Congress will admit to at $15.555TRIL USD.

MORE ON DEBT ...

Perpetual debt is exactly that ... I have shown simply by the "debt ceiling" that we have been paying for perpetual Wars since 1940 and we as a Nation have had perpetual debt since 1836, 174 years ago, when 1836 was the last year America owed nothing to bondholders. With a track record like that what Chinese Communist Party member really thinks the US Treasury and the US FED have the have even the most "nano-intention" of ever paying down the debt?

While most of us spend a great deal of our waking hours earning a living we pay little to no attention as to how politicians in Washington DC and other US States are spending their waking hours. Mainly politicians spend their waking hours experimenting with new ways to appropriate your earnings and issue more debt. The issuance of debt lessens our Freedoms because added spending by government competes with the private sector for ever scarcer resources which in turn drives up the price of basic necessities. Nobody here buys a house every day yet we do buy food and water and electricity and use gas every day. That means the more Congress spends and debts and raises taxes the less time you have to spend with your family and friends, which means you have less Freedom to do as you please.

So how did we get stuck into this vortex of "perpetual debt"? The main cause has been War and military expenditures. Something that is rarely even considered these days even while we move into our eighth year of the WAR ON TERROR. Lets look back and remind ourselves of our debt origins. Here is an article written in 2004 right after we invaded Iraq in 2003. Remember what the Bush regime said about the WAR ON TERROR?

PERPETUAL DEBT: FROM THE BRITISH EMPIRE TO THE AMERICAN HEGEMON
LINK: http://mises.org/daily/1419

Do any of the currency or bond markets have any of this "War Stuff" priced in? I see absolutely no consideration ... Its as if none of it ever existed, yet the US Treasury bottom line wreaks of War debts.

Que todas las obras hasta que no ...

Kaimu said: "By my calculations we would hit the current debt ceiling in 3.8 months if the net increase in the Public Debt continues on the same path. So that is somewhere around the first week of March give or take."

Sounds good to me. That strength in SLW could well be a harbinger of fortunes to come if Washington keeps abusing this trust. I'd rather be investing easy style on sound fundamentals but if this is the game Nero junior and his senate wants to play - so be it.

Stepped into a couple of your plays on Friday Kaimu - PMV and GRR - I think they made a couple of percentage points before close for me. Hopefully some follow through Monday.

Will be up bright and early Swiss time to catch the end of the ASX session Monday. SRL is looking ripe for b/o.

bon weekend.

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

with its own ETF to boot, listed in November:

http://seekingalpha.com/article/235566-remx-a-beef...

Dave,

I agree. It seems to me the only ones listening are the media and politicians. I just hope enough politicians heard what we said a couple weeks ago, but am not confident.

Everything seems surreal:

Rangel's dog & pony show — he'll go on as usual.

Airport security — all eyewash.

The Fed & Treasury — a theoretician and a tax dodger running us into the pits.

Health care exemptions for the biggest and to heck with the people who hire most.

Hollywood couldn't sell tickets to a farce like this, but it's a continuous run on TV news. But, as you said the markets will eventually prevail. They always do.

Grym (I may change it to grim.)

ALOHA!!

Les-Given the increased frequency that the G20 are meeting one can only imagine what sort of words will be exchanged behind closed doors when the rest of the G20 hears the US Treasury wants to raise the debt ceiling to $17TRIL USD in March! I am sure that the other G20 countries have calculators and can figure out that the last debt ceiling was raised a combo of $2.19TRIL USD($1.9TRIL + $0.29TRIL). Maybe even the US Treasury will shoot for a wider cushion and go with $18TRIL ... Not much austerity going on at Congress! I am sure that Obama and Geithner and Bernanke make it known how the US military shoulders the greater burden of "policing the World" and in so doing we deserve a "free pass". After all we are the World Reserve Currency and how would it look if we had to face the same depressing austerity those lesser EU countries now face?

I would look for a very angry G20 when the next debt ceiling comes to be ... Its about the C WORD! AUSTERITY-BAD ... DEBT-GOOD!

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.-Ludwig Von Mises;The Theory of Money and Credit

SAVIENT , Has had its ups and downs recently . http://tinyurl.com/7ygy2 Bob .

That looks like one heck of a good index. Thanks.

"The market has been under pressure for the last couple of weeks due to rhetoric within the Fed and around the world about QE and because of the unwind of profitable trades set up for QE..."

http://www.bloomberg.com/news/2010-11-20/treasury-...

That's the first time I've heard trader straight talk on bubblehead media. I think we are all eager to see if the unwinding of profitable trades includes precious metals.

ALOHA!!

Ahhhh ... TRUTH ... It is what it is, literally, it is something every person on Earth must decipher for themselves. Although governments throughout the ages have done their utmost to define our TRUTH for us invariably they fail due to that most unwelcome visitor REALITY! Human Action is what it is and the great mistake government and the monied elite make is that they believe they can control Human Action. The fact that today they do not act like Mussolini or Kim Jong Il outwardly does not disguise the TRUTH that they seek the same ends, to control the masses for their benefit and for the benefit of their ideologies. They really do not care what I think and if it were not for the fact they need OPM to exist they would not care to even know my name.

The simple TRUTH is that these agendas of massive monopolies have discovered the best way to control the masses is through the issuance of "debt", their version of "money". MONEY is our life blood. It matters not if you are a drunk or the President of the USA you still need money to exist and if you do not work then you need OPM to exist. The fact that so many Americans are continually willing to vote for the appropriation of their hard-earned wages is astounding. Its as if citizens are saying, "Yes, I don't mind giving away 30% or 50% of my income to some stranger I never met sitting somewhere in an office in Washington DC!"

Now what if you as a tax paying citizen were submitted a "bill" each time the US military did something, kind of like a monthly electric bill only for the WAR ON TERROR. Let's look at that one example. At the low end of the FY 2011 Military Budget we have $1.06TRIL. Naturally we cannot send a bill to anyone who does not work and earn wages so babies and kids and really old people are out. That leaves the rest of us! I calculate the bill for each working American would come to around $7200 annually or $600 per month. Who here would send in their payment? Or would you start asking for the military budget to be cut instead? The TRUTH is very few of us could afford that extra cost to our already overburdened cost of living. Heck, I am already paying a "house payment" for HMSA here ... $950 per month for medical coverage for my wife and I and we hardly use it. That bill goes up every six months whether we use it or not! It goes up substantially too, not just a tiny bit ... a lot! Here ... I just got out an old check register from 2005 and my HMSA medical coverage was $618 per month, a $66+ per month increase every year since 2005. Next year I expect my HMSA bill to be over $1000 per month. Well, I already know people here in Hawaii who are paying over $1000 per month for medical. My HMSA is actually worse than a house payment since a 30 year fixed is ... fixed! So given "that" would those same people struggling to pay HMSA want to add another $600 for their monthly MILITARY BILL? Doubtful ... very ... extremely ... What is more important to our survival, Afghanistan or being able to afford to see a doctor when you are ill?

The fact is that the same "money and banking stuff" that Mises was writing about in the 1920s is the same "money and banking stuff" we suffer from today. So as we "humans" have taken "action" to improve our lot with various technology and education we have failed miserably to make one single change in our banking and monetary system in nearly 100 years that would provide us with a sound monetary system. By default a sound monetary system would lead to a much more sound political system. If one day politicians could not print debt at will to pay for their agendas then would not that change the face of politics? Imagine no US FED and its member banks dominating politics ... Real estate and commercial office prices in Washington DC would then look like Las Vegas the very next day!

He was writing silly truths, a philosophy of what should be instead of a critique of what is.

I disagree. What alcoholic in AA would be in AA without at least a faint vision, a glimmer, of what life "should be" without the next drink? Besides Mises was critiquing "what is" ... I'm not sure how you can have a philosophy of "what should be" without critiquing "what is" ... You'd have to show me that mental anomaly. You'd have to exist in a vapor of non-existence! HA!!

I simply believe that our monetary and banking system need to serve the masses and not Wall Street or DC. Money needs to be a long term "store of value" not a "destruction of value". You have been alive long enough to see the destruction and so have I. The fact that you have your critters on your Texas ranch is testament to your own survival skills, but as you sit there munching Texas Critter Burgers(TC the B) there are 42 million people in the USA who cannot afford to eat. If 2 million unemployed are cut off before Christmas then make that 44 million! Ever try to feed 2 million people? I spent four years trying to feed about 1000 people in Oakland,CA back in the 1980s just by taking the trash food that SafeWay was throwing out over to homeless shelters. Even with that those homeless people turned their noses up to baguettes and tofu! All they ever wanted to eat was sugar! In the old days people had farms to fall back on now all they have is debt. Might I say OPD(Other Peoples Debt)! A lot more are coming and so is the debt! Debt-o-rama ...

Buenas suerte ... Hide your critters if you can.

http://ronsen.blogspot.com/2010/11/sunday-morning-...

http://tinyurl.com/2u827rh NYT 11/19 Business Day - Economy
The above link and chart were 1st found at www.ritholtz.com
I found the 11/19 article interesting, but the US/Japan Core CPI chart caught my attention. Click on the attached link to see the chart, which contains more information than that seen in the article. The chart makes a good case that the US is following right along (at least rhyming) with Japan's experience.
I could have made the subject "Official In-De Flation" as we all know there are other charts and viewpoints.
J

The New Normal in TSA operations is alas an old normal of Washington.

A former TSA Secretary benefits from sale of these machines. Funnily enough, George Soros had a small investment until contacted by the media.

http://www.thenewamerican.com/index.php/economy/co...

http://www.youtube.com/watch?v=n6j_3-2fTxQ

Downloaded this one from Netflix last night. Based on a story by the late author Stieg Larrson. Awesome commentary on one of the greatest/oldest 'social equity' challenges we face.

'At his death in November 2004, Larsson left three unpublished novels that made up the trilogy. It became a posthumous best-seller in several European countries as well as in the United States. Larsson, who was disgusted by sexual violence, witnessed the gang rape of a young girl when he was 15. He never forgave himself for failing to help the girl, whose name was Lisbeth - like the young heroine of his books, herself a rape victim, which inspired the theme of sexual violence against women in his books.'

Thanks to the person who supplied the link to the Black Dub video. It led me to another of their recordings, one which combines a driving bass line with a stark upper-register single-note piano line:

http://www.youtube.com/watch?v=9_0zrd2u3uk&feature...

The market rocks into year-end, further surprises in January, then swoons briefly before breaching 1300 in the spring of 2011. Predictions just for laughs, but that's my take.

Zack,

This "security" process has been clearly stupid from day one.

Our national fixation on avoiding the simple and obvious measures to eliminate as many security risks as possible is an international joke.

Fear of insulting the most likely suspects has gone beyond belief. Last year our neighborhood branch bank had an attempted armed robbery. Helicopters were buzzing around overhead and a radio announcement warned people to be on the lookout for a "...suspicious man riding a bike and wearing a hooded sweatshirt."

I had just returned from riding my bike through the bank parking lot, wearing a hooded sweatshirt. An evening TV report added that the suspect was a black male.

Too late to be of much use to the citizens who were told there was armed and dangerous guy around and I no longer had to wonder if I would be visited by a squad car.

The internment of the Japanese during WW2 was going too far — now we have done a 180 and air security is 99% eyewash. I have not flown since 9/11 and have no need nor desire to submit to such asinine treatment by any government policy. I feel sorry for those who must. It should be resisted.

Les & 2nd,
I think we could "stagger up" from here. I'm more cautious and still concerned about the overall mkt reaction to the Irish bailout, then possibly for Portugal and Spain, possible more trouble in Greece; that said, it may be an understatement to say this market has had it's share of shocks and got over it. imho Econoday stats trending sideways or even a few less important down numbers can be absorbed and mkts move higher, as long as the more important indicators don't tend to the downside.

The latest Railfax shows metals traffic as a booming 42.9% for 11/13. Most categories are in the black with autos weak and food in the red qtd. Overall rail traffic is moving into it's cyclic weak period. BDI has bothered me, but it may be basing here, ready to enter a grudging uptrend. I don't see the mkt falling off a cliff, unless there is the proverbial shock, examples mentioned above. As Patrick mentioned in the CTA post-close report "Next week could be woefully dull, all things considered.", so mkt results next week are probably not decisive either way.

On Friday, Bill wrote "Traders ought to be more focused on the rapidly improving picture of corporate fundamentals, I think."

I am optimistic about the mkts, but not convinced of an imminent rally.
J

Grym,
Thanks for the chart. I have that chart, studied it and I find it quite valuable, but like other important things, it fell off my 'radar screen'. Thank you for putting it back on! ...and for the accompanying article.

This chart, which displays two quite similar patterns ~2007-2008 and ~2010-2011 could be viewed by some as proof of the approaching 'double-dip' recession if the Option Adjustable/Option ARM mortgages have the same effect as the Alt-A.

Initial reaction is 'good grief', another reaction is that at least this time, the political & financial powers can see it coming and don't dare brush it off like in 2007 & early 2008. Maybe they got smarter....I have to stop here
J

Johnny & 2nd,

As you may know my general outlook is quite pessimistic on both the markets and economy. This is just because I'm usually thinking longer term, so don't let my comments deter you from participating in the cyclical uptrend.

With this in mind I see the corporates fundamentals in a different light. While I'm reasonably sure international corporations can make gains view is that the claims of large amounts of cash ready for investment and expansion ignore the overriding pension debt of old line companies.

Retailers of upper-end products will continue to do well, but a lot of old favorites with middle class customers cannot excel while the bulk of US consumers must fear layoffs, mortgage issues and kids returning home saddled with college debt and few job prospects.

My views are colored by actual situations around here which continue to multiply.

I see markets moving due to smooth talking analysts and bureaucrats, hope of post election change and misleading government data.

While I have pulled out of nearly all of my Treasury holdings (mutual fund, zeros) I own absolutely no individual stocks and am in a large cash position. I do think Ts are now oversold will give another opportunity with the next global scare or mortgage default cycle. Gold is still my best holding.

I would not agree with the suggestion that there is a criminal class among us, who is easily identifiable, and that if just screened them we would all be safe. If we are talking about ~1.5 Billion world muslims are likely criminals, and if we only screen them we would be safe...that is ridiculous.

The fact is we need to fear
- our own government for destroying our Constitutional rights

- our own government for continually willing to take measures "on our behalf" that put our privacy in internment camps

- our own government for funneling money into tens of security agencies, many of which are building monitoring technology not just at airports, but on the road, in our homes, and on the internet

- our own government for getting us into wars around the world, many of which have zero justifiable basis by any sound mind, and only serve to make orphans from families who will grow up to have hatred in their hearts

- our own government for creating situations that leads to more crime being committed, specifically we have US soldiers watching over opium farming, the CIA helping run drugs, and now TSA helping invade the privacy of our bodies (just a few examples)

Where are all the patriots speaking out against the fact that the core of our nation state is - the very idea of it - is being sold at auction for some cheap technology, some illusion of safety by harrasing the citizenry and using our money in vain?

"I would not agree with the suggestion that there is a criminal class among us, who is easily identifiable, and that if just screened them we would all be safe. If we are talking about ~1.5 Billion world muslims are likely criminals, and if we only screen them we would be safe...that is ridiculous."

I'm not saying that screening only Muslims would make us safe, but randomly screening grandma and infants is ridiculous.

However there is, of course a criminal class among us and always has been. If you have no way of discriminating (not always a dirty word) between someone who looks like a personal threat and those who don't you're living in a dangerous dream world.

I don't distrust people based on color alone — my neighbor is a fine person, but my office was in an increasingly violent neighborhood and I had a few seriously uncomfortable experiences. Those individuals were pretty easy to spot. After a woman was shot a block from my office and three armed robberies took place across the street, I determined it was time to leave. All were involving blacks most of whom were junkies. Profiling just makes sense.

The WTC and Pentagon attacks were by a group who has declared a holy war on the US — picking out quite ordinary or elderly people and subjecting them to body searches is just stupid.

Thanks again for another excellent WIR, Bill.

You said: "Until it doesn’t, it’s a matter of “in gold I trust”. And for that I will be watching to see if $SILVER maintains its lead W/W on $SILVER. In addition, I’d like to see the $WTIC Crude Oil future lift back into the 85-95 range."

I think you mean if $SILVER maintains its lead W/W on $GOLD?

Cheers.

mntinhi -

Euro is like the USD when it was on the gold standard. Can't print so it's time to quit ... like FDR and Nixon in all their wisdom. EU members can't print to oblivion like the U.S. fiat reserve currency today and France and then Germany are destine to quit as the PIIGS take them down the rabbit hole. When that happens, USD will collapse as a counter risk to the EURO with the $4 TRILLION per day carry trade. Everyone knows California is bankrupt with a bigger economy than Italy and Spain combined.

I like the direction of gold and silver on the NY futures this evening.

Cheers.

It's a beautiful Full Moon, and Euro rising on bailout!

From the land of WTF?

Ireland, after just days before, steadfastly denying it needs financial help, is forced to accept help.

Down below, please review the S&P 500, especially the Fib Fan from the Great Depression and the Big 61 Fibo, both now in play, both extremely bearish

And the Euro overall up on that news. Very odd. Perhaps what they nicely refer to as an exhaustion top/spike. Which basically means a last minute manipulation before the real direction is set.

NZD as a currency got hammered in Sunday action, against all others that I viewed.
I was snaked out of my copper short, and glad I had stop in place. Somehow I got a decent fill on a gap up. Again, with Eurozone blowing up I was surprised that USD down and copper up.

Went back in short copper at a higher price---based on the PRS kickdown shown in this blog last week.

Scanning the futures and FX, I really don't see anything "obvious".

Expiry was last Friday, and often the Monday after sees some serious moves as the market gets back to normal.

STRATEGY: set some orders to activate either long or short based upon a move. For ES (S&P 500 futures) I will accept an 8 point move beyond the entry point as profit stop. And a 1.25 point stop as a loss.

I get alot of periodicals. This one called Assembly is hilarious. Upset Zombie Workers, on the production line.

And here it is, the Fib Fan from Great Depression

setting up for a fight. We will see if the EU maintains a friendly tax environment in order to retain these companies so vital to the Irish economy, or if Brussels ups the pressure to raise taxes as part of the deal. US firms have made their opinions clear:

http://www.telegraph.co.uk/finance/financetopics/f...

... but of the most bitter and unpalatable kind.

It appears consumers increased expenditure slightly in October but only through tapping into savings and increasing debt levels. Large ticket items are being held off, even as the government increases VAT from 17.5 to 20% next year. Headline household finance index numbers are definitely in contraction territory.

http://www.telegraph.co.uk/finance/newsbysector/re...

This, at a time when the UK is prepared to bail out Ireland and the EU with £7B. UK is gonna have to choose - fixing itself up or getting caught in the failed Euro project.

--------------------------------------

Silver futures are giving me the jitters here. Gap up and dropping smacks of a reversal, perhaps creating a lower high for the metal in the daily time frame. Will be watching gap closure at around $27.30 to see what follows. I did note Bill's commentary in the WIR.

--------------------------------------

futures 5am

Dow 11219.00 +40.00 +0.36%
S&P 500 1203.20 +4.50 +0.38%
Nasdaq 100 2146.00 +12.50 +0.59%

Euro autos up strong. French banks gap up and drop to support. Most markets in Asia up today. I assume silver and gold gap up on back of Euro and successful resolution (albeit temporary) of Ireland's woes.

Cheapy,

Jobs — good jobs are the only real solution to our malaise. If the $ trillions had gone to something tangible like infrastructure instead of banks and health care we'd be in far better shape. At least we'd have had some genuine trickle-down effect.

Ending the unemployment will indeed be a terrible strain, but we will not let people starve. Here we are at somewhere around 15% jobless and many more are operating on "less job". My son took a 20% cut in hours last spring and many are being furloughed or taking wage cuts.

The food pantries are now feeding many who were once donors. Last night we contributed food to a group of teenage girls collecting for the pantries. This has been happening more often lately, but other charitable and gov. programs like food stamps are coping so far.

cheapy -

I believe only IB allows trade on foreign bourses and forex exchange. The others are strictly U.S. fodder.