Blog for December 10, 2009 [See POST-CLOSE REPORT]

On the interconnected financial system.

Apologies if already posted

http://www.theatlantic.com/doc/200905/imf-advice/4

I appreciate your continued effort(s) to keep all of us informed of HB&B antics. I have a question:

I think on this blog, someone or maybe more than one said or intimated that a hold is really a a sell in drag. Why is this, if true? Cramer, warts and all, did say that analyst are conflicted and further that they have a universe as in sectors they follow. He then went on to say that they have to pick winners and losers within that sector such that some are a buy, the best...some a hold, Ok...and some a sell. He attempted to fill the picture saying that these poor analyst mean no harm, but are being pulled thither and trow...please, can we cut to the chase and give us some benefit of the dought! Please, if others have a different understanding now would be the time to make that known. Another factor would be whether the analyst, such as Blogget (spelling perhaps)if he is able to still practice his trade, are telling all that they know about the situation or are trying to sell us something; after all they do work on the sell-side, no?

What a joke.

http://www.politico.com/news/stories/1209/30417.html

BBY - estimates raised at Morgan Stanley through 2011. Sales trends have been strong. Underweight rating.

ORCL - estimates raised at Government Sachs through 2012. Company should benefit from higher IT spending and market share gains in middleware. Buy rating and $27 price target.

RIMM - estimates upped at Kaufman through 2011. Company will likely benefit from new product momentum. Buy rating and $93 price target.

RIMM - PT Lowered from $150 to $120 @ RBC. Outperform

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Note to TN:

While it's commonly believed that a Hold Rating is "secret code" for Sell, in the case of DIS, the Needham analyst claims he called it a Hold because of uncertainty in consumer spending.

Regards,
BH

A family member sent this to me:

A little scary, no?

http://ssomail.charter.net/do/mail/message/view?ms...

Please keep all comments financial related.

Hey, a new line of credit! Just in time for health care.

:-)

http://finviz.com/map.ashx?t=sec

look at the red basket

http://bit.ly/5cpmOk

To E Warren from Geithner when pressed about why they were paid 1:1:
'I don't see what is so hard to understand?! u either prevent default or you dont.'

I can't wait to find the transcript of this exchange since i missed most of it.

ALOHA !!

The "debt ceiling" has been lifted for 70 years now going on 71 years! Pretend to be shocked! As I have said the "gross" US PUBLIC DEBT went over the ceiling last week.

The DEMS are worried about mid-term votes, not the DEBT itself! The DEBT is just a "big number" to them and the REPS. I think US government spending should only be limited to how high a US Senator can count in one day! If he can only count to $400,000 then that's all they can spend.

Please notice these guys want to "sneak" this $1.8TRIL debt increase into the very back of the Military Budget Bill, yet another sector of government spending that is never considered for cuts. Hummmmm??? What is LMT trading at?

With this move the US PUBLIC DEBT(internal debt) will now exceed the US external debt to about $14TRIL.

Do any of them care what our "creditors" must be thinking?

Geithner as to why he paid 100 cents on the US$ to AIG Counterparties: 'I don't see what is so hard to understand?! u either prevent default or you dont.'

Sounds like the Congress deciding NOT to negotiate with drug companies on the price of pills for Medicare. "Hey, either you buy the pills, or you don't - in which case the plug has been pulled on Grandma ... "

I LOVE to negotiate against bozos like this ....

NO!, its hard for me to envision in this country, but I wish it were otherwise. I can however say duopoly as in our government and vested interest are in bed together when that is plain wrong...break the Rutter...don't sacrifice our mother...sorry for the quick and dirty elit..., but how does one make sense in a senseless world sometimes?

Worked a JBE set up with DTG at 10:50. Is it always this easy :)?

Bob

Hi Jock - See you are in the house and I am trying to decide between Goldcorp and Terrane as a way to play the referenced project. Leaning toward GG as I already have a bundle of exploration (pending development, but with nice reserves in the ground) stocks with a long way to go yet. Also it appears current price might be a decent entry for GG - any thoughts you might have would be appreciated. Happy Trading

not on much vol though. no positions. i am pretty disenchanted by it all.

$USD RSI(7) coming back from 70, FXE RSI(7) bouncing at 30, GLD and SLV RSI(7) 20-30 range, and oil RSI(7) at 20.
I'm thinking time to buy gold again (with a stop) in case the powers decided we need weaker dollar. 2010 could be a different story with dollars being the best assets but we are not there yet IMHO.

The US Dollar Index continuous is bumping up against the bottom of the 89 day ma which is acting as resistance. The whole downtrend till now has been contained by the 50 day ma so this is a change of character.

Based on this information, I think one should be looking to acquire gold shares for trading bounces and if really nervous if the $ breaks above 89 day ma use that as your stop for your gold shares.

My thesis is that the gold market is still in a seasonally strong period and would look at this time as a period of opportunity to acquire. In worst case scenario gold should not fall more than 4% below 1089. This is my plan anyway.

When you say GS 15 min cup and handle are you looking at from the open of 12/7, start of the cup, to today top of the cup at say 167?

Or, are you just looking at todays 15 min chart, or are looking at both with todays action representing the handle?

Thanks

Long GS

Thanks, I checked the 89 DMA and it worked like a charm for entire 2007 and half 2008.

Stopped out of SPY puts at $2.18. Got greedy and didn't take a profit.

Covered MTW at $9.09.

Bought JPM at $41.18.

Same here. Bill said that part of the TOG is short bonds. Worked OK since Dec 2007, but I have some doubts long term. Japan has the highest debt to GDP ratio yet the rates are rock bottom. If USA is going in the same direction how do we know the rates will go up a lot? Clearly I need to learn some more about bonds.

Interestingly, Marc Faber feels strongly about hyperinflation in USA and one of the arguments he puts forward is a need for FED to keep buying the bonds to keep the government debt service burden reasonable (low rates) faced with exponentially rising debt.

My head is spinning from this. I personally feel it would make more sense to see periods of inflation and deflation (as debt cannot go exponential forever and there could be more credit shocks ahead).

I wish I was like you today, David. I added a few SPY puts again at $2.2...I'm getting a little too spastic today...

Sold my JPM at $41.22. False breakout...

too many day trades....

jack black -

"Japan has the highest debt to GDP ratio yet the rates are rock bottom. If USA is going in the same direction how do we know the rates will go up a lot?"

Wrap Up WIR #49, Bill Cara:

"In the market, I think there is a major issue coming to a head. Excessive liquidity has been pumped in the global financial system and must be taken out soon before it translates into higher commodity prices. One of the main tools of the monetary authorities in the inflation fight is to raise interest rates. But interest rates are not just affected by the govt sector; as economies recover from a period of slowdown or retraction, the private sector will demand credit. If they cannot get it from financially strapped banks, they will go to the public market to raise that capital by way of debt instruments. Rates will rise as govts get squeezed out. The investors that are holding bonds and highly leveraged commercial and industrial real estate will be relative losers. There will be more foreclosures. Bond issuers like the individual states will have to pay more interest and they are already financially strapped."

So if monetization of U.S. gov't debt ends (history tells us it must) and the inevitable rise in interest on debt ensues, as Bill suggests above, what we have here will be a world class currency crisis. Considering some $3 trillion in U.S. gov't debt comes due next year, I'd say the pucker factor over at the FOMC is high. FOMC will now monetize until Ben's Bell AH-1Z Viper "SuperCobra" runs out of kerosene and those deep thinkers running this currency dump are forced to reset the almighty buck.

Don't let the Man keep you down. Buy some gold.

http://tinyurl.com/4wx4na

Looking for some help on short term RMBS - I shorted the stock outright around $19 and watched it break out to new highs on high volume over the past week. Just hoping someone who is better at technical analysis than me can help me decide whether to cover my short here or hold on till the general market rolls over?

TIA GH

I don't have a good handle on bonds, either, but in response to jack black's righteous lament:

"I still wonder how Japan avoided that mess and managed to get the record government debt (while combating deflation)."

I heard some esteemed individual on Bloomberg radio (w/ Tom Keene) say that Japan doesn't owe that gov't debt to foreigners, the way the USA does, and that that was significant.

I don't understand how Japanese debt could be controlled in a public market that way, but I made a mental note of that distinction because it was the first I'd heard that. Apparently, the Japanese people own that Japanese debt. Since Japan is an enormous importer of oil, I question the veracity of this probably over-generalized sound byte, but I distinctly remember it being said in the last 2 weeks or so (after Dubai news broke) it stuck w/ me. I just can't recall which talking head said it or I'd try to give a link.

I think Japan has way more nat'l debt than Dubai, Greece, Spain or Ireland...right?

gap at 22 but a test of 23.15 looks likely

The statement seems innocuous enough, but it's who's making it that draws attention.

In the midst of its semi-annual Financial System Review, released Thursday, Bank of Canada analysts write that the stock market may be overvalued.

“While indicators point in different directions, various measures, such as forward price-earnings ratios, suggest that equity prices may have increased by more than warranted in the context of an expected slow recovery,” the Bank of Canada said.

http://www.globeinvestor.com/servlet/story/GI.2009...

Exactly.
According to http://en.wikipedia.org/wiki/List_of_countries_by_...
Zimbabwe is first at 240% and Japan is second at 170%. Now this is just public debt, excluding private debt. One thing that is startling the first country has hyperinflation, the second deflation.

Lets say USA will go from 60% now to hundreds of % in the next couple of decades. Inflation or deflation? I'm still not sure. Inflation seems logical in the short run at least.

Edit: the wiki numbers are old, USA's public debt exploded to 90% as of end of 2009 (estimated) from http://en.wikipedia.org/wiki/United_States_public_...

Edit 2: If the above sounds bad, consider this, according to http://en.wikipedia.org/wiki/US_total_cumulative_d...
US total cumulative debt (all types of public and private debts) per person is 700,000 USD per person or about 2.17 Million per US census household. I don't know if future social security and medicare obligations are counted in.

Then the global derivatives burden per person is just under 200,000 USD -- but to what extent this adds to Total Cumulative Debt Per Person in the US (or in any other nation) is unclear.

Apparently the reflective glass on skyscrapers is cannot be seen by birds so they kill quite a few. This design has used shade and form to help birds see it. Slated for completion in 2009 it won a PETA award for being bird friendly. Aqua Tower in Chicago.

http://www.studiogang.net/projects_e1.htm

Having learned through pain and suffering, when the trend line was broken on higher volume, you should have gotten out. That long red candle from today is the first bearish sign in this break. However, there is no resistance until 26. Given the market's penchant for grinding upward, 19.00 would appear to be new support yet to be tested. See tht long wick three days ago? If you want to hang around to see if you can get even, I would set my stop at the height of that candle.

What you do have going for you is the weakness in the stochastics, although they haven't broken under 80 yet, and a confirming weakness in RS8, which has yet to break under 80. Having said that, there is no negative divergence in RSI, unlike the stochastics, and MACD is still strong. I see the volume has dropped significantly, but I would have wanted to see bigger negative volume today.

Something else: notice the 200 fwma, it served as support for the wedge or triangle. Frankly, I would have only seen this as a long on a break of 19.

Looks like something out of 'Blade Runner.' I'm sure it was built on a 3% cap rate assuming 95% occupancy.

I hope the windows open. It could then be the biggest birdnest in the upper midwest! It may become the tallest HUD property. Verticle urban renewal.

I like your insights, Loanetter. No critisism (sp) implied.

22.50

Ross, Things unfamiliar do strike fear and suspicion. If birds like It I say it must be OK. Most startlingly fresh ideas are met with derision by small minds. Then it becomes flavor of the month. The question is essentially -- what moves you?

TOTN,

LOL! While this seems to weird to happen I had a neighbor about twenty years ago who told of a similar actual experience.

He was a civil engineer who had moved here from Norway. He told me that over there (where the current administration may be getting their economic model) the government would check the lifestyle evidence, determine what income it would require to maintain it, and assume you had moved large sums to Switzerland or some other tax haven. One year he was billed double what he had claimed plus a penalty. Luckily he avoided prosecution.

I asked if he had been hiding his money — he laughed and replied, "Of course. Anyone who was able to earn more than enough to get by was doing it."

His solution was to pay the fine and then move here. Soon there will be nowhere to hide — anything. Unless, of course you are "too big to fail."