Cara's Commentary & Community Chat, Fri., Dec. 19, 2008

London just hacked gold at the open sending it below the key $850 level. Similarly, the USD just received a phantom boost just near the usual and quiet time of 3:00 am EST. This tactic was employed much since July 2008 but had recently faded away. It always amazes me how key resistances levels seem to be much stronger than key support levels, at least in the "free" markets of the West.

We will see if the NY cartel can carry out their tag team play over the next few minutes. Lord knows they have had practice!

I think I am correct in saying that a passport is now required for US citizens to leave the US to go to the Bahamas. It didn't use to be and some previous travelers might not know of the change.

Someone correct me if I am wrong about the passport requirement. Gov regs are many and changing.

The Dollar has held at a support level and is this morning continuing its "johnnie jump up" dance routine - could go back to around .83 before hitting the bottom of an upper range area.

Meanwhile Gold seems to be contra-acting to the Dollar.

for those of you who are homeowners, there was a one hour window on tuesday when a 30-year fixed at 5.17% was available at no cost...if you file an application with your broker (i try to stay in touch with mine every few months), it's good for three months, and if he's watching rates all day, there's a good chance you can catch 5% or less at no cost sometime in the next few weeks...

Nice breakout about 40 minutes ago. Looks like the open will be green today.

http://tinyurl.com/4pvsng

2nd, If you were day trading right now you would have made a killing with your inner karmic sentiment tool.

Are you going to the Bahamas?

i think the sulfur content of light sweet is somewhat lower than that of Brent blend...

'sensationalism' seems to be a defining characteristic of all media reporting, unfortunately...

nice call on gold yesterday Vinod.

Good morning. Here is your late night party delayed report:

RIMM - Downgraded to Underperform @ Cowen & Co.

New Coverage:

FSLR - Buy @ Jefferies & Co.
SBUX - Hold @ Jefferies & Co.

Price Targets Lowered:

ORCL - from $22 to $20 @ Friedman Billings
PAYX - from $32 to $28 @ Credit Suisse
RIMM - from $65 to $62 @ AmTech Research

craig- can't make it this year...what a set-up, though-> coffee in the morning with Vad, and putting the lessons to good use at the Atlantis tables in the evening...

Saw a flash, autos got loan ~$13B

$40 looks like it may have good support,I should have looked at the long term charts for support before buying hou.to too early.

http://img254.imageshack.us/img254/2041/oilxp6.png

The markets today will no doubt enjoy tremendous volume and activity as bored to death specs finally get some range to trade. Hurry and get yours today for the balance of 2008 will feature the relatively illiquid trading ranges that have persisted for most of this Quarter.

Season's Greetings all.

I think blackjack is the model. Similar to the RSI Triple Screen. You make a series of small bets till the shoe is rich with face cards, then you increase the bet. Money management is also key. Most blackjack books instruct the bettor to divide his stake into portions. When it's gone, leave the table.

The key is to be able to stay in the game.

it should be a very interesting day...

risk returns to the market...

The question is will it last?

DZZ up, TNA up, FAS down (on opening, now up, almost triggered a sell).

Another anomaly: CPC down, CPCE up (edit: on opening, now both are pointing down).

The left-turn blinker is still flashing.

Possibly, but to me this is the same dumb money that went into commodities earlier this year. Has anyone noticed that banks got really in trouble when oil crashed in July?

Somehow I think the rate will go higher before it gets lower. I like the analogy of bonds and oil.

2nd
I just call my mortgage broker, he offer me 5.125 and no closing cost. And told me we will keep refinancing every .125 move. This way he can make some money. I do not have mortgage but will take money and put in market might do good this way.
Yesterday brought 2007 with 12k mileage Mercedes C280 4MATIC
Any experience about this car

"I think this story about investments in China will have huge ramifications."

Jim - what ramifications to you foresee?

jack black- i was thinking along the lines of the 4.5% 'rumors' flying around last week...banks have to make money, obviously, so if it is in fact banks that are buying up the long bond, then they have to think lending rates will be going lower...what's not so obvious is who the buyers are here...short-covering by the likes of Kass may explain much of it.

More info on Cowen downgrade of RIMM - Outlook created more questions than it answered, as gross margins are likely to fall 5% next quarter despite 19% sequential revenue growth.

Bull Hunter
everyday -first thing i look at is your daily rating post
thanks

VIX/VXN are dynamic. Best to compare them to indices.

Risk is increasing again this AM IMO.

Brought lots of -OXBLH
I am gambler and may lose all.

vinod- a 5 and 1/2 hour play? have fun...

2nd
If premium I paid is double, I am out . paid 0.35

I'm also watching.
As I wrote some days ago, I'm waiting to see Williams%R go over -80.
Stockchart now shows -88 http://xrl.us/pp68v.
So it's early, and also CMF is very negative, but is improving.
I checked the correlation of TLT and TBT in the last 6 months with Sectorspdr, and it seems clear that when TBT will break up, also the basic materials (XLB) will be the winning bet.

already have all I want which is too much.

If they give this crook the other 350 billion I'm going to have to find a hole to be sick in...

I gambled and bought some $122 puts in TLT that expire today. Average price was $.58

Got some TBT today @ 36.41

Keep up the great work...:)

Thanks

Minimum distributions for 201k's were not deferred, there could be some selling in order to meet requirements prior to year end?

How could it be dumb to borrow at .5% and buy treasuries at 1%?

that is FREE money, the whole globe is going the way of Japan's lost decade. ZIRP. This is probably the best way to reflate the banks. There are estimates for global write downs to hi 5.5 trillion. Maybe that in inflated but considering the drunken debt spree the house of cards below is very, very weak.

FED will keep rates low for a long time to slow the chance of foreclosures. Those who have loans tied to the LIBOR, COSI, COFI and treasuries will get relief as their rates drop down. They will still be upside down for a decade but if they don't want to walk away because of a lower payment they wont. This could slow down foreclosures but won't stop it. Low rates are here to stay. Don't be surprised to see 30 year fixed hit the low 4% next year.

All governments will print, print print and look for the ECB to cut somewhere between 1-1.75% next meeting. Look for them to expand their balance sheet above 3 trillion - more than the FED (2.3 trillion).

USD is in the next up wave (third wave up of five waves) the forces of de-leveraging and deflation are here and will be here for a while.

Sharkie

You are right.

Once the major banks found out that the CDO scam was unprofitable they looked elsewhere to make money. Why should investment banks store oil? is that part of their business?

Until the sheeple started to complain that 25% of their $600 stimuli checks went to $4.30 gas, congress started to ask questions.

Now those same banks are leading the fed to the Treasury market, the only catch now they have no exit because the whole globe is risky and we are in a down spiral.

Ms Whitney has never been so bearish now too.... Bless her heart.

I was just listening to yesterdays FedEx conference call - in addition to executive salary cuts they suspended their 401K matching program for 1 year.

I wonder if we will see a lot of companies making adjustments like this in order to cut costs. It seems to me its a way for a company to cut salaries down across the board w/o large scale layoffs.

PS....I am intrigued by the Credit Suisse plan to distribute shares of illiquid assets to its employees in lieu of cash bonuses. Sounds like a good management move at face value.

I look for it everyday, and to see how you're doing!

Many Thanks for the fine work.

I miss the market music though....:>0

Earlier today a caught a nice piece of the GM retracement and then packed it in and went to Stew Leonards

filled...

CP

You make great points.

government help
is like Military intelligence. Or Jumbo Shrimp.

Fed will add liquidity to keep zombie banks a float. It will not fix the ones who need it. The bankers have already cashed their bonus checks now they will thrive in a period of deflation; contraction of the total volume of money/credit/debt to chase goods/services (webster's 2008). Lets buy cheap stuff with the inflated dollars we earned to cause the mess... WHY DIDN'T I THINK OF THAT!

State and local government policies will only add pressure to deflation. Adding more taxes such as NY and perhaps california will not help the consumers.

Rumors out there that NY is going to have 18% sales tax on goods/services. Now instead of buying a $100 of stuff, you will only spend $90ish because of the extra taxes that go to support pointless jobs in the government. the government like private employers should be cutting jobs.

What about local governments charging hundreds of dollars of fees for foreclosed homes not being kept up? How is that suppose to promote the housing industry. Yeah it makes sense to cosmetic looks but economically it is desperate and no so smart.

We grew on credit, we must unwind along with the credit. Way to much excess capacity was built over the past 8 years globally.

Central banks will cut, cut cut. What is the point of low rates if no one want to take on risk or is able to borrow (in the creditors eyes)?

Look to see more wage cuts by companies or wage freezes...

When central banks are done cutting, they will start to buy more bonds, stocks and what next, houses?
Yeah that is real smart. Lets print our way to poverty by inflating the poverty line due to the fact that we will need to spend $10 on a loaf of bread. Think stocks will go up with currency inflation... How are they going to have better earnings when wages don't support $10 bread? Dow 400? anyone (not chemical), social unrest.
Of course stocks will fly because they lowered earning expectations...
How is it that analysts put a buy on AGs two days later the AGs lower their forward sales... Someone had to dump some inventory ahem, ahem stock.

My rant/// is they can't stop this, impossible good luck. We must stop them from spending/printing our kids (global) future. It isn't fair but nothing is.

GW, TJ, BF, JA and the rest of the founding fathers are rolling in their graves.... It should of never got here but it has and we are lead to belief all actions are for the great good. What a bill of trash we were sold.

Congratulations USA taxpayers, you just got your piece of ownership in GM (figuratively).
All I wanted for xmas was a pony, uncle sam where is my pony not a car company.
So if the car industry has excess capacity and employes over 2.5 million jobs.. BK will cause a million to go, so we have over a million jobs of excess capacity getting welfare support from the tax payers.. Restructuring will cause a million to go... maybe the car industry should only employ 1.5 million with the demand from consumers?

Lost decade? What about S&P 500 in 1999 to today? One decade down, global markets peaked last year, total peak credit was last year, peak money was last year. Peak peak peak. House of cards built on clay made a great "fantasy land".

yesterday's spiel re: fdx out of credit suisse. neutral with $64 target.

2nd
I just came back home and show market down.
I still have it. this the the reason i stop posting about OEX trade.
I do lose some and win some. this one i might hold them even if i lose 1k

2nd
Have to get ready for BIG snow storm. so, will be in and out of home

it is some kind of winter, as you put it...best wishes...

2nd ave.....you haven't lost your touch...Nice job SLW.

2nd and shark_attack
One food in the door and one out and wait for 20 cent price movement
This is the only way to make money in this market. It is very brutal out there.

I don't remember seeing any comments here about these, but Horizons Betapro has two ETFs on the TSX based on the U.S. 30 year bond.

"The Horizons BetaPro U.S. 30-Year Bond Bull Plus ETF (HBP U.S. 30-Year Bond Bull+ ETF) and the Horizons BetaPro U.S. 30-Year Bond Bear Plus ETF (HBP U.S. 30-Year Bond Bear+ ETF) seek daily investment results equal to 200% the daily performance, or inverse performance, of the U.S. 30-Year Bond futures contract for the next delivery month. The HBP U.S. 30-Year Bond Bull+ and Bear+ ETFs are denominated in Canadian dollars, as the U.S. dollar exposure of the underlying index is hedged daily."

Volume on the Bull is minuscule, but the Bear is getting stronger and averaging just under 50,000/day. As all similar ETF's, it rebalances daily, so has those inherent problems, but it should take the exchange fluctuations out of the picture.

2nd,

Remember that little inverse oil etf we used to trade, DCR? Remember how it dithered right above it's in the money price at about $110/barrel?

I wonder where that $.22 stock would be right now with black gold in the 30's......can you say Ferrari?

(know they replaced it with DOY or whatever but it never got the play DCR got)

“Yesterday brought 2007 with 12k mileage Mercedes C280 4MATIC
Any experience about this car”

vinod

I don’t drive a Mercedes, but I think your auto is rear wheel drive.

Caveat: Don’t drive in the snow and ice. You’ll be sliding all over the place.

If you absolutely have to drive it in this weather, place a couple of bags of cement or kitty litter in your trunk to help with traction. Good luck!

Who called it that:)?

2nd caught a ride on the SLW money train...

Brent = Oil sourced from the North Sea

Sub-categories:

Light = Low viscosity, easer to pump and haul than 'heavy' crude
Sweet = Very low sulfur content and far easier to refine than 'sour' crude

Cheers.

I also bought TBT when it was in a trading range at $42 with the belief that the large buyers' activity were a probable sign of a turnaround. I was however stopped out when the price broke through support.
We are now again in a small trading range, with some large buyers starting to accumulate. If this pattenrs continues for another few trading days, I would probably try to take another position.

I also attach the LQD file, which is a corporate bonds ETF. It is interesting to see that traders believe that yields will have to increase in order for corporations to attract money in the present environment. The GE downgrade by S&P is maybe the starting of a wave of negative reviews. The notation agencies have indeed to show how strict they have become after their big miss on the sub-prime issues. If corporate yileds increase, it would not be good for the stock market.

I have the feeling that, because we do not see big leading stocks breaking out, the fate of the stock market will be decided by the move out of treasuries, by a weakening/strengthening US$ and by the activities in the bond market.

This is just an opinion.

Pascal

It's odd...Gold is well down today, and yet certain miners are rallying...Gammon...SLW...

BTW...It turns out it is us who now have the Arabs over a barrel of oil. If they don't sell oil and provide social services 50 million 18 year old males will jihad against their own governments.

Placed stink bid on TNA @ $26.50 in case things fall apart.
Holding SSO - will sell @ $27.70 if we go up.

Wide limits because I'm an optimist, expecting a sell-off prior to next rally.

I will look at it though, b/c you need to have an IQ of 180 to understand the DXO prospectus

No whats odd is that gold stocks fell as hard as they did. Look at xoi compared to oil now that might be less than odd. Go back to when oil was at 40$ last and the xoi is only slightly below the level it was at that time. Gold stocks on the other hand are missing out on 50 points in the xau per the last time gold crossed up through the 830's.

Specifically gold was sub 500 when the xau was at these levels last so you are right in a sense something is odd. Oil, said to have killed miners profits on the way to 147 is at 40ish now so the very thing that was perported to be bad for miner profits has turned good for miners profits by it's fall. Yes it is all odd.

BTW I was right that day when SKF was rallying and I said it was about to turn into an awesome short.

the OEX calls, on the other hand, not looking good...but i'm playing with the casino's money now...

I see the same with the majors but volume is leaving a lot to be desired, with slw maybe its the Cara affect :)

still waiting, man...SLW was a morning diversion, although i think it's at least a triple play for anyone holding longer term...

I prefer my milk fresh, right out of the ..er...cow.

"Paulson says Congress needs to release the second $350 billion from the financial rescue fund"

AIG must've burned through their party money. Somebody needs to go directly to jail IMO.

2nd
They kick me out couple of time from FOXWOOD for counting cards. so, I stop playing blackjack plus opositon from family

you have to be kidding, man...(for a second i thought i was reading a post from CP)..

I decided to cancel my buy limit order on SLW at $4.75, as it doesn't feel like a real bargain price (the memory of SLW being under $3 is still fresh in my mind). Instead, I decided to do trading "the right way" and start selling put options. That is, I have enough stocks in my portfolio already, so that if the commodities start a long-term bull market now, my portfolio will do very well. If commodities will test their lows, then by selling put options I'll buy shares at a much cheaper price than now. Bill Cara did say that his current portfolio is part in stocks and part in short puts, so it would be foolish not to follow his advice. I just sold 10 contracts of January 09 $5 puts on TCK for $1.05. So I'll either buy TCK at $3.95 within a month or I'll make an annualized 126% return over the next month on the $5K I am setting aside to cover these puts.

can someone say what OXBLH is .... or better still, where can i search for options symbols..... (website) seems to be Dec 80 Call of something? thx

Join the crowd, I think this will be a very lucrative trade. Check out how toppy the HOD.TO is, similar to TLT.........

another lesson in the advisability of selling risk (to others) rather than buying it, but then, vinod was able to recapture his 70% gain for the year buying risk...

bought some more at 26.50. LT asset allocation play.

Someone in the last minutes liked it.

loannetter- i opened a file with my broker...shooting for 5% at no cost for a conforming loan; i think we hit that target within the next few weeks...

After learning blackjack I realized the stock market is a much better bet. Blackjack is fun, though. Ed Thorpe (Beat the dealer) made a boatload on Wall Street after blackjack.

Oh and 2nd,

I raise my glass to you. Salute! I loved your SLW trade today and if I weren't feeling so defensive today, I would'a should'a given it a shot with at least 500 shares and it would have made for a pretty good day. The stock had already made a so-called "A-up" (risen substantially above it's opening range and was a screaming buy. I was just too stupid to realize it. Today. See you next week.

Cheers!

Playing the stock market isn't that hard Vinod.

It's what happens when burning desire intersects with a willingness to learn and to, by definition, accept that personal improvement is possible.

Are you going to Bill's convention? Where I live, an hour above Manhattan I keep seeing ad's on TV for the Atlantis. Darn right I want to go. Let's see how things go.

BTW I admired the way you sold ESLR a couple of months ago, nice and high.

I felt bad about you selling the SIL too soon. These little stocks are tricky, and there's gotta be something wrong with the company, but I have no idea what that is.

We're all just playing a game.

Thank you for the follow up Bill. The thing I admire about you is that you do everything first class and with integrity. Very lacking in this world IMO. I'm sure the week in the Bahamas will be no different.

I'm just repeating Bill. For gold to break out, and miners, he was looking for a weakening $ and reversal in bonds. Oil basic metals, then gold. The $ was stronger today, which made sense after the drubbing it took the last week. Bonds are still rising (although maybe peaking); oil is weakening, and base metals have been slowly sliding the last few days. Profits are being locked in from the last month.

Interesting about your comparison between Yamana and Gold: I think of it similarly to how I think about SKF or FXP. Look how much they've come off from their highs, and exactly what has gotten better? The psychology of the situation in that, "oh, another 2x4 between the eyes, I'm used to that." The psychology of the gold and the gold miners, which have been on a run, might be similar. Those initial run ups last spring, were new, now it's calculated, expected, old hat. Mmmmhhh...sounds like relationships.

Don't mean to barge in on the clamback discussion..

I was a casino host for harrahs vegas, tahoe and reno properties- high limit VIP. Do they have single deck black jack in the bahamas ?

VB

as an addendum to my earlier reply, this from Bloomberg:

"Xstrata, Europe’s largest zinc producer, slid 8.6 percent. Antofagasta Plc, the copper producer controlled by Chile’s Luksic family, retreated 7.6 percent. Anglo American Plc, the world’s fourth-largest diversified mining company, lost 3.2 percent.

UBS AG cut its recommendation for the three companies to “neutral” from “buy.”

I believe Bill stated not too long ago, that Xstrata is one of the keys to the mining (especially base metal) complexes, and is dynamically related even to the gold miners (I believe the point has been made, that gold is often a by product in base metal production).

My question/assumption would be, in such an economic slow down, if much base metal production is taken off-line, how significantly does that reduce gold and other precious metal production? Will that cause upward pressure on gold at some point?

On Charlie Rose:

http://www.ritholtz.com/blog/2008/12/charlie-rose-...

Here is my monthly chart for the SPX. Swimming against a tide is possible for short periods of time, but it is easiest to go with the tide (trend) for a longer term.

The support line shows that a turn could reasonably be expected here, but the trend line (1) which worked after the last bubble blew, and the MA (2) which worked last time, and the shorter MA (3) which worked last time - all aren't indicating any trend change. I would accept any two out of three.
http://tinyurl.com/73xllc

Note: This chart is a gif done with ImageShack, Jeff.

ALOHA!!

You can now buy homes in the San Francisco Bay Area for less than $100,000(to be exact $79,000). The banks who own these bloated inventories are now just dumping them helter skelter in an effort to get cash. Honestly though these less than $100,000 homes are in undesirable neighborhoods, of course.

The future of real estate prices boils down to one phrase "negatively amortized" and I doubt not even Hank Paulson or Barney Frank could even tell you how that phrase fits into their HOPE PLAN, to rescue homeowners. Well, now Paulson wants his other $350bil(its his, not ours)and now that Barney has seen how the US CONgress has been conned by the US Banks he is begging Paulson to use some of that $350bil to help stem foreclosures. So here we have TAXATION WITHOUT REPRESENTATION, where our CONgress is begging for our own TAX DOLLARS from the US BANKS! You get what you vote for!

I have calculated that home prices will be forced down another 20% to 30% across America(of course asset velocity could add to that), but mainly in the the HOT SPOTS due to ALT A loans that beget "negatively amortized" loans. Already in the State of California home prices are down near 35% since a year ago on average!

NEGATIVELY AMORTIZED
$500bilUSD in ALT A loans loom on the horizon with up to $400bil set to negatively amortize those loans, where the principle and interest amortize which causes the loan principal to inflate above the original purchase price. It is in effect a PONZI SCHEME where DEBT is piled upon more DEBT until the mortgage payment is unaffordable and all this occurs in an environment of rapidly decreasing home values. JINGLE MAIL becomes the homeowners only viable solution, which forces more inventory onto banks with an already bloated inventory of foreclosures and the snow ball keeps getting bigger as the years go by.

Some of you may have just read that last paragraph and thought to yourself, "Hummmm, what other entity in the USA piles DEBT on top of DEBT?" You would be correct if you answered the US GOVERNMENT! The US GOVERNMENT never pays off any of its DEBT(only the minimum interest due), in fact it grows its DEBT. So in essence the US GOVERNMENT is an ALT A loan waiting to happen!

Home prices in America are caught up in a "death spiral" which is where the US Dollar is headed as well and it is all DEBT based and the only current US GOVERNMENT cure put forth so far, which OBAMA champions daily on TV, is MORE DEBT! OBAMA is bought and paid for! Our leaders in this country have been conveniently following the KEYNESIAN ECONOMIC PLAN of "spending to prosperity". What other choice do corrupt politicians who are owned by corrupt bankers have? To settle for no more DEBT means they would have to relinquish their power and renege on all their promises! Politicians would have to come clean and admit that there is NO FREE LUNCH! Isn't that why the majority of US VOTERS vote for them? No politician anywhere in the World spends a lifetime to achieve power and then just gives it up! That goes against the human condition and the human condition is the basis of FIAT! After all the AMERICAN DREAM is nothing but DEBT and if you look at how most Americans live and conduct their lives its about MORE and MORE ... not LESS! LESS is a dirty word in America! When have you heard a family member or a friend or a neighbor say "I want LESS in life. I want less pay, less house, less car, less vacation ..." The only thing Americans want less of is "less fat" but even that is based on IMAGE and that is how us baby-boomers were brought up ... IMAGE! Imagine how all this that goes on American TV must look to West African miners or Chinese factory workers? The vast majority of the World's population is poor and starving ... To the BAG LADY PAPERS: Get in line!

There you go from ALT A to Africa in six paragraphs! HA!!

nemo - Mine shutdowns - "Will that cause upward pressure on gold at some point?"

I believe so. When mines aren't producing, supply/demand curves can shift dramatically.

Then we should also consider the possibility of having just completed another dead cat bounce, a well documented phenomenon and routine component of a declining market.

Supporting evidence for further decline is debatable, but consider Obama's plan for another $1T economic stimulus.... and the associated implications. Part 2: Housing prices remain in free fall, consumer over-consumption still contracting.

I dont think the fundamentals are as important as the trend,the second hr at Financial Sense this weekend supports that.It's a great listen.

http://www.financialsense.com/fsn/main.html

The chart below is the visual of that thought that clearly represents what the author at Financial Sense was saying.OIl fell 73% and the xoi fell 55%
YET! the gold price fell only 34% and the xau fell 70%, this at a time that falling oil would increase profit margins for gold stocks. I didnt sell mine for that reason because of this underlying fundamental. That was wrong, the trend was more important, and what she says about total capitulation is/could be spot on.

The xau fell back to levels seen at 287 dollar gold and oil stocks per the xoi fell back to levels seen at 40$ oil. So something is wrong here, that is not a normal market is it? Maybe it is according to her.

http://img510.imageshack.us/img510/9335/xaugoldoil...

tbar - I'm sure you know my opinion on PM's and associated miners (the guys who excavate the world's oldest form of currency). Basically, the current environment is not where I'd commit to an exit... Waves of deficit spending are coming to a theater near you and I, the only question is when.

I wish it didnt surprise me but it has,in 1986 the xoi was at 120, the xau at 58.

Today the xau just visited 63 on a 34% correction in gold while the xoi saw 744 on a 73% correction in oil. Something seems messed up there,maybe I am in the wrong sector afterall?

If the oil shares/xoi had fallen back to 130 would that surprise anyone?

norm - "My rant/// is they can't stop this, impossible good luck. We must stop them from spending/printing our kids (global) future. It isn't fair but nothing is."

Depression hasn't happened in my lifetime, but it did in my grandfathers. He made it through and was a strong hard working man who did well and left sufficient wealth for his family. He had skills, he learned a trade and applied himself. My desire is to be as successful as he.

If the sky falls, it falls. If a tree dies, it dies. Perhaps there's a silver lining somewhere on those clouds, I've got my telescope out and working on a focal point.

Have a fantastic weekend, looking forward to next week!

ALOHA !!

IT'S OAKLAND !!!! To be more specific Magnolia Street is one area.

No mention of East Palo Alto, I guess it is too close to Silicone Valley to be destitute yet!

Isn't Jerry Brown(ex CAL GOV)mayor there in OAKLAND? Seems I recall something about him still being in the politics racket in his old age! I recall some antiBrown campaign slogan ... IF ITS BROWN FLUSH IT!!

Jock,

My tiny mind just assumed that Gold would be made persona-non-grata when the next currency crisis occurs. But I can't argue with the performance of Silver. Been playing SSRI instead of SLW, but can't complain at all.

AMAZING: this document, via Barry Ritholtz, is entitled, "The World's Largest Hedge Fund is a Fraud" and lists 29 red flags!

http://tinyurl.com/92zrcs

More of a smoking gun than the memo "Al Qaeda determined to strike within USA" which was ignored by Condalezza.

Christopher Cox has initiated an internal investigation! Have these people no shame? He should have dived on his sword 3 major fuck-ups ago ...

Jock, silver is generally acknowledged to be a highly volatile market with wild swings. But the gold/silver ratio is a sensitive indicator of credit markets. But learning to read it is an art in itself. You might also say that silver will advance against gold. A bottom could be said to be in when the gold/silver ratio finally declines off its peak.

Advances in silver vs. gold means liquidity is coming back into the market. When credit markets seize up, the gold/silver ratio can go to 100. We came very close this time around. But given the condition of the credit markets, I would surmise that the gold/silver ratio will remain fairly high going forward.

gold/silver ratio

I would say the gold/silver ratio picked out the general decline in the markets since early 2007. There are times when gold bottoms out against silver that you could say a top was in across all markets. But you also find that gold will be bottoming out several times, leaving a precise signal wanting.

" Aren't gold miners primarily minerals miners first with gold ore a relatively small component of the minerals mining business?"

Primary gold mines are being depleted, so the next great source for gold are the low grades found in porphyries and sulphides, whose primary metal is either copper or zinc. So what's being touted as a gold mine is really something else. The rocks determine what kind of deposit you have. But you're right to point out with the metals rout that many mines are becoming subeconomic. I would say that with quantitative easing, the effect will be multiplied several times over. Many gold miners went straight into base metals at a time when they should have started to focus only on gold. Many gold miners around the world have heavy exposure to base metals and the credit markets as well.

So common sense would argue that an epithermal style vein system with robust mineralization in gold only with very little else in terms of metals is a desirable vehicle for investment.

"Christopher Cox has initiated an internal investigation!"

Now Cox is being forced to conduct an internal investigation because of public awareness, not because of a proactive approach within the SEC. This typical modus operandi of US government regulatory agencies unfortunately remains an indicator of how deep corruption runs within governmental agencies.

Cox should be replaced immediately, along with Paulson, Franks, and a host of other corrupt officials.

The current rally will end soon - a recession the Fed can't easily fix:

Latest Fleckenstein:

http://tinyurl.com/9y4q5j

10 Best Stocks for 2009 - from Jim Jubak:

http://tinyurl.com/9toha7

I am a fan of TA and have been for a long time - it works for me. I think that we could have more meaningful comments here if readers would substitute a chart instead of so many words, feelings, and hopes - jmho.

For those who are trying to learn TA, it sometimes helps to hear someone explain his chart in simple terms. I just found the link below which is a video done at ChartSwingTrader dot com

The video also includes some good chart presentations on the Silver miners: SLW, HL, PAAS, and SSRI

Of course, I could nitpick the charts, but won't. Everyone develops TA techniques that work for them - and even in disagreement, there can be learning. Enjoy.
http://neebit.com/files/2dee50afb3.swf

http://www.gold-eagle.com/editorials_08/maloney121...

Spot:

Thanks for the link!

The deaths of so many relatively young top bankers lately almost makes one wonder if they all have been "non-suspicious" as claimed? Even with this latest case: a successful career banker with a nice family and just before the holiday season...

A top HSBC banker has been found hanged in the room of a five-star hotel, police said.

Scotland Yard said there were no suspicious circumstances surrounding the death of Danish-born Christen Schnor, 49, who was found at around 2.40pm on Wednesday at the Jumeirah Carlton Tower Hotel in Knightsbridge, west London.

The Mail on Sunday reported Mr Schnor, who leaves a wife and two children, was found hanging by a belt, naked in a closet in his room.

http://tinyurl.com/9u9kdf

loannetter - FYI - Being you have some unique insights many of the rest of us perhaps don't, I would be quite interested in hearing more from your side of the fence.

I agree that the central banks are trying desperately to reflate, but I don't see it having any short/medium term effect because everyone is very scared, too scared to spend, too scared to invest, etc., and it seems like many are already huddled in treasuries, and normal people that aren't are moving in that direction (like my Mom getting a ladder of CDs).

What company CEO would invest even 5 cents to expand any plant these days? Only someone with a product clamored for that also happens to be sitting on excess cash and good, stable cash flow. I can't even think of one thing anyone is clamoring for these days besides gold, and even given that, gold's price can't seem to rise above the downtrend line. Go figure.

Anyway, I think the fiscal stimulus will provide a quick sugar high, but like the spending stimulus before it (ie budget deficits are really stimulus), the trade deficit will just quickly drain it back out of the economy, leaving us that much deeper in debt and with little of value to show for it.

I wish I could see something positive coming our way. You get a depressed view of things when everyone in the house is unemployed and your healthcare runs out in 2 weeks. It will cost $1600/month for equivalent coverage (3 people) starting Jan 1.

Vad,

I am really enjoying your book.

2nd,

My idea of social equity......A brand new Ferrari for me:)

Everyone,

I believe great trades are an amalgam of technical ability combined with a fairly simple (and contrary) fundamental take. That said, I will be looking at GM as a potential long.

"Everyone" knows they will not be allowed to fail anytime soon. And still the price is in the basement.

Oil is crashing. Now, the big-assed trucks the Americans make seem to make more sense than they did 6 months ago when oil was at a buck-fitty...

Next, Mr. Obama will open the credit spigot like Niagara Falls, and the people will shop!

BTW....The oil chart Bill supplied with the week in review looks dismal.

The link below is to an article that contains quotes from money managers at Vanguard, TR Price, and Fidelity. Here is a snip of a quote from Mr Glock, Vanguard, who says it with clarity with regard to Money Market Funds:

"Mr Glocke said: “Interest-rate sensitive investors will start to look for alternatives . . . the Fed is trying to force investors out of a low-risk environment.” (my emphasis added)
http://tinyurl.com/7c6uy8

Maybe this remark is one he made out of frustration, but with a Government that now tells us what kind of tv we can watch, what kind of light bulb we can burn, when to water the grass, how to divide the garbage before pickups, and on and on, just maybe I can believe that this same Government now wants to "force" me out of Money Market Funds into their Bonds, or their Banks, or their Market.

He wrote this in 2003... I believe it is even more relevant today than it was then, because I think our good credit is running out. With him being one of Obama's economic advisors, I'm surprised we haven't heard more of this lately. Perhaps they want to milk another trillion or two from China before proposing anything that might upset the status quo...

The entire article is here, and worth reading, IMO.
http://www.pbs.org/wsw/news/fortunearticle_2003102...

A chunk of it follows...

The time to halt this trading of assets for consumables is now, and I have a plan to suggest for getting it done. My remedy may sound gimmicky, and in truth it is a tariff called by another name. But this is a tariff that retains most free-market virtues, neither protecting specific industries nor punishing specific countries nor encouraging trade wars. This plan would increase our exports and might well lead to increased overall world trade. And it would balance our books without there being a significant decline in the value of the dollar, which I believe is otherwise almost certain to occur.

We would achieve this balance by issuing what I will call Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports. Each exporter would, in turn, sell the ICs to parties -- either exporters abroad or importers here -- wanting to get goods into the U.S. To import $1 million of goods, for example, an importer would need ICs that were the byproduct of $1 million of exports. The inevitable result: trade balance.

Because our exports total about $80 billion a month, ICs would be issued in huge, equivalent quantities -- that is, 80 billion certificates a month -- and would surely trade in an exceptionally liquid market. Competition would then determine who among those parties wanting to sell to us would buy the certificates and how much they would pay. (I visualize that the certificates would be issued with a short life, possibly of six months, so that speculators would be discouraged from accumulating them.)

For illustrative purposes, let's postulate that each IC would sell for 10 cents -- that is, 10 cents per dollar of exports behind them. Other things being equal, this amount would mean a U.S. producer could realize 10 percent more by selling his goods in the export market than by selling them domestically, with the extra 10 percent coming from his sales of ICs.

In my opinion, many exporters would view this as a reduction in cost, one that would let them cut the prices of their products in international markets. Commodity-type products would particularly encourage this kind of behavior. If aluminum, for example, was selling for 66 cents per pound domestically and ICs were worth 10 percent, domestic aluminum producers could sell for about 60 cents per pound (plus transportation costs) in foreign markets and still earn normal margins. In this scenario, the output of the U.S. would become significantly more competitive and exports would expand. Along the way, the number of jobs would grow.

This plan would kill the small importers of goods into the U.S.

I run a small business importing goods into the U.S. for my customers. The goods that I import are niche market goods and i don't compete with the likes of Walmart. The way I read this, if this idea becomes reality, all of a sudden I would have to compete with Walmart on acquiring these ICs. And just like HB&B controls the financial market, this idea would give Walmart and the likes the control over the import/export market, and by extension, give HB&B control of "goods" market as well, since these ICs will most likely be traded on an existing exchange.

I would not be happy about this, but then again, I might be just talking my book.

BTW, long time lurker, first time poster. The commentaries by posters and Mr. Cara have been very educational.

I like that one and it would definitely level the playing field, but does it meet parameters/definitions for free trade?

• the length of the crisis
• the explosion of unemployment worldwide
• the risk of sudden collapse of all capital-based pension systems

Yes, and the second phase of real-estate foreclosures just about to begin... Lots more government spending programs.

I see no reason it isn't legal under US laws, since it does not tariff either imports or exports. The WTO rules I found wouldn't allow you to limit a company to importing as much as it exports, but I couldn't find anywhere that it wouldn't allow it on a grand scale as long as it was transparent and didn't single out any particular country or products. I'm sure they'd freak out, though, but then again, its pretty obvious they have abused our free trade stance for the last 50 years, and eventually there has to be trade, not just selling us goods and lending the money back to us til the debt piles all the way to Pluto and back. Here is the relevant text from the WTO site. They refer to it as "trade balancing".

Investment measures: reducing trade distortions
The Trade-Related Investment Measures (TRIMs) Agreement applies only to measures
that affect trade in goods. It recognizes that certain measures can restrict and distort
trade, and states that no member shall apply any measure that discriminates against
foreigners or foreign products (i.e. violates “national treatment” principles in GATT).
It also outlaws investment measures that lead to restrictions in quantities (violating
another principle in GATT). An illustrative list of TRIMs agreed to be inconsistent
with these GATT articles is appended to the agreement. The list includes measures
which require particular levels of local procurement by an enterprise (“local content
requirements”). It also discourages measures which limit a company’s imports or set
targets for the company to export (“trade balancing requirements”).
Under the agreement, countries must inform fellow-members through the WTO of all
investment measures that do not conform with the agreement. Developed countries
had to eliminate these in two years (by the end of 1996); developing countries had five
years (to the end of 1999); and least-developed countries seven. In July 2001, the Goods
Council agreed to extend this transition period for a number of requesting developing
countries.
The agreement establishes a Committee on TRIMs to monitor the implementation
of these commitments. The agreement also says that WTO members should
consider, by 1 January 2000, whether there should also be provisions on investment
policy and competition policy. This discussion is now part of the Doha Development
Agenda.

Placing a stop limit order on 500 shares of UYG: stop at 5.9, limit at 6. The collapse of the TED spread during the past week suggests that the banking crisis is over -- if the banks are not scrambling for cash anymore, then their recovery is not too far away.

Placing a buy stop limit for 100 shares of ACI: stop 35.75, limit 35.9. Preparing for the economic recovery.

It would seemingly force up the cost of exports, which may then trigger further domestic production-well, one would think.

ALOHA !!

I am always amazed at the many ways US economists and legislators along with businesses who have a need for WELFARE always come up with these schemes to short circuit productivity in America. This bit by Warren Buffet is yet another. It is yet another magic pill for gluttons to lose weight without any effort.

America is an import glutton(we are fat with trade IOUs). We long ago volunteered to export our manufacturing industry to foreign sweat shops and now we complain because there is a trade deficit. How do we dump this deficit onto those who produce our goods and services for us? Not much difference than the eternal problem of trying to dump our NATIONAL DEBT onto foreigners with little to no blowback for us. In other words how do we achieve the maximum amount of gain for the least amount of effort on our part? That should be AMERICA'S new MOTTO "MAXIMUM GAIN FOR THE LEAST EFFORT" rather than "IN GOD WE TRUST", because I run up against this mentality every where I go in America. It certainly thrives in DC and WALL STREET but it thrives as well at unions and throughout the Fortune 500 and small business as well. We want our greed and we want to eat it too!

Well Buffet in his own article spells out the problems and even alludes to this as a tariff, but a fair one! He gave the example of a Japanese car exporter having to add an extra $2,000 onto the cost of his product because his product was in demand and he then said this added cost would create competition issues where under certain economic hard times the Japanese could be forced to eat that $2,000 IC fee in order to be competitive. So in effect it hits unfairly the Japanese car manufacturer's bottom line.

Then "nemo" says this in reply ..."It would seemingly force up the cost of exports, which may then trigger further domestic production-well, one would think." HEY ... I think you just defined the mechanics of a TARIFF!

There is a trade deficit for one simple reason. We want what the World produces more than the World wants what we produce! Once again "consumers" on a global scale are in charge here. They vote with their dollars ... There is no magic pill for that! Like there is no magic pill to lose weight!

Just like the BIG 3, AMERICA as a whole needs to come up with more products that the World wants. Unless you call FRAUD a product then America has a long way to go and the biggest obstacle to becoming a global competitor in trade is as usual our own bloated government and the huge morass of regulations and taxes that US businesses must contend with to even produce one widget! This is why successful American businesses left the USA in the first place. Even GM has a large plant in China!

It is no coincidence that Buffet has an agenda and how many US based manufacturers and service companies does Berkshire hold? What sort of gambling bureaucracy would have to be devised to implement this tariff? If it was instated then I predict within six months a new ETF will be devised to trade ICs! There's the symbol ... ICS!! Then the "double" ICS Would be DICS!

More paper shuffling solutions and God knows this country can use another good paper shuffling idea that spawns yet another gambling product for the casino! Why work when you can charge paper shuffling fees? Why work when you can trade?

This idea is for lazy people! Yes GLOBALIZATION has finally globalized ... LAZY!! It certainly has GLOBALIZED ... FRAUD!

Adding hurdles to trade is not FREE TRADE!

IT ALL WORKS UNTIL ...