Cara's Commentary & Community Chat, Fri., Dec. 5, 2008

and this bodes well for emergency approval of Automotive bailout.

a jobless number three times the expected wouldn't have surprised me.

Whats all the fuss about. layoffs are expected. We have had layoffs month after month for several months. the news would have been a sharp decline in jobless #s.

http://www.bls.gov/news.release/pdf/empsit.pdf

Table A-12
U-6 is 12.5% unemployment up 50% from last november.

U-3 is reported to the public at 6.7%.

Hey gang,

I was gone for a month, 3 weeks planned, and 1 week not so planned, courtesy of the PAD protesters in Bangkok!

I'm liking the new site interface... kudos to Bill's design and development team.

I'm getting rocked in my longs, as always it seems! Decided to take some short positions (QID for now, SKF and maybe REW later)... I agree with those who are feeling more and more bearish due to all these "stimuli" we keep hearing about. Where is all this debt going to come from?

Meanwhile, I remember when 6 months ago we heard about $200 oil, now $25 oil! Anyone else feel that oil is dropping further than it should just as it rose further than it should have?

I think the pendulum is swinging too far back the other way with oil....we all have to use it and the major fields are in decline

Jesse Livermore would have made a bundle in this market...I'm getting slowly bled to death...I'm getting tired of fighting the tape by writing out of the money puts and covered calls on my longer term holdings...I'm collecting nice premiums but it's like using a bucket to scoop water out of a sinking boat

Andrew Mickey also has an interesting view on oil prices:

http://tinyurl.com/5smpat

I am beginning to believe that not only is there not a bull market now of course, but that the widespread presumption that one will begin anytime soon MAY also be in error. We may be beginning a slow-slide that could last until I'm well into my midlife crisis:)

Well there goes 827. Next stop 815(the low from Dec 1st) unless we can get back above it. After that it's the low from 11/21 at 741.

Rob.

i am not dismissing the number. but its not news. to the point of NotNekkidYet, its prob much worse.

I suspect we will reach 8-9% unemployment very easily. Many cuts are still going to happen at new yr to purge and start anew in 2009.

With or without a bailout, consumers are not going to flood back to buy shiny new cars in 2009 = more car dealer closures and layoffs.

Manhattan is a ghost town as far as banking jobs. Retail also will continue to cut. then you take the undocumented workers. In NYC, they are closing down several fire stations during night-time hours!

They would need to report 9% unemployment before i even raise my eyebrow. yes its bad news but its not really news, just confirmation used as news. again just my opinion.

EDIT: go to http://www.marketwatch.com/

that is the biggest type font i have ever seen to report job losses.

Careful sharkie. With respect, I've been betting on the bear since August and I have been more confirmed in that belief with every prediction of a bottom.

BUT

it's only when everybody, especially the experts, believes in the inevitability of the bear that the bull starts snorting and pawing the ground.

;0)

Bill said “pundits were saying that the Bull market that had started in 3Q02 was “long in the tooth”. Suddenly on the scene”
1. A Brahman scholar or learned man.
2. Used as a title of respect for a learned man in India
Problem is everyone is using name PUNDIT to describe them self and they are not pundit
These are phony PUNDIT. So, they are never right.

I have a fib on the DJI 60 minute chart using the extremes 11/14 and 11/21 as the high/low, respectively. It's a nice fit on recent price movements and right now we're testing the 50% retracement as support (~8154). If that breaks, the next support is ~7977.

The successfull hold of that support (so far) is what keeps me from going short via the etfs.

piazzi,
Great analogy!

OOOH RAH!

Great post piazzi.

Happy belated birthday (nov 10th).

My wife got laid off on sept 10, fie for unemployment.
Has not received unemploymeny check yet. She called many times and was told they are back and will take 8 to 10 week before she will get check. They are waiting for information about severance pay
She called her company to speed up serverance info. She was told PAYCKECK does their payroll and they should have provided information.she called paycheck, they said they have provided the info to MA
She went to local unemployment office with all info in hand, 3 hour waiting to see someone. When she shows someone there and told them she has all the info to show them. Guy said someone suppose to call you before end of week. Nothing happen two week wend buy.
She called again and was told we are back up and will take time.
So, if anyone is getting layoff it may take long time to get unemployed check. For us we can wait

Right, I agree. In my experience though, The real pro's do not buy stocks until they are in a definable uptrend, although my experience and a 2 dollars will get you on a city bus; that thing that was being said to me yesterday about the next larger timeframe dictating the direction being a well-known and respected principle. I remember when Kodiac o and g made a nice run last year, it wasn't until the thing was coming around on a weekly chart that all kinds of folks began buying the bejabbers out of it, and made mondo-money in the process. Really, it was the same broken stupid company that it had been 3 weeks before, but then "the game was on".

I liken this activity to an old New York streetcorner, remember the 3 card montey games? In the stock market it is as though someone pulls out a deck of cards spontaneously and beging dealing a game slightly unlike any you've ever seen, and invites the world to play. Each one has elements of a pyramid scheme, or a Ponzi if you prefer, but the game involves extracting profits from the players, just like a real casino. Then, when the sucker is holding tight the bag, without any announcement the game is over and the chips fall to the ground, the smarter players absconding with the money of the dumber.

Google is a dead duck too. It will go to 10 bucks a share before this is over.

"So, in that analaogy, the best course of the action might have been to let defaults and bankrupcies, in other words, to let free market take care of itself"

Very good post in general. But, lets keep in mind, that the above was Hoover's recipe to deal with crisis in 1929. I'm not saying that our kings P&B will succeed in averting disaster, but at least they are trying. To their credit, they succeeded in 2006, when it was politically unthinkable to let the economy sink in the mid election cycle.

"So, if anyone is getting layoff it may take long time to get unemployed check. For us we can wait"

This delay will cause additional mortgage defaults and additional pressure on banks.

10:34 (Dow Jones) Institutional Risk Analytics Director Chris Whalen sends an open letter challenging incoming Treasury Secretary Timothy Geithner to a public debate on the success of the bailouts so far and future strategy. Whalen has been a vocal Geithner critic for his role in bailouts of AIG, Citigroup (C) and other financial firms, which Whalen believes prolong problems and risk more taxpayer money. He thinks these firms and other large dealers of CDSs are basically insolvent and should go through bankruptcy rather than bailouts. Geithner not immediately available to comment. (EBW)

Fine it will go to 70 then.

shark, you need to reference the posts, as the dialog doesn't flow well with chronologic order of posts.

Vinod,

sorry to hear. My company is also going to let go of people 100% in January. not sure why they dont get it over with in Dec and not carry the related costs over into 2009. Maybe they really dont want to fire people on xmas.

as far as i know i am safe but we all know how that can turn out.

Hope your wife gets her checks soon.

No, I did not vote, and most of the country did not vote either in 2000. Just to keep it clear. When we invite crooks to run prez election committees (starting with Bush senior) or country and finance directly (now), all kinds of shit happens. Only people with integrity and no conflicts of interest should be leaders. You would think that this should be a common sense, but it's not.

I forgot to thank congress as well.

I believe the merger vote on BAC's side is due out at 11:00am so it should be out imminently. Again, I think an approval would be disastrous for BAC.

I can only answer your question by saying if another major downward wave occurs, which is possible because there are plenty of things which could go wrong from here. No one can call the bottom, and there are those that feel there will be no bottom for years. You may have to sell at a loss in order to preserve capital, but the better move is to take profit when the upward trend stalls, and wait for the pullback to buy again.

Job number manipulation

They are always manipulated by the manner in which they are measured — birth/death index, limits on applying for unemployment comp, what constitutes a job, etc.

They are always revised, sometimes drastically, due to requirement to report by date rather than by availability of valid data.

With all else going on lately any number which can make the scheme more acceptable can be expected.

------------
The US auto industry is a metaphor for the whole country.

CEO = Member of Congress
Union Pension & Health Care = Social Security & Medicare
Business Model = US Economy
Average Auto Worker = Average US Citizen

CEOs and Congress have income and benefits far beyond those they manage/govern. During the recent hearings the CEOs criticized for $20,000 personal jet travel quickly succumbed to the public humiliation and took to the road.

The CEO and his board of directors (supposedly representing the shareholders) vote their own pay and benefits — just like Congress. In theory both can be removed from office, but in reality this is done only in the most extreme cases and even then they go with all their benefits, lots of bucks and a future filled with board pay at other companies or a new job as lobbyist.

Neither auto employees' benefits nor Social Security/Medicare are funded — management and congress have found other uses for the money decades now.

The car companies have flooded the market with oversized, inefficient models, have far more employees than they can use and make far too many different models which even compete against their own. They have 15 times as many dealers as Honda and Toyota.

The overall US business model — we buy most of things, food, furniture, toys, cat food, clothing — from foreign manufacturers and they buy our debt. This enables us to buy more of their stuff, but we get things and they get paper IOUs. Hmmm, are they really that dumb?

While the current crises are "demanding" the attention of Congress, the CEOs who have offered to work for a dollar per year (a big come down from the $2,600/hr they've been getting), Congress can avoid dealing with tax reform, Social Security or Medicare, health care and a whole list of issues. Most conveniently they will avoid admission of their aiding and abetting the financial system collapse by boosting the margin from 20:1 to 40:1, allowing Fannie and Freddie heads and boards to be paid a percentage of all the risky loans they made and the lack of oversight which could have prevent it all.

Suddenly THESE jobs must be protected, but the millions already lost be damned.

XLF is up on another 200 point Dow down day. Almost unbelievable. Yes, I bought FAZ two days ago, and after the Dow falling over 425 points, I am only up slightly (+1%)...Hoot!

NYUGrad,

It's not a bug -- you can't edit any post people have replied to. I think it's just to avoid the issues that come from it. Picture someone replying with "I agree!" and the things you could make them agree to by changing your original post. ;)

Thanks for keeping your eyes open!

Jeff

Anyone else see the short squeeze going on in Hartford this morning?

Up 60% and traded 3x normal volume after reporting ample liquidity and upping 2008 guidance.

hey everyone, so where do you think that crude oil prices are headed?

Still trying to find a bottom. I thought a trade in DIG with a stop at the 52-week low ($21.42). But I don't see anything in the charts to like about it, so I'm not going to be a hero.

In the meantime, the ultra etfs are giving conflicting signals. It's a real tug-o-war.

I noticed a divergence between those 2 in the last 2 days. Anyone with ideas why? Thanks!

Very interesting article and interviews with Hugh Hendry at www.1440wallstreet.com

sold @ $22.60

Good Morning all, on this gruesome day, in this gruesome week, in this gruesome month, in this gruesome year, in this gruesome decade.

Things have got to be looking better at some point!

Don Coxe's call correlates strongly with Bill's TOG, for largely the same reasons. He's calling cash and T-Bills the current bubbles, and predicts that they will burst with breakneck speed.

http://tinyurl.com/5b6oho

http://change.gov/page/content/discusseconomy

She sounds almost glib in her video, and obama might be paying us lipservice in asking for our feedback.

but as an American i have to try and provide my input there.

I would encourage all here to do the same if you choose. maybe just maybe some positive change can actually come of this. I wont know until i try.

Opened small position at $36 1/2, probably to hold and add if its going lower.

What happened to PXP - I didn't see any news, is it just going down along with everything else?

Unsustainable peak in bonds.
Unsustainable peak in yen.
Small investors not in the markets.
Sentiment record low.
Oversold market on long term charts.
Eliot Wave analysis.
Smart people like Cara or Faber said so.
Financials rallying in the face of terrible news.
Good time of year for a rally.

The only case against that I see is continuing deleveraging/deflation, although we know from the 1929-1933 that powerful bear rallies do happen in the worst depression.

tango6
How would you compare investing and protecting yourself from this in the ring?
At least he didn't give him the tounge.....

http://www.youtube.com/watch?v=0BoLkv83XkE

BAC shareholders approved merger with MER...wondering what the market will think.

re: job numbers. Unable to speculate how accurate those are. John Crudele, NY Post, is convinced they're cooked. In any case, they're a lagging indicator but I wouldn't use a spot number. I'd do a 3 or 6 month moving average(after revisions LOL) and compare to current month to get more accurate view.

re: fear. when I compare VIX/VXN against INDU/SPX and COMPQ, they're not showing the fear levels of Nov 20/21 or Oct 26/27. A good test would be to hit those levels or exceed them and the MACD diverges to put in a tradeable bottom. Right now, they're in no man's land. Ditto $CPC (stockcharts.com), no extreme movement.

so I don't have a good feel for what's likely to happen next. I do believe the 870/875 on the SPX is pretty strong resistance. Support looks like 715. Something for everyone.

FD:Short but not near enough.

sorry to hear. My company is also going to let go of people 100% in January. not sure why they dont get it over with in Dec and not carry the related costs over into 2009. Maybe they really dont want to fire people on xmas.

NYUGrad,

Can you say what type of business you are in? Just curious.

Regarding USD and converting it to Canadian Dollars - you might want to check into the merk fund.

(The Merk Hard Currency Fund (MERKX) seeks to protect against the depreciation of the U.S. dollar relative to a basket of hard currencies. Hard Currencies are currencies backed by sound monetary policy, including the euro, Swiss franc, Canadian dollar, Australian dollar, to name a few. Gold is the only currency with intrinsic value, and, as such, qualifies as a hard currency. ).

VB

The Market, for whatever reason is too focused on too few media inputs. That said reminds me of something that I read this morning in the Pfenning:

" ... Trichet said something yesterday that made me believe that he won't become Trichet-san... Trichet said that, "we mustn't confuse Deflation with Dis-inflation" He went on to also say, "The ECB will NOT get trapped at rat[e] levels too low"

So... We had Australia drop 100 BPS, New Zealand drop 150 BPS, Sweden drop 150 BPS, U.K. drop 100 BPS, and Eurozone drop 75 BPS all this week, and for the most part, none of these currencies got taken to the woodshed for debasing their currencies by such large margins... Normally, a 25 BPS rate cut can cause a currency some major problems... But nothing here... So... Why... Do... I... Think... This... Is... Happening...? Hmmmm... It's probably a case of unconventional measures are seen as not working, so conventional ones have little chance. And... If you really get to the root of the credit crisis problem... It alls circles around the fact that the availability of credit not the cost of credit is the issue.

But that doesn't stop these Central Bankers from slashing rates at an alarming pace, eh? I think these Central Bankers are quite aware of the fact that the ** markets' focus has become so myopic on the Credit Crisis**, that they could do a handstand on their desk while sticking out their tongue while announcing a rate cut, and the markets wouldn't notice ...." [my ** for emphasis]
http://www.dailypfennig.com/

We are all "focused" by Media headlines and content, and the Media (follow the money) is focused by content provided by those who will profit in greed and/or power by having us think the way they intend. Too bad. In any case, that quote from Pfenning is worth consideration at leisure.

I'm heading outdoors for a period of healing in the realm of reality. Good luck to you all!

"Can you say what type of business you are in? Just curious."

Other than losing money on the stock market? I sell for a market research firm. my client's clients are companies like pepsi, msft, ibm, vmw, gm, etc etc. they buy global research services from my clients to commission research studies for new products, competitive landscape info etc. my client then comes to me for the actual respondents to take surveys for quantitative data.

as far as my job description: wine and dine clients, make sure they are happy, when things go wrong make sure i fix it quick.

thats all i do.

agree..rolled out of the dec puts and got into jan105 puts...thing is nuts

Sorry to harp on this, but I think everyone needs to pay attention to this company right now. MER has half the assets of BAC and most likely only 1/4 (at most) the equity of BAC. The combined leverage ratio is going to be a whopping 17:1 to 20:1 after this merger goes through (hard to know without knowing for sure what the write offs will be for MER this quarter).

Last 4 years, She used to work for a company with no product. Company stared by 4 scientists from Harvard and MIT and has total 20 employees. Their funding got shutdown by private equity firm baker Capital and
Rustic Canyon Partners
This downturn will have big impact on innovation and new discovery

We are about 1 hr away from the recent trend of a "news release" on a friday afternoon coming out that moves the market strongly one way or the other. Will we have another one this afternoon?

interesting. If true, the count would indicate that we have a long way to go to the bottom: 33 down days and 27 up days in the past 14 weeks - a difference of only 6

I just bought 300 more shares of TCK at $3.02 (the previous purchase was yesterday at $3.54, when my buy stop limit order was triggered). I figure that the only way to trade this market is to buy on the way down and sell on the way up in fixed price increments and small quantities. TCK also has the property of a call option but without the option premium. It can go bankrupt (with very small probability IMO) or it can quadruple as soon as the market stops panicking.

Dark Pools huge expansion:

"London-based ICAP, which in 2006 ended merger talks with London Stock Exchange Group Plc, joins other so-called MTFs including Chi-X Europe Ltd., Turquoise, Nasdaq OMX Group Inc. and Bats Trading Inc., all of which aim to take market share from the traditional European stock exchanges. ICAP will focus on offering a dark pool."

"Institutional investors are increasingly turning to dark pools, which compete with bourses including the New York Stock Exchange, LSE and Nasdaq OMX and allow investors to disguise their strategies. The systems match orders anonymously and don’t publicly disseminate quotes. In Europe, they are proliferating along with alternative exchanges as new rules spur competition and demand best execution for customers"

http://tinyurl.com/5awbwt

ALOHA !!

I was just told by my brother that all his company's projects in both Dubai and Qatar have either been postponed until next year or cancelled! His company went from GREAT to GONE in 11 months time! They are now laying off 70% of staff. All their domestic US projects are in trouble and being cancelled as well.

What does he do? He is a design architect for a Dallas based company whose many clients include Neiman Marcus, JC Penney's, Sears and international stores as well.

Last week he told em he would be flying to Qatar for two weeks and two days ago he told me he may get laid off! What a difference a week makes!

I have to say I have lived through a number of major economic downturns in America but I have never been in one like this where a vast majority of friends and relatives are either out of work or their business may have to be shut down. In the past downturns maybe two or three friends were effected but now it seems most all are!

The jobs numbers show that!

Price of gasoline here in Hilo Hawaii is $2.59 last time I filled up!

Unemployment rate here in Hawaii is 4.5% ...

HIG up about 100% today - will be an interesting end of today for this one....

Just to share my B.S. experiences with the room, This morning I identified HIG as being a prime mover at approximately 9:31 am when it was down at $9.50.
It's now at 14 and change.

But as paralyzed with self-doubt as I was (remember my yesterday post) I could not act even though I knew what the right thing to do was, I was unable to do it. I will spend the weekend with my favorite dominatrix who will, I trust, punish me severely for my lack of testicular certitude. Just kidding.

Now that made me laugh...:)

needed that......

in at 21+ this AM, out 24+ moments ago. This thing is still going up though. There is something big going to happen, I can feel it, but don't know what. There are a few anomalies in the market that are hard to explain.

http://events.startcast.com/events/199/B0003/#

Maybe it's my imagination, but volume across the major indices seems rather low.

Buy Goldcorp today or wait for a lower price next week...

Hmmmmmmm

I can follow the logic of being short financials, but holding a 3X bear financials over the weekend could be deadly if there is an announcement of a FED/Treasury 4.5% mortgage plan that gets layed out in detail over the weekend.

With these leveraged funds - one monster day/week goes against you and these vehicles never recover. Look at FXP.

why is it so hard to buy when prices bounce south?

Fear that they will go lower. Remember, it is a much stronger emotion than greed.

I'm regretting not taking long trades early today when the risk/reward was favorable. I did so for one reason: fear engendered by the dismal jobs numbers.

So it goes.

i'm making myself a new rule after trading FAZ for all of 61 seconds and before i get myself into trouble:

if you need a log scale on the weekly chart, DO NOT hold overnight

these things are scary.

Who knows? It could happen right? And if financials and Tech lead the way my UYG and QQQQ will finally come back.

I'm still holding my short on SSO to make sure HB&B keep taking it higher.

Call it superstition but it's worked since I did it.

And the position I sold is way down from where I sold it.

Rob.

Has anyone seen any news to explain this turnaround. I can't seem to find anything significant. Maybe the banks are finally using our money to buy stocks.

Rob.

they changed it to a kangaroo...

Rob... there is no particular news to explain this rally. It's a rally on bad news. It's a price/information divergence - sentiment shift in action; major principle of how the markets work in action; Smart Money trading against the obvious vs. Crowd trading on obvious in action.

Market is discounting mechanism. Movement based on widely known news would rather be exception than normal event

I voted for RON PAUL and I voted my conscience and I voted my beliefs without any compromise!

So did I in voting for Obama, as I'm sure did others in voting for McCain. You DO NOT have an exclusive franchise on principle.

I just bought 2000 of WGW at $1.03, replacing the shares I sold last week at $1.25. Placed a sell limit order at $1.25 for these shares once again. It is hard to guess local tops and bottoms in this market, which can change on a dime. So I'll try just buying the stocks I like in fixed price increments on the way down and selling them on the way up, automatically. In this way, I should make money on all the fluctuations we are having.

Sold @ $28.5

I could be wrong (which has been the norm - actually what was discouraging was that I was able to predict a lot of catalysts throughout the summer, but the market reaction was almost always the opposite - anyway, i guess that means i was wrong, or early, of whatever - incredibly poorer to say the least), oh, where was i, wrong, that's right.

Okay, it seems like we have a lot of up days on weak volume and then every now and then, we get smacked down hard at the end. That's the pattern I am seeing. I chose smacked down to describe it (I will leave the more colorful descriptions to the shark attack).

Once bitten, twice shy, Three thousand times bitten - not much left.

Oh, its amazing to see how sometimes things move together whose connection is not necessarily the strongest. I am guessing that this is the result of etf bundling, but then again (see above) I could be (what was that word that fonzi couldn't say?). Oh, some of you younger types might wonder who fonzi is, no wait, you guys grew up watching our tv shows and listening to our music. Nevermind (Rosanne Rosannadanna - no who could that be?)

Gotta go make a stock sale that i will undoubtedly regret.

NYUGrad -
Picked up GG at $19.79 on a limit order today near the low (follow your lucky hunch). MM often likes to dip twice a day to pick up those limits at 10 cents to 30 cents below the dollar resistence. Be patient and plan to add more under $20 and go long with generous stops to capture the TOG. Cash and treasury bubble will break, dollar will dive, and gold will soar but may take months. In the meantime, GG oscillates in concert with Comex suppression of gold spot price thru midday.

Know your history.

Picked up some RS @ $95.00 right at the close.
Had to wait for a while to see it at double digit levels.
Anything over 10% down and I'm gone.

I PASSED UP CVX AT 68.50 AND GG AT 19.95 TODAY FOR THAT VERY REASON.....SO IT GOES..

RE: JOB LOSS DATA:

IF THE JOB LOSS RATE REACHES 800,000 TO A MILLION IN FEB, 09....WILL THE "OBAMA FLOOR" TO THIS MARKET HOLD?

I'm with ya, NYUGrad. This market, and much of the commentary out in the blogosphere, is making me want to fashion tin foil hats for myself and my family. :0 :)

This one is as good an example as any. I understand about half of it. I think.

http://seekingalpha.com/article/109210-the-manipul...

i definitely think dollar and treasuries are the riskiest place to be...shorting tlt...think it hit top when it hit 113...

quick, which way is oil going - up, down, all the above? (I am voting for all of the above). Gotta go, be right back.

By the way, I wanted to panic out after the job numbers came out, but didn't. Wanted to panic out several times this year and should have. But no, I had to try and stay long (do that investing thing). It killed me. I am wondering if we will ever get back to a time where that makes sense.

I just sold my PetroBras which was way down from one of our earlier bottom calls (might have been from around the October 10th bottom. I did buy in in a 3 day period bracketing that bottom. Unfortunately, oil has still kept going lower and I sold out of a lot of the other stocks to try and minimize my losses (I sold a lot of stuff right before the Geitner announcement.) That sucked. So, there I go again (as ronny-baby used to say).

Its all part of that end up living in a box by the river retirement plan that I've got going. But, I will hang onto my plasma tv. I mean, you have to have priorities. Oh, I got officially divorced on tuesday after a 3 year nightmare. The losses due to the unbelievable divorce laws and that process almost rivaled my stock market performance for the year.

It seems like i am doing a better job in the market these days (since reading this website), but this could also be because I have a lot of money on the sidelines (unfortunately I used margin before and got slammed) and I was trying to be an investor throughout this awful period. I am also ignoring alot of the mad money, fast money advice.

Sad thing is, I invested in a lot of good companies with lots of good business on the books at great rates, but did not see the credit crises coming and the dramatic effect on the worldwide economy. A colleague of mine told me about this website sometime in the summer and i left the card on my dresser for a long time without checking it out. Perhaps if I had come here, I would have gotten more clued into the looming disaster (Who knows, i heard bill fleckenstein talk about shorting rimm and I tuned that out, also).

Anyway, the overall tenor here is more of an extremely short term trading perspective than I wanted to have, but the go long thing was a disaster. What I should have done was gotten pretty much everything into cash and sat all this out.

Also, the website seems to be more into currencies, commodities, and things that I don't really understand that well and wasn't interested in all that much. But I do read all the posts and try to learn from them.

One thing is, after losing an enormous amount of money in the market by staying way too invested and way too positive, I am becoming better at this. I should have been more conservative and come here sooner.

By the way, steve leasman (not sure how to spell it) said that all of the people on the set with him thought that the job numbers signified something along the magnitude of minus 5 to minus 8 on gdp for the quarter. I realize that it was only the 41st largest job number when adjusted for population. However, if we are dropping that much in gdp, it makes me wonder what we are going to experience to get out of this.

The amazing thing about my enormous losses in the market this year was that I was always someone who railed against the federal debt, but I had no idea about the cdos, mbs's, etc.

Do you really think that the market will continue to stay in this range or go higher if we have contracted so much so quickly? Maybe a quick contraction will result in a faster expansion. We'll see. I guess we have to figure out what makes for a real economy. If we are needing more manufacturing, well how do we compete with China, India, Vietnam, or Kenya? I have been concerned about our service/consumption based economy for some time (which again is ironic that I got slammed so hard this summer, but I got seduced by all the bulls and i guess i wanted to believe).

I have 3 wonderful daughters. I wonder what kind of world the are facing. If manufacturing is increasingly being done by robots and cheap labor, what will the rest of us do?

Trust me, I am a positive, optimistic person. However, the divorce and the market losses of late have beaten me up. I am concerned about how we try to support a world with increasing population and increasing consumption. Getting back to the website, how do you invest for the future (with what little money I have left?) I know that's why some of you talk about gold versus currency and all the credit and debt. I'm going to shut up now. Sorry to be so wordy.

Speaking of spin -

Right now the headlines for oil are along the lines of "Plummeting Oil Markets Reflect Slumping Economy".

Fairly soon in my opinion, we will see more headlines like "Low Oil Prices Help Struggling Consumers" and "Low Oil Prices Help Revive Struggling Industries" etc.

Low oil prices are defiently good for small businesses. For individuals, lower monthly costs for oil will provide some stability in repaying loans/mortgages/credit cards. I know there are many other forces at work, but low oil prices are always a good thing for the consumer!

BillySundance, it may have started already.

Just received the following email update from WSJ Heard on the Street.

“Falling oil prices and declining mortgage rates could pack a potent, one-two stimulus punch. Combined with the flood of government bailout programs, they could yet knock deflation from its perch as the market's biggest worry.”

“if the Fed prints it, Americans will likely spend it. That could KO the risk of deflation faster than markets think.”

http://tinyurl.com/5mwum8 (may need subscription)

It would be great if holding your nose and buying for bad news will start working again. There will be plenty more bad news to come and if the market rallies in the face of it, I'll be psyched.

Anyone notice that the DOW, Nasdaq, and S&P all closed higher on the week than they started.

Come on 11K by the end of the year!!

Rob.

on the other hand, one of the things that is true about the stock market is that it cycles in the short term, up and down up and down up and down.

I think much of Elder's strategy with trading is to watch the value zone between a short and long moving average (like 7day and 25day). When things go above the value zone, short, when things go below the value zone go long. There are of course the RSI signals and whole lot more, but I think the key "take it to the bank" observation is that things fluctuate in a short wave with a long trend. When you're 200pts down, the idea is that USUALLY you're going to cycle back up (at least temporarily). Cheering something to go straight up or down, is the natural human tendency :) I find myself hitting the short button like pulling a trigger hoping my target will die, but it just keeps on cycling :)

"“if the Fed prints it, Americans will likely spend it. That could KO the risk of deflation faster than markets think.”

Yes, seriously, 1T$ in stimulus is a torrent of money. 3000$ for every man, woman and child. On top of the other bailouts, and on top of the savings from deflated oil & food prices. This is a clash of titans: a historically vicious recession with the full might & force of the US government. Though I would cring at calling the government the "good" guys, they'd still be the ones I'd be rooting for.

Making or losing money in the market is all good, but right now I'd just wish my fellow men to breathe again and be able to live their lives without this national feeling of impending doom everyday. Not healthy :-P.

ALOHA !!

Risk is being forced upon us because our money is "all risk" and no "value"! The liabilities of a US Peso are endless!!!

I missed the babble of billary, but got an opportunity to see Mad Money today. Jeesh, that guy is something. The first thing out of his mouth that I was privy too went something like this:

"I just want to go on record as saying that the Fed is finally doing everything right. Last year, when I first warned of this credit crisis, I stated exactly what the Fed should be doing... They didnt do what I said they should. But now, finally, they are doing exactly what I said they should... a little late, but better late than never. Finally, they have a handle on this problem. Now we just sit back and let the medicine take hold."

I threw up a little bit in my mouth and changed the channel. The lunatics are clearly running the asylum... that cozy retirement box by the river may well be worth it just to get away from the insanity.

DOW JONES NEWSWIRES
Aetna Inc. (AET:$21.26,00$1.39,007.00%) on Friday registered with the Securities and Exchange Commission to sell from time to time an indeterminate amount of debt securities, common shares, preferred shares, purchase contracts, warrants and units.
The health-care benefits company said it intends to use the net proceeds for general corporate purposes, including repayment of indebtedness and share repurchases.
No underwriters were listed in the filing.

I would like to share a couple of my thoughts about economy and deflation.

1. Synchronicity. It seems to me that the horrible economic numbers we are seeing now are due in part to synchronicity – all companies/people realizing simultaneously (because of the credit crisis in October) that economy is going down and making adjustments for it by reducing spending. So in the future months, I expect the month-over-month economic indicators to be much better (much less negative or even positive).
2. Velocity of money. When talking about deflation and an apparent “destruction of capital,” many people are forgetting that the biggest cause of the deflation we are observing now is the great decrease in the velocity of money – people, corporations and banks are still hoarding money. This results in the price decrease for many financial assets, since the bids have disappeared. As John Hussman wrote at some point, the history shows that the velocity of money jumps right back to the previous levels when the panic subsides, and people always underestimate this effect. So the end of deflation and a beginning of a new long-term round of inflation can happen very abruptly, and people will be horrified to realize that we are now back to the previous velocity of money but with a greatly increased monetary supply. That’s when the $USD will fall off a cliff.

Brilliant. You've added to my take on things. Thank you.

Howdy All,

After dealing with the aftermath of Hurricane Ike and moving the family to a new city on the East Coast, I've been lurking and lurking (and staying in cash) the past six weeks. I would have killed to be able to day trade, but, alas, the new job means it is not meant to be. So, I've had to lengthen my trading timeframe, and, while cruising my charts, I'm seeing that the dollar is showing signs that often correlate to a decrease in value.

http://tinyurl.com/6zlx82

UDN is one pure dollar-downward play.

http://tinyurl.com/6f7s5q

I'm currently 100% cash, no positions, just trying to ignore the debates and read the charts.

Hi Blowout Preventer,

When you are studying charts like $USD and come across a negative divergence like that and reach for something like UDN, do you ever stop and consider the ramifications of you and, millions of other amateur investors, allocating scarce capital in that play? I mean if you happened to have large equity investments in the US I could appreciate that you might want to hedge your investments in America in case of a diminution of the US$. But, you say you are 100% in cash. So all I see is yet another speculator, jacking up the volatility in already screwed-up markets. Wouldn't your, obviously prescient, analytic skills be better employed in finding an asset, undervalued, and promising in its potential to return both a societal and personal gain?

Even with our hot mortgage rates (below 5.0% this week) consumers are sitting on the fence in disbelief. Come January the new guidelines will be so tight a tick won't squeak. While the Fed promises 4% don't bet on the average Joe qualifying or banks agreeing. Meanwhile, D.R. Horton's slapped-up boxes are at Auction for 3% financing in marginal areas. Producers of goods and services seem to have caught the bad vibes pneumonia and are running for cover when lots of great opportunites still exist. Aren't we a nation of thinkers and doers? Have we lost our nerve? I think optimism and looking for the good will win hearts and minds.

I regret that the spoken word on a computer screen can never convey the nuances of a real, person to person conversation. I hope my words do not appear bitter, snarky, or whiny, because, if we were at a table, I think my words would come through earnestly. But, were not, so here goes.

I am not reaching for UDN--not yet, anyways.

I am simply bringing what I see, to the Cara Community that I cherish, for discussion. My analysis could be off of its rocker.

But, in my amateur mind, I don't believe that investments, contracts, or holdings are a prerequisite for me to hedge the US Dollar. Virtually every asset that I own or could seel, plus the salary that I now earn (as opposed to being a small-businessman), is denominated in US Dollars.

I am American born and American bred and when I die I'll be American dead. But, if Bernanke and Paulson choose to debauch the greenbacks left in my wallet and accounts, then I might ought to consider some insurance.

Believe me, I could plow my entire Interactive Brokers account, including leverage, into a short-US dollar trade and it wouldn't amount to more than the tiniest blip on maybe a one minute chart.

Honest to goodness, here's the way I see it:

I was born in '74, about the time that inflation-adjusted returns in employee's wages and real estate reached their peak.

If the federal elected officials from Ford to Carter to Reagan to BushI, over whom I had neither a vote nor choice, decided to run deficits and borrow from "the future" (currently, the "present") to pay for "the past", then I have no compunction whatsoever in hedging/betting/shorting the by-God US of A.

I have worn the uniform of the US Army, stood guard on the DMZ in Korea, and patrolled the streets, highways, and biways of Diyala and Salah-Din province, Iraq. I believe my time card has been punched, and that my job is to trade prices to my family's benefit.

If the "powers that be" had been better stewards of our country's capital, then I might feel differently. But let's look at "their" track record . . .

Nixon drop-kicked Gold so that we could escape our debt obligations...Reagonomics and massive deficits..."Free Trade" ushering in the era of 100,000's of jobs heading to Mexico and overseas...the abolition of the American Small Farmer while agricultural big-wigs live off of the public dole...coordinated illegal shorting of Gold by our Fed...Phil Gramm and Robert Rubin keeping trillions of dollars of toxic derivatives (CDOs, MBSs, etc.) beyond public regulation and oversight...Medicare "D" benefits...Keeping our military in every country from Germany (WWI and WWII...still there!) to Japan (WWII) to Korea, Britain, Turkey, Saudi Arabia, Kuwait, Iraq, the 'Stans, etc. All at our expense and their benefit. I could list 100 more reasons why we're in deep trouble.

So, I look at a country that has lost its way. And, just as I chose to vote non-Republican in the most-recent election to hopefully (albeit not probably) send a message, I will manage my finances in a way that speaks to me and matches up to the charts. Because, at the end of my B.S., nothing will matter except the prices that are going up and those that are headed down. I hope I end up on the right side!

I pray that America's soon-to-be-Leaders are worthy of the best aspirations from both home and abroad ... however, my left eye is going to remain on all of the $USD, $GOLD, $SILVER, etc. charts. That poor thing can't help itself. ;-)

The sad part of the American War, as the Vietnamese call it, was it should never have started. As reported in the book the 10,000 day war, Uncle Ho negotiated with the Americans near the end of WWII to try and stop the French from re-entering Vietnam and for the US to help and support Vietnam. The US administration indicated it was too busy with the Marshall Plan in Europe to get involved in South East Asia. So sad. Makes you wonder what mistakes are being made today that will affect future generations.. oh boy we could talk about that forever.

From my own experience I have found it difficult to talk about my war with anyone who wasn't there. Au contraire, it is so easy to talk to those who have been there. So you can't expect anyone with that sort of experience to tell it all.

I was a few months into my year in Vietnam when Ho died. I found many of the South Vietnamese were crying. When I asked them why they would be so upset when the enemy of their country had died I was stunned when they said Ho was "father of their country ". I knew right then that our involvement in Vietnam was doomed. Can you imagine what it is like to fight a war in which you feel we will never win and at the same time you are castigated by the citizens of your own country for being there?

I often think we should only vote in politicians who have war experience because oddly enough they are the last ones who want to go to war. How many US Presidents of the last 40 years have such experience? I don't know the answer but precious few I would think.

I'm off to Vietnam in a week for a holiday, the first I've been there in 40 years. The Vietnamese were beautiful people then and I'm sure they still are. Politicians send us to war but never go themselves. I have often said that a nation should never go to war unless there is a majority of mothers voting in favour of such action. Imagine how many wars would never be fought!!!

Sorry for the rant but I've held it back for 40 years. God protect our youth becuase our politicians won't.

Kaimu :

>BP - When I registered for the draft during the Vietnam War I was living in Australia and that year it >was optional for those who were in college overseas to sign up, which I was. Bill Clinton got out of >Vietnam that way. Cheney got out by being 4F and George Bush2 got out by getting in the Air National >Guard and sitting it out stateside!

I was also an expat American, growing up in Europe during the Vietnam era.

As I recall, we registered for the draft at the local U.S. Embassy and we were assigned to Draft Board # 100. It is my understanding that no one was ever called up from that particular draft board.

In any case, my year participated in the lottery system and those of my contemporaries with my particular birth date were not called up, regardless of draft board.

Seadog,

I agree most who have seen combat would not be quick to go to war.

Johnson — Navy WW2 (No actual combat — a plane he was in once was shot at)
Nixon — Navy WW2
Ford — Navy WW2
Reagan — (made training films)
Bush 41 — Navy WW2, (yes, combat — When he went to war it was massive and out quick)
Bush 43 — (sadly we know this one)

We are in a bubble burst. No one would argue that fact - too many pointed out the bubble(s) in recent times. Yet, most all we hear is moaning and groaning about the "Markets fell today ...". So what? They needed to fall!

Everyone cried about Inflation. Inflation is toooo high, everyone said. Now prices are slowly coming back down -a little- and everyone is crying that they should go back up??

For gosh sake, let them fall. Home prices are coming back down to levels where a working man can buy a home. Car prices are coming back down to where a person just out of school can get transportation to work. People, in general, are starting to say to themselves: "Do we really need a television on cable in every room in the house, cell phones on every ear, and cars that look like the tanks in Iraq.

It's called returning to normalcy, and we need it.

I am of course sorry for all those who have been caught in the downslide. I know your pain and have suffered it myself on more than one occasion. Life is like that - full of pleasures and full of pains. There is no easy course through life except being born too rich to experience life as it really is.

jmho.

Fekete's concerns seem relevant, although Bill mentions naked shorting but hasn't said much lately about how one might protect himself on this trade? I appreciated his warnings earlier this year re: extracting cash from failing banks, but what purpose would it serve the FDIC not to deliver paper? Interesting to note, spot is much lower than earlier this year.

The concept of backwardation is comprehensable, but then again POG should be $2k/oz, according to the bugs, and my charts just aren't showing that. Gold market is so much smaller than paper who would really give a rat's ass anyway, right? The most interesting dialog I've heard recently per PM's has come from Dr. Cosa.

Disclosure - Long gold/wondering why...

I have worked in management at the VA hospital in Nashville, TN for the last 15 years. My mom and a lot of friends are all nurses out there. I think that the veterans get some of the best treatment per dollar in the nation including private hospitals. I think that Bush bumped up budgets by about 10% for 2008, and almost every position has been filled quickly in the last 2 months after years of going unfilled. Who knows what the future holds, but the veterans should be getting the best service they ever had this coming year. Even with a record number of them being served.

So one more day up in the market and then we fall?

Holding: CASH(80%) + FAZ(20%)

I am waiting on gold to hit $700 and then I will be back into the miners. SLW, WGW, AUY

Any thoughts on NOT.V? I have been looking at it for months, but I have never bought it. It trades in the US as NOSOF.PK
I am thinking about buying some around $.25 ($.34 now)

Enjoy the weekend, and keep trading ideas coming.

Anyone looked into the new "mandatory" televisions we're being herded into this year? One that's slightly larger than my current set consumes six times more energy! Wow, now I see why the numbers aren't widely published or discussed. I think I'll "suffer" until the newer LED back-lit sets establish their foothold.

[update] I was mistaken, power requirements are only about 2x, which is still considerably more...

I don't see higher highs, but I also don't see lower lows. I think perhaps we're converging in on a trading range while awaiting some event to take us either up or down in a big way. An auto bailout would probably give us some relief with higher highs.

I'm going to continue trading as long as the trend is flat to up, in an effort to make up losses from riding my bag down from 10.8k on the Big Board. Fly low and slow, throttle off the turns and keep my bird clean ie: Buy the pullbacks, sell the rallies, keep dry powder on the sideline.

ALOHA !!

Here is a link to AMERICA'S CHECKBOOK. As we who pay bills know the checkbook register must balance and we hope that from day-to-day and month-to-month the balance is in the black and not in the red.

Take a look at TABLE IV on page two and look where the burdens lie. In the past I have posted that US payroll tax withholding revenues have dropped 79% from FY 2007 levels. This is very troubling and was made even more troubling with the latest jobs report where another 533,000 jobs were gone! I cannot wait to report what FY 2008 total payroll tax withholding revenues have dropped to! We will have to wait until Jan 2, 2009 for that!

Draw your own conclusions but less revenues and more liabilities has always been negative in my book!

Also you will notice there is no mention of WAR ON TERROR expenses other than defense contractor payments listed under vendors(ETF). Those unposted expenses are "supplemental" and off balance sheet. I wonder why? Also what is "unclassified" withdrawals? I know what my wife would say if she saw a withdrawal labeled "unclassified" in our checking book! I would be doing permanent dog house duty!

Link: http://tinyurl.com/6jgf7o

Well, as you can see AMERICA'S check book is in the red for the month and the day as of December 4th. Remember the fiscal year for America starts on October 1, 2008 so this is just for two months. The only reason America's check book is in the black for the fiscal year is shown under TABLE IIIB, in one word DEBT!

We pay our DEBT by creating more DEBT! LEGAL TENDER ...comes to mind!

IT ALL WORKS UNTIL IT DOESN'T !!!

Amen brother Navid.

ALthough I guarantee you that this "credit crisis" will be the death of the US private healthcare system... much to the dismay of entrenched interests currently battling change. It will take time and painful legislative and corporate change, but the US can and must do better for the general populace. The waste, fraud,lack of organization, and insurance bureacracies are literally killing people.

When everyone sees the changes introduced with the implementation of an alternative system, people are going to be shaking their heads and wondering why we tolerated the joke we now have for so long.

Last week I asked Bill why one couldn't substitute TIPS for gold in his TOG. Well, Bill never responded but I got this confirmation from Barron's today... "Shorting Treasuries and buying TIPS.. might be the purest way to hedge against eventual inflation". Just putting it out there for people who are unable to get comfortable owning gold (yes there are some). I think I'm gonna make this bet but the question is when.

I met Thursday with Fronteer Development (FRG on AMEX and TSE, mkt. cap C$181M) which claims:

- the 2nd largest land position in Nevada after Newmont (including 1 property they have joint-ventured with Newmont)
- 40% interest in 3 Turkish gold properties (including 1 they have joint-ventured with Teck Cominco)
- 42% interest in "the largest undeveloped uranium deposit in a safe jurisdiction in the world" (134M lbs. in Labrador via FRG’s holdings in Aurora Energy, AXU).

Fronteer also has $84M cash, which would last 6 years at their current burn rate. Their largest shareholder (15%) is billionaire Jacob Safra of the fabled Geneva/Sao Paulo banking family. In short, Fronteer has no need to resort to financial markets during the current financial storm.

Even more engaging were Fronteer’s 2 formative “cold-calls”! I met with Richard Moritz, VP/IR, who only entered mining in 2005. Moritz had cold-called Fronteer's CEO, and was hired due to his hedge fund experience. (Pretty good "market timing" to exit hedge funds for gold in 2005!) Fronteer CEO Mark O'dea had previously acquired his Nevada land position through his own cold-call to Jacob Safra, who had gradually acquired massive Nevada mineral rights "as a hobby".

Safra liked O'dea's style, including his move into "the other yellow metal" - uranium. Safra swapped his land for stock in Fronteer at a price of $12.75 per share. (Current price to you or me: C$2.17!) Fronteer also raised capital during the uranium boom, yielding its large cash cushion for the current downturn. Two rapid opportunistic moves tied to the uranium boom!

Now, cash-rich Fronteer is getting LOTS of phone calls from cash-poor junior brethren. They have done a level of due diligence on 70 juniors, but found only 2 worth negotiating with. Fronteer’s priority is to buy production (and operating talent). They believe they can quickly emerge as a mid-tier gold producer. (Producers receive higher valuation credit for ounces in the ground than do explorers or developers.)

This ambitious goal will require skillful deal-making. TCK (given its debt, and need to sell assets) is likely not to proceed in the Turkish JV. Fronteer expects to benefit from TCK's "fire sale" exit, and to find a better-financed senior partner. Moritz spoke with a gleam in his eye of larger potential deals: buy in the rest of Aurora Energy (mkt. cap: C$66M) and hold an auction amongst the uranium majors when the uranium price improves. He believes the uranium majors will feel compelled to bid on Aurora’s rare major property in a safe jurisdiction. An even greater gleam emerged when Moritz told of "half-joking" with his CEO about using the proceeds from an Aurora auction to buy Novagold's 20+M ozs. (A pure gold company commands a higher valuation than a holder of “both yellow metals”.)

In hard times, it's impressive to hear a junior contemplating such bold strategic moves. Moritz’ confidence and intellectual agility stands in sharp contrast to the small, plodding producers and the cash-strapped, blue-sky, geologist-dominated explorers I have spoken with in recent months.

I won’t go into details on Fronteer’s 4M oz M&I plus 1.6M inferred, nor their belief that their Long Canyon, Nevada properties will prove part of a major new gold trend. Many details are here: http://tinyurl.com/6zjfzb

I haven’t done significant due diligence on Fronteer, just recounted Moritz’ impressive pitch. He reminds us that the current crisis won’t continue forever, and that now is the time to identify and study likely survivors who will benefit as the gold price rises and as capital returns to the sector.

DYODD; disclosure: no position

Jock

In order for T-bill rates to not rise 3 things need to happen. The risk of inflation needs to be seen as benign. The USD needs to maintain its current level. And the stock market has continue to look like a black hole thereby freezing potential investor's hands. Any one of those 3 things NOT happening will cause rates to rise.

With 30 yr t-bills rates at their lowest historical levels what is the upside for t-bills (I guess rates could go to 0)? IMO, being in t-bills now is the same as being in stocks when companies were earning record profits. Mean-reversion was inevitable for stocks and it will be for t-bills. Plus, by betting against treasuries you are taking the same side as the Fed (who's mandate is inflation).

By using inverse T-Bill and TIP ETFs instead of gold I feel like I am able to keep the forces in play to their simplest elements (2 in-kind assets with a simple difference vs. commodity attributes of gold).

Just having a hard time pulling the trigger...

naturally I had to be out Friday afternoon.

Anyway, TLT finally showed a reversal. TLT on Thurday really got close to that RSI 7 day 90 reading (blow off?). 50 DEMA is 99 so when/if it drops, I'd expect buying to emerge there. Volume had started trailing off Monday thru Thursday and Friday was significantly higher than Thursday on the reversal.

TBT is the mirror image. I'm going to put in a buy limit order about 43.15 (1/2 10 day range). My sell stop will be under Friday's low.

Is the 20 year better to do this with than the 7-10, my thought is that with a flattened yield curve it would be better to go further out (with the 20) with the idea that not only will inflation expectations return but the curve will mean-revert as well?

Also, is the 2x leverage the way to go (I couldn't find an inverse that was 1x) and what are you using on the long side (gold or tips?)

I did have SLW as another counterpoint to TBT until recently. Pick your own poison. Gold will most likely go up more gradually than silver or miners in an uptrend and TIP's will likely lag all those, IMHO. Safety vs. rewards.

2nd_ave, if you like independent movies, I just saw yesterday "The life before her eyes" -- one of the best movies I saw in a long time. Available from Netflix.

I just read an article published on Friday at CNBC.com, which suggests that more and more economists are beginning to see the "light at the end of the tunnel," as they are realizing that the synchronous downsizing of all business cannot last for long. Here are some excerpts:

******

If there was ever a time to remind investors that the labor market is a lagging economic indicator, economists say today is such a day. Once the knee-jerk, doom-and-gloom reaction is over, something resembling optimism will prevail with the conclusion that the worst is over for the economy.

"Every recession has its worst day, and this is probably the worst day," says Chris Rupkey of Bank of Tokyo-Mitsubishi.

“Severe drops like this (the Sept.-Nov payrolls ) cannot be sustained,” says Robert Brusca, chief economist at Fact & Opinion Economics. “It suggests we are getting so weak there will be a turnaround."

“The fourth quarter will be the cathartic period,” says Brian Bethune, senior US economist at Global Insight. “Once you have a steep drop like that, even a steady weak state starts to look better.”

Economists say there’s a lot of tailwind to drive an economic recovery and already emerging signs of one. “There's now starting to be some visibility about how this might end.” Says David Resler, chief economist at Nomura International. Resler and others point to a host of mitigating factors, including sharply lower gas prices, the steady and gradual decline in Libor rates and the very recent improvement in the mortgage market, a revival in the corporate bond market and the massive stimulus package expected from the Obama administration as soon as possible in January.

*****

These views may explain the rally we got on Friday. Once such opinions hit the mainstream news, the may in fact convince enough people to return to the stock market so as to generate a strong multi-week rally.

Jock, thank you again for another substantial perspective on one of the juniors that I own - unfortunately at at price closer to Safra's than the current quote. I've been wondering how a company with such excellent fundamentals could get so cheap, and am finally realizing that its no longer related to fundamentals, but more to overall market dynamics. I plan to add when one of the majors recovers enough to generate the funds - just hoping FRG stays under the radar for long enough. I think FRG and MDW have more chance of creating a mine in Nevada than UXG which would do better to concentrate its efforts in Mexico, where it seems to have a good property.

aka cyderman

Found this article by James Conrad on SinkingAlpha. Interesting look at what Bernanke has been doing (at least according to him), and the likely result for gold (TOG), and how it will be used to devalue the $ (and probably other currencies) to avoid hyperinflation.

http://seekingalpha.com/article/109210-the-manipul...

LOL. I'd like to see those weddings on the beach myself...sounds like a lotta fun. You keep the gin & tonic and I'd take the rum & coke. Life is good in Nassau. Here in northern Indiana it's very snowy and very cold; beautiful to see, but you know...

How do I change my password using my own choice of passwords. I was assigned one that has many letters & numbers and can't remember them - have to look up each time & copy and paste them.

With US Treasury/MM yields below inflation I was hoping to get a sense how you folks are squeezing yield out of your cash? I purchased a few short-term Calif munis a few weeks ago when I was able to get a tax-equiv yield > 6%. I've also landed some 12 mo. CDs yielding over 4% here in SF as well as brokered CDs (though the yields on those have come way down). I've been considering convertible bonds which have been hammered lately as a more speculative play (perhaps a CEF or Vanguards inexpensive VCVSX fund).

Any ideas would be greatly appreciated.

One of the insights I got from the most recent Don Coxe's webcast is that a serious rally will not start in the stock market until the yields on investment grade corporate bonds come down. Why would the risk-averse serious funds (not the risky speculators) invest in a company stock when you can buy its bond yielding 7% annually?

What has been happening with investment grade corporate bonds recently? The ETF QLD tracks such bonds in the US. It has been trading at or above parity until mid-September, at which point corporate bonds fell off the cliff. The bonds made a double bottom (Sep. 29 and October 10) at 82 cents on a dollar (I am assuming that's what the QLD price means) and then the bonds have been rising pretty steadily, closing at 91.88 cents on a dollar on Friday. If this trend continues at the same rate, then in a month or two all the money parked in bonds will decide that the bond yields are too low and do not represent an attractive alternative to the stock market.

If anyone can share their insights about the possible near future of corporate bonds, that would be great, as this seems to be the key in deciding when the stock market recovers.

Such a move would require the cooperation of the American middle class and the pacification of those already fired up about border security and work visas, etc. 30,000 troops? LOL! How many troops did it take, even with the "surge", to just hold *portions* of Iraq, a nation the size of California?

30,000 wouldn't hold our smallest state....and our armed forces are civilian.
If we weren't so recently innoculated by the Bush admin. and Iraq the chances would be better, but the people are feeling their oats.

I won't argue, but this will not likely earn a spot on my worry list.

brown-cal,

In my view — Inflation is a threat in certain categories, but falling in others. The dollar can't remain strong, IMO, very much longer — too many being printed and UN economists calling for a new global mix of currencies to replace it. The stock market is still trending downward as most profits are likely to fall in 2009 or longer.

re: Treasuries

What if the economy continues to tank with increasing job losses, benefit losses, and a money velocity like molasses in January?

The Fed was unable to move long bonds above 4,5% the last time they raised rates. Conditions are much more dire now. Could rates be allowed to rise even if they are able to make them? Who will buy our debt at any price with so many other things at "bargain prices"?

Japan's rates were at zero or below for years.

Over the past ten years or so, I have been able to make more consistent gains by trading bonds than stocks. (The moves are more at my speed.) I have no individual bonds right now (sold too early this spring), but a Treasuries only mutual fund (WHOSX) and some ETFs (LQD, BIV with stops in place) have been doing well since I bought them in October.

When the Fed actually begins to lower I'll "pull the trigger" and go to TBT and TIP, but I can't see how they can do so in the near future.

Jock thanks for hi-lighting FRG definitely work a look.

MDW - All I know is public info - they have a 43-101 1 Moz low grade deposit in Pershing County that Barrick is developing - big dirt moving operation that will benefit from lower input costs - MDW is basically carried to production tho' they won't see anything back until Barrick have recovered all their costs.. Barrick owns about 10% of MDW. Technically it looks horrible, breaking out of a triangle on the downside. One director is doing some buying and he was smart enough to be a seller in January when the price was 20x the current price. There was some sort of deal with Golden Predator that fell through - I didn't understand it at the time, and still don't. This could be another NG - good explorers, poor managers, or maybe they're just another victim of the financial meltdown. Still accumulating. I suspect that we may well see lower prices later this month just from tax loss selling which I think will hit many juniors - an opportunity to put what's left of my speculative cash to work. Any others you see in a similar situation?

Otto of http://incakolanews.blogspot.com/ reports that Argentina is going to support THEIR car industry from the bottom up: "The plan is to bolster new car sales by offering a state plan for easy ways to pay on new cars. There are three plans being mulled (and it's quite likely that all three become reality), but the base idea is to offer credit to buy a new car on an interest-free 48 month payment system of P$800 per month (about U$230 right now)."

Since "we're all socialists now" or fascists, and much else that would have seemed crazy just a few months ago, not learn a little from the land of Juan Peron? Why are Bushies still opposing helping homeowners instead of Wall St? Why doesn't Congress respond to Detroit with a plan like Argentinas?

When all else fails, why not subsidize the little guy for a change? - Jock

nemo - Thanks for pointing out Conrad's article, as it confirms my understanding of the economics of money supply, and offers reasonable explanation for current events. I probably would've missed it otherwise.

Basically, Conrad's argument for gold as opposed to other world currencies is that it's value has been depressed by manipulation in relationship, artificially held low to mask actual inflation and enabling tight control of currency. I've seen inflation-equivalency estimates on average of around $2k/oz (with other estimates ranging considerably higher perhaps under the assumption currency will become fixed to POG). I don't necessarily believe that currency will eventually be fixed to gold though, as this is the very mechanism which enables taxation through inflation (indirect, flat taxation). Conrad didn't really seem to tie into his article... nor did he offer insight on hyperinflation. Unfortunately, the flat tax rebate (redeemable in POG) won't be very flat at all for those gun-shy, or unable to hold PM's for long term in appreciable amount.

I'm still awaiting the spectacle of a simultaneous USD/POG rally, for which I simply cannot imagine fundamentals or dynamics to explain.

David- thanks, i'm always looking for good ones...

ALOHA !!

The chart attached below could be a chart of the US DOLLAR but instead it is a chart of the lost manufacturing jobs in the USA since 1980.

I will now make a statement that will explain why the US EMPIRE has to unwind ... It is not some rocket science or some huge monetary formula or even birth death ratios not even complicated derivative valuations. It is just SIMPLE MATH!

Manufacturing jobs in the USA are now on the exact same levels as 1950. The only difference was in 1950 we had a rising economy and rising manufacturing. The long BOOM was just beginning.

Simply put 13.1 million manufacturing jobs could support a population of 130mil Americans in 1950, but that same amount of manufacturing jobs cannot support 303 million Americans today! When the US manufacturing jobs peaked in 1980 there was still a ratio of 10:1 or 10%, for every manufacturing job supported 10 American citizens. Now we need to add 17.2 million more manufacturing jobs to support our population as was done from after WW2(1945) to 1980. We need to add those 17.2 million more manufacturing jobs TODAY ... not ten weeks from now or ten years from now ... TODAY! Furthermore, as the US population is expected to increase every decade reaching 450million by 2050, by 2020, which is only ten years away we need to add another 21.9 million more manufacturing jobs by then!

The OBAMA(FDR Jr)plan is not adding a manufacturing base. In other words once he is done building schools and bridges we are back at square one with no manufacturing base to fall back on, since a great deal of the products used to build out infrastructure will be imported. Only basics like concrete and labor will not be imported. Besides how will we pay for a MASSIVE WAR and MASSIVE NEW DEAL and MASSIVE BANK BAILOUTS all at the same time? The solution is not to expand the size of the US government and its DEBT to "buy jobs", but it is to make the US government microscopic in size so that we can "create a jobs base" not BUY them! Tax revenues that are not sent to Washington DC to be squandered would remain locally for the benefit of the local people and the local economy. In this fashion we know where our money is and exactly what needs to be done with it. Money that goes to Washington DC always disappears down a black hole of special interests and hidden agendas and "off balance sheet" military adventurism!

You do not blame businesses for moving their manufacturing overseas, because there is a reason they moved overseas that made doing business in the USA unprofitable. There are too many reason too numerous to list why owning a business in the USA is disadvantageous. Who do you blame? The exact same US government that keeps getting re-elected to rule! Government is at fault and the problem is BIG GOVERNMENT is TOO BIG! Sounds a lot like the US banking crisis and TOO BIG TO FAIL! Well, they're failing ... Hello?

If you need to blame someone then blame those who voted for this incessant two party rule ... perhaps looking in your mirror will yield an answer?

The US EMPIRE is unwinding and as with all Empire unwinding in the past it was due to internal failure! Government that got TOO BIG!

EMPIRE ... IT ALL WORKS UNTIL IT DOESN'T !!

Spot,

There's a lengthy argument for corp bonds at PIMCO titled, Credit now, equities later.

http://tiny.cc/zBdwi

Dear Bill,
I was puzzled by your comment on Canadian politics in the Daily Report for Saturday, Dec 6, 2008: "That postponement of the nation’s business blocked a vote in the House by the country’s three minority parties from joining their vote to gain control of the government, something that the voters had clearly rejected a few weeks earlier."
The Canadian people did not elect enough Conservative Members of Parliament(MPs) to form a majority government. This means that, if the other elected MPs decide to get together, they have the ability to form a majority coalition government. That's the way that the Canadian parliamentary system works. This is in fact what has happened, and, to avoid losing a confidence vote, the Canadian Prime Minister then shut down Parliament for 6 weeks.
The only way that Canadian voters could have rejected a coalition government would have been to elect a majority of Conservative MPs which they clearly did not do. This is why I find your remark puzzling.
joneb

The primary difference between Taleb and Rubini, as far as I know is that Taleb believes the economic effects of this recession will be much deeper than Rubini has expressed. While the feeding of a turkey goes on until his demise is a powerful portrait, it simply doesn't include enough detail for me to draw absolute conclusions on which to base decision. His black swan theory is purely conceptual in context, not necessarily practical, IMO.

Grym, naturally PIMCO will argue for investment in bond funds. But QLD is telling us that this article is "late" -- it is describing what has already been happening for a while, and as corporate bonds keep rising, their yields will keep falling and hence they will become a less attractive alternative to stocks. So the key assumption in that article will break down in about a month, if corporate bonds keep rising at the same rate.

Grym - What are you suggesting this information is telling us to do? Are you anticipating corporate bond rates will fall as credit markets thaw from the current frozen situation? How does one leverage gain with this info, through rates, or price?

I'm confused and unwilling to accept advice from the sell side (PIMCO) unless my understanding of the concepts are crystal clear.

A mid/lower level banker moved in to our neighborhood and during coversation he mentioned that everytime their cost of money decreased they just took the increased spread rather than pass the decrease to the borrower in reduced rates.

I asked him if that was not following the spirit in which taxpayer money was being used to reduce their costs. He replied they are expecting increased losses in 2009 so they are holding on to the money to help offset these unrealized losses.

After seeing my own industry (small homebuilder) pretty much wiped out and other friends losing life savings, I said welcome to the neighborhood but I don't care much for your industry.

Last night, I was talking to another neighbor and he knew a 37 year old mortgage broker here in southeast florida who started a call center to target minorities to let them know they could be qualified for a new home with no money down. (80%/main 20%/2nd - closing costs rolled in) Once approved, their real estate division took them to builders and collected the sales commission.

He made millions, lives in a 2.7 million dollar home on the water knowing all the while these people could not afford the loans. Now they have a skeleton crew of 3 people to deal with the loans that go bad within certain window of time and he is otherwise retired until further notice.

Sorry for the rant....just real upset at the moment 'cos all this didn't have to happen...just people gaming the system on such an epic scale that the system could no longer carry the weight.

CP,

As I recall from his book the only real conclusion is that there will be unexpected events from which a person may either gain or lose.

His recommendation is to put 90% of your assets into "safe" investments and only 10% into high risk.

Figuring out what is safe (the practical as you say) is up to us. With me that varies almost daily. I'm trying to do it with the only hedging I can — inverse ETFs with stops and bonds. Most of my assets are in a fee-based tax deferred pension plan which does not allow option trading. I don't want the headaches of paying or figuring the taxes trading would cause in my other account.

For a real deep depression scenario read this from the Boston Globe. I had just finished telling my wife that there is no official definition of a depression as far as I know. This should make it easy for the government to avoid declaring such. I expect, like the definition of pornography, most of us will recognize it when it comes around knocking on our door.

Depression 2009: What would it look like?
http://tiny.cc/YFpUK

Everyone's worst fear.

New definition of schizophrenia: Knowing the fundamentals and efforts to save them are shot while thinking a rally is on its way.

Grym - Depression - Well, I will of course assume we're not attempting to define clinical depression, as that might be easier to describe than economic depression. Perhaps the similarities would suffice, but I see dead people.

Okay, I don't see dead people, that's just as ridiculous as economic depression. While I'm at it, allow me to offer my simple definition of economic depression: A prolonged price deflation. I don't see this happening for too much longer because of the baggage it brings along with it. I'm anticipating a reversal within months or less and my belief entails real estate financing, where in my mind the problem originated. The banks have stepped into creative financing which wasn't really very creative (it's just not creative when making loans to people who cannot pay, it's stupidity. Just as bundling BBB instruments through financial alchemy doesn't produce AAA quality), now that needs to be reversed before confidence can be restored. Confidence is key, Americans aren't going to buy jack squat when the value of their greatest investment is falling precipitously. It's all up to our governmental regulators who by the way, created this mess through lack of oversight and by adoption of policies that stifle our economic engine. This also, cannot be defined as creative.

I do wonder though, if authors of doom and gloom who make up words like "stag-deflation" suffer from clinical depression:

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

One of the best things to do when looking at an explorer or developing company is to look at the long-term chart. FRG.TO was a market darling for a time, but came down precipitously.

Grade is a key component for gold deposits. Without a strong grade, a gold mine in development will face very high costs due to the size of the mill and the operational requirement to move earth.

Fronteer cashed up with the mania, but did not manage to get into production. They are also looking at NG.TO which would also be another high cost startup. NG.TO was not able to raise funds sufficient to carry out their plans to go into production and offered guidance on the issue. Why Fronteer imagines that it can develop NG.TO, when with the participation of Teck and Barrick, was not able to carry forward their production plans begs the question whether Fronteer has any real intentions in that area.

The geologist for Fronteer was the one that figured out where Goldcorp's high grade deposits would most likely be found, which is the richest gold mine, so their reputation precedes them, but no high grade finds of that nature to be found again.

Perhaps this company has seen its day?

I watched a bit of the opening comments during the bailout hearings for the Big 3. What got my attention is that credit default swaps were mentioned, which would never see the light of day. Essentially, what we are watching is the bailout of the credit default swaps. Not the car makers. The car makers disappeared under layer after layer of easy credit years ago. Its an absurd reality that the more bloated the CDO/CDS trade held over the car makers, the more bloated the vehicle. Its been going on for years.

Hi, tango6.

I disagree with the comments that the bloq is dedicated to the separation of Quebec from Canada. Quite contrarily, separatism in Quebec renews federalism in Ottawa. The bloq knows which side their bread is buttered. I call them "the bloke" now, since they have obviously capitulated. Every province in Canada needs a party like that.

I changed my voting choice because of the conservative finance minister, whose reputation precedes him. Very disliked in Ontario.

With the announcement of the coalition, I felt that Canada would be renewed in confederation, and the we would progress as a nation.

Just the same, buy gold.

F6

Ha! Buy gold, sure, but only at the right time.

Duceppe would slit his political throat if he ever suggested to his constituents in rural Quebec that he stands for a strong and united Canada.

The unholy Lib/NDP/Bloc alliance is a vile concoction -- rank political opportunism -- that thwarts the will of the people.

Chickenpookie:

Anything is possible but the S&P has to increase about 100 per cent in the final three weeks of the year to achieve a level over 1600 before January.

Sorry, I misread you Chick. A bottom in the S&P is more than possible before the end of the year.

Strong early.

tango6, I'm not sure if you understand sovereignty association. Just a fancy term for renewed confederation.

Here's a video from BNN, an interview with Seymour Schulich:

BNN.CA Interview With Seymour Schulich

Note that Stephen Jarislowsky, called "Canada's Warren Buffet" was a proponent of a "continental currency" last year.

Billionaire to Canada:
Time for amero is now
Wants euro-style currency
to avoid exchange problems

http://www.worldnetdaily.com/news/article.asp?ARTI...

I wonder if GS will be the North American bank that sits over BofC & the Fed?

http://tinyurl.com/3xr343

Futures up for U.S
http://tinyurl.com/5663jg

Having flown 'up North' on way too many occasions while Russians were trying to stuff telephone poles in my tailpipes I can honestly say that it was only business. Today I actually have many Russian friends. One is a former navigator on a Backfire bomber. His target? Chicago and Detroit.

America has been a very positive force in the world for the last 200 years. But I can criticize (sp) America because I and my family have been fighting her wars since 1812. I may be the biggest cynic and critic of our current system but my ticket has been stamped. I also know that things can change. I pray that they do.

Back to the luck of the military lottery. My Dad graduated high school in 1938. With no jobs and since he had been an ROTC officer, he joined the Natl. Guard. The Guard was called up in 39 for what was supposed to be a year of active duty. There was a popular song then "Good Bye My Dear, I'll See You In A Year." My Dad's unit was out of Ft. Riley Kansas. In 1940, they lined up his company and counted off 1-2 1-2. The 1's were sent to the Phillipines. The 2's to Alaska. My Dad was a 2 or I may not be writing this today.

Only 2 of 10 sent to the Philippines returned alive. Most were captured or killed on Batan.

Pardon the personal observations but today IS Sunday........December 7th. A day that will always live and be remembered as the day America lost forever her innocence.

May we never forget. May we always forgive. May we always be vigilent against tyrants both foreign and domestic.

Regards

Flat vs last yr November 1 – December 5

Blurb below:

Holiday E-Commerce Season Sales Finally Match Last Year as Two Workdays this Past Week Each Surpass $800 Million in Online Spending

Sales Since Cyber Monday Up 9 Percent Versus Year Ago

RESTON, VA, December 7, 2008 – comScore (NASDAQ : SCOR), a leader in measuring the digital world, today reported its tracking of holiday season retail e-commerce spending for the first 35 days of the November – December 2008 holiday season. For the holiday season through December 5, $14.92 billion has been spent online, essentially the same level compared to the corresponding days last year. For the five days beginning with December 1 (Cyber Monday), the kick-off to the heaviest part of the online shopping season, sales totaled $3.74 billion, up 9 percent versus year ago. Two individual days in the past week achieved more than $800 million in online spending: Monday, December 1 (“Cyber Monday”) with $846 million, and Tuesday, December 2 with $823 million.

ALOHA !!

Now the 12/5 COMEX delivery report is up to 12,164 ... Times that by 100 ounces and the total has moved from 1.1759mil ounces to 1.216 gold ounces. More and more are taking delivery each day as we approach Dec 31st. Now we are at 42% of COMEX gold inventories that will be removed from COMEX gold vaults by Dec 31st.

This has to be making the COMEX and JP MORGAN very nervous because I have said before a 100 ounce gold bar cannot be printed! Lets put this into perspective. I will admit that I do not follow past COMEX gold deliveries stats but I understand the usual average delivery in the past was around 2% to as high as 5% of inventory. So 42% is a troubling number!

On this link you will see the cumulative Dec 08 gold ounces for delivery. This is designated with the COMEX product code "GC". The other product codes are: SI for silver and HG for copper. Only the first column is for gold.

Here is the LINK ... http://tinyurl.com/cs84a

Watch this link to see how much COMEX gold deliveries rise!

ALOHA !!

Okay here are some more stats that you probably did not read past the recent NOV JOBS DOWN 533,000 headlines ...

If you missed it Merrill Lynch is predicting that another 3mil US jobs will be lost in 2009. Add that to the near 3mil US jobs lost since Dec 2007.

*** What is $6mil X average monthly unemployment benefit equal to? ***

What is very interesting here is the "average work week" ... lowest since 1964! That says it all ... If Americans are not working then they're either getting unemployment benefits(on the dole), on welfare, on food stamps or just plain old STEALING!

Also note the "revisions" that are always present from past monthly reports by the BLS! Its as if the BLS is saying, "Well, we can't hide those job losses any more so we may as well report them now!" Kind of like getting all the bad news out all at once!

FROM RGE MONITOR:
- Payrolls declined by -533,000 in Nov (largest decline since 1974). Job losses in Sep and Oct revised down to -403,000 and -320,000; Since the start of the recession in Dec 2007, 2.7 mn jobs have been lost and -1.91 mn ytd; Unemployment rate rose from 6.5% to 6.7% (highest since 1993)
- Spike in service sector job losses (-370,000) which was considered less cyclical than manufacturing sector. Continued job losses in goods-producing (-163k), manufacturing (-85k), retail (-91k), business&professional (-136k), leisure (-76k), construction (-82k), finance (-32k)
# Household survey: employment down -673,000. ADP: Private employment down 250,000
- Hiring freeze across sectors led labor force to fall by -422k, thus containing the spike in unemployment rate. Long-term unemployment rate (marginally attached, discouraged, part-time for economic reasons workers) rose to 12.5%
- Avg work week fell to the lowest since on record since 1964. Overtime and full-time work , temporary help declined. Avg hourly wages rose 0.4% (3.7% y/y). Avg weekly earnings rose 2.8% y/y. END

Now look at what FRAUD STREET is predicting to be future unemployment rates! These predictions all support the current BLS false data rigging the unemployment numbers. Whose administration started the practice of not counting the long term unemployed? CLINTON!

FROM RGE MONITOR:
Unemp rate forecast - Fed: 6.3-6.5% in 2008 and 7.1-7.6% in 2009; Goldman: 9% by end-2009; Merrill: 8.6% by 2010; NABE: 7.5% by 2009-end; Bloomberg: 7.7% by 2009-end; Morgan Stanley: over 7% by mid-2009.

Look how the US FED has the lowest predictions of 2009 unemployment at a max of 7.6%!!! Hey ... look Morgan Stanley has really raised the bar by statung they predict over 7%!!! That's like me saying the POG will be over $42USD(current US TRES reserves value per ounce)in 2009! If you want the REAL unemployment rates then at least double all the numbers listed above!

I for one will be awaiting the US payroll withholding reports instead! That gives me a more unbiased and accurate picture of where the US government is on the road to insolvency! No need for BIRTH/DEATH fraud or U6 lies ...

So far for 3Q 2008 US payroll tax revenues are down 79% since 4Q 2007.

Tax revenue losses speak ultimately to reducing the US Sovereign Credit Rating, currently at AAA(S&P) and Aaa(Moody's) ... I wish my FICO score worked that way! MORE DEBT ... HIGHER RATING!

IT ALL WORKS ...