Cara's Commentary & Community Chat, Fri., May 8, 2009

Bill,

your insight and perspective continues to take me to school when it comes to trading decisions and interpreting the events in the capital markets.....thanks for doing your blog in the manner you have chosen. I hope your perspective and others like it will take serious root among the voting public. Be wise as a serpent, tread like a dove......

DB

Please turn out the lights?

Thank you,

Mr. Market

Good morning.

Upgrades:

DEO - to Neutral @ UBS
TGT - to Overweight @ JP Morgan

Downgrade:

SLB - to Equal Weight @ Barclays

www.nytimes.com/2009/05/08/science/earth/08energy....

Taking the -0.16 hit for now. Awaiting payroll numbers.

...

Still holding my 100 shares of FAZ. I'm down a whopping $32.
Looks, temporarily, like it's still sell the news on employment. 8.9%.

Right, and I'm the Pope.

...

thanks Bev, much appreciated. I'm as much prepared for another crack at 1000 as I'll ever be, should it eventuate.

2nd
we are at the stage that can go either way--up or down
will keep eye on FXP/SMN/DUG, small position and may keep untill monday closed

Les

Remember if the $VIX closes higher than it did yesterday [#2] that indicates a possible change in the trend [sell off]. But a lower close on the $VIX would signal the current trend up is still in place [buy signal].

"The key factor here is not that the Devious Duo forced Bank of America into a merger it didn’t want to commit to. Granted, that’s an unheard-of interference of government in the free market, but we’re quite sure that the Powers-That-Be could sweep it under the rug by invoking the “greater good.”

No, the part of the story that could really break Al Paulson and Don Bernanke’s necks is the failure to inform the Securities and Exchange Commission, as well as Bank of America’s shareholders, of the extent of toxic waste Bank of America was forced to accept. That’s fraud, pure and simple.

And that’s a pretty good sign that this is not going to go away. Some of the Casey Research editors – yes, we do have bets out – think it’s going to be huge, especially since the scandal happened on President Bush’s watch and the Democrats are in control of Congress. Chances are that either Paulson or Bernanke is going down, depending who cuts a deal with prosecutors first. Their “friends in high places” may be able to keep the Justice Department out of it, but they won’t be able to control ambitious state officials like Cuomo. There’s blood in the water, and this is a career maker for a prosecutor."

http://www.financialsense.com/editorials/casey/200...

Bev,
Your charts are interesting, but I was under the impression that a reverse H&S was only valid after a decline. Wondering if you, or any other TA guru out there can expand on this. (Frankly, I'm a bit of a gold bug, but looking at a longer time frame than you GLD chart, it looks more like a double top).

Offering $11Billion in shares to raise capital. At $8.79 a unit.

How's that dilution going for you?

The dilution on a bankrupt bank is laughable check out the common, traded at $14.62 or $5.83 ABOVE the proposed max issue price. 66% below where it is trading now. WHO (among us) is stupid enough to pay a 66% premium for a defunct entity?

"What chance does a returning deceased war veteran have for that good paying job, more sugar and that free mule you're dreaming of? Well, think it over. Then take off your shoes. Now you can see how increased spending opportunities mean harder work for everyone...and more of it, too!"

( DJ ) 05/08 09:17 DJ Bank of America Registers To Sell Up To $11B In Common Stk> BAC
DOW JONES NEWSWIRES

Bank of America Corp. (BAC) on Friday filed with the U.S. Securities and
Exchange Commission to sell up to 1.25 billion shares of common stock from
time to time.
The Charlotte-based bank estimated that the offering could be worth up to
$11 billion, based on an proposed maximum offering price of $8.79 per unit.
Bank of America said it expects to use the net proceeds from the offering
for general corporate purposes.
Banc of America Securities LLC and Merrill Lynch & Co. were listed as the
underwriters for the offering.
Shares of Bank of America closed Thursday on NYSE at $13.51 each.

-By Brian Coyle, Dow Jones Newswires; 202-862-3545

RE:>If you can't sell your house (most people's single biggest asset) eventually you can't afford travel to look for work elsewhere

and there research can point out the correlation between government policy towards house ownership and unemployment. Anecdotally, I can point out that Swiss property ownership remains at about 35%. It's unemployment rate is about 3.4%.

Other Anglo and European nations with housing ownership policies typically induce higher rates of unemployment.

Les - Other Anglo and European nations with housing ownership policies typically induce higher rates of unemployment

Hmm that's an interesting observation. Switzerland is a special case, of course - it always is. But, the thought that home ownership leads to higher unemployment, now that's something I never thought of.

Can someone explain how issuing stock at previous levels is any different than back-dating options?

All making nice moves today, Mark. Thanks for the heads up on CHK two days ago, although I passed on it.

What all of you need to do is open an account with BAC/ML and bet an allocation for the secondary @ $8.79 concurrently shorting BAC common at $14.50. LOL!!

Bloomberg's cheerleading counterpart to Maria Cramer Kudlow

Out at $0.86, a quest for better opportunities..

has gone negative

...

I read that the birth/death adjustment which is an estimate of jobs created was ratcheted up almost double over last month to +229,000. If you exclude this doubling and only use the amount in March then the April Jobs report was actually worse than the March one. In addition the unemployment rate would have been 9.0%.

By the way, the stress tests assumed an average unemployment rate of 8.9% for all of 2009. Well, here we are through April and it's at least 8.9%. The U-6, in my opinion the true unemployment rate, which includes all marginally attached workers and those working part-time who would prefer full-time jobs, rose by 0.2% to 15.8%.

Anyone still believe in these stress tests? Remember they were brought to you by the same people that said only 2 years ago that the subprime meltdown would not impact the economy.

...

( DJ ) 05/08 10:36 DJ CORRECT: Bank of America Files To Sell 1.25B Cmn Shares
(The headline, "BofA Plans To Sell 1.25B Cmn Shares At $8.79 Each >BAC,"
published at 9:01 a.m. EDT and the story, "Bank of America Registers To Sell
Up To $11B In Common Stock," at 9:17 a.m. incorrectly said the bank had
decided on a price per share and a total price for the offering. A corrected
version follows.)

Bank of America Corp. (BAC) on Friday filed with the U.S. Securities and
Exchange Commission to sell up to 1.25 billion shares of common stock from
time to time.
The Charlotte-based bank said it expects to use the net proceeds from the
offering for general corporate purposes.
Banc of America Securities LLC and Merrill Lynch & Co. were listed as the
underwriters for the offering.
Shares of Bank of America were trading Friday morning at $14.25, up 74
cents.

(END) Dow Jones Newswires
05-08-09 1036ET
Copyright (c) 2009 Dow Jones & Company, Inc.

Here is my take on the S&P

http://tinyurl.com/pbxfev

They never come into the hills.

Thanks Bev, and a quick heads up for fellow gold bugs, looks like RBY is breaking out on the upside - probably goosed a bit by a Seeking Alpha article suggesting McEwen will merge it with US Gold (mistake IMHO, as I think RBY has better prospects based on drilling results so far).
FD long (but not enough) RBY and USG

Grym

I too am bartering when I can but it is illegal. It is offense in Canada not to declare the value of income derived from barter, something I personally believe to be heavy handed and unfair to the working poor. As well, the Canadian government taxes tips (from the poorest tranche of wage earners) and claws back 25% of pensions of its non-resident citizens - even if the pensioner is living below the poverty line. System is very grasping.

In fact, it is part of the Canadian pysche to be grasping. In retail, most stores in US close to the border towns, offer a currency advantage to shoppers. In Canada, they squeeze the exchange rate to get an extra penny or two. American merchants seem to be saying: "Hey buddy, let me give you a break because, next time, you will come to me." Canadian retailers, on the other hand, seem to be saying: "I'll probably never see you again so I am going to get everything I can from you."

JMO

Vadym, I didn't get it, could you elaborate?
And BTW, hail to the Master of sell on news!

Jack.... that first version of the news on offering looked either fake or erroneous... and stock action didn't confirm it either. Thus it looked like a big (intentional or accidental) trap for shorts. Now that error is confirmed and correction is issued, that ceased to be an issue.

jack black

I do. Very closely, since Tech as led this rally.

http://tinyurl.com/ppjdyd

I don't have shares in Air Canada, but an news item from the Vancouver Sun on the fate of Air Canada demonstrates that there is no justice in compensation:

"The union said that Milton has received $63.6 million in compensation since 2003, and will receive another $10 million upon the successful windup of ACE, while Air Canada itself is now worth only slightly more than $80 million, Reuters reported."

and from the paragraph before the above:

"It (the union) also urged the government to halt the wind-up of the airline's parent, ACE Aviation Holdings Inc., and any future payments to ACE's chief executive Robert Milton who the CAW blames for Air Canada's current troubles after he spun off the airline's various subsidiaries and their cash flows in recent years."

We do know the USSR took 70 years to change although their multiple 5-yr plans had long ago failed. Failed to the masses, that is. The oligarchs lived rather better than the rest as I have heard.

I finished an interesting novel last night based on a plot to destroy the world economic system in the name of "fairness".

I will never be able to use an ATM again without thinking how I may be the "trigger" bringing down everything from the World Bank to the Pentagon.

The mysteries of high tech may well be beyond the scope of human capability to control. The Fed may be about to prove this. Certainly the AAA rated modeling has taken the title from LTCM as the worst academia has been able to conjure.

The book is, "Firewall," by Henning Mankell

I also find the timing of this short squeeze interesting as it happens to occur on a week where the Nikkei index is closed all week.

I am thinking this was timed well so that HB&B can avoid having to apply upward pressure to the Japanese markets and continuity in the global markets!

I understand it is illegal here too.

I figure Timmy Geithner's $34,000 "honest mistake" will be my annual limit. (I wouldn't want to ruin my chances at a government appointment.)

A mild form of protest, but there was a time when I would not have considered doing anything illegal. If I were to be asked by the IRS if I had done any, I would probably still feel compelled to give an honest answer.

That has been cueing the PPT music...

@11:40 and here it comes

I see big volume, and not much price movement today. That's distribution!
With RSI at 76, I'm thinking it's a little bit fatigued. Really impressive volume though.

I'll look to reload on a bounce.

Your welfare and insecurity will be assured by the Department of Redundancy Department.

Absolutely no one admitted!!!

I'm watching XLF closely, my benchmark is $12.12...

I took profits at 15.12...in at 13.55...11.5%...small, but a profit.

Not saying it will not go higher, just intuition and someone was talking about Technical weakness...plus I needed the powder for later.

JMO

Been observing this for a while. Any idea why this happens, almost everyday from 12pm - 1pm EST? Of course there's the crazy 3pm EST - 4pm EST that is beyond logic...

EMA(200) is 83.01

@12:16 83.11
@12:19 83.069
@12:31 82.997 <<<<<<<<<
@12:41 82:869
@14:18 82.75 .........

Mr USD defenestrated

That's as good as it gets when I didn't double up at the end of yesterday's session. Wasn't thinking, letting it trail that far from the purchase at 10am.

Will reload if necessary

http://www.fundmymutualfund.com/2009/05/minaynvill...

That's alright, I offed FAZ at 5.38 and lost about 12 big macs.
I'm hungry.

I recall saying something Monday about the good possibility that having cut losses quickly on SRS/TZA/FAZ would turn out to be the best trade(s) I made all week.

More so than I imagined.

On the other hand, could have let my (NGas) winners ride.

The same lessons over and over again.

Wasn't cracking on Grantham WC - it was Henry Blodget. Why are there two different angles written in two different columns, but the source is the same man - Grantham.

The tech ticker article is leaning to the bullish side, but the TBI article is decidedly bearish. Makes me wonder what game is being played, with which client/reader.

As it turned out Reagan may actually not have been able to recall. But I suspect it's pretty much like when I was in the army...

One time the CO, a Captain, told my Platoon Leader, a Lieutenant, who told me, a Platoon Sergeant, "I can't order you to do this, but..." The implications were very clear.

The guys at the top like a bit of a circuit breaker between themselves and any possible fan propelled stuff.

Reagan was probably never told anything which could be a personal problem.

Great story Grym.

Just noticed Randgold, ticker GOLD, managed to make a new all time high today following a Citi upgrade.....Randgold scheduled to ring the closing bell. Nice day for management to visit the exchange I am sure!

ALOHA !!

So in essence Bill's comments of today and those posts that I have seen so far really speak to the HUGE tangled web of counteryparties that have at its center the one entity that has orchestrated and dominated this three ring circus of fraud known as the US EMPIRE since 1913 and that rntity is the US FEDERAL RESERVE BANK.

There is no doubt in my mind that the elimination of the US FED and all its member banks would be the biggest leap forward that Americans could make towards the pursuit of liberty and happiness and social equality since the American Revolution, or as the Brits call it the "American Insurrection"!

Eliminate the MIDDLEMAN!

Vinod- They're plowing through the shorts. I'm inclined to get short, but I'll settle for the smarter move and remain on the bench.

"One could argue the new HVCC could be used to descriminate against individual Borrowers, certain property types and neighborhoods by their ability to set values and limit loan amounts."

Lest we forget how relaxing M2M was sequenced post bailout. The few banks repaying TARP now received monies funneled through AIG and who knows how else... while subservients were threatened, bullied or bribed into compliance. The remaining "un-chosen" too small to survive were decapitated and hung out to bleed, their bones shall serve well as flour.

FAS/FAZ

Interesting story on Bloomberg re: the float on these.

The float on FAS continues to shrink indicating lack of confidence while FAZ float is growing (looking a little parabolic actually).

Interesting considering price action...it is slowly breaking down.

loannetter -

The AMCs may be a band aid but how does it give banks "absolute control of valuations" ?! The AMC is an attempt to stop mortgage brokers from bypassing the bank-appraiser client relationship. This was already established under FIRREA as a result of the S&L crisis but the mortgage broker and naive residential appraiser rampantly broke that rule. No more 'You promise a certain value and you get the fee or we'll take you off the list.' The AMC assures the appraiser is not manipulated by the bank client or the mortgage broker.

Mortgage brokers and bank clients are biased in that they want to make the deal. Banks should want an unbiased appraisal opinion to judge collateral risk and the bank's AMC also will stop loan officers paid based on commission from seeking out biased appraisals which is also against the law but allowed by unsophisticated community banks with limited resources.

Cuomo is not on the take. The mortgage brokers just lost the ability to establish biased valuations and that's a good thing.

By the way, I know a few mortgage brokers and they're hardworking, honest and provide a good service to society. Just realize that the appraisal is not a negotiation process but an unbiased opinion for a fixed fee.

Cheers.

It seems the dollar just fell from the 84 level down to 82. Can anyone clarify for me how this may keep the rally going? I know this probably relates to the lack of demand for Treasuries and may come back a little...notice things like metals and energy going up quite a bit today. How can rally pull back with dollar falling? Want to go short but feel
like many in that maybe I should continue to sit on sidelines.

New to this forum...hi...Steph

The longer I read Bill, the more I loathe the horse---t passed on as journalism in the financial and mainstream media. I have noticed that many traders that journal let's say on Seeking alpha, often lack the "plainspeak" that Bill demonstrates ( Some speak plainly, but few like Bill). It is almost as if they are afraid to call the liars, liars.

Happy Trading....

>>> Green Chutes. <<<

Sold out my positions today at average $36.45 Cdn. Added to hsd.TO AT $24.26. I need a pullback.

The following is a chart of TARP/Bailout receivers recent lobbying activity:

>
Bailout Recipient Lobbied Spent on Lobbying 1Q Bailout Funds Received
American Express (PDF) Cramdown, Credit Card, Exec Comp $875,000 $3.4 billion
Bank of America (PDF) Cramdown, Credit Card, Exec Comp $750,000 $52.5 billion
4.5 billion
Bank of NY Mellon (PDF)* Credit Card, no response $497,000 $3 billion
Barclays PLC & US Affiliates (PDF)* Cramdown, Credit Card $1,435,916 $7.0 billion
Capital One Financial Corp (PDF) Cramdown, Credit Card, Exec Comp $469,000 $3.6 billion
Citigroup Credit Card, Exec Comp $1,680,000 $50 billion
Credit Suisse (PDF)* Cramdown $580,000 $.4 billion
Deutsche Bank* Cramdown $220,000 $6.4 billion
Discover Financial Services (PDF) Cramdown, Credit Card $257,500 $1.2 billion
Fifth Third Bancorp (PDF) Cramdown, Credit Card $31,000 $3.4 billion
GMAC (PDF) Cramdown $410,000 $5 billion
Goldman Sachs Group, Inc. (PDF) Cramdown, Credit Card, Exec Comp $1,105,000 $10 billion
$12.9 billion
HSBC GR-Corp (PDF)* Cramdown, Credit Card $1,176,573 $3.3 billion
ING North America (PDF)* Cramdown $720,000 $1.5 billion
JP Morgan (PDF) Cramdown, Credit Card, Exec Comp $1,386,000 $25 billion
Morgan Stanley & Co (PDF) Cramdown, Exec Comp $645,000 $10 billion
$1 billion
PNC Bank (PDF) Cramdown, Credit Card $150,000 $7.6 billion
UBS Americas, Inc (PDF)* Cramdown $70,000 $1.7 bilion
U.S. Bancorp (PDF) Cramdown, Credit Card, Exec Comp $255,000 $6.6 billion
Wells Fargo & Company (PDF) Cramdown, Credit Card, Exec Comp $810,000 $25 billion
TOTAL $13,522,989 $220 billion

>

My QID is doing OK.

The following is a chart of TARP/Bailout receivers recent lobbying activity:
>
Bailout Recipient Lobbied Spent on Lobbying 1Q Bailout Funds Received
American Express (PDF)
Cramdown, Credit Card, Exec Comp $875,000 $3.4 billion

Bank of America (PDF)
Cramdown, Credit Card, Exec Comp $750,000 $52.5 billion
4.5 billion

Bank of NY Mellon (PDF)*
Credit Card, no response
$497,000 $3 billion

Barclays PLC & US Affiliates (PDF)*
Cramdown, Credit Card $1,435,916 $7.0 billion

Capital One Financial Corp (PDF)
Cramdown, Credit Card, Exec Comp $469,000 $3.6 billion

Citigroup Credit Card, Exec Comp $1,680,000 $50 billion

Credit Suisse (PDF)*
Cramdown $580,000 $.4 billion

Deutsche Bank* Cramdown $220,000 $6.4 billion

Discover Financial Services (PDF)
Cramdown, Credit Card $257,500 $1.2 billion

Fifth Third Bancorp (PDF)
Cramdown, Credit Card $31,000 $3.4 billion

GMAC (PDF)
Cramdown $410,000 $5 billion

Goldman Sachs Group, Inc. (PDF)
Cramdown, Credit Card, Exec Comp $1,105,000 $10 billion
$12.9 billion

HSBC GR-Corp (PDF)*
Cramdown, Credit Card $1,176,573 $3.3 billion

ING North America (PDF)*
Cramdown $720,000 $1.5 billion

JP Morgan (PDF)
Cramdown, Credit Card, Exec Comp $1,386,000 $25 billion

Morgan Stanley & Co (PDF)
Cramdown, Exec Comp $645,000 $10 billion
$1 billion

PNC Bank (PDF)
Cramdown, Credit Card $150,000 $7.6 billion

UBS Americas, Inc (PDF)*
Cramdown $70,000 $1.7 bilion

U.S. Bancorp (PDF)
Cramdown, Credit Card, Exec Comp $255,000 $6.6 billion

Wells Fargo & Company (PDF)
Cramdown, Credit Card, Exec Comp $810,000 $25 billion

TOTAL $13,522,989 $220 billion
>

50 shares at $38.77 -- still scaling in. My total portfolio is still growing (but ever more slowly) during this rally, and so I am slowly increasing my relative short exposure. Placed a sell limit order at $43.77.

http://tinyurl.com/pbxfev

Some unwinding of positions to occur. No need to take a hit and press a daytrade today.

Let's see which way the wind is blowing Monday.

Apologies WestCoaster for earlier response. I was having a go at Grantham in the first comments made and admittedly, I didn't read what the guy had to say in his e-letter, just the paraphrased parts of Henry Blodget's blog. Will look more closely at what the man said this weekend.

Ooops forgot the chart.

http://tinyurl.com/cdh2tm

Make it so Bev and I will send you a delightful bottle of Swiss red in thanks.

Enjoy your evening all.

Thanks Bev, I actually pulled your chart out from yesterday and was refreshing it every hour for an update.

It was apparent from this morning that it wasn't going to happen, unless a big swing of some sort was to happen, which it didn't

Beware Crisis' Next Wave: Option ARM Foreclosures, More Debt Defaults

William Black, an Associate Professor of Economics and Law at the University of Missouri - Kansas City.............. foresees bad loan "shoes yet to drop" that will be like "Imelda Marcos' closet in an earthquake":

* Commercial Real Estate:
* Option ARMs:
* Credit Card Debt:

http://tinyurl.com/qkn6e7

Loannetter - "who among us believes the spin about 'the chosen' anymore?"

If there's any one thing or event that impresses upon me to be humble about what I believe is truth, it matters not from the perspective of trading stocks, and the world is full of opposing opinions. Yes fundamentals do matter, but there is at best slight relationship with prices in a short time frame.

Have a great weekend, FEE-FI-FO-FUM!!!

Good point. I thought of this as I was liquidating, but don't have the experience so took the weaker path. I know I could have done better your way. One day I'll dip my toes into selling covered calls and puts.

LOL..

... you might want to go burn a sedative if you have any left from that foot injury....

...Maybe you are gone and wont read this...hehe

I've been reading The False Economy, by Alan Beattie. He draws interesting early parallels between the USA and Argentina economies and why they diverged as a result of the choices made by leadership. A big point made was why Teddy Roosevelt chose to take on the Trusts and fight the industrial elites, which if left to their own devices, would destroy the economy and the nation. Argentina's leaders always chose to protect their elites and they went from being First World economy ( larger than France, one-third larger than Italy ) to a Third World economy in only a few decades. Today, America's financial elites stand to destroy the economy and the nation and Barack Obama is faced with making a choice. Is he big enough to make the right one? Current events suggest otherwise, and inaction will only extend the climate of distrust and aggravate the wounds he talks about healing.

This is a Liar's Market, not a Buyer's Market. If you are in a position of influence and can tell the big lie - you will make money. If you are it's audience and listen and act on it - you will be the loser. That's how I see it.

Dr Strangelove, "HVCC IX. Scope of Code: nothing in this Code of Conduct shall be construed to establish new requirements or obligations that: (1) require a lender to obtain a property valuation, or to use any particular method for property valuation (such as an appraisal or automated valuation model) in connection with any mortgage loan or mortgage financing transaction"

This suggests that a borrower may have no appraisal conducted or they may be presented with a valuation based on this new lender biased code. If that's fine with you, great. For a less than perfect borrower the valuation presented via this code may serve to refuse their loan application and that smacks of economic discrimination.

In the past, I was always able to give up shorting a rally or buying on the way down almost precisely at the peak of the move. I have just listened to Don Coxe's weekly call, where he explains how several very important macro indicators are pointing to a noticeable increase in the risk-taking attitude among the investors (such as a rally in the junk bond market, which allows banks to actually sell their bad loans in the market at decent prices), and I now feel like I am ready to accept that this rally will go much higher and close my shorts. Therefore, a pullback must be near! :) Possibly even on Monday...

ALOHA !!

I guess there really is a "pandemic"! Not swine flu, but "whine" flu! The Postmaster is whining about retiree health care costs, not to mention the post office will lose $6bil this year on top of $6bil in cuts. I don't recall what cuts they are talking about? The one I remember being considered was cutting mail delivery days to 5days from six days. I don't care if they cut the delivery days down to three! All I ever get are bills and junk mail anyway! Now I do send postcards when I travel and I think that is a dying art. Who sends postcards these days? Do young kids write postcards? Here in Hawaii they have digital postcards for tourists!

Someone here once claimed the Post Office was not taxpayer funded. Since they are on the US TREASURY DAILY STATEMENTS then they are taxpayer funded! Come on ... what isn't US TAXPAYER funded?

I wonder where they got the idea to raid the TRUST FUND?

This sort of junk legislation get me laughing all the time ... "The fund was established as part of the Postal Accountability and Enhancement Act of 2006". Now if CONgress has to pass legislation forcing government entities to be accountable then whats left? Where is the US CONgress Accountability and Enhancement Act of 2009?

READ ON:
Postmaster presses Congress to act on retiree bill
Nancy Kearney
May 07, 2009

In a letter to a key House subcommittee chairman, US Postmaster General John Potter again pressed his case for Congressional action on proposed legislation that would reduce the agency's out-of-pocket costs for retiree health benefits, which could save the US Postal Service $2 billion this year.

The proposed measure, HR 22, would allow the USPS to pay its share of contributions for retiree health benefits, estimated to be $2 billion this year, out of the Postal Service Retiree Health Benefits Fund. Annual payments to prefund health benefit costs for future retirees would still be made by the USPS.

The May 4 letter to Rep. Stephen Lynch, chairman of the House Subcommittee on Federal Workforce, Post Office, and the District of Columbia, seeks “prompt action on this much needed assistance.”

The bill, which has drawn 299 co-sponsors to date, was introduced in January and remains in the House subcommittee. The bill also is backed by the National Association of Letter Carriers and the American Postal Workers Union.

“As I have testified before the (subcommittee), the Postal Service desperately needs help from Congress,” Potter wrote. “Our urgent request is that the Postal Service be allowed to pay its retiree health benefits premiums from our Retiree Health Benefit Trust Fund.”

The fund was established as part of the Postal Accountability and Enhancement Act of 2006, and receives separate annual payments from the USPS to prefund the employer share of premium payments for current and future retirees.(more)

loannetter -

"For a less than perfect borrower the valuation presented via this code may serve to refuse their loan application and that smacks of economic discrimination."

Is that the intent? Why bother with an appraisal at all if everybody qualifies and you can't trust the valuation! I read that a credit card company just rejected a guy with an 800 FICA because of his location and the company put it in a letter to him. That's called redlining. No regulator to stop that anymore. It's more likely that Fannie and Freddie use the old deregulated model of lending to those who cannot repay via this loophole in HVCC. Team Obama wants to re-up the go-go consumption, remember? The CFO offed himself but it was for personal reasons, right? Funny, no note, so how do they know?

I see there's a new Fannie mortgage program offering 100% loan-to-value. Glorified renter program. Can't see economic discrimination anywhere yet but I sure hope it starts soon. HB&B remains a rogue abuser of the people. I see pitch forks.

David- It sounds as if you're just voicing your readiness, which is entirely different from acting on it. I would wait. Think back to your FAZ short- I think you're well-positioned to make money on the next few legs in this market.

As for why financials have rallied so long and hard, well- It ain't no use to sit and wonder why...

"I forget who it was who said that - Vad maybe, that you should (not) short on an up day."

Ummm... I can take credit of course if offered, but I could try and take credit for coining the word "and" just as well :)

To be sure, it's oversimplified a little... let's put it this way: Do not short new highs in uptrend arbitrarily unless and until you see a trend reversal setup. Same goes for buying new lows in downtrend.

"Prefer to have a little exposure to energy area with core position if possible."

Seamus,

If you are looking for something longer term you might check this out.

ING Managed Natural Resources (IRR) Pays a nice dividend around 11%.

Interesting observations. When you think about it this seems true of total civilizations as well as individual countries.

For that matter, now that I think about it, I've seen a similar result with individual companies — both public and family owned.

A couple former clients were family owned businesses who really treated everyone, employees and suppliers with great respect and had great success. After finally dying off they went public and straight down in a decade or less.

Like they say — What goes around...

2nd_ave, I was saying that I am ready to throw in the towel on shorting this rally for the benefit of others, since good traders on this blog are trying to gauge the sentiment extreme of a J6P and do the opposite. I am usually the last one of all J6P's to give up, and so the trend change should be near.

Luckily for me, this time I started scaling in small, and the total SKF position in my portfolio is now only about 8% of my portfolio. This is the benefit of buying ultra-ETFs that bet against the trend (which is a strategy with limited maximum losses) instead of shorting ultra-ETFs that go with the trend (which is a strategy with unlimited maximum losses). Unlike the case of my shorting FAZ in a downtrend, I am not even using my margin this time, as my SKF position is decreasing during this rally and would be doing less and less damage to my portfolio if I stopped adding to it. So hopefully I'll be able to hold out until the short-term trend changes and then sell my recent SKF purchases at a profit.

David,
Don't know if you saw my post earlier, but I finally sold my BAC today. Got an email from a client who took a huge position in BAC @ 3.30, that basically said..."Thanks, it's been fun, but time to say goodbye."

Vinod- In addition to BAC, I see FAS, UYG, RTH, and URE made the list.

http://tinyurl.com/pt6cea

"In a nutshell the Fed has purchased enormous quantities of T-Bills, Agencies and Agency MBS held by i-Banks with the understanding that the i-Banks will turn around and invest that money in 'productive' assets. Whether those assets be stocks, commodities, real estate or dog food is of no particular importance to the Fed, so long as the cash is placed into the economy and placed there in a hurry.

The i-Banks have obliged in a big way – scooping up boatloads of commodities and commodity-related stocks as well as massive blocks of index futures and equities via SPY and QQQQ. These enormous block purchases have caused equities across the board to skyrocket. No stock has been left behind - from the crappiest bank stock to the most cutting edge tech stock. As a result, correlations between stocks are at levels not seen since after the crash of 1987."

WP- Just for fun, from the same article..."Let's call it a Draw....although a decent portion of my Thursday gains were wiped out with Friday's fiasco, I remain hopeful that next week will see a meaningful reversal - in fact, the NQ may have already reversed.Hope does not fly in this market however, so if Monday turns into more of the same I will be gone very quickly.
I took these Fed actions into account early on and it kept me away from the short side for most of the rally. However I obviously underestimated their effect by at least a day or so. That was a mistake. Whether it will be costly or not remains to be seen.In any case it is becoming abundantly clear that we have seen the lows for awhile."

Thanks Vinod- I see that now. Have a great weekend.

Just a minute while I re-position my propeller beanie for some deep thinking. I've been doing a lot of noodling about the future lately because I am a few days away from announcing my retirement from a great 25 year career in financial planning, almost 20 years as a CFP.

Wayne Gretsky often said the reason for his success as a hockey player was to know where the puck was going to go and his task was to be there ahead of time.

I'm faced with the prospect of putting a lot of money ( which is mostly in cash MM funds ) back to work to provide future income. I'm contemplating what products and services will be in demand during the next 20 years and conclude that it will be a different game if I'm correct in thinking the targeted consumer will be increasingly in BRIC countries.

Maybe autos wont be the big thing, but companies like Boeing and Bombardier may provide high volume and high speed transportation solutions. Vacation travel should thrive, for demographic reasons among others..... Carnival or Disney? Consumer electronics looks good since they will increasingly function like computers..... Sandisk and Micron ( gotta love that patent revenue ). Samsung and Sony for hardware?

How about the need for basic commodities like concrete for housing and contruction. Water treatment and delivery systems? Any names out there? Suez?

There's got to be a lot of good stuff in the Cara 100!

Come on folks, help me out here! I'm trying to participate in the new economy for the 21st century.

unemployment may go down for a while reason is they all laid off wall street type are going to be hire as census workers?. And in this scenario
They going to take bear to cleaner and then bull will be ruined and only most experience and knowledge people like Bill will do great. We must follow his daily and WIR to get a road map how-to navigate this road
Since options expiration is next week there is a good chance that we’ll hit 9000 on the Dow. After that I think everyone is headed for the door

Bev,

Let's assume for a moment that the market continues to rally such that the slope of the neckline drawn from the January high becomes positive. At what point would you concede a legitimate bull rally ?

Your TA charts are much appreciated.

thanks

The highest unemployment since World War II and people want to call a bottom. This is not a normal recession, but a restructuring of the economy.
Because at some point someone will need to pay the cost for these toxic mortgages.And gigantic bubbles like this has ended so badly that they have knocked powerful economy into doldrums, so to think that we’ll have a second half recovery is hubris to the maximums courtesy of our Federal Reserve and U.S. Treasury.
GM stock is at a 1.61 when GM itself said it was going to wipe out the shareholders- seems to me everyone would be running for the exit but they are not.if you can figure this out than this rally is real

I had a SMALL short position on financials via call option on skf. closed it before 11am. then had to be in nyc all day.

watching the markets i was amazed. Who was buying? more importantly, who was selling? financial's trumped all. i will wait for the opening on monday and watch close. i may jump back on the bulls back, but a pullback is only natural. A correction down is needed.

looking fwd to WIR.

Thanks Bev,

it's funny how the likes of Bill Black and Simon Johnson pass through Bill Moyer's program first and then are welcomed to the mainstream financial press.

"On Tuesday, long bonds cracked a potentially important level around 3.85%. One could make the case that the low is in for yields and that they are on a slow, steady march higher. Of course, the Federal Reserve is not going to accept that at face value and will become more aggressive by monetizing long (30-year) bonds.

What ought to happen to the dollar -- as I have felt for some time -- is that it should be pressured by that monetization. On Tuesday and Wednesday, the dollar was very weak. It looks like it could be beginning to break down on the charts.

But charts have a way of repairing themselves, and I may be jumping the gun (which I have been known to do on more than one occasion).
There are myriad reasons -- not least of which are the trillions of dollars of supply -- why one would expect interest rates to rise and the dollar to decline. But an environment where we saw weaker growth and more inflation would be especially bond-unfriendly.

Weaker growth would prompt the Fed and the government to keep applying stimuli. The inflationary consequences would pressure interest rates higher, which the Fed would try to suppress. That action would exacerbate the problem, and the vicious cycle would continue."

Permit me to continue on his 2nd page:

Though I hesitate to make too much out of one report on the gross domestic product (or government statistics in general), Wednesday's first-quarter GDP data -- which showed a contraction of 6.1%, versus expectations of 4.7% -- make for a wonderful example of what the future holds: essentially a replay of the 1970s, only far worse.

It's not that I find the results terribly surprising or especially alarming. I do not. What's more interesting is that the GDP price index, which measures the prices of goods and services included in GDP calculations, was expected to be 1.8% but registered 2.9%, and that the and that prices of core personal consumption expenditures (a measure of inflation that master of disaster Alan Greenspan particularly focused on) rose 1.5% quarter to quarter, versus expectations of just 1%.

Hard-wired for inflation

To stare at those numbers for a second, what you see is that while GDP was contracting at a rate rarely seen in this country, there was no deflation but rather inflation. That is because the reaction to anything that looks and smells like an "unauthorized" decline in asset markets is met by the stimulus that we have seen.

(We will likely transition from two quarters of minus 6% GDP growth to a rate less severe, like, say, 0%. If that happens, it may look like an economic revival when in fact it's just a deceleration in the rate of collapse.)

I have been waiting for signs of an inflection point that signals a sea change in psychology. As inflection points occur, it's quite difficult to actually determine that things are changing. (Inflection points are always obvious in hindsight -- the greater the distance, the better.)

Nevertheless, the aforementioned data/market reactions appear tantalizing, as they hold the potential for just such a change."

Does this observation tie in with Bill's TOG? IMHO, it looks like we're getting closer, if a continuing rally Monday does not permit us to be there (the psychological sea change) already.

What will be investor's reaction to the next Treasury auctions in a descending market? Continued "flight to safety", or greater skepticism?

"AP sources: Obama wants Fed to be finance supercop- AP

The Federal Reserve could become the supercop for "too big to fail" companies capable of causing another financial meltdown under a proposal being seriously considered by the White House."

Who the hell are they kidding!

ALOHA !!

Les, yes I was surprised by Switzerland! I guess their past reputation of austerity no longer applies. Also the UK is a complete mess and look who's at the helm there! Then the EU countries are dismal as well.

Then look at CHINA external debt at $659BIL ... with billions of people their EXTERNAL DEBT is less than Australia with only 23 million people! So in essence COMMUNIST DICTATOR countries have more fiscal responsibility than the USA and the entire Western civilization combined!

What did our Founding Fathers fight for? Looks like that's right out the window! We Americans have traded freedom and liberty for DEBT SERVICE!

Amazing ...

http://www.atimes.com/atimes/South_Asia/KE09Df03.html

ALOHA !!

Very funny ... The fox is guarding the hen house!

So on one hand OBAMA wants to get rid of the US FED member banks who are screwing poor students on their student loans and now he wants the US FED to police them?

WISHY WASHY ... MR. FLIP FLOP!

OBAMA? CHANGE? What can we believe in?

You get what you vote for ...

By the way I just got another menu from EBay ... This one is the US SENATE RESTAURANT LUNCH MENU dated April 11, 1941.

Crab cocktail-45 cents
Lobster cocktail-60 cents
Caviar Chef Salad-80 cents

Pot of Coffee-15 cents
Orange juice-15 cents

Whole Broiled Lobster, Julianne potatoes, chefs salad-85 cents

BEN? Aren't you the guardian of inflation? BEN?

"not only do these rating agencies report corrupt ratings on SUBPRIME MBS but that same corruption extends all the way up to US sovereign debt as well!"

Obviously you're not surprised, and neither am I. This is what quickly happens when the leveraging engine runs out of fuel while the financial engineers quietly try to get her kick started.

"... the nest of vipers beneath is revolting enough to send the peeps into the streets with pitch forks. They'll hit the streets in such numbers once they come to realize they've been fleeced..."

Don't I wish.

I've been expecting a major revolt for nearly 20 years — no longer believe it will happen.

Unions: Instead of revolting when NAFTA first began exporting jobs just sat. Now they are morphing into management at GM.

Individuals: Too fragmented to gain strength. Fall has been as small segments. Loss of some benefits, loss of house value, dipping into 401(k) seeking part time or temp job

The oldest have been hi the hardest and least likely to revolt against gov.

My 90-yr-old friend Ken said yesterday his wife's trust fund is broke at -$300,000. She's in altzeimers wing. His own retirement plan nearly gone in past year — cost for both $9,000/month.
One neighbor (also 90) has two major mortgage backed bond investments in bankruptcy and his GM preferred will convert to common stock at $0.01/share by vote, or GM will file.

Too late for too many.

ALOHA !!

Vinod ... Thanks for that link! More US EMPIRE stuff ... I love the new OBAMA term for the WAR ON TERROR! OVERSEAS CONTINGENCY OPERATIONS! That's CHANGE we can believe in! How long before we hear the DRAFT is back?

This was all covered in Ludwig Von Mises book PLANNED CHAOS, first published in 1947. Part of his theory revolves around the perpetual state of war between the resource rich countries and the resource poor countries. At one time the USA was RESOURCE RICH and we were oil exporters like OPEC is now. But that has changed and now the USA is an oil importer like Japan was prior to WW2. What else has changed about the USA is this entire "environmental lobby" that dominates in Washington DC, led by the likes of Al Gore et al! Now the USA is NOT actually RESOURCE POOR, but we are LITIGATION RICH! The US CONgress is constantly attacking US oil companies for their profits, yet they are stone cold silent on the massive profits of Goldman Sachs, not to mention the massive fraud every US Bank has perpetuated now in the TRILLIONS. PROFIT EVIL ... FRAUD GOOD! There comes a time when EMPIRE is threatened by its shear size of GOVERNMENT and MILITARY. The USA is there ... My stance has always been WE CANNOT AFFORD IT! We cannot afford EMPIRE!

Bin Laden is winning ... Essentially what Bin Laden is proving is that there is no difference between Russia and America. What is the US MILITARY BASES in 134 countries and NATO other than AMERICA'S IRON CURTAIN?

IT ALL WORKS UNTIL ...

http://ronsen.blogspot.com/2009/05/saturday-brunch...

I missed this Black interview, but have read enough to assume I would have agreed with much of the show.

I stopped watching Moyers (was a regular) when he seemed too whiny and repetitive during Bush era. While I never liked Bush (Quit watching him for repetitive everything.) I felt less threatened than now under Obama's reign.

With few exceptions I am totally disillusioned with both parties. Perhaps a viable third party will emerge (Paul?) after desperation become universal, but that's too late for too many.

Condolences on your brother in law Ron.

I've got the name of a skin specialist on a post it next to me.

You've just convinced me to give him a call sooner rather than later.

Grym, I can totally see where you're coming from. While there was much about Bush I disliked (list being too long to get into) Obama seems to be tragically a continuation (economically) of the Bush years.

He's clearly smarter than Bush, yet he too is captured.

Here's the Moyers Interview. It really is worth watching. He's not whiny, at least not to me. And he's critical of both administrations.

http://www.pbs.org/moyers/journal/04032009/watch.html

I find that Bill's analysis when the markets are at the outer edge of either extreme changes. it becomes laser focused and the trader notes shows.

I make it no secret i hate the financial's, yet i put my emotions aside and went long the past few weeks. So now i am ready to go back to my natural state and will wait to short them.

As I see it, hb&b are selling high risk right now. I have never had a broker, never will, outside of the CTAB model. But those of you who do have typical "brokers," do they call you to buy on the dips or buy on the way up? In my experience it is much easier to sell buzz than doom. I can almost hear them, "Now is your chance to let me help you make it all back." Selling risk masked as hope.

And I have also been saying the stress test has been a joke from the start. There is still a lack of volume. Our president is now a confirmed chattel to the banks.

In a month from now, i will be surely shocked if this balloon hasn't popped violently. But now i am thinking too much. I just have to watch and react.

Hey DaveFairtex, FYI: the new national licensing laws require all mortgage brokers and their loan officers be background checked, fingerprinted, educated and licensed and cannot have committed a felony or have claimed bankruptcy during the last seven years. Banks are not required to train or license their loan officers. One hopes your trusted banker is at least background checked. The buyer beware for commercial lending is that residential (RESPA) laws don't apply.

http://tinyurl.com/obdskx

ALOHA !!

As I have been posting on EXTERNAL DEBT of various countries there is a way to measure this for EMERGING MARKETS and it is known as the EMBI SPREAD. This stands for Emerging Markets Bond Index ...

Here is JP MORGANS website that follows EMBI ...

Link: http://www.cbonds.info/eng/pages/JPM

Note how some BRIC countries are fairing much better in the costs to finance their DEBT. Brazil is the leader.

Once you are on the JPM website page link scroll to the bottom. When you click on the various spreads go to the "chart symbol" and once there a window will pop up and then click "whole period" to get the big picture.

This would be a useful tool to assess country risk for mining company due diligence in the EM.

EM or not ... who rules EXTERNAL DEBT WORLD? yep ... the US EMPIRE!

TOO BIG TO FAIL?

I have to admit I'm getting a little nervous about our government. I have read in more than one article that our government is like the old Soviet Union government (corrupt). I have also read that the IMF would not loan money to the USA because of banksters involvement in the government(imf own rules). All financial numbers are twisted so there is no clear picture of what is really happening in the economy. This stress test is nothing but a cruel joke on the naive investor. This market feels like it now being use by Goldman to steal money from everybody, even their own clients. The government is suppressing the price of gold, and keeping interest rates low. I talk to one guy that has lost over a million dollars that has now doubled down, says once he gets his money back he is out of the market for good. This doesn't seem or feel like America.

RE:>As I see it, hb&b are selling high risk right now. I have never had a broker, never will, outside of the CTAB model. But those of you who do have typical "brokers," do they call you to buy on the dips or buy on the way up?

Had a drink with my neighbour this afternoon. I know it's not sexy to exhale wine through one's nose, but that was the best I could do when he told me that he'd been offered to buy citi stock and sought my opinion.

I am assuming his broker was the one who offered? Brokers can use much sexier language when selling stocks if the markets are moving up.

kaimu
It's a classic case of calm before the storm. The Obama's brand new OCO ("Overseas Contingency Operations") does not imply only a surge in the Pashtun Federally Administered Tribal Areas (FATA). A surge in Baluchistan as well may be virtually inevitable.

Great article--thanks Vinod. This whole 'great game' is fascinating. I have a book by a French author Jean-Francois Susbielle called "Chine-USA, la Guerre Programme'". One of the points he makes is that the US does everything to cut off China from a reliable energy supply. This happened in Russia with the whole Youkos-Gazprom-Sibneft affair and he claims that it was a prime reason for the war in Irak. It is a prime reason for all our bases in that region and the strength of our navy in the straits of Hormuz, the straits of Malacca, and the South China Sea. (It is one reason why China is seeking control of Gwadar.) It is certainly consistent with PNAC. It's interesting that Obama is pursuing the same policies in this (with perhaps more flexibility and attention to public opinion) as Bush-Cheney. People think that the Chinese can just pull the plug on the dollar, but we would instantly cut off their energy.

Kaimu,

I remember telling friends when the USSR collapsed that it could happen here. When was that — about 1989? It seems like shortly after the 1987 mess. Anyhow, it is far more likely to happen now.

Even after thinking of the possibility for years, it is still more scary to read it spelled out. Also, I said with the fall of USSR, that we were in far more danger than during the cold war. Then only an accidental trigger of nukes would bring mass destruction, but without a strong fist who would keep track of their arsenal? We know there are missing big time weapons and who knows where to begin looking?

Same can happen here. A year ago there was a flap over a B-52 flyover while carrying a "misplaced" nuke.

Think of the blackmail prospects in the wrong hands. Give us your oil or else? Wheat? It won't gives us your Gm stock or bearer bonds — for sure.

-10,348,214 SELL SPY SPDR Trust Series 1
State Street Global Advisors

This is an item I pulled from the www.buylist.com using INTC as the stock symbol. As I read it, State Street sold a block of over 10 million shares during last week. I went through a few other stocks and noticed State Street had large block shares of other tech companies being sold. What gripes me is that people with managed accounts don't have a clue that their portfolio assets are most likely being loaned out to beat down tech stocks and at the same time the money is being used to pump up the banks.

I've invested in Intel recently only because they are still managing to invest 7 billion dollars in facilities this year, they pay a dividend and there is no one on the planet that can compete with them on such a massive scale. Looking back ten years at their chart says it all. They've been well above $20 for a long time and they know how to get there. I see a lot of tech being bought in the very near future by business. Just the health care industry alone with a mandate to get everything electronically available is big.

I foresee companies using any available assets to modernize and expand efficiency along the tech lines. Any productivity accomplishments they can achieve will allow them to keep their bottom line down and grow the profits.

We are mainly focused on what our government is doing in relation to the economy and the market. Here's a couple of other things they are up to.

BIG BROTHER GOES AFTER YOUR WATER
If you have a pond, stream or reoccurring mud puddle on your property, the Federal Government wants to control it.

Introduced into the US Senate this past week on April 2nd a new law called the Clean Water Restoration Act (S.787 IS) to amend the Federal Water Pollution Control Act (Clean Water Act) by, and quoting directly from this new law:

(1) by striking `navigable waters of the United States' each place it appears and inserting `waters of the United States';

(2) in section 304(l)(1) by striking `NAVIGABLE WATERS' in the heading and inserting `WATERS OF THE UNITED STATES'; and

(3) by striking `navigable waters' each place it appears and inserting `waters of the United States'

and then adding:

(25) WATERS OF THE UNITED STATES- The term `waters of the United States' means all waters subject to the ebb and flow of the tide, the territorial seas, and all interstate and intrastate waters and their tributaries, including lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, natural ponds, and all impoundments of the foregoing, to the fullest extent that these waters, or activities affecting these waters, are subject to the legislative power of Congress under the Constitution.

*******************************************************************************************************************
PAKISTAN-Winning hearts and minds in Central Asia

In the past few months, the Obama Administration has been escalating the conflict in Pakistan and now actions by the Pakistani army is creating a human refugee crisis of perhaps up to a million innoccent people being displaced from their homes. Forced into refugee camps with little resources or jammed into relatives homes, their main focus is probably getting enough to feed their family and they probably care little about politics. US unmanned drones have been shooting at their villages from time to time over the last six months. Now following strong U.S. pressure, the Pakistani government launched its latest offensive, and the prime minister appealed for international assistance for the growing refugee crisis and vowed to defeat the militants.

Making war on Shaista

NBC/ MARDAN, Pakistan – Shaista, a terrified 11-year-old girl from the Swat Valley, was lying in a hospital bed in Mardan’s ill-equipped health center on Friday.

She suffered severe injuries to her legs when an artillery shell, reportedly fired by Pakistani troops, hit her family’s small house Thursday night in Mingora.

The traumatized Shaista said the mortar shell struck a room where she was sleeping. Her voice choking, Shaista said her mother, two sisters and brother were killed in the incident – and then she became lost in deep despair.

Those who voted for Obama expecting an end to this perpetual war in Central Asia are finding out they misjudged
the candidate.

I sold INTC and AMAT near their weeks peaks but at a loss. Think they have reached a mini-hi. Getting into more cash. Proved correct for the weeks close. Still, they seem to be a value for excellent companies under a more normal economic scenario. I missed the dividend x-date but thats ok. Will buy lower. Can always buy SMH and still take tax loss. Btw, I have an over abundance of tax losses. The $3000 annual limit is another example of something that needs to be changed. Ridiculous.

MoKat,
I guess I shouldn't have put 4 gallons of acid dye #9 in the pond last week. The fish don't mind neither do the ducks and geese and it sure is a pretty blue.

I get your point. The West has always been arch socialist. Try enrolling a kid in public school without his shots. Even my dogs are forced to endure the needle for the sake of the common good. Tobacco is daemonized as a health hazard. Not that anyone is concerned with my health in particular but that the economic cost to 'we the people' become unacceptable.

My take is that we are making another cyclic transition between politics and money. We have increasingly laboured under the tyranny of money for the past 60 years aided and abbeted by political hacks but that may change. The tyranny of politics may be worse of course. I could be forced to take out a mortgage for the betterment of the whole...

The parade continues. Empires last centuries after they peak. I reckon the West will collapse around 2867 or roundabouts thereto. To quote Chief Dan George from the movie Josey Wales "we must endeavor to persevere."

One of my favorite books is "The Coming Boom" by Herman Kahn published in 1982. Perhaps HB&B did kick off the Bull market that August but it was time. This cycle will be different of course. They always are.

http://tinyurl.com/q24hrk

I've been to Bentonville, AR and sat in on one of the infamous "Wal-Mart weekly meetings."

This company can tell you how many eyeglasses of frame X with lens Y it sold last day, week, month, etc. They can do this with any product they offer.

Wal-Mart can track every item sold worldwide and report it's numbers to management with a few mouse clicks...why would they quit reporting data that's so easily obtained?

Is it because even mighty Wal-Mart can't keep up numbers in a depression/massive recession?

I think Wal-Mart replaced GM as the American company to watch. This doesn't bod well ... no position in WM.

"The drop from the right shoulder (should it materialize) may accurately price in the third wave."

What was the second wave? If it hasn't happened yet, then the stocks cannot start pricing in anything beyond it since we don't know how bad it is going to be. The notices of default in the Santa Clara County were at an all time high in March 2009, and we will soon know what they were in April 2009 (most likely, their number increased even more). On the other hand, many analysts including John Mauldin agree that the GDP change in 4Q2009 might be 0 or positive, which would be sufficient to keep stocks at the current levels or even higher for many months (in early March investors were pricing in a free fall in the economy with no recovery in the foreseeable future).

"The third wave may retest or even exceed the previous low."

I am afraid that will be the case, and when the next leg down will start in the market, everyone will be sure that this is just a temporary pullback in a bull market that started in March 2009, and so people will start buying this pullback right away and will be VERY sorry later on. I am afraid that I will be one of those people, unless I decide not to start buying anything until we drop below the March lows. But then, we may not get there for another year (the stocks will be fixated on the possibility of a positive GDP growth in 4Q2009 for several months now, until the time comes to start asking what will happen AFTER 4Q2009), and if things turn out better than I think, then we may not come close to March lows at all. I am sure that when the real bull market will be ready to start, I'll feel the same way and will miss out on it or will even start shorting it after the initial 25% rally. It's tough to play the market...

http://www.imf.org/external/pubs/ft/weo/2009/01/pd...

See pages 122 - 125, "Growth and Credit during recoveries". Explains a little of the madness that the Fed is shoving down our throats.

Note the differences between normal recessions (bad), credit based recessions (worse), and global (credit based) synchronised recessions - the last one being as bad as it gets (and we're in it)

When will housing recover? Depends who is talking!
http://tinyurl.com/pa9uqs

http://www1.investorvillage.com/smbd.asp?mb=2234&m...

Re: Obama Stands in the Way of Our Energy Future - It's Inevitable

And it came to pass in the Age of Insanity that the people of the land called America , having lost their morals, their work initiative, and their will to defend their liberties, chose as their Supreme Leader that person known as "The One". He emerged from the vapors with a message that had no meaning; but he hypnotized the people telling them, "I am sent to save you. My lack of experience, my questionable ethics, my monstrous ego, and my association with evil doers are of no consequence. For I shall save you with Hope and Change. Go, therefore, and proclaim throughout the land that he who preceded me is evil, that he has defiled the nation, and that all he has built must be destroyed."

And the people rejoiced, for even though they knew not what "The One" would do, he had promised that he would bring change, and they proclaimed, "Yes, we can".

And "The One" said, "We live in the greatest country in the world. Help me change everything about it!"

And the people said, "Hallelujah!! Change is good!"

Then he said, "We are going to tax the rich fat-cats." And the people said, "Sock it to them! and redistribute their wealth."

And then he said, "Redistribution of wealth is good for everybody."

And the people said, "Show us the money!"

And Joe the plumber asked, "Are you kidding me? You're going to steal my money and give it to the deadbeats??"

And "The One" ridiculed and taunted him, and Joe's personal records were hacked, publicized, and ridiculed--though no crime could be found.

One lone reporter asked, "That shouldn't be, isn't that Marxist policy?"

And she was banished from the kingdom!

Then a citizen asked, "With no foreign relations experience and having zero military experience or knowledge, how will you deal with radical terrorists?"

And "The One" said, "Simple. I shall sit with them and talk kindly to them and show them how nice we really are; and they will forget that they ever wanted to kill us all!"

And the people said, "Hallelujah!! We are safe at last, and we can beat our weapons into free cars for the people!"

Then "The One" said, "I shall give 95% of you lower taxes."

And one, lone voice said, "But 40% of us don't pay ANY taxes."

So "The One" said, "Then I shall give you some of the taxes the fat-cats pay!"

And the people said, "Hallelujah!! Show us the money!"

Then "The One" said, "I shall tax your Capital Gains when you sell your homes!"

And the people yawned, and the already slumping housing market fully collapsed.

And he said, "I shall mandate employer-funded health care for EVERY worker and raise the minimum wage, and lower the white collar wage. And I shall also give every person unlimited healthcare and medicine and even transportation to the free clinics."

And the people said, "Give me some of that!"

Then he said, "I shall penalize employers who ship jobs overseas."

And the people said, "Where's my rebate check?"

Then "The One" said, "I shall bankrupt the coal industry, and perhaps even the oil industry (Cap & Trade/Carbon Tax) and though electricity rates will skyrocket, we shall soon build wind farms and solar power stations and drive green cars that I shall mandate in Detroit !"

And the people said, "Coal is dirty, coal is evil, no more coal! But we don't care for that part about higher electric rates."

So "The One" said, "Not to worry. If your rebate ($10/week) isn't enough to cover your extra expenses ($3,000/year), we shall bail you out. Just sign up with ACORN, and your troubles are over! Only the fat cats will have to pay."

Then He said, "Illegal immigrants feel scorned and slighted. Let's grant them amnesty, Social Security, free education, free lunches, free medical care, bi-lingual signs and guaranteed housing."

And the people said, "Hallelujah!!" And they made him King!

And so it came to pass that employers, facing spiraling costs and ever-higher taxes, raised their prices and laid off workers, though they sold much less of their products. Others simply gave up and went out of business, and the economy sank like unto a rock dropped from a cliff. The banking industry was destroyed. Manufacturing slowed to a crawl. And more of the people were without a means of support.

So "The One" again blamed the prior administration, extended unemployment benefits to a year, bailed out his favorite banks, and then took over the banks and auto industries. "The One" said, "I am the 'The One' - The Messiah - and I'm here to save you! We shall just print more money so the government will have enough! Surely one trillion dollars will make everyone happy." And immediately the Fed complied, and the money presses roared.

And China reconsidered their one trillion dollars of loans to the US , and threatened to call in their debts. Other foreign trading partners said unto "The One", "Wait a minute. Your dollar is not worth a pile of camel dung! You will have to pay more.....for everything......as your dollar becomes worth less."

And the people said, "Wait a minute. That is unfair!!"

And the world said, "Neither are these other idiotic programs you have embraced. Lo, you have become a Socialist state and a second-rate power. What factories are not owned by your government are owned by us. Now you shall play by our rules!"

And "The One" said "Americans are arrogant, divisive, and derisive! We will listen."

And the people cried out, "Alas, alas!! What have we done?"

But yea, verily, it was too late. The people eventually set upon "The One" and spat upon him and stoned him, and his name was dung. But the once mighty nation was no more; and the once proud people were without sustenance or shelter or hope. And the Change that "The One" had given them was as like unto a poison that had destroyed them from within, and like a whirlwind that consumed all that they had built.

And the people beat their chests in despair and cried out in anguish, "Give us back our nation and our pride and our hope!!"

But it was too late, and the once-glorious "Home of the Brave and Land of the Free" was no more..

While I commend the students for their objections I'm afraid this kind of revolt will not have any appreciable affect. This is one mighty and persistent well lobbied category and has been for decades.

If we are to have a revolt it must be against the main culprits — congress.

All of our biggest problems have been either allowed, aided or instituted within our legislature. They have become the embodiment of all ills.

An illustration of their hubris: While millions are losing their jobs, the benfits, their homes and their life savings — congress just got a raise.

At the same time they are bashing auto CEOs and AIG, they are awarding cash bailouts and bonuses to bankers, Fannie Mae execs and approving a tax dodger as Treasury Secretary.

It's enough to gag a maggot.

A few med students will not be noticed. Sorry.

Obama is not the root cause of the USA problems. Here is an interesting wiki on root causes. The thing I like most about this blog is that people tend to dig deeper and continually ask "Why?" or proclaim "BS!!".

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

http://www1.investorvillage.com/smbd.asp?mb=2234&m...

This story was sent to me this from this site - I did not compose it and am merely passing it along as the writer has made some interesting observations. Far be it for me to be pointing any fingers at any one person. The difficulties were caused by a collective group of persons as Bill so aptly points out. Happy Mother's Day to all of you moms out there - enjoy your special day

Lori- What are you saying? That Obama sold his soul in order to become President? That Americans have lost their moral compass and/or their own souls and will thus blindly follow anyone who proclaims to know the way back to "the land of the free?"

Obama is just one man. He's not perfect, but I believe he's well-intentioned, thoughtful, and takes his job seriously. He hit the ground running in November, and IMO, has accomplished more in his first hundred days than any I've lived under as an adult. He has charisma and self-confidence, not to be confused with "a monstrous ego." As far as I know, he has not lambasted his predecessors, associated with 'evil-doers' any more than the rest of us do, taunted or ridiculed anyone in public, or hacked into anyone's personal files. In fact, he's pretty much taken on the nation's problems with little complaint/blame, and taking it all in stride.

As for your characterization of Americans, I don't even know where to begin. Sorry you feel that way.

[edit] Just saw your follow-up post. So I guess I'll redirect my comments to the author.

aucorant- Yes, the 'great game' is fascinating, and I'll have to check out Susbielle's book. I was talking to my Dad this weekend after watching Ang Lee's "Lust, Caution." He (through his Dad) knows/knows something about many of the characters the film/book was based on. The Sino-Japanese War, and whether Chinese "collaborators" were traitors or heroes, can be looked at from many angles. There are always broader as well as highly personal motivations behind most political decisions.

Vinod- Thanks for bringing it to my attention.

""If Harvard can do it, so can we!"

MtnGtnx- Reminds me of the T-shirts they were selling in Ann Arbor in the eighties- "Harvard- The Michigan of the East."

I agree with you, RU.

I am a Chinese Medical doctor - an acupuncturist. I took a seminar a few years ago from a very well-respected and extremely knowledgeable man, Dr. Jeffrey Yuen (http://www.jadepurityfoundation.org/master.html).

He said that the Chinese were vaccinating in the 6th century, but stopped due to side effects similar to the ones we're experiencing today.

Think about it - can it be good to make your system think you've had several major diseases by the time you're six weeks old? (and this isn't even taking into account all the additives to the vaccine)

And Gardisil - very short time testing of something that will influence the reproductive capabilities of an entire generation of young women (it seems like they're all vaccinated already except for my 17-year old). And now they want to vaccinate the young boys...

The following article may have appeared in the opinions/views section of your local paper today. It originated in the L.A. Times:
http://articles.latimes.com/2009/05/03/editorial_p...

"As this newspaper recently noted, an increasing number of parents are opting out of vaccinating their children. Up to now, they have tended to be affluent families. But I fear we are starting to see a new contagion, a terrible idea spreading."

Ah, look, the word 'fear'...great tool. This guy is so one-sided. Has he counted the number of deaths and injuries caused by vaccines? Does he mention VAERS? Most people don't even know that VAERS exists. And, I have a very big question: Why were the affluent not vaccinating? Do they know something us peons do not? Those poor authors of the original Lancet study. 10 of the 13 authors retracted their conclusions? This piece must have really been a thorn in the side of Big Pharma.

At one point I wanted to be a physician. But, how do you go into a profession where you take the Hippocratic Oath ("Above all, do no harm") and force vaccinations upon those who aren't given proper informed consent? I've been to a few Pediatricians and not one gave me any information about these vaccinations. In the physicians defense, there simply isn't time. However, parents are essentially told this is something you do for child's health and that of the community. Additionally, there are the children who have already been harmed. The parents object to further vaccination and are told their concerns about their injured child are "unfounded". #9 of the Nuremberg Code allows for withdrawal from the "experiment": "During the course of the experiment the human subject should be at liberty to bring the experiment to an end if he has reached the physical or mental state where continuation of the experiment seems to him to be impossible."

I've studied this subject extensively. The theory behind immunization is a good one and occured by accident because of Benjamin Jesty:
http://en.wikipedia.org/wiki/Benjamin_Jesty
However, we have taken this theory and injected these toxins directly into the bloodstream. If we could come up with a pill form in which the digestive system (body's defense system) could filter through the ingredients then I might not have such a problem with it. Also, we are doing way too much and "overvaccinating". Not every disease is life-threatening. Not every disease requires us injecting these toxins directly into the bloodstream. What about the DNA of the monkey cells and chick embryos? Do they combine with ours when injected directly into our bloodstreams? Are we medically advanced enough to determine these answers. I FEAR these answers may come too late. We need to be more proactive and stop blindly trusting the experts.

What is the next step in hb&b's plan? they have successfully raised their capital by inflating the price with our capital and sector rotation. Would the next logical step be to unload the same inflated shares to mom and pop before they tank, and move their money back into something else?

My question is regarding below insight from WIR:
"Why did the S&P 500 index rally +5.80% this week? It happened because HB&B needed the public to feel good. It’s called sugar. What little wealth the public has left after losing trillions to billionaire bankers has been used to pave a yellow brick road for the anointed bankers, the top 19, to enable them to stay in control, to repeat their actions. I feel sick about it that there are people – clients even – who think this is a good thing.

What happened this week is the Pied Piper of Wall Street, Jamie Dimon, played his pipe as loud as he can to hypnotize the masses so that his gang can continue to live like the classes.

Do not be spellbound my friends. This matter will end badly."

http://ronsen.blogspot.com/2009/05/more-charts-mor...

" A few nights ago I knew that the Obama propaganda engine had really succeeded when an airport limousine driver recognized me as a guy who is on TV a lot and asked me which banks I thought were going to pass and which banks I thought were going to flunk the Stress Tests. But, before I could answer he told me which banks he thought were “keepers” and which stocks he was shorting. By the time I got dropped off at my hotel I not only knew what he thought but also knew which stocks most of his relatives were buying."

To my novice senses, this seems like a top, but of what I'm not sure...

This is an article I just saw on google news.

http://seekingalpha.com/article/136799-the-stress-...

http://bbs.chinadaily.com.cn/viewthread.php?tid=51...

"Taipei's mayor Ma Yin-jeou was received in grand style in his visits to Washington D.C. and Singapore.

"In both places, the Mainlanders hardly raised a little finger in objection as if they were collectively held spellbound by his personal charisma.

"It reminded me of one of the earliest KMT leaders -- Wang Jing-wei -- a handsome young man who at the hot-headed age of twenty-eight tried to assassinate a Manchu noble.

"Despite his failure, the attempt nevertheless established him as second only to Chiang Kai-shek in KMT's political pecking order.

"Yet when the Sino-Japanese War started in 1937 he lost confidence in the nation's ability to resist, and excused himself from the resistive efforts to form a separate Hanjian government at Wuhan."

If crude is going up, what would be the stocks to buy (oil services?)

"Is Anyone Minding the Store at the Federal Reserve?"

She is clueless !

http://www.youtube.com/watch?v=PXlxBeAvsB8&feature...

as i have been noting on many days the past few weeks, there has been a lack of volume. This no doubt made it even easier for hb&b to use minimal capital to drive up the share prices of bank stocks, so they could dilute at higher prices.

I believe the same lack of volume will also aid the correction, if/when it happens. I can be wrong and maybe this is the new bull market.

Also, it is clear in my short study of the markets, stocks go down much faster than it takes to go up. We have had 7 winning weeks. What i am saying is, IF we were to correct 100% of this recent move, it would prob take much less than 7 weeks, accelerated even more with the lack of any buyers to absorb any panic selling.

http://tinyurl.com/rctj27

"The basic premise of investing is 'buy low and sell high,'" he said. "And low is when nobody else wants it." But even the professionals don't always get it right. Legendary contrarian-minded managers such as David Dreman and Marty Whitman had a tough 2008, with Dreman Contrarian Large Cap Value Fund and Whitman's Third Avenue Value Fund losing 45% and 46%, respectively."

"And Bill Miller of Legg Mason Inc. another manager with a contrarian bent, saw his Legg Mason Value Trust fall 55% in 2008."
"Each manager is different, but these guys can get it wrong, too," Morningstar's Kinnel said.
Not just wrong, but spectacularly wrong. "They buy stocks thinking things can't get worse," Kinnel said, "but last year was such a bad year that areas such as financials, and other cyclical names, kept getting worse."
McGinn, the independent money manager, would agree. "Being a large-cap contrarian manager in a bear market is like trying to catch a falling knife," he said. "Some things that are going down can keep going down."

"knifecatcher"'s going to have to work harder to catch up to these guys...

"I would like to see a listing of the institutions that buy the offerings."

Vinod- Do you still have the link to the site that lists the names of funds buying/selling a particular stock on any given week/month?

Here you go, 2nd.

http://thebuylist.com

Thanks, Dr. Strangelove. We recently bought a new PC and have yet to copy all the old links.