Cara's Commentary & Community Chat, Friday, Oct. 2, 2009

The big hint came when you were in Cuba and your standin said that the you were going short.

To All,

This is, in my opinion, a must see video for all. It involves discussion on the USD, Gold and SDR's. Its only six minutes. It is with a fellow by the name of Jim Rickards. I hope you all take the time.

http://www.youtube.com/watch?v=0-ZZFmKFk1s&feature...

Cheers
Ad

I don't even have to check the news, but I am 100% sure the jobs report is a bad one, and prob even worse than what GS revised yesterday.

Good morning.

Upgrades:

COST - to Outperform @ Robert W. Baird. PT Raised from $53 to $65

INTC - to Outperform @ Oppenheimer. PT = $28

New:

FSLR - Janney Montgomery Scott Initiates Coverage with a Buy.

PT Raised:

CSCO - from $26 to $29 @ Jefferies & Co. Buy

...and speaks to CNBC - http://bit.ly/JDKxh

Found this over at “naked capitalism”, which seems very fitting:

“ Gas Mask Bra Among Ig Nobel Winners “
http://www.nakedcapitalism.com/2009/10/gas-mask-br...

Had to smile as I read that item, but laughed at “JoJo’s” comment:
“ ... I love it! Multi-purpose clothing. But what do men use? A jock strap? ...”

Reggae for the day: "Don't worry, be happy!"

I think this is the kind of day Bill has been talking about for awhile. We just need to stay nimble and watch out for the head-fakes (i.e Wednesday morning's action).

1/4 position in FAZ, looking to add on what Bill mentioned as the head-fake.

think singles and doubles - Billy Ball.

PT Raised:

CSCO - from $22 to $25 @ Wedbush Morgan. Neutral
GOOG - from $500 to $575 @ Argus. Buy

2nd you are much more nimble than I.

Nice call.

In natgas these companies are CHK and SD.

ez_money- Too nimble, sometimes. So it's another wistful look, this time at SLW.

This morning the buck is getting sold hard. Perhaps someone is trying to slow down the southbound SPX train. Its down 0.5% already, and SPX seems to have arrested its fall for the moment.

EDIT: buck down -0.70 now. SPX has moved up gently.

...

About to do the taxi thing again for a daughter. C looks pretty weak as its MACDh indicators are rising, but it's share price is not. Negative outlooks shared by Bill are already affecting risk appetite?

Wow ... for a company that has yet to earn a nickel in profit, it is ballooning like crazy. Heavy volume, too.

And on a day like today, no less ...

2nd, I am in the natgas business, be careful, look at the TA on UNG.

Thanks for the heads up. I've been flipping back and forth between HND.to and HNU.to for a few weeks now, with mixed results.

Bill,

Is this a head-fake, intra-day, higher highs, higher lows in the S&P, need to break 1028 on S&P to confirm daily trend.

Exactly what I was thinking, re: UNG.

Looks like it bounced off the 50 day MA. That, and we're right at RSI = 30 for the daily, which has almost always been where we get a bounce during this rally off the March 9 lows.

It seems to me they threw the buck under the bus to get an SPX bounce today. The news certainly wasn't good!

I've bought back half the short calls I had outstanding. I'm keeping my puts. I'll reload if we go seriously higher, which if the buck stays down, we may well. TOF's AAPL is looking strong today.

From Bloomberg:

CIT Pledges to Cut $5.7 Billion of Debt in Swap Offer

http://tinyurl.com/ycbxn98

May the trade winds be with you

...

I am calling the bear trap.

Econoday's manufacturing commentary:

Consensus: +1%, Actual -0.8%

The manufacturing recovery is having a bumpy lift off. Manufacturing activity first moved higher in June then improved further in July but then dipped back in August. Factory orders for August fell 0.8 percent vs. a 1.4 percent rise in July (1.3 percent first reported) and vs. a 0.9 percent rise in June. August's data were pulled lower by durable goods, down 2.6 percent in the month (revised from an initial 2.4 percent). August orders for non-durable goods make their appearance with this report, up 0.8 percent and reflecting higher prices for oil & coal but not nearly enough to offset the drop in durable goods.

Exactly when does "a bumpy liftoff" turn into "a double dip recession"?

Speaking of which, how's the weather in the US? Over here it's been a balmy autumn - absolutely fabulous. I read in the English Media the other day of an influx of African butterflies into SE England for an Indian Summer. Is the US enjoying good weather. I'm starting to think that El Nino is already doing its thing and we are approaching the point where blood is on the streets vis a vis NatGas. Alternative thoughts are appreciated as I anticipate shorting UNG soon.

Les- The weather has been beautiful on the Peninsula. But then, it's always beautiful in the Bay Area ;)

A central bank can always print up a bunch of new money and buy foreign currencies. That will weaken its own currency. And we've seen how dollar weakness in the recent past seems to be well correlated with SPX strength. But they can only do this if other central banks don't respond in kind. Presumably there would have to be an agreement between the parties to allow this to happen.

I have never seen so many people so negative on the dollar. If every body is so negative on one side of the trade it seems that the dollare may go up instead. I just bought UUP at $22.88. I put a stop in at $22.40 - Just under the recent low. On a weekly basis MACD, Fast STO, Slow STO, are giving buy signals. RSI and PPO will probably give weekly buy signals at the end of the day. I looked at just buying the Dec 23 Calls at $.45 but like the stock with stop better. Any comments on my strategy especially where I set the stop? Could use some input. Thanks.

Lower lows, lower highs.

...

Bruce - I've attached an updated UUP chart that I posted here yesterday - not much change so far for today.

A couple of comments:
- Currencies are generally considered to be HIGHLY manipulated by Gov/CB's, and charting of currencies may be more indicative of who's "jawboning" the currency, or when a bond auction is taking place rather than anything of meaningful value to the chartist.
- Placement of "stops" is a very personal thing - how much you can afford to lose - how well do you sleep - how much faith in your system? The archives here might give you some insight and links on the topic.

Good luck!

http://bit.ly/uc2KI

This was mid sentence during a large speech. Shows you who is really running this circus.

From a clip from Michael Moore's movie Capitalism, which opens nationwide today. I am def going to check it out with a few friends.

I just sold (5) 40 Nov puts on RGLD @ 1.55 which gives me cash in my account of $775.

If at expiration RGLD closes below $40, my cost basis will become $38.45 which is an entry I feel comfortable with. The stock has a base between July and Sep of 37.35 to 38. If RGLD is put to me I would most likely set a stop around 37.

I made this trade because I think we could get continued share weakness of gold equities going into mid to latter Oct period. If this weakness occurs, as expected, I will then purchase RGLD outright on such development.

This is not a recommendation to anyone. It is my desire to learn how to write calls and puts to either create a stream of income or initiate positions on what I think will be good entries. By writing this out here I think I can accelerate my learning and maybe others who are doing the same/similar can share their insights.

Very impressive in my opinion that gold was able to recapture the $1,000 level after getting as low as $987 this morning. I added to my GLD position on that dip.

Thanks, just got out of my shorts (that doesn't read right) for a small loss today (but gain overall).

Rio got it!!!!!!!!!!!!!!!!

TD Bank said Friday morning that it was still experiencing problems with its computer system, but has completed processing all of Thursday's transactions.
http://bit.ly/Qw75x

Hi - Bought this dog a while back and it cratered due to some corporate problems with paying China taxes, and I did not think it would see the light of day again. Original purchase on the strength of a share purchase by Spanish company Abengoa to partner in the development of enzyme for cellulostic ethanol production. Seems the stuff is at least safe and the chart reflects good stuff for the day trading types:
Dyadic International, Inc. announced that it has received acknowledgement from the U.S. Food and Drug Administration (FDA) that it has no questions at this time regarding Dyadic`s conclusion that the cellulase enzyme preparation derived from a genetically modified strain of its patented C1 organism is generally recognized as safe (GRAS) under the intended conditions of use. Happy Trading

I was wondering about the context too. Moore has been shown to bend the facts by doctoring the tapes and quoting out of context, and this "command" makes no sense to me whatsoever in a context of "master commanding his puppet" (which is obviously implied here). Chief of Staff reminding President that time is tight before some next event? That makes much more sense, IMO. But omit conveniently his role as Chief of staff and focus on Merrill Lynch connection, and episode immediately becomes so ominous...

I's all "fair" I guess when one aims to prove at all costs that "Capitalism is an evil, and you cannot regulate evil."

Back in SDS at 42.48

http://bit.ly/Sfru7

That breakout from sept 1 could be a h&s top. But i am betting on the two solid blue trend lines to support the price and hit the ball back up to the higher trend line.

If it breaks down from here its gonna go down pretty fast.

Want to pop in and say thank you for this morning's "CTA trader’s conference call notes:". I can't begin to tell you how helpful they were.
+1 for Bill Cara

Si02 thanks for the links ,its appreciated, I Will be using them for a quick reference.If I find something useful I think its important to give the original poster positive feedback.

Gutsy call with it currently at 1029. Are you holding your shorts through the weekend?

ez_m- I've already taken everything except HND.to off the table (see earlier posts). HND is often worth holding overnight- NGas gaps up/down more often than anything else I've traded. Of course, it can gap against you. So I try to keep position size manageable.

....

I think the problem is more than just TD bank, in my TD brokerage account I have been getting bad quotes all day today, yesterday as well. When I first logged on yesterday it showed my account down 10K and I freaked out until I could figure out what was happening. Not a comforting feeling.

Chart based on today's CTA trader’s conference call notes.

http://tinyurl.com/ydz7tm6

[Please let me know of any inaccuracies]

knifecatcher

The chart is in real time so it will always be up to date. Just hold on to the link.

Oh...it's from Moore..explains it. Also, arguably, at that time Reagan was beginning to suffer the effects of Alzheimer's. He may have been getting more support from his handlers. Manipulation, possibly, but in public settings they may have needed to keep him on task

It's a hot potato, but to short this sucker back to $1 - what a prize.

Oooooooooooo LES.... I am going to spank you at the CARA BAHAMAS 2010 CONFERENCE for that one ! ! ! :-)

Wow, I think this qualifies as a double or a single.

Don't even go there Bev :) Seems IB is giving me problems logging back in. Don't know if it's an issue for anyone else? So market direction remains academic speculation for me until Monday.

EZ and others - SPY ticker is clearly rolling over on the 60 min chart yet the indicators remain oversold. As someone once said, the market can stay irrational longer than we can stay solvent. I'll take the same grain of salt on the downside and am waiting to see how this unfolds Monday. Bill gave a clue in traders note - he wants to see 1000 before aggressively buying. I'll take my cues from the maestro. Night all.

I'm having them too. It's been over 20 min now. Good thing I was planning to hold my small position over the weekend.

into the weekend. Monday is like a 50/50 bet. I'll just wait

"Capitalism is an evil, and you cannot regulate evil"

Well, I had no intention of going to the movie, but that comment pretty much puts my opinion of him back where it was before I watched the Ratigan interview.

I'm sure if he feels this is true he is not keeping any of the money the film brings in. Right? All will be given to the jobless, homeless and starving.

ez_m- Nice call.

I just got back from a long morning meeting at work and missed today's action, or the lack of action. :) After looking at the charts I decided to sell a little more SRS after hours, reducing my position by 10% at $10.61. I think the market is ripe for a little rebound.

Also, seeing that copper made a new lower low today but FCX has actually increased today, I placed a sell short stop limit order under FCX, with a stop at 65.76 and a limit at 65.5.

I think I recognize that marble-walled background and also from the rousing cheer when he said "we're going to let the Bull loose" - I think Reagan was opening the NYSE Stock Exchange and the bell was likely going to ring for the open in seconds...

edit: Yep. Found this from the March 28, 1985 L.A. Times:

"President Reagan opened trading on the New York Stock Exchange today in a campaign-style trip to launch a rescue effort for his embattled budget..."That's our economic program for the next four years," Reagan said. "We're going to turn the bull loose."

http://articles.latimes.com/1985-03-28/news/mn-290...

<%-)

Mackinaw -

Bingo!

I have not seen the movie where I might hear it better, but if you turn up your computer speakers you will hear Regan say "tell Congress to speed it up".

The context, as provided by the LA Times is: "Adopting the jargon of Wall Street, where a bear market declines and a bull market rises, Reagan said that if Congress adopts the tax overhaul and budget restraints he wants, "our economy will be free to expand to its full potential, driving the bears back into permanent hibernation."

The message seemed to be to Congress.
I don't know how much of a rush he was in but the LA Times provides the timing.
"That's our economic program for the next four years," Reagan said. "We're going to turn the bull loose."

And with that, at the appointed moment of three seconds before 10 a.m., he pushed a button to electronically ring the bell that traditionally opens frantic stock trading on the floor of the exchange. Traders jamming the floor below chanted "Ronnie! Ronnie! Ronnie!"

Since none of us was there to know the exact context, maybe the question or issue isn't whether it should be speeded up for Congress or the bell, the question to me, since I only have one hunch in the sound track is: Should we have self interested parties representing Humongous Bank and Broker who profit or even heist money from the people, involved, like Hank Paulson or Don Regan or Tim Geithner, as Treasury Secretaries, Chief of Staff or Fed Chairs? Where are the interests of the people sped up? Where are the common people getting their bells rung?
Who's looking after our interests in Washington and on Wall Street?
Because the issue isn't "speed it up", the context is the lead in to that part of the clip, the introduction and background of one Donald Regan. He does tell the President to "speed it up" but that really doesn't seem to be germain. That isn't Moore's focus, although it would be easy to misread that context as well. It's who is telling him to speed it up and what HE is doing there. It probably wouldn't mean much if a big HB&B mover/shaker wasn't there to provide the true context. The message is clearly to the street and monied interests. Right? The message wasn't to the citizens who were going to pay for the tax cuts or for those, for example, in mental institutions who were put out on the street due to the budget cuts while he increased tax cuts to the wealthy and increased military spending.

And we have never had "permanent bear hibernation" no matter who promised it, have we?
The questions aren't political. They are systemic questions as no party has served the general citizenry as far as I can see. It was afterall Reagan, that appointed Alan Greenspan and he was reappointed by the next three Presidents of both parties.
The question isn't which of two broken systems do we choose, the question is what can we do to fix corrupted American capitalism/corporatism as it has become.

looks interesting. More interesting than TBT. (TBT is in RSI accumulation mode). Buy limit 58.20. Thursday's 3PM price.

Do your own homework.

GL

Run by a guy who also runs a junior energy fund; the fund will refrain from investing in Russia and the Middle East; 70% of funds allocated to the sector at launch; may invest 10% in other precious metals, 10% in base metals, and 10% in uranium. The fees are high: 5.25% load, 1.83% annual expenses.

It's down 5% from its mid-Sept. launch:

http://www.h-l.co.uk/funds/fund_key_features/sedol...

He assigned a caption to an image that had nothing to do with what was happening. Fraud is fraud. I guess you're saying the ends justifies the means.

Mac,
How about Paul Krugman or Bill Black or Joseph Stiglitz. There are any number of excellent, trustworthy individuals who could fill the top spots. Do they all have to be Goldman Sachs or JPM alumni, who provide us with mealy mouthed tomes, non answers and apparent conflicts of interest?

I have had it with this HB&B hegomy. They aren't the only ones who know banking and finance. I am sure you will agree.

Woah. I have been hasty in posting that vid. I am pulling it down now, until I can get more info. Haven't seen the movie yet either. I def learned something today. Feeling pretty stupid actually.

"....the point of the video, which is the interests of the wealthy and connected HB&B over the average citizen and their interests and their financial future"

Craig, I agree and I allow Moore poetic license to make a good case. The really memorable item was that Regan was Sec Treasury and point man for tax cuts for the really wealthy.

The revolving door syndrome has weighed heavily on good government for decades. The DOD is another prime example. That would be another film for Moore if we can get past this financial implosion.

I remember the Donald Regan 'Presidency' quite well. I believe that after doing his job at Treasury he was brought in to be chief of staff to the failing (in mind) President.

Illini, you have good memory. Here is more info http://en.wikipedia.org/wiki/Donald_Regan

With the US$ -7.25% http://nexalogic.com/currency.html
If you are from Brazil, New Zealand, Australia and quite a few other countries, you can visit the U.S. on the cheap.

We did get rid of a big accounting firm a few years ago in the Enron aftermath. That was Arthur Anderson. I guess that was just the tip of the iceberg. The rest still floats ominously, mostly hidden. Then again, there are now obvious cracks appearing.

Craig,

I have no political affiliations or interests other than any normal person whose ways of life are being impacted by whatever happens "high above". Nor am I political activist by any means. I am a trader and for this blog intends and purposes I intend to remain in this quality only. Since in your rather sweeping generalization you obviously included me I'll show where I am coming from, but forgive me for not making it a subject of prolonged back and forth exchange - this will be my only post on this, and in order not to provoke extended exchange I'll limit my reply to "my position only", without any discussion of anyone else's views.

All below is MY take on the matter - not intended to influence anyone else's and without pretense on being the ultimate truth.

1. I've seen enough of MM to understand his positions, and I disagree with majority of them. I've seen quite a few instances (and they are well documented)of him bending the truth in order to make his point - even when the point itself was either valid or at least worth honest discussion. That, in my book, is not the way to lead the discourse. Ends do not justify means.
2. I've heard enough of his interviews about this particular movie and topics in it to come to conclusion that he does not really understand what he is talking about (you should hear his explanation what derivatives are and why they are bad). He just does what he does best - creates outrage.
3. In directing this outrage in a wrong channel (damning capitalism) he misses the golden opportunity to nail down the real problem - ruining capitalism by introducing "socialism for the rich" and by managing (not to say manipulating) financial system to the political ends. A lot of those who understand the problem have little means to make their knowledge widely known, or lack the ability to make it simple enough for the layman to understand. With his popularity and reach, he did have this opportunity. And he CAN be very effective - you should hear him nailing down Tim Geithner - perfect aim, perfect wording... Opportunity squandered at best, used to reach wrong ends most likely.
4. I don't like using cheap theatrics for igniting the crowds. Yellow police tape around Wall Street buildings, "citizen arrest of AIG board" etc... I do NOT want enraged crowds on barricades - nothing good ever comes out of that.
5. I dislike his manner to make issues a matter of good men vs bad men. As if any good man never goes to work for a bank, or if he does he turns evil... and all bankers are bad people by definition while some other people are good by definition... who? Filmmakers? Heh... Or there are no criminals or dishonest people among blue collar workers? Is there any profession that makes someone good or bad by the very token of being a representative of that profession? It's The System that is structured wrong - system of motivations and punishments. Such system defines people's behavior. To create the system that rewards thievery and then cry about thieves multiplying is hypocrisy or stupidity or both. If we want things to be fixed, we need to fix the system - not to leave it as it is and wag our fingers at "bad guys". And no, I do not see capitalism as evil.

Hopefully all above explains why, seeing how he used that tape in order to prove his point, I took it as just another typical MMish trick.

This was rare case when I went off trading topics. After clicking Save, I am back to trading...

Bill and community before seeing the movie I want you to keep these thoughts in mind. First, I am a fan of Michael Moore as an artist, but do not agree with many of his political views. People on this site, because we have a clue about the financial markets and its inner workings are not his intended audience. The intended audience is the clueless Mom and Pop investors who actually don't understnd the inner workings of the financial markets, the Fed and the governments. I think most on this site will find the Michael Moore argument presented in this film as too basic. Too simple. I am sure you will find instiences where he is bending the truth, taking sound bites out of context in a way that may be unfair, but really why does MM have to be fair. Should we hold MM to a higher standard then all other media sources. Why should MM have integrity when the forces he is taking on have none? Bill has often, and even today, pointed out that the media is manipulated for HBB's benefit. The media's constant spewing of the HBB party line drowns out any opposing voice. I admire MM for his guts. Who else with any power (Bill and Blogosphere excluded) has said anything about the trillion dollar gifts given to HBB. For myself when I see the film I am not going to nitpick certain points. I already know i am going to have some "come on Michael moments" when I watch it. Yet I am going to judge the film in its entirety based on his ability to show how the system is rigged in HBB favor. In essence I will judge the film on his ability to shout above the roar of the tide against him.

ALOHA!!

WOW ... the very first day of a 100% Obama FY 2010 and the US Treasury is already in the hole $77.6BIL USD in one day!

Not only that but Obama has gone hog wild on the entitlements and military. The US Treasury spent the most I have ever seen on Medicare in one day ... $14.6BIL USD! The 100% Obama US Treasury spent on military related line items a total of over $12BIL USD on Thursday. He sure spends a lot of money for not having a strategy!

I see Obama wasted no time on marketable and non-marketable DEBT ... $352.8BIL USD on the very first day of which $85BIL USD in US Treasury Bills(short term debt).

On the first day of FY 2010 US PUBLIC DEBT went up $10.7BIL USD, showing a gross PUBLIC DEBT of $11.92TRIL USD. The US PUBLIC DEBT subject to statutory limits rose to $11.86BIL USD.

As a comparison Bush started FY2008 $10.3BIL USD in the hole on the first day October 1, 2007. That day the US PUBLIC DEBT subject to statutory limits was at $8.9TRIL USD.

Bush started FY 2009 first day in the black by $22BIL USD, but the only way he pulled that off was to issue $45BIL USD in US DEBT, actually it was rather sneaky, because he used CMBs to do it, Cash Management Bills, which are only supposed to be used to fill gaps on redemptions, for which that day there were no redemptions, so no shortages. Bush even had Hank Paulson painting the US Treasury's tape as well! Interesting that Bush threw $13BIL USD at Medicare on the first day of the FY 2010, so Obama out spent him by $1.6BIL USD!

If you compare the Bush FY 2009 to the Obama FY 2010 a lot of the same line items appear and in very similar amounts, as if the Obama US Treasury was copying the Bush US Treasury, only Obama is spending more and issuing more debt.

I think the first 100% Obama day is setting the stage for what is shaping up to be a disgraceful orgy of spending and debt. NO CHANGE is in the cards.

I always hear pundits, like the one I mentioned earlier today, who say that by devaluing the US Dollar we can pay the debt off. I wonder what planet these guys reside on. It is not Earth ... The last time America paid its debt off was 1835 and that was when the USA had no central bank and the President in office then despised bankers! So do you think America will ever pay anything off as long as this AMERICAN DREAM DEBT LOVE FEST keeps truckin'? Think of the US DEBT as a DEBT CARRY TRADE. A currency Carry Trade borrows from one currency at a lower rate and then buys another currency's DEBT at a higher rate reaping the reward of "free money". It works great so long as the borrowed currency does not appreciate too rapidly and so long as the spread is not put into something risky like SubPrime, where it is lost. So how much "carry trade" was being bailed out along with US Banks on SubPrime? The US DEBT carry trade is where politicians take our tax revenues(no cost to them) and then leverage up our entitlements using US DEBT in order to stay in power. In effect they are taking our own tax dollars from our own pockets to "buy votes"! Wouldn't you rather vote for a politician who was running on the "free lunch" and "business-as-usual" platform rather than the politician who was running on the "pay the debt" platform? Never mind that the way the politician "finances" the "free lunch" is to leverage huge DEBT so that many future generations of Americans will be left with the burden of debt in order for the immediate gratification of the generation now in power enjoying the "free lunch". This same debt carry trade could be used by each succeeding American generation so long as there is a willing buyer of the US DEBT. So far there is, even if it our own central bank. Also huge US DEBT can remain easy to leverage so long as interest rates remain low. So one would have to question the BOJ(Bank Of Japan)real reasons for keeping interest rates low for so long. Is it really to keep the Japanese export markets humming along, so that jobs are plentiful or is it really to benefit the politicians in Japan who have used huge debt to buy votes? A Japanese factory worker likes the idea of having a job and a Japanese politician likes the idea of staying in power. Everybody is content so long as the DEBT keeps growing and so long as the DEBT can be serviced. It looks as if many global currencies are competing to be the basis of the global currency carry trade. The Yen has a lot more competition than it had in the past!

The first step for any recovery from addiction is to first admit that you have a problem. The next step is to stop using! When it comes to the drug of choice in Washington DC ... DEBT ... these guys could care less about stopping. If they stopped spending they would not get re-elected ... government would not grow ... more lost jobs ... rioting US government union workers ... military adventures end ... As it says in the BIG BOOK, some people are constitutionally incapable of quitting. I would love to see the US Congress do STEP #8 AA TWELVE STEPS ...

8. Made a list of all persons we had harmed, and became willing to make
amends to them all.

Yeah, that's all your constituents and their children, babies and all ... The American youth are the future DEBT INMATES. That is highly immoral.

Hummmmm ...

Nice one Bill and whoever sent that to you. Fox TV picked up on MSNBC's boo boo:

http://www.youtube.com/watch?v=1Jwg-f3dqN4&feature...

Reflecting on these games that the media play, I might suggest that they're as old as the media itself:

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

There is a term I learnt in Uni called the fourth estate - an addition to the traditional tripartite of democratic govt. - the executive, legislative and judiciary. That is, journalists should be the watchdog that keeps the other three estates in check by keeping a politically active public well informed:

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

Note the difference between my explanation of the 4th estate and what you read in Wiki. That should alert us to the notion that Wiki, like TV and paper journalism, should serve as the basis of further discussion, and not be the authoritative end of discussion.

There is an ideological bent in that wiki article that seeks to undermine the legitimate historical role of the British media. We can see today that the British media are doing a marginally better job of keeping the public informed than its US counterpart.

I'd hazard a safe guess in suggesting that we're in an evolutionary process of change as media consumers. If there was no digital device to record the two stories you linked, how would we have seen the false nature of MSNBC? There is a majority who know no better than what they see on TV, but certainly a growing minority who are taking recourse through alternative media. The future of media is going to be interesting. Once the traditional TV outlets realise they can't fool people the way they use to, watch them change tack and use the internet as a propaganda tool. It was after all the US that perfected psychological warfare.

edit: after reading all the posts, am I to understand that this youtube scene with Reagan is part of Moore's new film? NYUGrad, could you provide me with the link now that you've deleted the file please? I hope you're not embarrassed by the manipulated video - IMO that's part and parcel of healthy discussion which I enjoy on this site. Dissect and dissect again until we find a greater element of truth on the given matter.

Johnny,

I wholeheartedly agree.

When the truth is stretched or deliberately distorted to make a point it only confuses the issue, or worse yet, makes the legitimate objections less acceptable.

There is plenty of evidence of favoritism, cronyism, and possibly criminal fraud to make a strong and influential movie. Anything else weakens the case.

Moore should stick to a reasonable approach instead of opting for sensationalism.

He was on CNBC yesterday and started out just fine, then began to show his ignorance and diminished his argument.

Good summary of the situation, IMO.

I have never been a fan, but one of my sons is. After seeing only the exchange of ideas between Moore and Ratigan I thought perhaps he had matured in his approach to the point of delivering a rational attempt to create meaningful change.

Subsequent appearances and comments have convinced me that nothing has changed. He is simply using the same old techniques on a very serious matter.

I think perhaps his best bet for a future movie would be to star in the life story of Buddy Hackett. He would probably be a good joker.

Clearly a rising wedge breakdown.This is a log chart, the linear is barely above the lower rail but below the 50dma

Which one do most prefer? LOgarithmic or linear for daily timeframes?

http://www.cnsnews.com/news/article/54930

Self-explanatory...sheesh.

I value this site for several reasons. Of course the main reason is learning more about the Markets and this thing they call "Trading"... but the other reasons that keeps me coming back are some of the regular contributors that for the most part some of the comments can be looked at as "not on topic" but to me they are sometimes the most important dialog of the day. I second Les and could not have said it better>>
"IMO that's part and parcel of healthy discussion which I enjoy on this site. Dissect and dissect again until we find a greater element of truth on the given matter."

I also second Bobbyo comment #47873

But who i look forward to seeing and educating me on the $$ that has opened my eyes to some "truth" i never even understood is > kaimu Thank You for your continued posts like #47875

The bottom line here the thread is education, knowledge and seeking Truths..
Everyone have a Great Day..

Following your line of reasoning what is going on with the TARP and other stimulus hype is OK for those guys to do.

After all if they tell the truth — they won't accomplish their goal.

What's sauce for the goose is sauce for the gander.

Giuliani took down Ivan Boesky and Michael Milken. Also put a serious dent into the Five (Mafia) Families of NYC.

Spitzer ended control of Manhattan's trucking and garment industries by the Gambino family. And was well on his way to taking on white collar crime.

When you finally find a sheriff able to clean things up, does he need to be perfect?

http://www.youtube.com/watch?v=bLMotU8Tu9E&feature...

Bill, speaking for myself, I caught the reference about buying gamma - you've said it often enough lately that it penetrated into my brain, and it keeps me thinking about buying puts and calls. I've actually bought a number of them lately. But I'm handicapped without charts, and I suspect many other traders here are as well. We cannot tell on a relative basis how cheap or expensive these options really are. All we see is the current price (and IV).

I can guess that options are probably cheap right now because the VIX is just now bottoming out, and so all I can assume is that the options of the stuff I want to short may be underpriced also. I know when I think about writing puts for some things, I have this sense that I am not getting paid all that well for the risk I am taking.

EDIT: Gah, I re-read the Friday morning daily report just now. I think I was still suffering from too much wine Thursday nite for it to all completely penetrate. You couldn't be more clear, it's all there in black and white, beautifully laid out. I think I'll trade better once I'm back in Thailand where I'll have time to wake up before market open.

Last time I checked this site a year ago, there were 17,211 homes offered at the Countryside Foreclosures Blog. Latest report of June 2009 shows 7,017. Note the graph.

http://countrywide-foreclosures.blogspot.com/

Frankly, I've been intrigued by Ron Paul and his ideas, but his excited manner of speaking made him seem somewhat like an excitable counterpart to Maxine Waters. Pardon my ignorance; he's much more than that.

His new tract is a well-reasoned, thoughtful (yet readable) exposition of ideas so basic and tuned in to US values - yet far from current mainstream - as to really get you thinking. (I had never read "the Austrians" either. They need a good PR dept!)

The first takeaway is of a man who has been outspoken and consistent in his beliefs for decades, having long debated Greenspan and Bernanke. He followed the Austrians for years, and read Ayn Rand (although he rejected some of her ideas).

Can you imagine? - a surviving politician with a well-reasoned, deeply-held, and openly expressed personal philosophy !

This is NOT a policy document. There's no exploration of how a gold standard could actually be re-instated. In college (during the sunset years of the gold standard) I remember distinguished economists arguing how absurd it was to limit global investment and trade to the amount of yellow metal which could be pulled from the earth. Now, that seems quite a bit less absurd!

It's also hard to imagine how the US could function without a Central Bank - in a world full of them.

But those are details. To me, the key point is that the FED is a PRIVATE institution (which he mentions but does not dwell on.) The FED is OWNED by its member banks. The NY-FED Board to which TurboTaxTimmy reported included Jamie Dimon, Jeffry Immelt, and (as PUBLIC representative) Dick Fuld. The FED is an appendage of the the banks who got the US into the current mess.

This book creates a framework for contemplating the implications of this. It may also give you an increased appreciation for its author.

Putin shaking down Renault's Russian subsidiary for a bailout of failing Russian automaker. Makes me wonder what other industries are being held together with bandaids and a bailout. Bearish divergence of indicators and price on the Russian ETF RSX Weekly charts. Two big weeks of selling - with the tight price I'd say distribution. Didn't the Russians release some bad economic forecast recently? Either way, looks like risk being sold and RSX is good for a short.

Buying premium means buying either a put or a call. And actually, you can buy both a put AND a call and even if the underlying doesn't end up changing, your put and call get more valuable if the overall volatility increases.

But put in context, with lower highs and lower lows, I'd guess that means if the rally looks lame, load up on cheap puts as it starts to peter out.

I've been wanting to find out who exactly owns The Fed, and in what %'s. Further, are any owners outside the US? I understand that the member banks own the various Fed's, but is 100% of the stock owned there. I imagine not?

And if you can't find it, I have the story saved on my worksite PC, and will provide you the link on Monday morning.

2nd, that would be a 100X. Wow!

I had OEX October puts in 10/87, which expired up 27X - on the Saturday before the (Monday) crash, but not enough of them to do more than hedge my holdings.

On http://www.efalken.com a former hedge fund manager displays his brokerage statement documenting a 13X return during one day - crash day, 1987.

When premiums are low, and the market crashes, you get some major consolation ...

tof/jock- The point is not to repeat the gains of October 1987. It's simply to bank some coin on the potential complacency of traders.

Below is an excerpt from John Mauldin's latest e-letter, where he is warning about the crisis that will inevitably arrive as a result of US spending more money every year than it earns (Obama administration is now projecting a $1T+ deficit every year for the next 10 years):

"Just as I was writing in 2006 about the potential for a crisis, and yet the party went on for quite some time, I think the party can limp along now. But there will come a point when the party is over. Interest rates on the long end will rise precipitously, forcing mortgages up and making the deficit even worse. It will be an even worse crisis than the one we have just gone through. And there will be fewer options for policy makers, and none of them will be good or pleasant. And it will take most people unawares. They will see the current trend and project it into the future. And they will be hit hard."

How can we protect our portfolios against such a crisis? A timely purchase of TBT will do that, but those who purchase TBT too early will be killed. Now, for example, I think TBT has a LONG way to go down, since money will keep flowing into bonds during the next down phase in equities, which can last several years until THE bottom is put in. David Rosenberg likes to point out that THE bottom in interest rates usually occurs MANY years after a financial crisis begins. So it will be really hard to figure out whether bonds are falling because of a short-term rally in equities or because the treasury debt market is getting saturated.

Another favorite crisis-protection investment is gold. However, if the interest rates will shoot up because of the bond market saturating (rather then because of Bernanke playing "catch-up" with inflation and rising interest rates but still staying "behind the curve"), then so will the $USD (as it happened during the crisis of 2008), and so gold will be killed. If Meredith Whitney is correct in saying that we will have another leg down in the credit crisis very soon, since the total consumer credit keeps contracting, then a big move down in gold can come sooner than we may want to see it, when credit dries up once again and everyone will be looking for dollars to pay back their debts.

Now that $USD has participated in the "carry trade" for almost a year (people borrowing $USD at less than 0.25% interest and investing it into all kinds of foreign risky assets), the impact on $USD of the next credit crisis will be much more profound, since the carry trade will need to be unwound in larger volumes, with everyone selling risky foreign assets, converting the money back into $USD and preparing to pay back their debts. $USD will shoot up once again and gold will collapse. Gold investors were hit with this hammer once, and the whole mechanism is still in place to hit them (us) once again soon.

What strategies are people here proposing that will survive BOTH the time until the next debt/credit crisis AND the next credit debt/crisis?

Interesting post Zack. Especially the link to the 90's USA Today article. Shows more than the Bush Administration is complicit in attacking Iraq. Of course we all know Hillary voted for it also.

David,

We all have to find our own bit of truth on these things. For me, the focused bit of truth is in the midst of all these intertwined variables (US$, Treasuries, Bonds, Equities)...the one thing you can't escape is the affect on Main St. That is one thing you can bank on. To give one example, is there any reason that Tol was $22/share a few weeks ago which is about where it was in August 2007?

Just after/in the middle of the biggest housing collapse and debt collapse in history? Things like that I can bank on, even with intermediate green shoots and intervention. Timing is tough, the thesis is easy.

I wrote more about this in a post above. For me, the low risk play is to find highly leveraged vehicles backed by a strong underlying Main St. thesis. The only other area I would feel as confident about is stocks like MCD which will probably pickup in sales no matter the timing.

In terms of risk reward, banks who are technically insolvent may be a good direction, on the other hand temporarily they are being bailed out in so many ways including interest being paid to them on reserves (this is many billions) and borrowing cheap money from the Fed and buying treasuries (huge markup), and lastly getting full cash payment from the Fed for toxic MBS.

Thanks 2nd and Davef.

So $USD carry trade is talk of the moment. Mauldin says there will be a bigger unwinding of risk back into $USD - that should push the $USD beyond present resistance. Bill remarked that the 2nd leg down in a bear market is the killer. So if I understand Patrick we could pick up option "premiums" on the cheap, perhaps on the rebound that Bill is looking for around 1000 on the S&P. So, SPY Mar 60 puts for $.35? (less on a weak rally?) For small trades only, given the limited volume.

I think we will know very soon whether the 6-month long rally in equities is finally over. If the uptrend is still in place, then the market must not only bounce next week from the locally oversold level, but it should also keep on going to a new high. If get just a small bounce next week and then S&P heads down again (say piercing Friday's close on the way down), then there will be little doubt in my mind that we are in a serious downtrend, at least until S&P 800 and most likely even lower (I'll definitely close all my long-term short positions at S&P 750 and will use tight stops on shorts at that point, if I choose to still keep shorting equities below S&P 750)

If S&P declines on Monday to 1013, then rises above 1030, and then starts heading down again, then I'll try to push my fears aside and make a large increment to my short positions, with the goal of taking off 1/2 of the new shorts (opened once S&P pierces 1025 on the way down after rising above 1030) once S&P reaches 990. At that level, however, my strategy will be different: instead of waiting for a rebound to happen and then waiting some more for the market to cross 990 on the way down, I'll be heavily shorting the rebound itself, as I'll be much more sure that it is just a temporary rebound in a downtrend rather than a move to new highs.

No worries Jock, glad to hear you have found some value in it. Its just a starting point, but hopefully a good starting point.

All the best
Ad

If you're playing currency ETFs, then options strategies would be the way to go.

But then it may well be a better thing to just open a forex account.

David,

"How can we protect our portfolios against such a crisis?"

"What strategies are people here proposing that will survive BOTH the time until the next debt/credit crisis AND the next credit debt/crisis?"

1. Since last fall I have been trading in and out of TBT/TLT and also holding a fair amount in WHOSX and PRPFX.

2. Also keeping my extra cash in VFIIX (about 4% return) available for buying bullion on dips. (gold up 33.4% —12 months)

I am retired, but want to spend my days on other pursuits and far it has worked OK for me. I am currently down 2% net worth YTD after living expenses drawn for my wife and me.

"...if the interest rates will shoot up because of the bond market saturating (rather then because of Bernanke playing "catch-up" with inflation and rising interest rates but still staying "behind the curve"), then so will the $USD (as it happened during the crisis of 2008), and so gold will be killed."

Can't quite agree on this scenario, but I'll think about it.

Edit: attachment

I noted your commentary on the water ETF PHO. I realise now that water is becoming a more critical issue here in Switzerland akin to the Europe wide heatwave of 2003. The fountains in our village have been turned off and passenger ferries no longer link various town on the Rhine in Northern Switzerland - the Rhine's level has dropped precipitously. I'm guessing that El Nino is already doing its thing, recalling a noted Australian climate scientist's warning that the next El Nino will be a doozy. Given probable US water infrastructure plays over the coming years (throwing money at banks didn't do squat for the economy) which will extend to European infrastructure upgrades as they learn that water is no longer a given in this changing climate, getting in early on PHO might be worthwhile. See also PIO, FIW & CGW. CGW is a bid dividend payer. DYODD etc etc.

that's a gain of 1055X. I doubt that puts are cheap enough these days to make possible a gain like that ... Very interesting.

jock- Yeah, I doubt any of us will be dropping everything to ski and live in the mountains with our beautiful families within 6 months.

Same issue in Spain, Europe's big housing problem. Bank's refuse to drop housing prices, instead offering low rates, free cars, blah blah blah to entice buyers. I was not particularly impressed with prices I glanced at online. Makes Switzerland look reasonably priced by comparison. The British media thinks the market's rebounding over in the UK. I wonder how much of that is wishful thinking?

ALOHA !!

David posted - "Now that $USD has participated in the "carry trade" for almost a year (people borrowing $USD at less than 0.25% interest and investing it into all kinds of foreign risky assets), the impact on $USD of the next credit crisis will be much more profound, since the carry trade will need to be unwound in larger volumes, with everyone selling risky foreign assets, converting the money back into $USD and preparing to pay back their debts. $USD will shoot up once again and gold will collapse. Gold investors were hit with this hammer once, and the whole mechanism is still in place to hit them (us) once again soon."

Most pundits only offer one-sided views. If they were betting on a coin toss then they would bet that both sides were heads and of course they would claim "heads"!

Here is the other side of the coin ...

First of all I would need to see a breakdown of this so called one-sided US Dollar Carry Trade(USDCT), because if memory serves me there are a plethora of other currencies who are competing with super low rates. The Yen comes to mind and the Loonie and even the venerable Pound. In fact here is a link to global central bank rates that shows at least six other currencies sitting at 1% or below. The lowest is Bank of Japan at 0.1%. The USD Fed Funds rate is 250% higher than that of the BOJ. There is no incentive for the Japanese(housewives)to move their basis in the carry to the USD. Last estimate of Yen Carry Trade(YCT) was $1TRIL USD, but Mauldin will not show the size of the USDCT. Is it more than the YCT?

LINK: http://www.fxstreet.com/fundamental/interest-rates...

Then even the Canadian central bank(Bank Of Canada)has the same rate as the US FED, at 0.25%. Oh look even the Swiss rate matches the US Fed rates at 0.25%.

The other aspect of Mauldin's analysis is the other side of the coin. Say he is right and the entire World including the very large YCT has moved into the USD exclusively. Now when the USD rises that means those participating in the carry trade need to unwind those "foreign risky assets", but what if those assets are sold for a loss or cannot be liquidated fast enough, then the carry trade would be defaulted, which means there would be no need to buy US Dollars. In order to make those loses up then there would have to be a demand for the local currency where the "carry" was placed, which would then offset the USD demand.

Also with a USD rising against other foreign currency carry trade participants then the foreigners would require much more internal dollars than they originally borrowed, which would again create more demand for offsetting currencies not the US Dollar.

The Fed Funds Rate started to drop precipitously in Q4 2007 from 5.25% and is now at 0.25%. It was claimed back then that the unwinding of the YCT would cause a rise in the USD and gold would drop. Yet at the end of Q4 2007 the gold price went from $750USD to $840USD. By the end of Q1 2008 the gold price was at $1000USD while the Fed Funds Rate was still dropping down to 2% from 5.25%. It was not until mid March that the gold price started dropping from $1030USD down to $850USD, then to $700USD and back to $900USD by the ned of Q4 2008. How much of that was central bank sales and futures driven? So Mauldin is going to tell me that the astute YCT which he spoke of that caused the first gold price hammering waited to unwind when the Fed Funds Rate was at 2%, but did nothing to unwind on a 3.25% drop. Hummmmm??? Now he is saying the entire World is concentrated into a USDCT, even though a YCT has more advantageous spreads. More hummmmm???

So I would have to say to Mauldin that it is one thing to "guess" at the USD Carry Trade size it is quite another to prove it up. Show me the cold hard facts that the YCT is dead and has moved into the USDCT. Then show me the facts that those risky assets have value and tell me where the funds will come from to make up the USDCT default or in this World of super volatility and no liquidity does he think the banks will loan freely to support risky asset losses again?

I would say that the drop in the gold price had a lot less to do with carry trades and more to do with a banking sector meltdown and the perception that a USD and US DEBT was a safe haven. I think that is the main driving factor for the prior precipitous drop in the price of gold and I think it will be the same going forward.

Mauldin has one side of the coin only ...

If I still had a mortgage I would be tempted to stop paying. My neighbor has a relative who lost her job and has been unable to pay since Feb. 2009. In July she got a letter announcing the bank had noticed the lack of payment, but still has had no threat of eviction.

I see no chance of loosening credit any time soon here in the midwest. The banks need all the cash they can get.

I would also question Maudlin's dollar rising/ gold falling due to carry trade unwinding.

I have been recently asking the question, "If the stock market experiences a strong correction, will money flow back into USTreasuries as a safe haven investment and push the dollar higher, similar to what we experienced in 2008"

I recently heard... in 2008, the Fed initiated a $600B currency swap with foreign central banks, which was then used to buy UST's, which pushed up the dollar, lowered interest rates and created a brief period of asset deflation in stocks and commodities and real estate. The dollar has since retraced downward about 70% of the up move.

Perhaps in days soon to come, US bonds may become the risky asset and the dollar flight to safety may be muted.
I think foreign participation declines in recent bond sales may reflect the beginning of this trend. I suspect most of the emergency stimulus money appropriated by the government went to foreign creditors and that's one reason it hasn't appeared on Main Street. It may also be why the Fed is resisting the judge's order in the Bloomberg FOIA lawsuit. They don't want you to know where it went.

The Fed must "inflate or die" as Richard Russell says. I would add "inflate and then die". One way for the Fed to inflate on the stealth is to deflate the dollar in an orderly fashion. But perhaps the Puppetmaster's plan is to plunge the dollar all at once by crashing the bond market which could initiate a hyper-inflationary event and further destroy the US economy. We await our fate. Maybe the drive to eliminate the Fed will succeed ...as Kaimu
says repeatedly..... that is about the only thing which could offer us salvation. We will see who wins this struggle.
I would like to be optimistic but.......

US total debt including unfunded liabilities is around $118 trillion. Current debt is about to go over $12 billion... at an average of 3.6% interest cost which costs about $400 billion of $2.2 trillion in revenue. If the deficit increases 1 trillion a year over the next 6 years and interest rates would double.... interest only would hit 1.3 trillion...over half of current revenues. Returning to a rosy economy with 3-4% growth and rapidly falling unemployment during that time period is questionable at best, so revenues will probably not keep pace with debt creation. Tax hikes lay ahead for sure...still probably not enough to plug the gap.

So it seems we are insolvent now or later and most of the entitlements and unfunded promises by the government will have to be withdrawn.

I would recommend to all Caraistas to check out this week's Financial Sense audio program.... Jim Puplava reviews
recent interviews with Faber, Schiff, Hunt, Misch, and others on the question of Inflation vs Deflation. See the 3rd
hour, parts 1 & 2. This was an excellent debate... rich in information.

Most of our financial futures rest on the answer to the question of deflation vs inflation. Since most of us live in a dollar centric environment, knowing whether our currency is going to implode is the big bet. Many are saying a 50% reduction is possible. In the past we struggled with our long term/short term investment mix of stocks,bonds, gold and cash. We never worried too much about the dollar. A wrong decision now on holding dollars may seriously erode our wealth. For me, it is the biggest decision to make. To diversify or not diversify....that is the question. So you buy some foreign currencies, stocks and bonds.... if the dollar rises, you lose. Or the government institutes some huge taxes on foreign investments and gold which negates your attempt to protect your wealth.

We wait and watch.

Bill,

I still been "dancin", albeit more slowly as befits my age and the beat of the music lately. I continue to dance with two slick partners named MRO and COP. Also dancing with a short partner, hoping for a fall to the floor to protect me from the gas generated by the other two.

I have not danced with a platinum, golden or even silver blond for a while. Got burned in the recent past but am always on the lookout for such beauties.

In the meantime, I have been surveying the dance floor and have concluded that OXY is a good partner, at the right time, to replace my two slick partners. Really slick and not gassy.

Pardon the crude metaphors.

kaimu, I am not disagreeing with your basic premise, however, for documented examples, Brazil is seeing record inflows (and this was before Rio 2016). Their interest rates have also fallen quite a lot, to something around 6% in practice, so you can clearly see the attractiveness. Actually, anyone who invested there even at 0% would have made 10% in weeks. Smart money moved there ages ago, these people are ahead of the crowd by miles, who knows where they are now.

Links on inflows:

http://shockedinvestor.blogspot.com/2009/09/brazil...

http://cfdmarkets.com.au/market/2009/09/brazil%E2%...

http://www.fxstreet.com/news/forex-news/article.as...

Now I still believe the USD will bounce back up at the next crisis, and the others will suffer. Things are pretty overbought there.

Temporarily, that is...

Kaimu, MoKat: I only quoted one paragraph from John Mauldin in my original post:

"Just as I was writing in 2006 about the potential for a crisis, and yet the party went on for quite some time, I think the party can limp along now. But there will come a point when the party is over. Interest rates on the long end will rise precipitously, forcing mortgages up and making the deficit even worse. It will be an even worse crisis than the one we have just gone through. And there will be fewer options for policy makers, and none of them will be good or pleasant. And it will take most people unawares. They will see the current trend and project it into the future. And they will be hit hard."

The rest of the post were my own thoughts, and John Mauldin is not guilty of any speculative conclusions that I made. :)

http://bit.ly/pyGYR

At the risk of offending anyone, I have to say that I was struck by the irony of the MSNBC reporting. They cleverly disguise the race of the man with the guns, then turn it into a "angry whites against blacks" discussion. Meanwhile, the man in the video is an African-American gentleman. Of course, since Obama is half-white, one could make a similar case for "blacks against whites" or "blacks against blacks." Ridiculous, isn't it? All of it! It's almost like they want to create racial tension. I'm one melting pot American that won't fall for any of it...

KC

I am thinking that "all asset classes" can take a hit, gold included.

Based on deflation....smaller money supply, since credit is in an easy way of thinking 10 times larger than "printed money". Elliot Wave theory for sure, but I am in that camp.

http://ronsen.blogspot.com/2009/10/least-important...