Cara's Commentary & Community Chat, Monday, Aug. 24, 2009

More news on the SW GS uses.

http://www.nytimes.com/2009/08/24/business/24tradi...

I doubt they have the balls to take action...

They are just the first to be exposed. Do you think that they are the only ones?

ALOHA !!

Down but not yet out ...

A vote of no confidence by clients of Cerberus ...

Founded in 1992, Cerberus is named for the mythological three-headed dog that guarded the gates of Hades. Hummmmm, what hubris!!!

Guess who was one of the three heads guarding the gates of hell? None other than exBush Tres Sec John Snow. Snow was Bush second Tres Sec, the first being O'Neil who was fired for saying the Bush estimate for the Iraq War was too low at $1.78BIL. We all know who the third one was ... HANK PAULSON ... the man with the plan! The US Taxpayers guardian!

Cerberus has a lot of top political investors and I believe the Bush family is in there. Former U.S. Vice President Dan Quayle has been a prominent Cerberus spokesperson and runs one of its international units.

Right on their home page is their big investment ... GMAC! Not to mention one of their banks got scammed by Madoff for $137MIL ...

Cerberus homepage link: http://www.cerberuscapital.com/

Cerberus Investors Choose to Withdraw
August 24, 2009

BY JENNY STRASBURG AND PETER LATTMAN

Clients of Cerberus Capital Management's core hedge funds have opted to withdraw the majority of money from the funds, marking a sharp rebuke to the weakened firm and its boss Stephen Feinberg.

Clients owning more than $4 billion of the $7.7 billion in assets in the Cerberus Partners hedge funds have opted to liquidate their holdings, rather than allow Cerberus to collect its typical fees and continue making new investments, say people familiar with the matter.

Mr. Feinberg, striking an apologetic tone, personally called Cerberus clients this week to share the tally, which was current as of Friday and could ...

Can they cover the $4BIL?

Good morning.

BDK - Price Target Raised from $27 to $45 @ Credit Suisse. Neutral.

---------------

Monday morning blues:

Otis Spann played in the Muddy Waters Band from 1952 - 1968.

http://tinyurl.com/lt9vz7

ALOHA !!

Here is the MISH MODEL to determine inflation or deflation.

Mish Mathematical Model

Fm = Fb + MV(Fc)

Fm = Fiat Money Total
Fb = Fiat Monetary Base
Fc = Fiat Credit, the amount of credit on the balances sheets of institutions in excess of Fb

MV(Fc) is the market value Fc

Inflation is an expansion of Fm
Deflation is a contraction of Fm

If only base money was lent out (no fractional reserve lending), MV(Fc) would equal zero. The equation ensures we do not double count credit in Fm.

MV is a function of time preference and credit sentiment (ie. Belief that one can be paid back). As long as that belief was high, banks were willing to lend.

Because (at the moment) Fc (credit) dwarfs Fb (base money), the system can only hold together as long as there is belief credit can be paid back and as long as there are not defaults. Needless to say, the perceived belief that Fc can be paid back is under attack, both by rising defaults, and by sentiment. That is why MV(Fc) is collapsing.

I agree with all but "Fc". Where in this model is the government credit and debt? Then if you concede that somehow the US Treasury needs to be counted then the Mish "MV" is out of whack, because there is no MV in US TreasuryLand since they have carte blanche to print money and pay creditors back, albeit in continually debased currency.

On August 20, 2009, the US Treasury reported in the US TREASURY DAILY STATEMENT that they issued $8.1TRIL USD worth of debt(Treasury securities)for FY 2009 so far. On Mish charts he is only counting consumer debt which he pegs just over $2TRIL USD. Is not $8.1 TRIL of debt more than $2TRIL?

So I would add "Ft" to his equation which would be US Treasury debt issued, which is added to the monetary base. Its issued and the banks are not hoarding this $8.1TRIL! Perhaps this is why Greenspan got rid of M3.

So it would be Fm = Fb + Ft +MV(Fc)

I mean there has to be something that explains why my bills keep going up in this supposed Mish Depression we are in. People in the 1930s Great Depression would laugh at this one! What have real estate prices deleveraged to ... 2005 levels? Farmland has deflated to Jan 2009 levels! One of the big signs of the Great Depression was how depressed farmland was. Wake me when prices deflate to 1970 levels.

I personally believe it is a question of the C WORD and trust will have the final say so, trust that a US Dollar has some future worth. This rampant exponential debt fest the US Treasury has going is steadily eating away at the US Dollars viability as a "going concern". That's not inflation or deflation that's a monetary crisis, the symptoms are inflation or deflation. But ask any cancer patient and describing the symptoms are meaningless unless there is a cure. We need a cure not more descriptions of the symptoms.

You already know what my cures are ...

QUESTION AUTHORITY!

CP,

Bill's commentary today is about what is happening when the government ignores the law.

How can you believe your following statement?

"I still don't see why allowing firearms within proximity of a presidential gathering should be an acceptable practice, legal or not."

When the government is allowed to ignore the law we have seen what havoc it caused in our financial system — do you really want to turn a blind eye on them regarding other Constitutional rights? If this is seen as a problem they can try changing the law. Until then, however unwise, the gun carrying people were within their legal limits.

Our Constitution's Second Amendment was meant for citizen's guns to protect us from what the colonists had so recently experienced — a government imposing its will on individual, law abiding citizens. They posted troops in private homes, took what they wanted and gave us taxes without representation (a step we are once again seeing today).

You also said, "We haven't worn guns around here in many many years because it's just unnecessary;"

Within the past year in my home neighborhood we've had a carjacking one block away, several break-in/robberies while people are at home, and last week the bank branch a half mile from here there was an attempted robbery by a guy on a bike with a shotgun. I had ridden through the bank parking lot on my bike less than an hour before.

As our unemployment rate climbs where I live (13.4% now) we are seeing more violent crime. I guess we're just not going to get together on what I see as a very basic exercise of a Constitutional right.

I have never carried a gun without being willing to use it.

Bull Hunter- Otis Spann! I lived in a co-op my freshman year at Michigan (one of the so-called language houses, where the resident advisors were all foreign citizens of the country represented by the house). A junior down the hall had a huge collection of LPs, and was very much into Chicago blues. Thanks for the link.

The original downside targets. Why is it so hard to go long here?

What if the low volumes represent smart money?
What if volume comes in above DJIA 10000?
What if we look back in a year and start singing lines from Amazing Grace? (And furthermore, Vad Graifer becomes our patron saint?)

You know, at some point, the guy next door (the one who never pays attention to the market), may be whistling backing out the new car. While you're left wondering why you failed to get back in at DJIA 10000.

Worse, you shorted at DJIA 10000. And no longer live next door to that guy.

2nd_ave

So true. There are many doubters to this bull move (me included). But the inverse H&S bottom in the S&P points to a target a bit over 1200.

I originally posted this back in early July. http://www.twitpic.com/d6zjl

It may not be justified - it may be driven by money managers chasing performance - but the move up is undeniable.

What's that saying about the market climbing a "wall of worry" ...

in accumulation zone.

buy stop 11.77/11.80 limit

Exactly. Sometimes makes me wish I just ignored this whole thing and went with the flow. Extremely hard to trade against my preconceived notions of where the market is and where it should be going. Taking a break.

Good thing my birthday is coming up, I asked my wife to get me Vad's book!!!!

Yes UNG is in AZ, but according to my data a buy alert will only be triggered if UNG crosses over $11.61. My own RSI7d calculation as of EOD Friday is 17.87, while the RSI tool shows 17.73 (these differences are normal). Of course a threshold value of 30 or 29 or 33 or whatever is arbitrary.

As many of you know, fundamentally my position on natural gas remains the same (for whatever I know), it's a short for the medium and long term, it's a temporary long strictly for hurricane plays, and it's a long for the very, very long term. Natural gas however, is not UNG. UNG is a broken instrument and should not be bought. JMO...

Friday's close:
UNG NAV = $9.94
UNG price = $11.35 (14.2% premium)
Henry Hub spot price = $2.78

Be careful using technicals to make decisions on this one.

UAUA/CAL/RJET absolutely raging this morning

After Fannie made a j-hook shape, I figured Freddie would do the same....so I bought it...and it did. My position was probably too large though, so I sold into the first wave of good strength when I should have held...Made money, but didn't made the dinner for (10) at Per Se that I should have.....Now watch this go to 3 bucks today........

ABK starting to happen.....

Truth is, it takes a big set of brass balls to put on a big position in the face of relative uncertaintly and hold it....the key here is, you need to be able to emotionally accept the possibility of loss on every single trade you ever make....and most folks are strongly conditioned to prefer the certaintly of nothingness than the possiblity of loss versus the possiblity of gain.

i don't think it makes sense to include 1 time charges into calculations of P/E. No one really thinks the S&P 500 is going to earn $8/share or whatever it was going forward.

I hate to break it to bears but this price movement is beginning to tell us that growth in the U.S. will be a lot stronger than people think.

We've already legalized the killing inconvenient people at the earliest age (when it's so easy to avoid pregnancy), so as a 71-year-old clunker I hesitate to ask :-)

Seriously, the clunker deal will only lower the number of people willing to buy a new car next year. Duh! Do I detect a note of panic in the plan to "solve' the economic problems?

I hear you but I have friends that work for publicly traded semiconductor companies and they are telling me that end demand from businesses is picking up a lot, which is echoed by their CEO's in public statements. I also see the strong price movement in the markets and burst through the longer term moving averages suggesting that growth in our economy will be stronger than people anticipate.

Ask yourself this: if economists that are currently predicting sluggish growth for years to come were the same ones that didn't foresee the credit crisis, should you be listening to them?

fjd- Let me use the same reply I used on another blog, which is you could have made the same argument six weeks ago. Would it not have been more prudent to pace on the sidelines the past six weeks (assuming you are a bear)? Why not save your ammo for a cleaner shot?

If you had bought even as recently as shark's last post, you'd be up significantly.

What must be going through the heads of buyers would have to be something along the lines of "What if they're in double digits next year? Isn't that how legends like Templeton amassed their fortunes?"

Probably an extension of the "Cash for Bankers" program

Seems like the safe bets these days is "00".

it could be that the fed is printing money faster than update of the earning...
this just show how inflated the market is..

"mugged in broad daylight in the parking lot of that store."

And had this fellow been packing, he may have had his pistol turned on him.

Look, there's all kinds of ways a situation can go wrong, you could get hit by a bus while crossing the street. When a fellow comes into a gun shop to look over the weapons, I'm not surprised to hear he's got some story to gab about. I'm not against gun ownership or the right to carry, I just don't believe it's acceptable to go around flashing and flailing your arms in public like a crazed lunatic.

It's just bad publicity, it scares the bejeebers out of everyone and just makes it that much more difficult to justify.

So don't come around me carrying a weapon in (what I might erroneously construe as) a menacing way, unless you're dying to get shot....

It's not illegal to put your hand in your pocket either, but I don't recommend it if you've just been stopped by a police officer.

"Look, there's all kinds of ways a situation can go wrong, you could get hit by a bus while crossing the street."

Just another way of saying, "Do you want to make money, or do you want to be right?"

You could have had the right of way.

This Ned Davis book is mediocre imo. It gives a lot of indicators that are produced by Davis which are very hard to have access to unless you are an institutional investor (it may be possible to access this at stockcharts.comm now), although Fido provides some Davis research designed for retail consumption.

The book provides a stock market model which has nine indicators.
1. Weekly new highs divided by issues traded and weekly new lows divided by issues traded
2. Weekly new highs
3. S&P percentage reversals
4. the 40 day trin trading index
4. NY member short ratio
6. Ratio of composite long bond yield to S&P earnings
7. Composite long-term bond yield reversals
8. Prime rate reversals
9. CRB index momentum

With respect to #3, S&P % reversals, he simply states an 8.4% rise of a low is bullish and bearish when it reverses downward by 7.2%.

So one could simply use this indicator if one wants to dance with price. He further states that this model follows closely the mantra do not fight the tape and do not fight the Fed.

P.S. like both the 129 p/e chart and the 10 p/e chart

Somebody's blog had the picture of Lucy pulling away the football from Charlie Brown. You know it's coming; you don't know when.

At some point in this run-up, stocks get distributed (at least temporarily) to speculators auditioning for the part of "greater fool."

wow that is a great clip Bill. It gives me (good) chills to hear an Arab woman say something like this.

That was incredible Bill, that is the first time I have heard a reasoned rebuke to the Muslim extremism. Unfortunately I fear she will be silenced, the extremist element cannot allow this discord to go unpunished.

They said the same about Salman Rushdie....maybe she should give him a call?
That is one brave woman.

in many ways i believe Korean is doing a better job than the Japanese.
look at the market that was once dominate by the Japanese..
from memory chips to cellphones to home appliance to automotive...

between EWJ and EWY... i would rather invest in EWY

Wow, Bill. Powerful indeed. Note the distinctive contrasts between the voice of intelligence/reason/compassion and the voice of implacable extremism/intolerance/hatred.

You guys are giving implicit authorization for a police state.

To paraphrase: Placing an order for a stock purchase using public communication access gives the SEC or the FCC the actual, if not legal justification to monitor or ban your purchase and messages.

Government needs to kept in its place, or more accurately — put back in its place.

IMO they are doing far too much "protecting us" from each other, accidents, bad dietary habits, etc.

Thank you.

I think Bill made it very clear last week to take this guns rights discussion elsewhere. Enough already!

Korea has done very well as they kept (devalued) their won currency cheap compared to other countries. This has allowed them to make inroads not only in U.S. (look at Hyundai overall sales increase (not just clunkers program), but also in Asia, including China. It has a lot to do with their currency, but not all of it. That said, Korea has vastly improved their overall quality and has some world leading companies like Samsung, Hyundai, Posco, etc.

Agree on Japan demographics presenting long term high, very high hurdle . . . currency strength affects their exports too . . .

FWIW, If you're looking at Asia, this week's Barron's had an interesting interview of a Hong Kong based stategist you might find informative.

I don't claim to know.

The vix still seems contained 2nd. We'll see....

I saw the last part of the Miss Universe last night and there were lots of promos for the caribbean islands. The one that really got my attention was for Puerto Rico stay 2 nights get 2 nights free. I am really thing about going because of that promotion. Lots of other resorts looked nice, but a little out of my price rage at $300 per night!!!

Rick Santelli... just listening to him on ' CNBC Halftime ' was sickening... the Corporation has pulled his chain... guess we'll have to wait for another up and comer to piss on the Boards' shoes.....

I was able to watch the whole Miss Universe last night. I was cheering for USA but switched to Australia for the final girls. It was a great show of the islands as I have been there a few times to Atlantis.

I am up 75 cents on ORCL from last week. I am holding out for a whole dollar. I almost followed 2nd into the shorts over the weekend, but the markets just don't look like they want to go down. Maybe I will try again around S&P500 1050 level or Dow 10,000.

Just sitting in 95% cash with a few longs.

After thinking about the UNG situation a little more, I figured that I should feel lucky that in order to bet on higher NG prices, I chose in the past UNG rather than HNU.TO, since it allowed me to both avoid the volatility decay of HNU.TO during the downtrend phase in NG prices AND take advantage of the UNG fund premium, which morningstar.com reports to be 14% today!

I called the UNG creators once again today and they said that within a month they'll most likely reach a decision about how to proceed with their fund. If they feel that CTFC is going to continue giving them trouble in the future, they'll opt for growing their fund through swaps, which have higher transaction costs than futures and are not that liquid, but otherwise work identically. So it seems to me that in any outcome, the fund premium will disappear. So why hold UNG now in the face of an imminent 14% drop in its price once this situation is resolved, when I can hold and trade HNU.TO instead? The timing for entering HNU.TO seems to be great now, as the NG futures are greatly oversold, and if they rebound now, the growth of HNU.TO will be compounded and will be greater than 2X.

I just sold my entire UNG position and used 60% of the money to buy HNU.TO. The "accurate" lateral move would place 50% of the money into HNU.TO, but I feel that it is ready for a trade now, and I placed the extra 10% of the money received from the UNG sale so as to sell it if HNU.TO has a nice bounce (say by 10%). As we know, trading a little around an ultra ETF position is likely to be more beneficial over time, as it will help compensate the volatility erosion. If HNU.TO will keep falling, then for every 10% fall I will add to it 10% of the proceeds I received from selling UNG today.

I can't seem to find a way to trade HNU.TO at Schwab. Any ideas?

"The original downside targets. Why is it so hard to go long here?"

Because the company earnings (and especially revenues) have collapsed much more than we have expected. When the facts change, we need to change our strategies as well. The current state of affairs is that the S&P just had a 50%+ rally led by the riskiest stocks on low volume -- a standard characteristics of a bear market rally. The move was great and unexpected. But it has ALREADY HAPPENED. People have a tendency to extrapolate the shock from the recent move into the future, but in reality the market doesn't work like that. After a great period of outperformance (of expectations) comes a great period of underperformance (say a sideways movement). The time to go long and throw caution in the wind was in early March (which most of the people here did, based on the posts about buying 3X ultra-long ETFs). Now the time is to get that caution back. I haven't had the time yet to read what Hussman posted last night, but here is what he wrote a week ago:

"Stocks are currently overvalued, which – if the recession is indeed over – makes the present situation an outlier. Unfortunately, since valuations and subsequent returns go hand in hand, the likelihood is that the probable returns over the coming years will also be a disappointingly low outlier. In short, we should not assume, even if the recession is ending, that above average multi-year returns will follow."

The time to go long is when the stocks are oversold relative to their valuations. Going long when the stocks are overbought relative to their valuations is risky.

David Rosenberg:
The Fed's balance sheet, contrary to popular opinion, has not
expanded at all this year. M2 over the past 13 weeks has contracted
fractionally (-0.7% at an annual rate) for the first time in six years. Ditto for MZM
(-0.3%). The Fed has allowed the monetary base to shrink at a 30% annual rate
on a 13-week rate of change basis too — and is now flat compared to where the
level was five-months ago. Combine all this with a -0.6% YoY trend in unit labor
costs and it would seem that the near 2.0% inflation rate embedded in 10-year
TIPS securities is too high.

David,
You should be clear for a profitable short term rally in HNU.to; I sold mine into today's rally and increased my short position in UNG :)

My thinking is that UNG has a 14% premium to NAV, and the Oct futures ($3.36, which UNG supposed tracks) also have a 14% premium to Sept futures ($2.95). The Sept futures should be very close to spot. So UNG is trading at least 28% above spot.

Spot price has to climb at least 40 cents within the next 4 weeks for HNU.to to hold its present value, and if there is "chop" in NG prices, HNU.to could get additional value erosion. Of course there could be tradeable volatile rallies in between.

And the contango between Oct ($3.36) and Nov ($4.33) is deadly. That's a steep wall to climb.

For that reason I still see the path of least resistance to the downside, shorting UNG, capturing premium erosion along the way. If NG climbs again tomorrow I'll likely buy some HND.to. You might want to use me as a contrary indicator; I've been wrong on many trades lately.

"I can't seem to find a way to trade HNU.TO at Schwab. Any ideas?" - MarkW

Switch to Interactive Brokers to trade currencies and foreign exchanges. Cara manages accounts from IB.

http://www.interactivebrokers.com/ibg/main.php

teamonfuego,

"I hate to break it to bears but this price movement is beginning to tell us that growth in the U.S. will be a lot stronger than people think."

This kind of thinking is what bubbles are made of I'm afraid.

Example of the logic from a couple years ago:

Price movement is beginning to tell us that the real estate market will be a lot stronger than people think.

Growth first — then price appreciation is a lot safer bet.

and 1 day down (has a pattern formed?) everyone is looking/going short?

Another $109B of Treasury paper going on the block this week, folks... I think TBT could get a pop.

at $3.25 for 1/6 of the position I purchased today at $2.93.

I am trying to decide if this gap down after earnings will bounce off the trend line. That is where it sits today but I have read in the past a gap down usually precedes a continued downward trend. I attached a picture of the chart

ulvy - "I have read in the past a gap down usually precedes a continued downward trend."

I believe that's correct, and if SHLD falls out of the channel there could be further loss involved.

Craig, CP - What constitutional right or law was violated by Larry the gun toter? If there was none, any further conversation about the matter is moot and counterproductive.

So what if he is a jackdonkey or a puppet? Really, is anybody who does not constructively contribute to our short existence worth the time?

CP,

I don't think we are on the same topic but traveling parallel paths.

I don't want to to change the law, but what got me on this was this comment:

"I still don't see why allowing firearms within proximity of a presidential gathering should be an acceptable practice, legal or not."

If we are going to prohibit arms "...within proximity of a presidential gathering..." I believe it should require a change in the law (in this case the state of Arizona) and believe states right are an issue here. No federal agent (in this case Secret Service)should be allowed to override a state law based on any "special circumstances".

To expect people to behave in a "polite fashion" rather than according to law is way beyond the range of my belief system. If it were possible we would not need the Secret Service or any other law officers.

What is polite is far too subjective a criteria.

BTW, I'm long SRS, FXP, XOM, TLT and USL right now and expect to see nearly all equity markets pull back this fall.

Joe,

What David or anyone does has no bearing on what I do or what you do. David's results are the fruit of David's experience and temperment and talent and insight, all of which appear considerable, but applying the wrong style to another persons temperment would be like me trying to squeeze into a Speedo....It's just plain wrong:

I never ever base what I'm doing on what anyone else I happen to know is doing. I look to charts to try to see where the action may develop. I like to get to the party early and get out before that craziness gets to high.
I think you need to be able to think and act independently in order to do this right, while keeping in your heart the following truths....

You can always be burned by any trade. I never think of it as being burned, the language you used, because I'm, always quick to kill a trade that isn't going well. You have to factor that in and get over it. You need to be able to act knowing that the failure of this or any particular trade is possible. The trick is asking what/if scenarios.....If this goes to here and the Dow is here tomorrow, which of these will be the strongest and where will I buy and sell it? Kind of play out the possibilities in your mind in front of the screen the night before and you will be like a soldier who has studied the maps and knows where the trenches are.

My current plan is to continue doing what I've been doing.....Buying stocks that are going up at times and places where I can attempt to make money. That's all it is. Keep with the horses that have been strong, minding that today's close wasn't strong and that maybe we're looking at a week or so of sideways or down even until the Hamptons slows down for the season.

But I don't know...I never have known and I never will probably know but when you hit the ground you'll see where the enemy is and marshall your troops accordingly.

Don't trade if you're just guessing or not really sure.

It was in arabic with no video at all, so if there was an english translation, it wasn't there to see.

FDIC to report tomorrow on its balance sheet and update its watch list of troubled banks. Some have said the FDIC is covering up problem banks just like
the FASB rules have provided cover for the super banks. Wait until the commercial real estate loans come into focus. FDIC is probably close to insolvency and will need to get Treasury to print up some $$$.In April, Ms Blair said they wouldn't need any money.Just like all the other government trust funds.. broke and full of IOU's. Makes one question the trust we have in the safety of our bank deposits. We assume the government will just print up the money but maybe a time comes soon where they will fail to compensate us.

A friend who works for a midwest regional bank said the recent FDIC special assessment wiped out their quarterly dividend funds.

Did anyone notice a Spanish bank Banco Bilbao was awarded the Guaranty Financial franchise in Austin, Texas that was closed this past weekend? There were domestic bank bidders... but the foreign bank walked away with Guaranty.

I haven't posted to this blog for some time. Now, I would like to share my views on 2 issues:

First, is health care reform. It has become increasingly more difficult for the administration and Congress to secure not merely the profits but the economic viability of the insurance and pharmaceutical interests here. The taxpaying public has learned a lot since the bailout of the financial system by Paulson, Bernacke and Geitner, to wit, that government will do whatever it must to protect the rich and ultra-rich, the government will outright lie about its cost, and the taxpaying public will be forced to pick up the tab for that protection. Most members of the public believe that the health care plan they have is far better and cheaper than the one they will have after reform measures are enacted. If Pres. Obama wants a health care reform bill passed he is going to have to address these concerns with honest specifics, not phony rhetoric.

Second, is the GS "huddle." The news story on the "huddle" has left me with many unanswered questions, such as:
1. Who were the 50 others in the "huddle" besides GS?
2. Was the conversation in the "huddle" really the unilateral presentation by GS as described in the story or did the others participate by suggesting various stocks.
3. Does the "huddle" result in an ongoing concensus of which stocks will be pumped and dumped in order to establish very profitable stock rotation trades for the "huddle" group members?
In other words, I am left with the suspicion that this could be much more illegal than the improper dissemination of proprietary information by GS.

Grym - What I meant was, people shouldn't bring their weapons to a presidential gathering even if it's legal for them to do so, participants should be asked not to (maybe they were?) if they don't have the common sense to make that decision for themselves. Anyway, guns weren't allowed for the inaugural, but maybe that was due to local law. Perhaps the display in Az was simply a glimpse at what happens when a desperate Republican party begins imploding... I hope not to be forced to watch more of these embarrassing displays over the next several years.

We are crowding the airwaves with this subject, so I'll refrain from further useless comment.

1958 Speech by CO-Founder of John Birch Society, Robert Welch.... describing the eventuality of our current socio-economic position. Amazingly prescient.

http://tinyurl.com/n5qvwu

...

Pz- Yeah, you've been trading wisely, which is to say not much. I'm getting hints (you know, cosmic hints) of an impending sell-off. That and $2 can still buy a cup of good coffee.

...

2nd- Interesting, I'm still in the filed. It just felt a little different this time.

I'm not convinced markets have to confuse people that thoroughly. You can caught in triple-think that way: "I'm not going to do THAT, that's exactly what they're expecting me to think!"

I feel this "news macro environment" is currently ambiguous, but prices have moved up to a degree that may have priced in an actual V-shaped recovery. The regular folks now believe that we've hit bottom, and we're coming back up.

TOF thinks the macro view is improving - if this continues, we will keep moving up regardless of the crazy RSIs because I believe that's the required HB&B bias. The quid pro quo: SEC hands off HB&B in all respects, everyone makes gobs of money, just as long as the people's 401ks go up. Nobody cares about reform if happy days return and everyone's accounts go back to where they were in 2007.

However, if the macro view starts to deteriorate, then I see two cases:

* "trend change - a steady increase in bad news" - HB&B will have a better window onto that, and they will distribute in advance of this news trend change. They will organize a market trend change in response, and we will be probably be able to spot the signs - high volume with no price move on good news & serious pumping. Lower highs and lower lows. It will be an organized takedown. We will have time to get to the exits, if we're paying attention - i.e. selling or shorting the lower highs, watching for signs of distribution, etc.

* "a black swan" - HB&B will be just as surprised as we are, and the bottom will drop out of the market as everyone in the crowded theater rushes for the small exit at the same time. You better have your S&P 750 puts now, and have stops on your longs, because you will probably not be able to get your trade executed that day. Perhaps they'll even shut the market down for a time. There won't be any mistaking this move.

I think TOF has the right bias, in the absence of any news trend change. But we need to keep alert for the trend change signs by watching price & volume, and always realize that a black swan could materialize at any moment. And with the high RSIs and fragile macro economy, even small black swans will have an outsized effect on the market.

Mac-

"8/24/09—Even with the Moon in easygoing Libra this morning, we can feel that change is in the air. It's as if a storm is on the way, yet there's no sign of clouds on the horizon. But the emotional weather starts to shift when the Moon enters intense Scorpio at 3:16 pm EDT. And although Mars and Mercury won't switch signs until tomorrow, we must finish up old business now, for we are at the end of one phase yet not quite ready for what happens next."

http://www.stariq.com/

There's your signal. Come on, man. Get with the program.

Whoa, 2nd. That's way too fast for me. I'm still trying to decide if we've entered the Age of Aquarius or not, an event I 'm sure will have profound consequences for my trading:

The Age of Aquarius is one of the twelve astrological ages. According to astrologers, it is either the next age to come, or else it is the current age. Each astrological age is approximately 2,150 years long, on average,...

A little background music while you study-up on this earth-shattering event:

http://www.youtube.com/watch?v=EhbxI5eVnM4

Age of Aquarius at Wiki: http://en.wikipedia.org/wiki/Age_of_Aquarius

Ray Grasse provides a guide to the Aquarian Age: you should leave room for silence in your life; create a center in your life ; and resist the deadening of your world, so instead of filling up your life with manufactured goods or artificiality, bring living organic things into your life. Furthermore, you need to maintain a compassionate heart; be involved in a network or group; become more self-reliant; avoid being hypnotized by the "group trance"; and take control of your everyday attitudes

ALOHA !!

Yes, I read that ... I hear Obama is going to say, "Good job Bernanke-ie!"

ALOHA !!

So as Obama is congratulating Ben the State OF Rhode Island is closing! But will the unions allow them to close? Here in Hawaii the unions won reversing an attempt by the governor Lingle to force the state employees to take 3 days off per month without pay. Hummmmm??? There's some precedence for the Rhode Island state employee unions. I was reading somewhere yesterday that the average annual pay for Federal employees is $90,000USD. They just got a 5.8% COLA raise this year, the largest in over 20 years. Brilliant ...

READ ON:

RI gov to shut down state government for 12 days
AP

By RAY HENRY, Associated Press Writer Ray Henry, Associated Press Writer – Mon Aug 24, 5:32 pm ET

PROVIDENCE, R.I. – Rhode Island will shut down its state government for 12 days and trim millions of dollars in funding for local governments under a plan Gov. Don Carcieri proposed Monday to balance a budget hammered by surging unemployment and plummeting tax revenue.

The shutdown would force 81 percent of the roughly 13,550-member state work force, excluding its college system, to stay home a dozen days without pay before the start of the new fiscal year in July.

The closures come as the worst recession in decades has eliminated hundreds of millions of dollars in tax collections and pushed unemployment to 12.7 percent, the second-highest jobless rate in the nation behind Michigan.

Carcieri predicted the state's fiscal future could grow even bleaker.

"There are going to be inconveniences for the public, and there are going to be sacrifices, as I said, for state employees," Carcieri said at a Statehouse news conference. "These steps right now are unavoidable if the state is to live within its budget, live within its means."

Critical workers such as state police, prison guards and child abuse investigators still will report to work during the shutdown, Carcieri said. He ruled out raising taxes to balance the budget and said the state cannot lay off more workers since it deeply trimmed its work force last year.

At least 19 other state governments have proposed furloughing workers or shutting down government offices to save money amid the worst financial crisis since the Great Depression, according to a survey by the National Conference of State Legislatures.

Carcieri said he is willing to negotiate a different deal with state employee unions so long as it saves the same amount of money, roughly $22 million. But time is short: the first shutdown day has been scheduled for Sept. 4. Additional shutdown days have been scheduled every month through June.

His plan is certain to spark a legal fight with state employee unions that contend it violates their contracts. In bargaining last year, state workers agreed to give up a pay raise and pay more for their health insurance as state leaders struggled to balance the budget. They also took a day without pay.

"We did what we think is all we can do as taxpayers and state workers," said J. Michael Downey, president of Council 94, a state employee union that represents around 4,000 workers. "We're saying to them that enough of the budget problems have been taken on the backs of state employees."

Besides shutting down state government, Carcieri asked lawmakers to grant him the power to unilaterally cut spending approved in the budget. State lawmakers rejected a similar request from Carcieri earlier this year.END

Vad- You continue to impress me with new revelations. A haruspex as well? I was only joking earlier about Saint Vad. No matter, it's been replaced with the proper deference.

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

"The emperor Claudius was a student of Etruscan and opened a college to preserve and improve their art, which lasted until the reign of Theodosius I. Further evidence has been found of haruspices in Bath, England where the base of a statue was inscribed to honour a god for a haruspex."

I remember those! We called them Rae Days, after the Ontario Premier at the time.

wiki: http://en.wikipedia.org/wiki/Social_Contract_%28On...

Today in the WSJ they were discussing the effect of ETFs on commodities, and said they were liquid enough to drive the price, and that they require higher fees to discourage price manipulation.

Like I said before, they are betting the farm in a manner of speaking that the gold price will not rise, and this is yet another rule change with which to limit or control or manipulate the markets further.

Or to keep poorly conceived plans in order. They could also attempt to impact other ETFs as well, not just commodities.

Note there is no ETF for Copper. So why then, is it in a parabolic mania?

F6

OK. I'll bookmark this post so as not to miss it.

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

What's your sign? Mine is Aquarius.
"This could turn out to be a very big month for you, dear Aquarius. With a lunar eclipse due in your sign, you have the power to change your life dramatically for the better. You also have Jupiter, planet of gifts and luck, in Aquarius in 2009, and this is the first year in 12 years that this has happened. This alone automatically makes you the most favored sign of the zodiac. Jupiter will be at your side until mid-January 2010 and will give you an enormous advantage, especially in the later months, once Jupiter turns direct on October 13.

The eclipse, August 5, will add to that favor and bring your desires to fullness. It will also package all the good energy in the air and make it accessible to you. You should find that this month you can finally harness and direct it toward the areas you'd most like to improve.

If you were born within five days of February 3, (Me) you will feel the effects of the eclipse very strongly, but all Aquarius will find August to be a defining moment of the year. It is your month to turn an important corner. If you have been diligently trying to build a relationship or create more presence in your career, you may now be able to lead the brigade. All you must do is show the universe your intent. Do you have the courage? Of course you do!"

Budget cutbacks, less revenue. Yes, it’s a sign of the times.

The City of Chicago asked their people to take 10 days off without pay as well as 6 holidays without pay beginning July 1. I think the police and fire departments were the only exceptions. All non union employees are in the program. Mayor asked the unions to join.

Of the @ 48 different unions working with the city, all but one agreed to the furlough days off without pay to save jobs. The one union that didn’t agree these were tough times necessitating budget cutbacks will not have to take the furlough days; however, result was they had something like 504 of their union employees laid off. Now out of work and searching.

As an aside, a group of city attorneys that play music on the weekends, the Xylenes, came out with a new song: Furlough Days.

http://www.myspace.com/xylenes Click on Furlough Days on the right side.

http://www.reuters.com/finance/markets/asia

bsi87- Doesn't the premium over NAV and the Funds inability to clearly state their future plans worry you? They do me. Or is this simply a quick TA trade?

Edit: I hope you mean 11.77

particularly impressed by the colour found in that late afternoon sun. Copper or gold - I don't readily recall seeing such colour in my views of the sky.

Interested to note that it's so often the same players that show up in daytrading discourse. NVAX, BCRX, etc, which JL introduced me to weeks ago. When they develop this pattern of movement, do you simply keep them mentally tagged for further watching?

gotta find me that same news source you're getting. What is it? Reuters, Bloomberg paid feed?

Noted your blog comments concerning flu virus immunization in the US and subsequent rally in pharma stocks. Received a letter from the school director yesterday that suggested schools will not be closed and students with fever will be permitted 5 days off. Looks like public policy, at least in our state, is not to feed the pharmaceutical beast and let nature run its course this time.

stocks traded yesterday. (scroll down a little)

http://ibankcoin.com/chart_addict/

Bert,

I am often puzzled by the number of people who look to the government and think it is capable of solving problems. I can understand this idea for someone raised on Aid to Dependent Children or other some life-long welfare program, but to the majority it seems like a look at government housing, the handling of Katrina, the present impossibility of sustaining Social Security and Medicare...

"government solution" should stand out as a definition of oxymoron.

Here, where it seems like most people posting see the government complicity in causing the economic mess and their protection and even rewarding of the biggest perpetrators, how can anyone see giving the government an even freer hand to be a good idea?

CP,

"We are crowding the airwaves with this subject, so I'll refrain from further useless comment."

We agree, at last. Should we ever meet I'll be unarmed :-)

FranSix,

Just out of curiosity I check on only the gold coins I have bought since selling out of equities last July and they are up 25.5%.

Wish all my other investments since then had faired as well.