[9:37am ET] I wrote this piece as the wrap-up for the previous Week In Review, but I’d like to publish it separately here. Eventually the message will sink into the heads of elected representatives to government. If you think Town Hall meetings over Healthcare are becoming nasty, and they are, I believe there is just as much dissent among the majority of the largest individual taxpayers over the unfair operation and regulation of US capital markets. This, then, is the nub of it.
There is a saying that crisis equals opportunity. I believe that, but only in a transparent world with a level playing field. Increasingly over the past generation or two, the drivers of share prices are manufactured by Interventionist policies that have nothing to do with trading prices with the objective of discovering value and growing one’s portfolio wealth, nor with Humungous Bank & Broker (HB&B) people who manufacture and hype stories to cause more trading than necessary only for their proprietary traders to take advantage of the client order flow and the mistakes that less resourceful traders continuously make.
The capital markets have always been a war zone fought by Bulls and Bears, each believing themselves to be on the right side of the trades. But markets today have changed. All day long, all we independent traders hear about is talk of Big Brother and Humungous Bank & Broker, and of course Goldman Sachs, which seems to be dominant in both, today.
We hear such talk because it is based on truth, perhaps not all of it, but enough to cause fair-minded people to sit back and say that things must change. The facts are that it is not the market’s job to support the $USD vs the Euro. It’s also not fair that our orders in the market are processed by traders who use that knowledge to trade against us, and we have no knowledge of their orders, just like we have no knowledge of the government’s orders like they do. It is really not fair that those traders use our capital to trade against us, and we have no access to their capital, so they don’t take the risk we do. Clearly, none of this is fair and yet our elected representatives condone it, and continue to put in place mechanisms to ensure the status quo.
Wouldn’t it be nice if this were baseball, where we could boo and throw their home run balls back onto the field of play to show our disgust, and aim our pitches appropriately after particularly offensive play by their team? But you know even that game would hardly be fair; they’d be using steroids, corked bats and juiced balls to their advantage and their umpires would be tossing us out of the game for trying to do the same.
Nobody ever said life was fair; but then until recently too few of us have been saying how really unfair it is, particularly when it comes to money and capital markets. We need to spread the word that we’re mad as hell and not going to re-elect persons who support the other team, and do nothing to level the playing field.
I’m saying all of this now because in a month or two, I believe, we are going to be hearing screaming from people on our team who have been cleaned out – jobs, homes, pensions, and, next to come, investment portfolios. All it will take is one more crash in the equity market.
To stave that crisis, I think we would have to see much higher commodity prices, whether the $USD falls or not, and more earnings from corporate restructurings. To keep the $USD from falling too far amidst higher commodity prices, there would have to be higher interest rates. That would put more pressure on the REITs, financial lenders, mortgage rates, foreclosures, and generally the economy. That’s the bind the Fed and Administration have gotten into. For the source of that problem of course I look back to Paulson and Bernanke and the people in the Administration who put the muzzle on the SEC chairman in recent years.
The public mindset is changing slowly – admittedly slower than the people in this community want – but nevertheless there is a change underway, I feel. Because money talks, and the Interventionists and bankers have the money, it may take years to change the process, but it is happening. Even though it might be a couple years out, I do see a return to normality.
It’s tiring, it’s boring; but we must keep up the fight for free capital markets and social equity.
Have a great weekend. The weather here in Nassau today is spectacular, so you can find me at the beach in front of Sandals.
Comments
The Bridge
"Nobody ever said life was fair; but then until recently too few of us have been saying how really unfair it is, particularly when it comes to money and capital markets."
One might slightly rephrase the above to read 'how unfair life really is, as reflected in the gap between rich and poor, and control of the bridge we call the capital markets.'
Career/investment opportunity
Recently I met a world famous dive operator here in Nassau. A rather engaging type, he told me he’s looking for a young marine biologist who with financial backing might be the right person to move here and joint venture his business, ultimately taking it over. I didn't hear anything after blogging this info a week ago, but I am a believer in the Six Degrees of Separation concept, so I will repeat it. If you think you might know someone who could have an interest and the necessary resources, please contact me and I’ll be sure to pass along the co-ordinates – without any commission or involvement on my part. I think this is a once in a lifetime opportunity for the right person, and there would be a benefit to The Bahamas.
http://en.wikipedia.org/wiki/Six_degrees_of_separa...
Bahamian realtors
The system is so corrupt that if Al Capone were alive today, his organization would qualify as a bank and get TARP money.
Any real estate/commercial opportunities on the islands? Any 'honest' realtors you would vouch positive?
I believe real money owners are about to vote with their feet!
Re: Bahamian realtors
No, the only charge Al Capone was ever convicted of was income tax evasion. He's out of his league compared to top tier names like Geithner, for whom tax evasion was a mere bump in the road.
"To keep the $USD from
"To keep the $USD from falling too far amidst higher commodity prices, there would have to be higher interest rates. That would put more pressure on the REITs, financial lenders, mortgage rates, foreclosures, and generally the economy."
Without thinking about this in depth (because today I must concentrate on weekend chores), and assuming the $USD were to gain from here, it sounds as though REIT's (such as NLY) might soon be meeting with severely challenging conditions. This is a subject which I feel needs full comprehension and will greatly affect most of us and so begs careful consideration and planning on our behalf.
Personally, I'm not counting on a situation of public outrage (even if it were to materialize) greatly changing the course of action taken in DC, we might all be surprised by the shear height of those castle walls. Take cash for clunkers for example, there are at least two ways to consider the intent of this program, one of which is as a simple mechanism for pacifying the public. Okay, so where has the controversy surrounding this program lead us, more of the SAME? GM wasn't making much money in auto manufacturing prior to the "economic crisis", so at first glance I see a huge money sink-hole forming.... consider though that if the $USD were to continue falling, higher energy prices could be subdued by transportation technologies and so survival of auto manufacturing may be paramount in that respect.
If you find my thoughts incoherent this morning, I apologize as I am preoccupied as previously mentioned, but would appreciate hearing others comment while I find an opportunity to further ponder the subject. Or perhaps it doesn't matter if we're only trading in response to the tape....? I suspect there's a high degree of correlation and that even traders (not to mention citizens) are currently shouldering unprecedented levels of manufactured risk.
So who benefits from a stronger $USD?
Re: Career/investment opportunity
"I think this is a once in a lifetime opportunity for the right person, and there would be a benefit to The Bahamas."
Bill it does sound like the opportunity of a lifetime for the right person. - Boy do I wish I were a marine biologist and I guess I wish I was young also :) Don't know any to refer to you or I surely would
S&P 500 Volume
Sorry. Didn't see that a Saturday Commentary had been started so I had posted this, originally, in Friday's.
Observed a volume "divergence" pattern in S&P 500 this morning (see attached chart). Specifically, I think there have been 5 serious rally attempts during the bear which began Oct 2007, the most recent being this current one which began July 13th. In the previous 4 attempts, volume declined consistently and markedly throughout the rallies. In this current one, however, there has been a consistent and marked increase in volume.
I find volume to be a confusing indicator, so I'm not entirely sure what it all means. So I pulled out my Edwards and Magee and poked around for insight:
So, the drying-up of the volume in the previous 4 rallies was merely a reflection that the Primary trend was a Bear market. That makes it very interesting that volume is now rising in this 5th attempt.
Short term look at Ford and SPY
http://stockcharts.com/h-sc/ui?s=F&p=60&yr=0&mn=0&...
A gap fill in Ford. I've heard Bev talk of filling the gaps, but never seen it in action.
http://stockcharts.com/h-sc/ui?s=SPY&p=60&yr=0&mn=...
If Ford can fill the gap, why not the SPY? Looks like the beginnings of a new range bound market to frustrate us again.
Re: S&P 500 Volume
Mac - So from your previous post I conclude with increasing or constant volume, it is most likely that prices will not fall.
Is this an incorrect assumption?
Re: Canadian Supreme Court Decision Guts Defined Benefit Plans
Here it is. We knew it was coming eventually. The supreme court decision on allowing companies to defer payment into defined benefit pension plans will merely shift money intended for retirees into risk management obligations,(credit default swaps) and prop up huge bonuses:
http://www.bloomberg.com/apps/news?pid=20601082&si...
Re: S&P 500 Volume
I don't know, CP. I just saw something on the charts, did a bit of research in one book to try and understand it, and laid it out here for debate. Of course this little trend will stop rising at some point, possibly even when volume has risen to a crescendo. What will be interesting to watch, however, is how volume behaves after that. I guess the theory quoted suggests that if it gradually diminishes as prices pull back (or move sideways?), that will be a good sign for the Bulls.
3 more banks fail
Three Banks Fail as 2009 U.S. Total Rises to 72
By DAN FITZPATRICK
Regulators seized three banks Friday in Florida and Oregon, increasing the number of 2009 U.S. bank failures to 72.
Stearns Bank of St. Cloud, Minn. agreed to take deposits and most assets from the two Florida institutions, Community National Bank of Sarasota County in Venice, Fla. and First State Bank in Sarasota, Fla. Both Gulf Coast banks collapsed due to risky loans made during the housing boom and were severely undercapitalized near the end.
Home Federal Bank of Nampa, Idaho, took deposits and most assets from the failed Community First Bank of Prineville, Ore.
For Stearns Financial Services Inc., a Midwest bank holding company with more than $1 billion in assets, these purchases represent its fourth and fifth such pickups of the financial crisis. In October 2008 it purchased $346 million in deposits from the failed Alpha Bank & Trust in Alpharetta, Ga., in January it was awarded a $730 million pool of loans once belonging to the failed First National Bank of Nevada and in June it assumed deposits and most assets of the tiny Horizon Bank in Pine City, Minn.
With Friday's failures, Stearns agreed to purchase Community National Bank's $93 million in deposits and $94 million out of $97 million in assets. Community National Bank had four offices. The FDIC and Stearns Bank agreed to share future losses on $79 million in assets. The estimated cost to the FDIC insurance fund is $24 million.
In the case of First State, which had nine branches, Stearns agreed to buy $387 million in deposits and decided not to take $8 million in brokered deposits. It also agreed to purchase $451 million out of a total $463 million in assets and entered into a loss-sharing agreement on $364 million of those assets. The estimated loss to the FDIC fund is $116 million.
The banks are the fifth and sixth to fail in Florida this year. Both were established in 1988.
Community First is the third Oregon bank to go down this year. Home Federal Bank took $182 million of its deposits, leaving $31 million in brokered deposits, and $197 million of its $209 million in assets, with a loss-sharing agreement covering $155 million of those assets. The cost to the FDIC fund was $45 million.
The number of U.S. bank failures this year is the most since 1992, when 179 institutions went under.
Re: For Vad...Rachmaninoff...
Glad you liked it Craig. Vysotsky is an iconic name for many Russians. Incredibly powerful voice that spoke the truth when no one else dared; rare ability to resonate with minds of people from all walks of life. Listening to his songs, mountain-climbers thought he was one, military folks believed he went through WWII, convicts trusted he had prison experience, sailors, hunters, car racers, coal miners... meanwhile he was a theater/movie actor and author-singer.
Re: S&P 500 Volume
Mac- Interesting indeed. It makes sense that no one believes we are in the midst of a new bull. Well, no one apart from Cramer and Cohen. Seriously, though- in 1982, how many people saw it coming?
Re: Vad Your divergence indicator choice is?
In reply to http://caracommunity.com/content/caras-commentary-...
Bobbyo,
those screens look complicated only because they are new to you. I am sure if we went over their content once, you'd be amazed how focused they are. Order routing system is practically one click. Scanner windows only look intimidating, in reality one never watches them all, different windows are of more interest for different types and times of the market, so it's 3-4 at the same time max. And you can see how simple charts are... in fact, I am getting dizzy looking at all the indicators Les shows in his post to dig into HIG trade... I am lost about what he sees in those lol.
"One last question before I order your tape reading book. Are these same set ups valid with a longer time frame for swing trading? I assume instead of a minute chart I could use an hourly or a daily chart for the same set ups. If so, could I still call myself a tape reader and not a chartist or technical trader. Tape reader just sounds cooler."
Those setups are based on eternal thing - mass psychology. They are the same in any time frame. You can go over the charts of any stocks in 1 min or hourly or daily or monthly time frame - I guarantee you will see them. On chart reading vs tape reading - you got it right. I sincerely hate the refrain "if you are not staring at the ticker, this is not a tape reading". Nothing could be further from the truth. Please read my sarcastic tirade written after obtaining yet another e-mail denying me the tape reader's title and claiming that the book is mis-titled too... hence the venom, LOL: http://www.realitytrader.com/blog/2007/11/whats-in...
Tape reading
Vad- Too funny. We can all 'read the crowd' at a concert without drilling down very far. Usually pulling up in the parking lot will do it. Similarly, I 'read the dice' at the craps table without looking at the dice. In fact, I couldn't even tell you how I read the dice. It's the gestalt of body language, audibles, the amount/arrangement of chips on the table. I don't necessarily care what the point (number) is, or how many times a particular number has come up.
Shorting 1982 and 1987
Speaking of 1982- Do you wonder how many savvy traders shorted the first few spikes in 1982 or post-October 1987, and how long they lasted? I don't think the market ever looked back in either case.
PRICE DISCOVERY OF PRICE DESTRUCTION
ALOHA !!
You know it gets more and more confusing as the "recovery" continues. Use the word "recovery" to mean whatever you see that may or may not be "recovering". Are the markets in "recovery"? Are jobs now in "recovery"? Are commodities in "recovery"? Is Brittney Spears in "recovery"?
One thing I have always been suspect of is the way the elite in Wall Street butter their bread. Wall Street has a "monopoly" when it comes to creating "investment vehicles" or to be more accurately termed, "trading vehicles"!
One of the most popular in recent times has been the most suspect for me and that has been the huge rise in the popularity of ETFs of all kinds, but in particular the commodities. You guys all know my stance on GLD and SLV, but in the past I warned about those ETFs that were backed by swaps(derivatives).
Here is the simple truth for me and the one idea that raises the most red flags.
THERE IS A FINITE AMOUNT OF COMMODITIES ON EARTH YET THERE IS AN INFINITE AMOUNT OF FUTURES TRADING.
I believe this has evolved from the derivatives side. As we have seen with AIG and Lehmans what happens when counterparties fail to "deliver"! The way the US Congress handles it is to make the US taxpayer make the "delivery" when all along it should have been the banks and hedge funds that placed the bet who should have been held liable.
Lately there has been a lot of talk on the recent CFTC investigation into the commodity "bubbles" and some of that blame is being viewed as an ETF issue. Here are some recent comments.
“We believe that the significant increases in energy prices last summer were wholly unrelated to the activities of our commodity-tracking funds using the commodity futures market to hedge the exposure to investors that results from their obligation to track the price movement of a commodity,” said John Hyland, chief investment officer for U.S. Commodity Funds LLC - an industry player with $3.9 billion in assets under management as of March 31.
Added Hyland: “In fact, rather than acting as a source of risk, the funds provide investors with a transparent, highly regulated, unleveraged vehicle through which to hedge their pre-existing price risk in commodities.”
Hyland is the CIO of both the United States Oil Fund LP (NYSE: USO) and the United States Natural Gas Fund LP (NYSE: UNG) - two ETFs that are among the largest such products in the world.
Commodity speculators have been criticized for pushing up energy prices that hurt consumers at the gasoline pump and raised costs for businesses using large amounts of energy in their operations. Crude oil soared from about $80 a barrel to an all-time-record high of nearly $150 a barrel.
Trade groups that represent transportation firms and other industrial companies attended the hearing and urged the CFTC to crack down on funds and other speculators that cause energy prices to trade in market-destabilizing whipsaw patterns.
“The creation of the futures market was not intended to be a substitute for a gambling casino for Wall Street banks, hedge funds, sovereign funds and index funds,” said Paul Cicio, president of the Industrial Energy Consumers of America, a trade group that represents big energy-using industries, like cement, steel, chemicals and paper. Passive index funds and other funds such as ETFs can “undermine price information” in the financial markets.
So Mr. Paul Cicio gets it ...
As I have been saying all along WHAT PRICE DISCOVERY?
I come back FULL CIRCLE now and ask again why it is Wall Street has the ultimate monopoly on "trading vehicles" like ETFs? I think the answer to that is due to the fact that these same Wall Street banks that have a MARKET MONOPOLY on Wall Street are the same member banks that make up the US FED and the US FED is a MONEY MONOPOLY. Just like any other past monopolies what is it they all have in common and that is GREED. It all goes back to ROTHSCHILD 101. You own the MONEY then you own the MARKETS ... you own the NATION! That is what I believe needs to be "fixed". I honestly can not envision that any of these problems we now face can ever return to "normal" because there never has been anything such as "normal" in my lifetime. None of us even know what "normal" is since we all have been living our lives inside a MONOPOLY vacuum. Our only vision of normalcy has been that prices always rise, other wise I could still buy a Lobster Dinner for 85 cents. When prices of anything come down we all go into panic mode because that is not what we are used to seeing. It challenges our belief system when we see prices of our most cherished possessions come down. Our government believes that it is "normal" for government to grow and that belief is reflected in the daily spending over at the US TREASURY DAILY STATEMENTS. Stability to America is when the cost of everything is rising. This belief Von Mises accurately termed PRICE FIXING and that is why I entitled my FINSOB REPORT "PRICE FIXING 101" ...
Make the monetary system honest and we will expunge a great deal of what ails us now, but that requires a change in our belief system that values must always rise. There can never be any "real" future stability so long as we adopt rising prices as "normal". This is why we all must day trade our way to retirement and believe me Wall Street could not be happier with that prospect!
- ELIMINATE THE US FED
Once you do that its like unplugging the entire system of the MONOPOLY, who's main ingredient is always ... "fraud"! Name me any other MONOPOLY where "fraud" was not at the core? POWER CORRUPTS!
ES QUE LO ES
WHAT ABOUT WARREN?
ALOHA !!
I am thoroughly confused about WARREN BUFFETT!
One year he is damning derivatives as "Weapons of mass destruction" and the next year "derivatives" are the only thing turning profits for Berkshire. I recall grandpa Warren put out many long winded descriptions of what it was like to unwind the derivatives mess at General Re and he swore he would never do it again!
I guess now that he is in bed with Goldman Sachs he has a whole new "attitude adjustment"! Perhaps he thinks he will be saved like JP Morgan and Goldman if Berkshire gets into trouble with their derivatives counterparty exposure. Think again on that Warren, because the last time I looked neither you nor Berkshire were US FED member banks!
Did you read about his derivatives? WOW ... what a deal! Warren will be dead in ten years so if he loses the bet and has to pay up $35BIL then so what ... What he never reveals is who is on the other side of that ten year bet that has made Berkshire profitable suddenly this quarter?
Warren who are you?
Re: WHAT ABOUT WARREN?
"One year he is damning derivatives as "Weapons of mass destruction" and the next year "derivatives" are the only thing turning profits for Berkshire."
I thought I heard him at the annual gathering correcting reporters on his statement, which was meant to praise derivatives as 'weapons of mass confection,' while assistants handed out boxes of See's best.
Gaps down
In addition to GS recoiling from yesterday's high as Bill mentioned this morning, I have noticed that a few stocks are gapping with significant moves down in the last 10 trading days. Is this telling us something about the market preparing to correct soon or is this merely profit taking? Check out the charts on MSFT, AMZN, AGP, DNB, DRIV, MCD, STEC, IM, SYNA, PPL, SYMC, YHOO, EAT, and the real surprise is PG. Is it possible that consumers are so strapped that they can no longer afford laundry detergent, soap, razor blades, and toilet paper?
I apologize in advance if this was already discussed because I have not been reading the commentary for the past week.
Re: S&P 500 Volume
Mac & 2nd_ave,
Some things to consider...
I'm not sure what you define as a Bull Market, but in any case wouldn't it matter from where any increase it volume may be coming?
Is this real people investing?
Is this simply computers set to go with momentum?
Is a "Bull Market" measured simply in a rise of S&P and DOW?
How often is the crowd on the right track?
Barron's
So, just what is the hard truth we are not hearing? See it for yourself in "Taking Back Our Fiscal Future," a paper written by 16 Republican and Democratic fiscal experts and published by both the Brookings Institution and the Heritage Foundation in April 2008. (http://www.brookings.edu/papers/2008/04_fiscal_fut...).
Re: Shorting 1982 and 1987
Current conditions are vastly different than 1982 or 1987.
• Job losses now and also job quality
• Huge indebtedness (personal and national) now
• Trade imbalance now (lack of US mfg now)
Just a word of caution from someone who has seen the massive changes.
Re: PRICE DISCOVERY OF PRICE DESTRUCTION
Here's just one more example of the monetary system incest which gives these guys the edge. How cozy it all is.
from Wikipedia:
"Many former employees of primary dealers* work at the Treasury, because of their expertise in the government debt markets..."
*Primary Dealers – The Federal Reserve Bank of New York trades U.S. government and select other securities with designated primary dealers, which include banks and securities broker-dealers. Weekly transaction, market share data and primary dealer lists are updated periodically. Much of the information is submitted voluntarily. The Bank expects primary dealers to submit accurate data, but the Bank itself does not audit the data.
CTA Canada
Bill, congratulations on CTA Canada! Will you be providing details about how to set up a Canadian account through MANNA? I cannot find MANNA's website.
Thanks.
Re: Vad Your divergence indicator choice is?
Vad, thanks for sharing your screen set-up. I like to get inside others head so I set up a work space called Vad. The one thing I'm unsure of is "stochastics rsi 30" I have never seen/heard of that indicator combination before and it is not in tradestation. Where do you get that from?
In the event if I cannot duplicate I will just use a fast sto and will set up a 1, 15, and 56 minute chart with those inputs. Do you generally trade only one minute charts?
That's for your wonderful input and sharing of your views, much appreciated. And while I'm at thanks to everyone who shares on this blog and to Bill who makes it all possible. Gracias.
Edit: I googled stochastics rsi 30, and all references goto cara community.
Re: CTA Canada
MANNA does not have a website. They are very private, but I can tell you the principals are world-class people with global reputations. They had no connection with Interactive Brokers until we made the introduction. They will be responsible for all the non-trading aspects of the service, and we will do the trading. We both think this venture will be a HUGE success.
Re: Shorting 1982 and 1987/ Wedding
Grym- We just returned from a wedding at a church in Palo Alto (neighbor's son). Watching the couple (guessing mid-twenties) exchange vows took me back to 1979-80, when the economy was also in tatters, but those of us who were in our mid-twenties at the time were as optimistic about our futures as any other generation. So bride and groom will begin married life in the midst of what will likely be the worst recession of their lifetime(s). Having been to a few weddings in the late nineties, I can say I did not detect any difference in the mood of the crowd (about 300) who were, of course, here to celebrate a new beginning. The future always looks bright to those who are young and starting out.
Off to the dinner/reception later this evening, where conversation around the tables may offer a different take.
Re: Short term look at Ford and SPY
Has anyone looked at these charts? (please, someone say yes:)
I just returned from an evening out and clicked on the URL and found that it was showing a daily chart, which is not what I wanted to show. It's a 60 min. chart. Has this proven to be an issue with others looking at the chart? It seems that StockCharts.com logs out my session after a period of time, then only default day or weekly charts are viewable, which would make a mess of the charts I'm attempting to show. I think Mackinaw commented once on this issue.
Dunno what I can do. Take a screen shot maybe? How annoying.
Re: Short term look at Ford and SPY
Hi Les,
Yes, I have noticed this a few times with your stockcharts posts. I had the same problem at the start. The thing you have to remember to do, just before you have a chart set-up that you want us to see, is to click the link directly below the chart that says "linkable version". Then you can copy the resulting URL from the address bar to your post here and we will see what you want. Basically what is going on is that as you modify settings in the chart, the address bar is not updating. I especially found this frustrating as I have bookmarked thousands of charts over the years and sometimes have forgotten to click that "linkable version" link first. I hope this is the issue that you are having although it may have something more to do with the fact you are using a paid account vs free charts.
Cheers.
Re: Gaps down
MG - My knee-jerk response to observing a sudden drop in PG is this may simply represent a flight from safety, aren't consumer staples traditionally safety plays?
As for the others, MCD could be considered a safety play as well I suppose, there are numerous variables running the gamut from profit taking to downgrades and so on....
But I'm not much of an expert on rotational patterns, your experience in this regard is likely more vast than mine...
Re: Gaps down
I had the same thought instantly on reading the post, CP, FWIW.
Re: Vad Your divergence indicator choice is?
Telestar,
I am sorry, I am not sure where this came from... I don't see any references to that in my screenshots?
Re: Vad Your divergence indicator choice is?
Right Vad, I do not see it there anymore it was a chart of FIG and I think HIG?
Anyway it showed an indicator that said "Stochastics RSI 30 MA 5" in the input section of the indicator portion of the chart. I just have never seen or heard of it before. Thanks anyway. Cheers.
Re: Vad Your divergence indicator choice is?
Oh, then you are referring to the charts posted by Les, he should be able to help :)
Backing up Bill's Relative Strength....
which is considerable!
Okay Bev, I have one for you.....alright, for everyone!
Jump here: http://thepatternsite.com/Blog.html#P7
and check out the best and worst performers (good info, notice where the Ultras are) as you scroll to the bottom of the page to the DJT relative strength chart from Bulkowski's Tutorial Tuesday. You can fake us out with a head and shoulders, but the caution we feel now is on the charts! How can you fake RSI of the transports?
Edit: Also this chart indicator: http://thepatternsite.com/CPIUpdate.html#PZT
Re: Gaps down
Right Mac, re-reading I suppose a better choice of words would have been "migration or rotation to risk" as opposed to "flight from safety".
Re: Backing up Bill's Relative Strength....
Creig,
Thanks for posting the link as I'm a big fan of Bulkowski. Currently reading his book time permitting. However, notice that his patterns are showing bullish message and no sell signal occurred yet. The divergence can last for a while. Notice how long it took for the markets to turn after becoming oversold in Oct 08 and Feb 09. Now the same can happen in reverse. The RSI patterns we see now are very similar to later part of 2006 when it was way too early to short. I wish I had a source of daily RSI in 2003 as it would be very instructive to follow. Yes we will have a crash in equities at some point but maybe no sooner than the end of the year?
My main point is $ is crashing now due to macroeconomics. Markets are reacting to that. They are going up, makes it contra intuitive, but this is how it works. It worked the same way in 2003.
How important is timing?
Let me paste the last sentence of a comment I posted on another site: If I receive 'intel' that says your house will be bombed sometime in September, and it gets bombed instead in August (while your family is still living there), was I right or wrong?
Which is to say, if followers of my blog are wiped out by the time my 'predictions' come to pass...you know, if a major blogger is going to stand by his positions at any cost, maybe he/she should make that clear to readers. Not everyone has the resources or the stamina to survive what amounts to an ego trip for the blog host.
Re: How important is timing?
Pat related his experience about being right about direction but wrong about the timing during the dotcom bubble. He went short substantially prior to the top. He concluded that early is the same as being wrong.
He summarized by saying, "there are no prizes awarded for being early."
Re: Vad Your divergence indicator choice is?
Vad, sorry to inconvenience you, my mistake.
Re: How important is timing?
You're right. I remember that now.
There are indeed no prizes awarded for being early. What is also pertinent (and often overlooked) is that there are no second chances awarded to those whose portfolios pay the ultimate price for being early.
Re: How important is timing?
Might also add that we are unlikely to hear from anyone whose portfolio paid the ultimate price for being early. I'm just trying to put in a word on their behalf, in the hope that others may avoid the same trap.
Re: Backing up Bill's Relative Strength....
Yes Jack, It sure can continue to run for a while as it did when Hank was parachuted in...they kept pumping and pimping. The point of Bulkowski's chart was not so much the indices, but the transports, which indicate overbought shipping.
So it plays into DOW theory that the overall economy can't really be expanding if the transports are already topped out (overbought) at this point.
I don't think the $USD strengthening is really counter intuitive yet as currencies are relative to other currencies as well as relative to the markets, so it's complicated by other relationships/comparisons.
Right now it's almost like a slack tide where it's not coming in or going out, but that doesn't last long. Sooner or later something changes to offset that equilibrium. Right now it's HB&B's aim to pump, pimp and dump their high priced overbought junk on Joe 6 Pack. Just watch tout TV and your local newscasts.
As soon as they're clear someone will ring the silent bell and the selling will commence, but we know this can go on for some time before the tide changes.
Remember, 2006 we had Hank Paulson dropped onto the deck of the USS Titanic and he bailed water and TARPED almost until Bush was gone. I don't know who it will be this time but you can be sure they have some trick to keep the dog and pony show on the road longer than it really should.
Re: How important is timing?
2nd - I agree, you aren't likely to hear from folks who get wiped out.
That "survivor bias" makes me wonder. All the folks who "called" the crash - how many other things did they "call" and get wrong? Or were dramatically early? Stopped clocks are no use in advising our trading, right? In fact not only are they no use, they are dangerous if we start trading on what they provide.
I believe this is why dr.cosa gets so wound up about the gold newsletters. These guys will probably be right - eventually - but in the meantime, you may well go bankrupt by trading on their opinions.
Re: How important is timing?
2nd, You seem to have spent a lot of mental anguish about these bearish bloggers. Why do they concern you so? Have you gone on the blogs and called them on their B.S. Maybe you feel its not polite, but sometimes a cult follower needs a wake up call. In fact you are so good at expressing yourself you might not even get banned. Of coarse you may be ignored which is disconcerting. In some ways maybe it would be good for these people that trade on bloggers recommendation to get a swift kick in the butt. I mean really does anyone believe that they can be Alpha positive by following a biased blogger egomaniac.
Bob
Now how about some modern gypsy music. I saw this women in Hungry in 1992 brought down the house.
http://www.youtube.com/watch?v=lVKvCinOOMY&feature...
Re: Vad Your divergence indicator choice is?
http://stockcharts.com/school/doku.php?id=chart_sc...
Telestrar3d, there's your explanation of stochrsi. FWIW, I was experimenting with it but don't rely on it heavily. It does help indicate overbought and oversold postions on a one minute chart.
Re: Vad Your divergence indicator choice is?
Vad said: in fact, I am getting dizzy looking at all the indicators Les shows in his post to dig into HIG trade... I am lost about what he sees in those lol.
:P
Reading over Stock Charts MACD explanation I note that:
"The most common signal for MACD is the moving average crossover. A Bearish Moving Average Crossover occurs when MACD declines below its 9-day EMA. Not only are these signals the most common, but they also produce the most false signals. As such, moving average crossovers should be confirmed with other signals to avoid whipsaws and false readings."
It appears that I'm interested in false signals, and I use them on a one minute chart as opposed to daily or weekly charts. When the MACDh indicator has a negative divergence (it's heading south) yet the price holds or increases then it indicates to me that there is overwhelming momentum, the trigger being the bottoming out of the MACDh indicator and it heading into positive territory again (see attached).
Here, StockCharts makes mentions of peaks and troughs:
"Be careful of small and shallow divergences. While these may sometimes lead to good signals, they are also more apt to create false signals. One method to avoid small divergences is to look for larger divergences with two or more readily identifiable peaks or troughs"
I have identified from JL's daytrades that negative divergence given in a peak and trough MACDh signal which is not reflected in the price is the signal I'm looking for.
I note the following caveat from StockCharts:
"The MACD-Histogram is an indicator of an indicator or a derivative of a derivative. The MACD is the first derivative of the price action of a security, and the MACD-Histogram is the second derivative of the price action of a security. As the second derivative, the MACD-Histogram is further removed from the actual price action of the underlying security. The further removed an indicator is from the underlying price action, the greater the chances of false signals."
It does appear I am dicking around, doesn't it? Yet it is a signal I can read and play on at the moment. Thank you for the link to your blog entry that you posted concerning tape reading. You linked your book on Amazon, which I have gone and bought. Time to read more from Vad Graifer.
Wow Vad, what sort of Level 2 quote is that?
http://realitytrader.com/vad/Scr2.png
I feel rather inadequate using this URL for level 2:
http://www.level2stockquotes.com/level-ii-quotes.html
Did you download that software from this company?:
http://www.cygrouponline.com/quotes.html
Short term look at Ford and SPY
It seems that if the chart is not daily or weekly, Stock Charts is determined to mess with it when my session has a time out.
Ford filled a gap this last week. The S&P to follow? I note that John Lee is 100% cash close of Friday. Speaks volumes of the caution he has going into Monday, for a trader who plays 1-5$ stocks that normally ignore the direction of the market.
Re: Short term look at Ford and SPY
Hey you could say that "double bottom" is actually a descending triangle about ready to break below support. After market open, if it pops on the open, you can maybe short it, with a stop at 8.25, and if it breaks below 7.95, double up.
I'm not seeing a lot of accumulation at the "double bottom", especially when you compare it to the volume on Thursday on the breakdown at the open.
Of course I'm just an uber bear, you don't have to listen to me. :)
Re: Short term look at Ford and SPY
:)
You're right dave, I was only looking long when given an SPY gap fill scenario I could have been looking short as well. Given the lack of volume following the double bottom I shouldn't have been thinking about it as a double bottom. Thanks.
Vad, just quickly ran through Part 3 of your Master profit plan. At the moment that MACDh signal works for me if JL gives a heads up or an after hours scan shows up such a short-term pattern, accompanied by volume and confirmed by the actions on a 1 min chart during trading hours. Those signals represent a workable scalp or intraday trade for me at this time.
As Dave just pointed out and your chapter just reminded me, intraweek trades can be made with the appropriate chart formations and perhaps concentrating on Ford will help me to mentally note and catalogue the plethora of long and short chart formations that I have yet to burn into my thick skull.
This is a recommendation to buy Vad's books.
S&P WHACK?
ALOHA !!
Doesn't this chart look WHACK?
S&P P/E: http://www.bullandbearwise.com/SPEarnings.asp
Does that not look like a S&P P/E BUBBLE? Is there a quadruple reverse ETF for this? HA!!
It kind of looks like this chart ...
Debt link: http://www.babylontoday.com/61982ae0.png
Is it an anomaly though? Like so many other US government and Wall Street indexes there is this constant "re-weighting" going on, like the rotation of the S&P.
Here are the latest re-weightings for the S&P for 2009 ...
S&P re-weight link: http://tinyurl.com/yr6xg2
Then there is this chart that to me speaks volumes as to why the Fed Funds Rate is so low. In a time when the US government is heaping huge amounts of DEBT onto its Balance Sheet it is nice of the US FED to keep rates so low. Imagine if rates began to rise what the cost of debt service would do to America? Look how interest rates have fallen over the years as the US Debt has skyrocketed. And here we all thought this was so the Dow would rise!
Imagine what would happen to the US government if they were treated like its citizens are by VISA and Mastercard. In the most harsh economic times ever the credit card banks are lowering credit limits and raising interest rates. What if that happened to the US government, who would probably be turned down for a loan from Bank America as too high a credit risk! In fact Bank America could not even qualify for one of their own loans ...
Debt Interest link: http://www.babylontoday.com/618f4730.png
Questions is how much longer can all these balls be juggled? So much is riding on the ability of America to service its ever expanding debt load. Based on Obama's agenda I see no end in sight to increasing debt.
Even in the last quarter FINSOB REPORT there is this:
"The Consumer & Business Lending Initiative (Super TALF) will support the purchase of loans by providing the financing to private investors to help unfreeze and lower interest rates for auto, small business, credit card and other consumer and business credit. Previously, Treasury was to use $20 billion to leverage $200 billion of lending from the Federal Reserve. The Financial Stability Plan will dramatically increase the size by using $100 billion to leverage up to $1 trillion and kick start lending by focusing on new loans."
Those are not MY words, but those of the Financial Oversight Board, the watchdog for TARP. The US FED Balance Sheet is already bloated to all time record highs and what a coincidence so is the Balance Sheet of the US government.
This is disturbing to me because this Super TALF $1TRIL USD inflation will be on top of all the other debt loads that Obama has plans for which include even more STIMULUS and the already heavy handed outlays needed to support the "embedded promises and guarantees" of past two party aristocracy administrations. Its Crony Socialism at its best!
The more the money supply inflates the better for the DOW as inflation drives the DOW higher. You could say the motto for the DOW would be INFLATE OR DIE! In the end it's a monetary function and money is corrupt. The World is awash in "malinvestments" ...
A FIRST
ALOHA !!
Now here is a first for me as a small business owner in America.
I hired a 25 year old man to help me do some painting. He was raised in Seattle(haole)who has no car, no phone, no TV, no computer, no home, no credit card, no health insurance and no stuff at all. He rents a very small shack out back of a ranch. I think he has about five teeth left and he always has that "homeless smell" of not being bathed in awhile. Yet he is a hard worker and has no attitude and shows up for work on the day he says he will and he does the work he says he will do for that day. Every day he comes to work here he hitchhikes or walks, which is about six miles. He never complains about his life and in fact has a good outlook. He is not a depressed basket case popping Prozac and always has a smile on his face and jokes around. He never talks about money or politics or his portfolio. We talk about beaches and places in the World and music and agriculture stuff.
I think this guy is one of those Americans that slips between the cracks and is never counted in census or BLS reports, one of the chronically unemployed, but does not care. He has already had a hard life and he's only 25.
As I have said before most of my neighbors have no electricity or sewage or any of the amenities we all take for granted living in suburbia. Why is it that rural agriculture is always the poorest communities? I wonder about a society who pays teachers to teach its kids and ag workers who put food on our tables the least. While we pay people who lie and defraud us and shuffle paper as a profession the most!
Obviously nobody here lives in such conditions as my new employee ... I believe in the long run all this debt that Obama and prior administrations have piled up is only going to result in a lesser quality of life in America and eventually civil unrest. Americans and much of the G8 world have been conditioned by entitlements and if those entitlements are removed then the US government will have many unhappy citizens. Obama and every US Congressman is fully aware of that fact and so it goes ...
If you have ever read George Orwell's short story, Shooting An Elephant, then that would explain how Empire really imprisons itself by its own grandiosity and can only collapse under its own weight. It has been proven recently that the US Bank model of TOO BIG TO FAIL has been transferred to the US government. Is the American Empire TOO BIG TO FAIL?
"My reading of history convinces me that most bad government results from too much government." - Thomas Jefferson
Has America ever tried the "less government" route? As long as I have been alive we have not! Maybe we should for once in our lives ...
Re: Shorting 1982 and 1987/ Wedding
2nd_ave,
Well, beginning marriage and being young is a pleasant and optimistic time, as it should be.
In 1980 my business had been good, my oldest boy was a college freshman at Northwestern (National Merit Scholar, gov. student loan, two grants and two scholarships made it affordable). Then came 1981.
I had to get a new car (1981 Jetta @ 14% interest), all scholarship and grants were either cut or dropped and because of my latest IRS return the Financial Aid Form was a problem.
I opened a margin account, borrowed to pay off the Mafia-type agreement, appealed the financial aid by revealing my Q1 tax estimate and we struggled thru to graduation. The car eventually was sold for 2/3 of original cost ten years later.
People will adjust to the massive changes we see happening. It is probably not going to seem s bad to those who never knew what life once was like for so many, for so long, here in the US.
The really sad part is those who had just started to work their way up will feel the worst effects. The black citizens were able to enter the middle class due to manufacturing jobs which got them out of the rural south. That began to disappear about the time the 1964 Civil Right Act declared them "officially equal".
We are going to through a complete national remake which is tough in itself, but the financial boondoggle is wiping out virtually all of the black middle class and much of the white too. The upside may result in less racial division as we become a two-class system based on wealth and lack of.
Edit: I think we are just entering a true Second Great Depression rather than a simply worse recession.
Re: How important is timing?
This question reminds me of a book, "No Second Place Winner," by Bill Jordan. Bill was a Marine in WWII in the South Pacific, a US Border Patrolman and long time law officer who survived many gun fights — hence the book title.
Timing IS definitely important!
Also important is the bigger picture. We've all heard, "Don't bring a knife to a gun fight." But you don't want to kill someone unnecessarily either.
Getting a handle on the big picture is primary.
visa and mastercard
So just one quibble Kaimu. Visa and Mastercard are just the trademark holders and (often) the transaction processors. They get a few pennies on each transaction plus a kicker depending on transaction size. They also provide the rules for receiving particular card interchange rates. Transactions with a card present gets one rate, transactions with a card not present gets another rate (but requires address verification data), etc.
It is the (card) issuing banks that charge usurious rates of interest on card balances - BAC, Chase (JPM), WFC, etc.
We don't hear VISA or MC needing bailouts because - like the house, they always get their cut. NIce work if you can get it.
The rest of it - well, it's the usual story. It is as if the US has a massive negatively amortizing home loan with an variable interest rate. Its all well and good when rates are low, but it all comes apart once rates rise. And now that national income is dropping at the same time that we are doing a "mortgage equity withdrawl" in the form of the stimulus plan, well, it's just like we're stepping on the gas on the way to the cliff.
Re: How important is timing?
I "survived" the 1987 crash, not because I called it or listened to anyone else who called it. I had stops on all my investments and got back in early (also with stops that I moved up) enough to close up substantially on the year.
Trying to "call" things is always a gamble. Better to protect and relax.
Re: visa and mastercard
ALOHA !!
Hey, are you still at the Fairtex Hilton in Paris? HA!!
Yep, I know the MC and V thing, which is why I put this part ... "In the most harsh economic times ever the credit card banks ..."
I agree ... my point is that the US FED and US Tres Sec Paulson Geithner keep acting as if they are doing all of "us" a favor with these low Fed Funds Rate, when in actuality it is them who benefit the most! Would any of these clowns ever get re-elected if all of a sudden the Fed Funds Rates went up to 17% like back in the Volcker days that Grym mentions paying 14% interest on a car loan? He got a deal. I bought my first Chevy truck back then and I was paying 16% interest! HA!! Seems unfathomable now. So while the Fed Funds Rate was sky high at 17% the POG was at record highs over $800USD at the same time. Anyone ever ask why?
Higher interest rates only means the DEBT is riskier? Creditors will only accept higher risk if they believe they are well compensated for their gamble. Without World Reserve Currency status the Fed Funds Rate would be much higher.
So in reality the last thing Obama wants to see is higher Fed Fund Rates! Obama is no different than a SubPrime borrower, who takes advantage of the low interest rates and continues to ratchet up spending!
Paulson's calls Goldman TESTED ETHICS ,WHAT ETHICS???
If Mr. Paulson had ethics, Goldman Sachs would have been last in line to recieve help . In fact he would have exchanged the places of Goldman Sachs with either Bear Stearns or Lehman Brothers, to prove he was impartial. http://tinyurl.com/nkafyo Bob.
Re: visa and mastercard
Yes guilty as charged. Still in Paris, getting fatter by the day. :)
Low Fed funds rates are all about giving banks a high interest rate spread, so the Fed can pump profitability into the banks at our expense. Why not skip the banks and give ME money at 0%? I tell ya, I could earn some money on that. In fact, it's hard NOT to make money, especially when you get BAILED OUT if you somehow screw up.
How about you, Kaimu? Want a million dollars at 0%? Too bad you aren't a bank, you (and I) are just one of the loser citizens who end up at the tail end of the money train.
Someday the overreach will be so great it will all come to a sticky end, but that time is not yet here.
Re: Wow Vad, what sort of Level 2 quote is that?
Les,
Level 2 is Level 2, they are all the same... the difference may lie in quotes' speed and accuracy. One you show is free for all, thus is not likely to be a top of the line, but the again - not everyone needs that. If you are a day trader/scalper - you sure do.
My software is provided by the broker. Never heard of that one.
You say you want a Revolution? LOL!
Speaking of credit cards, this story is from page 11 of this weeks Barrons.
You can read it here: http://online.barrons.com/article/SB12496835229901...
Kaimu may want to look into it for his biz as it may help.
It looks like some wealthy folks have figured out a way to shuffle to the front of the MC/Visa/AMEX/Discover money line.
I love the name, maybe it portends the future of more than CC's.
There seems to be enough interest in setting things right. Maybe WE need to start an organization aimed at bought off politicians, the Fed and banksters?
The one thing about Pete Peterson as well intentioned as he is, is you will never see him in the streets. He is still trying logic, but greed hears no logic.
WE however, are just citizens and it is our duty to take to the streets to petition our government when it so blatantly acts against the greater good of it's citizenry. To Gandhi they listen, I don't know why, but they do.
Proof? Look at the right wing organized mobs at health care reform meetings. They aren't even close to a majority but they are loud and visible and somehow that works on HB&B's TV stations and papers.
Talk about timing
After months of uninterrupted great weather streak, we have a first rainy day today. Glad I got these shots, not much can compete with gorgeous sunset:
http://www.realitytrader.com/photography/2009/08/c...
Re: How important is timing?
It's hard to get a handle on the big picture when there is no reliable data: cooked government statistics, cooked books from governments and banks, accounting shenanigans-the list goes on and on, and as Bill says, we're not in the room with the inside scoop. It's ironic that the correct question of defining the big picture is the hardest to answer. In my densa mind maybe it's as simple as life, liberty, and the pursuit of happiness, thrown in with good health.
Building?
Some Caraistas were discussing home builders and their suppliers a while back.
They may want to read the article in Barrons pages 14 and 15, http://online.barrons.com/article/SB12496960076481...
and then check out Dr. Ron's site this AM ( http://ronsen.blogspot.com/ ) where he discusses Floyd Upperman's COT work.
Interesting stuff. Bubble blowing? I note WY went from 18 to 36, back to 28 or so and now back to 38. If you take Barrons and COT seriously you probably want to think again....
BTW, it doesn't thrill me as I happen to own land in the PNW with some rather large trees on it, but it looks like I might be able to build for considerably less in the future...if there is a reason to build that is!
Re: S&P WHACK?
kaimu - "Imagine if rates began to rise what the cost of debt service would do to America? Look how interest rates have fallen over the years as the US Debt has skyrocketed. And here we all thought this was so the Dow would rise!"
This is why rates won't rise, the $USD will take the hit instead.
China beat the US to the punch from what I read, hot money flying into the Chinese stock market was obtained at low rates and put to "work". I guess you could say they were given a 4x long ETF, leverage, leverage, leverage!
So it seems China is inflating as well as the US, but the US must inflate more than China in order to inflate away the trade deficit, the federal deficit, and the housing bubble. Why China is inflating is hard to understand, I suppose to keep the Yuan from appreciating too rapidly (keep the $USD peg intact) and maybe to spur investment while the $USD inflates away debt.
Americans must be able to earn a living, so I'm expecting a much weaker $USD going forward, it has to be. The problem with gold is that it's just a hard asset like a home or farmland, and will retain it's value (subject to supply/demand constraints, ie: a timing issue) but does not enjoy the fruits of leveraging such as a mortgage would. Now if you were to buy gold on margin, you would lever your access to credit and as the $USD/Yuan/etc. falls, your debt would be melting away. Ha!
After all, what good does hoarding currency do for anyone anyway? The beautiful thing about paper is it's value can be easily controlled by those in authority, limited only by access to various distribution/accumulation (spending/taxation) vehicles.
Once the $USD is sufficiently inflated, the consumerism engine can be re-started. We should be anticipating rising wages for American workers, I'm already witnessing rising food prices (I can't simply grab a guava off a tree).
So doesn't it make more sense to lever-up your cash as high as possible in order to maximize gain from the great reflation? Sure, gold will gain against the $USD as inflation runs it's course, but gold is a very low-risk play that can't possibly fail in a long time horizon. Aren't there any other options available to the savvy investor that could provide a higher return and naturally of course, slightly higher risk? A couple options would be as we have previously mentioned, might be the EWA or EWZ?
Re: S&P WHACK?
"This is why rates won't rise, the $USD will take the hit instead."
CP, can you explain how this can happen?
How can the $USD take the hit (devalue leading to inflation) IOW, increased $USD supply, and not lead to rising interest rates when they start to pull away the oversupply? The Fed will have to pull away the punch bowl at some point, the only way to do that is to raise interest rates, which is the basis for the TOG.
It can't happen until they have an actual rise in real economic activity, the banks are rescued, and we are 'safely' underway, but how else can that happen? Until then we will see low rates, but at some point they have to rise across the board instead of only for CC's like we have now.
Re: S&P WHACK?
Craig - "It can't happen until they have an actual rise in real economic activity, the banks are rescued, and we are 'safely' underway, but how else can that happen? Until then we will see low rates, but at some point they have to rise across the board instead of only for CC's like we have now."
Yes, of course they will eventually take the punch bowl away and it won't be until after economic activity has recovered (maybe 6 mos after?) the wealth creation engine re-starts, and "unreasonable" threats to the federal deficit are neutralized.
I believe we are witnessing the early signs of recovery, market prices are the first indicators and too many indicators are now pointing up to ignore. Sure, we might experience a pullback here and there, but I see blue sky on a longer time horizon. To borrow a term from civil aviation, I would label this a touch and go. A rough one perhaps, but I'm not anticipating anywhere near new lows again because the resulting economic damage would be much too great.
Re: S&P WHACK?
My worry is that we don't really see blue sky yet, it's a little early and almost all supposed gains we see now are from government reflation efforts, government jobs, and government manipulated numbers in an effort to reflate while telling the public the gun to their head isn't really there.
In order to have real economic 'recovery' they have to convince all of us who are saving that all is well and we should now spend so we will restore the 70% of the economy currently being supplanted by government largess. If they are successful in convincing J6P that all is well and to start spending, THEN it might be blue sky, but unfortunately it will be based on.....more debt.
Not so good in the long run, just another of a string of bubbles.
It reminds me of addicts that clean up and then relapse. They're still addicts.
Hard to say it constitutes blue sky unless it's based on real production, savings and living within our means. I don't see that, I see propaganda, ignorance and consumer/debt/inflation based slavery. Who is going to loan us the money to keep up this shell game, the Chinese? Are we going to convince them and their people to play the same game, and if we do, who will loan THEM the capital? And they say poor Bernie Madoff is the biggest ponzi schemer?
Puleese!
Our little planet..
Amazing pictures of our planet. Vad, I would think you would really enjoy these.
Re: visa and mastercard
ALOHA !!
It is sad to hear you are "Still" in Paris, you poor man! It must be hell! HA!!
You posted-"Why not skip the banks and give ME money at 0%?"
Hey, that's what I have been saying all along. Who needs banks? If the US Taxpayers are backstopping the entire US financial sector then why should we have to pay interest? If I had a huge amount of cash, like billions sitting around, then I would file a lawsuit against all US banks and the US government and US FED under anti-trust and discrimination basis. Even if I were to lose I would turn the trials into some really fabulous "discovery"!
Seriously, why should a company like MSFT who has a proven track record of innovation and who has built the "real wealth" of America have to pay more interest than Goldman Sachs who really has not contributed any "real wealth" to the USA and in fact has removed wealth from Americans? I am of the opinion that when Lehmans failed then US banks would now have to pay the highest rates not the lowest. Its completely assbackwards from the loan industry itself where more risky clients pay more in interest. I would love to hear someone in Congress ask Bernanke to explain that! Is the only factor that MSFT is not a member of the US FED?
Really ... ELIMINATE THE US FED!
BROWNS BOTTOM
ALOHA!!
This proves that a complete idiot can go very far in the UK! So it appears that successful idiots are not the exclusive domain of the US two party system!
Link: http://www.youtube.com/watch?v=EzVhzoAqMhU
Wow ... look what Greenspan said ...
This guy had some great timing. He tried to intervieew the German Bundesbank on the same day Bear Stearns went bust. Look at the complete LOCKDOWN they put up over in Germany over Bear Stearns. You would have thought there was a bank robbery in progress or some sort of Al-Qaeda attack!
Why can't unknown reporters just roll up to the US Congress like this guy does in the UK and interview high-up government officials? Shouldn't I as a US citizens be able to hop on a jet and go knock on Pelosi's door over at Capital Hill and get an interview? I would call first!
Hummmmm???
Re: S&P WHACK?
Craig - "Who is going to loan us the money to keep up this shell game, the Chinese? Are we going to convince them and their people to play the same game, and if we do, who will loan THEM the capital? And they say poor Bernie Madoff is the biggest ponzi schemer?
Puleese!"
We should hope the Chinese don't keep buying Treasury paper, this is the mechanism they've been using to prop up the $USD and maintain the peg. So if the $USD weakness continues and perhaps gains momentum, the Chinese might try to keep the peg intact by buying Treasury paper and inflating the Yuan, stunting global recovery. No, the Yuan should be deflating while the $USD inflates, the peg is a powerful form of trade protectionism on behalf of China that enabled the global economic slump we are now experiencing. WMT will need to be looking into stocking more American products.
Craig - "In order to have real economic 'recovery' they have to convince all of us who are saving that all is well and we should now spend so we will restore the 70% of the economy currently being supplanted by government largess."
Again, the real problem has been the yuan peg, which was used to prop the $USD and enable US government(also consumer) spending without weakening the $USD dramatically.
The Yuan peg is the anti-competitive trade practice that levered the US gov and US consumer and migration of value-added manufacturing out of US (jobs that create the wealth necessary for maintaining consumption). It worked until it didn't, the US consumer engine ran out of gas when the housing bubble ATM machine ran out of money, housing prices began to fall because the consumer maxed out his credit and couldn't keep paying rising housing costs with falling wages (the supply and demand curves crossed). The turmoil we are witnessing is the result, and the peg is being dismantled by the global market.
Higher paying jobs will be coming back into the American theater as the recovery progresses and the $USD weakens, but the Yuan peg must go in order for a true global market environment to exist. All of this is unwinding, but the progress must be gradual to avoid unnecessary systemic shock waves.
Re: Talk about timing
How far do you have to go to find views like that Vad?
What the flock?
I awoke this morning to the cacophonous honking of Canadian Geese having a conference in an adjacent pea field. I watch from under my heavily laden apple tree that- inexplicably- bears far more fruit this year despite a drought (I water sporadically). Various flocks take flight and circle low in different directions between local ponds. The sudden drop in temperature coupled with so many forest fires raging in British Columbia may have forced their early migration. We have (in years past) had so many geese crowding private lakefronts that their groundskeepers actually rounded them up and gassed them! The smart ones have figured out that smaller flocks are more nimble and draw less attention in rural locations. As they circle noisily I imagine they are discussing which pond has the best koi or trout and which farmers kids are bad shots. A few flocks have apparently adapted to our mild winter and will stay after the rest have flown south. Maybe those who stay are just the elder contrarians who never liked Mexico. This early migration conference bodes an early winter. As does my heavily laden apple tree. If the squirrels have really fluffy tails it's another sign of a cold winter ahead. Are we listening?
Kaimu wrote "None of us even know what "normal" is since we all have been living our lives inside a MONOPOLY vacuum". Perhaps this is the place we poke our heads out of the vacuum and take some new readings on what is possible. My apple tree lost a heavily laden bough during the night. I could have propped it up but didn't. Now my harvest may be cut or the remaining fruit may be larger...time will tell. Anyone want some nice green apples (shoots)?
Re: Our little planet..
Wow Mark, that's stunning imagery, thank you. Too bad it's difficult for me to get this angle :)
Re: What the flock?
loannetter - In many regions it is common practice to remove a good part (1/3? I can't remember for sure) of the fruit early on, in order to improve the quality of the remaining fruit and avoid tree damage.
If you are in a normally wet region (>+40 inches of rain?), your trees probably receive too much water and on dryer years are likely to produce more fruit than they normally would.
It seems trees rarely receive the optimum amount of moisture, it is always too much or too little, depending on region.
Re: Talk about timing
Les,
no need to go anywhere really... it's all around, for instance: nearest of ocean shore walking paths being 5 min drive, particular one in the photos about 20 minutes, lake where the sunset was taken about 7 minutes...
Re: What the flock?
The things you learn on this blog! My tree will benefit from a trim now. Thanks Chickenpookie!
Re: Talk about timing
Gorgeous photos Vad, I'm envious of where you live - LOVE the west coast of Canada
Re: What the flock?
loannetter - I would remove some of the fruit, but not by trimming. I wouldn't prune wood while the tree isn't dormant unless absolutely necessary, you should prune in early spring (just as the tree comes out of hibernation and blooms), there are many popular shapes, but most important to many are to keep tree height limited and the center of the tree open to air flow (disease reduction). In any regard, the main trunk(s) should reach farther than any branch, so trim the branches below the main trunk(s) (my preference for an apple and most fruit trees is single trunk for reasons of simplicity this must be pruned into the tree within the first few years of planting).
Never remove more than 1/3 of the wood during a spring pruning, some fruit trees only bear on mature wood(identifiable in spring bloom). Anything growing inward should be removed.
I suggest obtaining some literature and assessing the shape of your trees before pruning. Pruning while the tree is growing will remove nutrients that would otherwise be stored in the root system over winter. This is one reason why the tree should be pruned while dormant if possible, the other is attack from diseases that are active during growth periods.
Research has shown that pruning in early spring results in less damage, and a healthier tree.
Re: S&P WHACK?
CP, the issue is cause and effect. Which comes first? The need to manipulate currencies comes from lack of discipline regarding both government (us) and private (us) spending. Ever notice how we're government of, by and for the people UNTIL it comes to government spending? Then suddenly there is this manufactured separation as if government spending isn't US spending or borrowing.
The only way for there to be a recovery, that is a REAL recovery without inflating still more bubbles, is to stop the spending, produce something and live within our means and pay off our debt.
I do not get even an inkling of hope that this is in anyone's plans, most notably the plans of HB&B and politicians, otherwise they wouldn't be screwing with the stats on everything from inflation, money supply, value of the $USD, Yuan, Yen, "profits" based on expectations instead of reality based YOY numbers, bailed banksters, GS, green shoots, cash for clunkers, near zero interest rates, doctored housing sales stats, mark to market, bank reserves....need I go on? Bullshit is bullshit and there is no change in their plan to dupe American citizens into becoming levered consumers again and again. THAT is their plan, has always been their plan, and will continue to be their plan. In this Grym and I (and Kaimu) are in total agreement.
These people are like addicts. They can't stop and they will stop at nothing to feed their habit, they aren't going to volunteer for rehab. They will and are lying to keep up their addiction and the means to feeding their addiction, currency manipulation and borrowing. If they were going to change they would tell the truth, immediately move to U.S. production, cut spending to the bone, increase revenues to the degree possible....all the things regular people in massive debt default do to pay off their debt and recover their savings to keep from going BK.
When THAT happens we'll have blue sky. I'm not holding my breath.
Who benefits from the current scheme? Why don't we see banks offing their backlog of underwater housing? Do banksters produce anything? Why move production off shore? Do those moving companies to China/Mexico/wherever produce anything? Do they make regular wages for producing or do they suck off the carcass of real productive workers? So why move production to poor countries? Increased profits? Who benefits from increased profits by taking advantage of the poor (and their environment and natural resources) in 'developing' nations? Do we?
All they are doing is kicking this can down the road in hopes they can convince us all is well and we should start to spend again....relapsing addicts with no hope of recovery. Consumerism is debt addiction and should be done away with as a means of sustaining an economy. The addiction is useless spending, the tool is manipulation of currencies to keep the addiction going.
Apple load
Thank you again. I will only lighten the apple load til fall.
Article self-congratulating Switzerland for its health system
some very simple comparative analysis, but to get an idea of how health is run over here...
http://www.swissinfo.ch/eng/front/US_healthcare_re...
Re: S&P WHACK?
"Higher paying jobs will be coming back into the American theater as the recovery progresses and the $USD weakens"
This is what I mean.
How can wages be higher if they are paying with weakened $USD? That's an oxymoron. Higher wages should mean increased purchasing power or it's back to the same old thing again. Same for equities. Sure equities go higher but what are they priced in? Weakened $USD? Then they didn't really go up did they? As Kaimu points out, you can be a master trader and make a killing in the markets and still lose because they are priced in manipulated $USD! Same for wages. And then you pay TAXES on the earnings making you an even bigger loser! Manipulated currencies win everytime. Making 20% in equities with over 20% inflation is a losing game.
Real wages aren't going up anymore than gold or oil are going up, they are the same, they are simply priced in weakened $USD. IE: Inflation.
What makes higher wages and higher commodities in *reality* is real production and demand with an un-manipulated currency based on some rarity that can't simply be printed (like silver and gold), otherwise all we're doing is protecting ourselves from inflation while we stay static in purchasing power (at best after taxes)....treading water if you're lucky.
More Green shoots. Can't drop S&P with data like this
Aug. 9 (Bloomberg) -- The Obama administration’s cash-for- clunkers plan probably gave auto dealers a boost in July, while other retailers struggled to lure customers constrained by ongoing job losses, economists said before reports this week.
Total purchases climbed 0.7 percent, the most in six months, according to the median of 54 estimates in a Bloomberg News survey ahead of Commerce Department figures due Aug. 11. Excluding autos, retail sales probably rose just 0.1 percent.
Industry data showed sales of cars and light trucks rose to an 11.2 million annual unit pace in July, the highest since September, after the government offered credits of as much as $4,500 to trade in gas-guzzlers for more fuel-efficient vehicles.
The automakers’ return also probably contributed to a pickup in industrial production for July, economists forecast figures from the Fed may show on Aug. 14. Output climbed by 0.4 percent, according to the survey, the first gain since October.
Swiss governance
Les,
What do you think of the Swiss system of legislation by popular vote/Initiative? They are the only nation to have a national initiative system. I understand it works well.
Re: Swiss governance
In paraphrasing Churchill, Democracy is the worst form of governance, except for all the rest. The Swiss system is probably the best form of democracy around, but Switzerland is peculiar as well. I recall from my psych studies that the French speaking part of Switzerland contains the most neurotic people on the planet. The Swiss Germans aren't too far behind. Neuroticism being a certain learned behaviour to a given stimuli for want of the proper term. This implies a conservatism, which you don't have in the flamboyant home of Hollywood, California, which is why their popular initiatives have created such an economic shambles. Without giving too much thought to the question, I would suggest it is the conservative nature of Swiss people that enable a stability to this system of voting over any ideal that they may be better educated or wiser than their European neigbours.
Examples:
1. Scrapping private health insurance system for 1 universal state health care system - voted no.
2. Banning of 4wds and vehicles producing above a certain CO2 output that will force Lamborghinis and Porsche Cayenne's off the road - vote due 2010?
3. Second (or it might have been 3rd) generation foreign immigrants to be automatically entitled to Swiss passports - voted no.
4. In Geneva State, abolishing jury duty - voted yes.
5. Extension of bilateral accords on the free movement of people from Romania and Bulgaria in Switzerland? - voted yes (a no would have been slamming the door on the EU, not wise)
6. Elimination of smoking from restaurants and bars - almost complete at a national level.
7. Decriminalisation of cannabis - governments' are moving mountains to see that such an initiative is never put to the vote.
hmmm maybe Swiss people are more progressive than what I give them credit for?
Re: S&P WHACK?
"How can wages be higher if they are paying with weakened $USD? That's an oxymoron. Higher wages should mean increased purchasing power or it's back to the same old thing again."
As the $USD falls, American products become more competitive in the global market, which tends to create value-added jobs (wealth creation). If the $USD falls 5% but my wage increases 10%, the net wage gain is 5%.
"Same for equities. Sure equities go higher but what are they priced in? Weakened $USD?"
Sure beats sitting in cash, doesn't it? A quick glance at the SPY will reveal that recently. equities gains have been considerably greater than gold, my thesis supposes that gold doesn't generate wealth, a characteristic that equities have, and so equities offer a better ROI.
I've heard the same arguments against an improving economy since the beginning of March and I'm certainly glad I've been able to ignore at least some of it.
aside note on saving: True the US consumer has cut way back on discretionary spending, and J6P socked his stimulus into his savings account (for HB&B to leverage), but another piece of the puzzle you don't hear much about involves the household that now has more disposable income available due to the fact that he's no longer making an overpriced mortgage payment on an overpriced home.
Re: S&P WHACK? / CP's touch and go
CP said - I believe we are witnessing the early signs of recovery, market prices are the first indicators and too many indicators are now pointing up to ignore. Sure, we might experience a pullback here and there, but I see blue sky on a longer time horizon. To borrow a term from civil aviation, I would label this a touch and go. A rough one perhaps, but I'm not anticipating anywhere near new lows again because the resulting economic damage would be much too great.
I think you nailed what they are attempting to do. I believe you have described the "hoped-for" result, based on previous cases where they were able to drag spending from the future to smooth out lack of spending in the present.
But I think it truly is different this time around. We aren't dealing with a standard inventory correction recession, we're dealing with a multigenerational debt default combined with a real estate bubble bursting, and mix in massive unemployment AND reduced income. Throw in Peak Oil and you've got a real confluence of major issues.
Bill says "there are black swans circling this rally" and that tallies exactly with how I feel.
The history of the depression tells me, there were a series of blows that the economy received, one after the next, with many months between each one. Each time, the folks figured that THIS time things were really getting better, that NOW the worst was over. This went on for 3 years. What makes us think we're smarter this time around?
And that's why Les calls me an uber bear. Alas, as for informing my trading, this doesn't help. I haven't yet figured out a way to spot a black swan on a chart formation. So I just muddle along, trying not to risk too much on the long side.
It really almost blew up last fall. When the money markets started to break the buck, we were almost done. And things are much shakier now than they were last year about this time. For all the talk of green shoots, why would BOE be printing $50B more if things were so rosy? Why would the Fed be doing the same thing?
I think we will find out soon enough which way it will go. If it's back to BAU and happy days are here again, why I'm a happy man because a rising tide lifts all boats. But based on my reading of the depression, that's not how its likely to work out.
Re: Building?
Now is the contrarian time to build assuming you can afford to risk the capital.
http://www.buildnet.blogspot.com
Les
Thanks for the info, it was your FIG chart I was looking at yesterday. You may want to consider when looking at the MACD to give wait to the direction of the histogram rather than waiting for the crossover, but you probably already know that.
Great photos of Switzerland you posted along with Vad's Victoria Island shots.
Thanks again.
Re: S&P WHACK? / CP's touch and go
"And things are much shakier now than they were last year about this time."
How do you know this for sure, the difference now is that you have more knowledge of the mechanisms in play and a historical account. Other than this, your forward vision is no better(or worse) now than it was in early 2008. The tape has shown you a trend, I hope you've taken advantage.
"For all the talk of green shoots, why would BOE be printing $50B more if things were so rosy? Why would the Fed be doing the same thing?"
Because the crowbar was bent, lower asset prices beget additional mortgage default. Refer to the Yuan peg, which is the next crowbar under great duress. If the POG were to double, would the S&P quadruple?
comment on Sunday week in review
I am commenting here because I can do so quickly. I read Bill's Sunday week in review comments. I say this: it is fine to be an optimist, but there is little, or nothing, to be optimistic about. Here is what I see in the economy-stores are pretty much empty, people all around me are being laid off of work, homes are not selling, governments are selling bonds at breakneck pace passing the cost of today's programs to our children as opposed to taxing current users of the programs, private borrowing is or will be crowded out, and the huge cost associated with global change continues to be ignored (which is another momumental expense being handed to our kids). Obama, while trying to fix some of our problems, is making many of the same mistakes as Bush. We don't have people in office who are worried about the ramifications of actions 25, 50 and 100 years down the road. We have self serving people who pander and seek re election in 4 years. What does it mean? America's best days are behind it. With all of this, the market is up? I am shorting the market right here.
Re: S&P WHACK? / CP's touch and go
CP said - The tape has shown you a trend, I hope you've taken advantage.
I'm not sure what you mean by that?
I can easily see scenarios where POG doubles, and the S&P stays flat. If the buck really tanks, we will import a boatload of inflation. That will help some stocks, and hurt others. It might even be a wash for the overall market. But it will definitely crush consumer spending, since wages won't rise, mostly because of the 16% unemployment rate we now have.
So no, I don't think the S&P is guaranteed to beat POG given a dramatic USD fall.
Re: Building?
LN- I, of course, agree. I would add to your list the tidal wave of fee increases coming to a theater near you. How about school, permit, design/review, fire/police, parks, roads, and anything else local tax authorities can come up with.
Re: comment on Sunday week in review
fjd10595, did you read this or stop when I said I am by nature an optimist?
Most people will read this and say I was far too gloomy this weekend. For the featured stock WMT, I even said I'm long puts.
Anyway, tonight Reuters is reporting that BoE to warn that UK risks slump into deflation. I guess you can read it and smile. If UK can get caught in a debt deflation trap, why not the US?
http://www.reuters.com/article/usDollarRpt/idUSL96...
Re: Building?
Good point MarkW! We already have some very restrictive watershed protection and wetland mitigation costs which are designed to steer growth i.e.., building to less envionmentally sensitive areas. Neccessary as buildable land becomes more scarce and to reduce urban sprawl taking over food production land. We have seen lush dairy farms turned under for housing and dairy farmers going to desert factory feedlots. Have you seen the dairy 'farms' in CA? Sad looking creatures huddled into pens. Shudder.
Re: S&P WHACK?
Interesting CP. I am forced to disagree. What I find particularly interesting is that I wrote all of the above BEFORE I read Bills WIR today, where he pretty much says what I said word for word. I'm not patting myself on the back, but Bill has far more experience than I do and he must be a hell of a teacher, because I knew only bits and pieces of this picture before I discovered this blog several years ago.
THANK YOU Bill!
Re: S&P WHACK? / CP's touch and go
davefairtex - "If the buck really tanks, we will import a boatload of inflation."
Where is this inflation of which you speak coming from? The trend I speak of began Feb/E.
My belief is the inflation has already been imported over the last two decades (but delayed by a now failed HB&B lever) and it's been working it's way into the economy first, in the form of high home prices. The consumerism, and federal deficit bubbles were enabled by the Yuan/$USD peg, the housing bubble was courtesy HB&B.
We don't need more of the same (China's continued buying of Treasury paper), we need a lower dollar (with it should arrive wealth creating jobs) to compete on an even keel in the new global economy. The American consumerism economy of the last two decades was built upon a substandard foundation, one based upon increased debt obligation and rising home prices. The FED is forced to convert the debt my means of QE, a task that's been in the making as a result of the trade deficit and delayed until recently. The S&P could, theoretically, outperform gold, because the S&P represents a measure of wealth creation and gold does not.
I suspect the tables may be turning. Project into the future by pondering the concept of American exports to the world instead of the previous massive import trade deficit, a predominant factor over the past two decades.
Re: S&P WHACK?
Craig - Sorry, I thought Bill had been short the market since about Feb/E and long most of the second half of last year. It's been quite some time since I've heard anything about a glass half full.
SCO
CP- I did some chart comparisons this weekend, and for the short term, SCO tracks pretty well to WTIC. Looking for an entry point. It also looks clear till about 20 if it turns. Are you looking to get back in after enjoying your cheese burger this weekend?
Re: S&P WHACK?
"another piece of the puzzle you don't hear much about involves the household that now has more disposable income available due to the fact that he's no longer making an overpriced mortgage payment on an overpriced home."
That's true even for those of us who were not making overpriced house payments on overpriced homes to begin with.
Refinancing from 5.5% down to 4.875% last spring now allows my family to (a) pay down principal at a higher rate than before (ie, we have always strived to pay off our loans faster than necessary- now it's even easier), and/or (b) help the kids with college expenses at a time when they most need it. I would imagine we're not the only ones who took advantage of the low rates.
Re: Building?
LN- I get to see both ends of the diary farms here. From the 100 year old farms on rolling green hills on the coast to the dusty, cramped and hot farms in the C. valley. Guess which ones are growing and which are close to extinction? GL.
Re: S&P WHACK?
2nd- Did I miss a report from the reception? Sometimes one gets a really interesting cross section of location/age/occupation, etc. at these events.
Re: comment on Sunday week in review
Strong words Bill. The U.S. could well be headed for a similar fate.
Reuters article ---
"The recession is over, in the sense that you will probably now get three to four quarters of a decent bounce -- just as Japan did in the early 1990s," Wadhwani told the paper. "People think things will then return to normal -- but these bounces are driven by temporary factors."
"The second half of 2010 could be more difficult for the UK than 2009," he added. "There will be a big fiscal tightening, the VAT (value added tax) cut will have gone; and the world as a whole will be slowing at that point. You will have several things coming together which will dampen the economy."
Re: comment on Sunday week in review
I'm sorry bill, my comments came off as critical and I did not mean it to be that way. I was actually trying to agree with you. I was trying to say that I have little hope for our kids, and I think the markets will drop from here. I have the greatest respect for you. Your writings are clear and insightful. Thank you.
Frank
Re: SCO
Mark - SCO is still on my radar, I'm going to try getting in a little late this time around as opposed to too early. The chihuahua enjoyed his cheeseburger, he even allowed me a couple bites so I guess we shared!
I'm also looking at refiners again, but not sure which way their likely to go, I'm attracted by their bearish aura.
Re: S&P WHACK?
Mark- We sat at a table with other neighbors, which worked out well, as we don't get the chance to chat at length that often.
One couple is retired and about to celebrate their 60th anniversary. They bought their home brand new in the sixties, which is when our cul-de-sac was originally subdivided.
Another couple is recently retired, although the wife still works part-time.
Rounding out the table was the long-time housekeeper for the family hosting the reception, along with her husband and daughter.
Almost all of the homes on our block (the street is a one-block cul-de-sac) belong to the original owners, or have changed hands twice at most. It's a very close-knit neighborhood.
I learned last night that 40 years ago there were 42 kids on the block. Now it's mainly retirees + a few older working couples. We have one young family renting, and the Mom is expecting. Apart from that, my seven-year-old is the youngest resident.
The reception took place in Cupertino, at a huge Chinese restaurant where 3 or 4 receptions were going simultaneously (8/8 is a popular date for weddings in the Asian culture). Are we in the midst of a recession? If so, it was forgotten for at least one night. Plenty of food and festivities. We had a difficult time parking, even though the restaurant was located in a mall with a three-story parking garage.
The Bay Area is a relatively unique place. I lived here twice in the sixties, and moved back permanently in 1990. I would say the population possesses above-average levels of resilience and resourcefulness. Maybe it's the sun, but it would be hard to find someone unemployed sitting around staring at the four walls in his apartment. It's easier to call someone to talk ideas over with. I can't say for sure, but I think it's also easier to find funding for ideas here. Generosity comes to mind when one walks down the laid-back streets of Stanford or Palo Alto. Not so much when walking down the gritty streets of Cambridge or Manhattan. The recession hits home here, of course. But the weather, the surroundings and the people around you lessen its impact. Which leads to more optimism. Which then leads one out of the valley a little sooner.
Re: How important is timing?
Bob- I wouldn't call it mental anguish. It's fascination. I surf these blogs to 'study' human nature under real stress in real time.
Believe me, there are posters on all of them with opposing viewpoints who do not shy away from calling people out or rubbing it in at the best/worst possible times. I don't think anyone has the persuasive firepower to convince traders who want to be deluded that their 'guru' may be wrong. It's usually the reality of a sinking portfolio that does it. It's the rare trader who seeks to understand himself with a little introspection.
Re: Building?
Yes, I am sadly aware of the trend toward factory farms and feedlots. It's enough to make a vegetarian out of many a committed carnivore. The scarcity of land is making WA farmers sell out. In my home state of NC the trend toward intensive dairy farming is reversing on smaller farms where the good sense of herd wellbeing became obvious. These enterprising farms are going organic for lower operating costs and higher prices for their products.
It's hard to fight headlines like these/ Nikkei up 1.6%
"Japan's current account surplus rose 144.4% from a year earlier."
" Japanese core machinery orders rose 9.7% in June from the previous month."
"Nikkei index surpassing the 10,500 line for the first time in 10 months, as investors cheered reinforced recovery hopes."
http://www.nni.nikkei.co.jp/e/fr/freetop.aspx
Pick your battles/ Dead men walking
If you lose 19 out of 20 encounters on the battlefield, maybe you should rethink your strategy.
That's not a quote by Sun Tzu. I don't think Sun Tzu would bother including something like that. He wasn't interested in addressing an audience of dead men walking.
Hang Seng barreling out of the gate>> up 2.2% to 20819
http://www.hsi.com.hk/HSI-Net/
Dionne Warwick - Walk on By (Pebble Mill 1984)
http://www.youtube.com/watch?v=07cS50j46T0
This Guy's in Love
http://www.youtube.com/watch?v=4WZjqdPVaI0
Re: Dionne Warwick - Walk on By (Pebble Mill 1984)
All right CP,
Yep, this is on my ipod also. Someone, please help me....
http://tinyurl.com/lb2ljj
Most of All
http://www.youtube.com/watch?v=XCN4OmUddCo
Re: This Guy's in Love
Forget my previous request for help. I obviously won't find it here!!
I Just Can't Help Believing
http://www.youtube.com/watch?v=ApBJMrYcTmM
Don't Sleep in the Subway
http://www.youtube.com/watch?v=NRtjDSuyvMA
Re: comment on Sunday week in review
I'm just tired. I sit down and focus for hours and then stop without re-reading. People can be critical if they want. I write to spur discussion, pro or con.
Why Music?
It can change your outlook on a dime (mine, anyway). It may be the greatest psychological tool ever invented/discovered.
$USD
US$ Chart from Jesse's Cafe http://tinyurl.com/lnbak8
Next week should give us a good idea if the $ maintains its bounce off the 61.8% retracement, or heads lower into the abyss.
Re: Dionne Warwick - Walk on By (Pebble Mill 1984)
Mark - With music like that on your ipod you need no help my friend, you're already on the right track.
And I was worried about stealing signals in the NFL
Interesting article. The playing field is as uneven as ever.
http://tinyurl.com/nwfmbm
Re: comment on Sunday week in review
Bill,
W.I.R.....not too shabby:)
Re: Why Music?
Totally agree 2nd, it's what gets me through some days in the office.
Re: Why Music?
"It can change your outlook on a dime (mine, anyway). It may be the greatest psychological tool ever invented/discovered."
Yep. Hence the rather sizable collection here of all types. Pick a favorite and presto-chango!
My best,
Cybil :>)
Re: Dionne Warwick - Walk on By (Pebble Mill 1984)
Mark,
Oh my god take that off your Ipod now! That is so WHITEBREAD. I thought I was all over the map musically. You might be the champ. After that we need to get funked up. http://www.youtube.com/watch?v=pq1w0syylZI&feature...
Re: comment on Sunday week in review
Bill's just one man. My Dad's just one man. It's difficult enough to teach a 'static' subject- how much more so navigating the capital markets (or life) in real time. I left home at 18 to find myself, and found myself in a few harrowing situations. What I learned from my Dad, as imperfect as the process was, allowed me to eventually return home safely. And I believe the lessons Bill shares, as imperfect as the process is, will allow you to eventually trade in confidence. There are no supermen. Only concepts that supercede the ordinary. And it's the concepts that are bequeathed to the next generation.
Student Unemployment
I read this on Saturday and my blood absolutely boiled! I am frapping pissed-off! I am going to sell some of my Canadian Bank shares and hire a student to do some odd-jobs for the last month of the summer.
http://www.cbc.ca/canada/story/2009/08/07/students...
Re: Student Unemployment
Mac- I don't quite get the outrage. The economy's bad and students are having a hard time finding jobs? Or is it that financially-strapped schools are continuing to raise tuition and fees ?
Re: Student Unemployment
It's the future, 2nd; all our nation's young people. Big Business and Governments have screwed up and don't care.
Re: And I was worried about stealing signals in the NFL
It doesn't surprise me. There's only so much we can do about greed and corruption. I would say what's most important is not allowing the devil to steal our souls.
Re: And I was worried about stealing signals in the NFL
Not to say I'm speaking from a position of authority. I've done more than a few things I'm not proud of. Which makes it easier to understand and forgive some of the things I see around me. (No, shark, not interested in elaborating on the things I'm not proud of.)
Re: Student Unemployment
Mac- I've met many people in business and government who (seem to) care. Of course, I also thought Obama was sincere in his Inauguration speech (not ready to write him off yet). I also know many of these same people can be cruel in personal relationships with family or significant others. In the context of human nature, it all 'makes sense,' although to an outsider the human race must seem an enigma.
Re: Student Unemployment/ Easy to be Hard
http://www.youtube.com/watch?v=plC9Ijy7Ak0
"Especially people who care about strangers, who care about evil and social injustice..."
Video of the day
http://www.youtube.com/watch?v=sa49hli94Vs&feature...
Re: Dionne Warwick - Walk on By (Pebble Mill 1984)
Mark - Here's a little help:
http://www.youtube.com/watch?v=AjvHB76wWxo
Re: Dionne Warwick - Walk on By (Pebble Mill 1984)
NICE I was doing the funky chicken Chicky.
Bob
Bill's Construction Friend
"Do you recall my construction worker friend who put all his eggs into a single basket, Citigroup (C) at $1.00 in March, telling me he didn’t believe the industry or the government or the Fed would let them die? He figured somebody would save Citi..."
Nice move. At least one guy on main st. figured correctly that the capital markets are a casino and betting on the house was the right move.
Best example of buy and hold I've heard for a while :)
Tell us that he's cashed out now Bill - he still can't be holding can he?
Re: S&P WHACK? / CP's touch and go
CP said - Where is this inflation of which you speak coming from?
Hmm, if one of those Austrians were here they'd chide me for calling "a massive increase in the cost of living" inflation.
When the buck tanks, everything priced in dollars will rise. That includes all raw materials, and all importable/exportable goods, which these days means clothing, shoes, furniture, and many cars - all the stuff people buy over the short and medium term. Essentially, the contents of your local Wal-Mart. It will all become more expensive.
Massages, haircuts, medical procedures - those things won't rise. They can't be exported.
Certainly it will help restart manufacturing here. But in the near term, everything will get dramatically more expensive, overnight. Your number of dollars will remain the same, but your plasma TV will double in price. So will your TV dinner.
That will crash consumer spending, and retail stocks. Sales (in terms of units sold) will drop by a huge amount. I'm guessing XLY will be a good short at that point. That won't help the S&P.
Also, because "exportable" commodities will be priced globally, they'll rise as well. US food that could be shipped overseas - will be, for export cash. Might we have starving people here in the most productive farming nation? We might, since food too will double in price. That will help the S&P.
My shorthand for this is "importing inflation". Some sectors benefit, some sectors will suffer. But any sector that depends on consumption will get hit hard.
Hence, some things in the S&P rise, others fall - maybe it's a wash. Perhaps smarter to be in the sectors that rise?
The Royal Scam
I love a good conspiracy. This one reads like a blockbuster movie.
I have thought for a while that "the Argentina scenario" was an entirely plausible outcome to our whole situation. A bank closure, a market holiday, currency controls followed by a currency devaluation. This particular game plan was put in play by many countries during the great depression.
The author put it quite colorfully:
"Once every exit was chained tight, they firebombed the casino, trapping everyone inside. Even if you had thousands in stocks, bonds, and savings accounts, with the market frozen and the monthly bank withdrawal limit set at $300/mo, the little people could not pay rent or even eat, becoming “Cartoneros” garbage-picking architects and engineers, wandering the streets with their children at midnight as the nation devolved into a chaos that did not topple the ruling class."
I wonder why Kaimu has stock in aussie companies, and allocated gold bullion stored overseas, and lives off the grid? Just because he's a crank?
The one thing I didn't consider was - it was deliberate. The Bush administration was "crazy like a fox" rather than being "asleep at the switch." That would be remarkable.
Yet I must ask one question: as a non-billionaire, does it matter to me if it is deliberate or accidental? How do my actions change?
Also - if the Argentine scenario plays out, what's the trade? Foreign currency and gold bullion? And once things stabilize, exchange it for farmland on the Big Island?
Re: The Royal Scam
http://www.youtube.com/watch?v=EXd66gP53fk&feature...
I'm following the Crash Course Video on money, debt and the economic future of the US that was embedded in The Royal Scam page.
Up to Chapter 13 and I'm scared s&%çless. We are going to witness interesting times.
US Government Immorality Will Lead to Bankruptcy
http://www.youtube.com/watch?v=OS2fI2p9iVs
This guy (The now retired Comptroller General of the United States) was screaming "murder" in 2007. Imagine how much worse it is 2 years later.
Re: The Royal Scam
Ahhhhh. Les. NOW you see why I'm an "uber bear." Chris Martenson is a very sharp cookie, and he's tied it together like nobody I've ever seen do.
I watched the crash course April of 2008. I recommend it to everyone.
Re: The Royal Scam
ALOHA !!
"The greatest shortcoming of the human race is our inability to understand the exponential function." -Dr. Albert Bartlett
How very true that is ... This is a major factor of a "monetary crisis" that very few understand except those who have experienced one.
Define crisis? That is so subjective.
If you are diagnosed with cancer most people term that as a "crisis"! Yet when it comes to the money with which they exchange their products or services not one in a million ever gives the word "crisis" a second thought today, even though all around us banks are collapsing every week and the the US TREASURY is spending exponentially more than ever, while "real" tax revenues collapse into the abyss.
Would you consider the loss of 96% of your vision a "crisis"? Most people would say YES! Would you consider the loss of 96% of your homes value a "crisis"? Once again most people would say YES. Yet nobody considers the fact that a US Dollar purchases 96% less than it did in 1913 a "crisis". The average American will only go into "panic mode" when he realizes that the money in his wallet has achieved 100% loss, not 97%, not 98%, not 99%, but 100%! The last 4% is what Dr. Bartlett relates is the part that most of the human race fails to understand and that is "exponential growth".
Thanks Les for the link ...
Re: S&P WHACK?
CP, re: "Craig - Sorry, I thought Bill had been short the market since about Feb/E and long most of the second half of last year. It's been quite some time since I've heard anything about a glass half full."
Except for goldminers, we are net short the market, but got that way recently after we started closing our bullish positions. We are also way under-invested (i.e., over-weighted cash) right now because there are things going on we don't understand or feel comfortable with. If the markets take a decided turn south, we will be aggressive on the short side for a number of fundamental reasons that we believe HB&B are ignoring due to their need to keep this ship afloat.
Re: S&P WHACK? / CP's touch and go
davefairtex - "When the buck tanks, everything priced in dollars will rise. That includes all raw materials, and all importable/exportable goods, which these days means clothing, shoes, furniture, and many cars - all the stuff people buy over the short and medium term. Essentially, the contents of your local Wal-Mart. It will all become more expensive."
Yes, this is precisely what I've been saying, the inflation has already been imported though, it's just been packaged into the form of a time bomb by HB&B.
Another factor which you haven't mentioned which will help to drive up WMT store shelf prices of foreign goods, is supply destruction (currently in a theater near you). Demand destruction may help to keep commodities prices from escalating dramatically.
I see no way to avoid this wave crashing on the shores of America, these will be interesting times (I've already purchased my large screen LCD television (hecho en Mexico) to monitor the situation), I expect a mad rush to US employment in manufacturing after the wave crashes, it may take a short while but I think it could happen this way and the disturbance response could yield a brief equities sell off but there's a possibility the market has already accounted for the unfolding drama.
Re: S&P WHACK?
Yes Bill, I didn't mean to use the terms long and short. In retrospect, I meant to use bullish and bearish.
HIGHER DEBT PLEASE !!!
ALOHA !!
Last Friday Geithner wants more DEBT! How did I miss this? Heck when the US PUBLIC DEBT goes up $88BIL USD in one day why have a debt ceiling? I think this "con job" the US Congress calls a "debt ceiling" needs to be the centerpiece of their upcoming Beijing Improv stand-up act!
Geithner asks Congress for higher U.S. debt limit
Fri Aug 7, 2009 9:43pm EDT
By David Lawder
WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner formally requested that Congress raise the $12.1 trillion statutory debt limit on Friday, saying that it could be breached as early as mid-October.
"It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations," Geithner said in a letter to Senate Majority Leader Harry Reid that was obtained by Reuters.
A Treasury spokeswoman declined to comment on the letter.
Treasury officials earlier this week said that the debt limit, last raised in February when the $787 billion economic stimulus legislation was passed, would be hit sometime in the October-December quarter. Geithner's letter said the breach could be two weeks into that period, just as the 2010 fiscal year is getting underway.
The latest request comes as the Treasury is ramping up borrowing to unprecedented levels to fund stimulus and financial bailout programs and cope with a deep recession that has devastated tax revenues. MORE ...
Oh hey, look at that they're just now acknowledging that tax revenues are devastated!
HUBRIS ... the ancient Greeks felt it was such a horrible human trait that they outlawed it, made it a crime. Here in America it is a prerequisite to enter Harvard or run for Congress and without a massive dose you cannot even work the mail room at Goldman Sachs!
If I did not know better I would swear the elite wanted to destroy America! It seems our government is doing everything in their power to wipe out the US Middle Class!
HIGHER DEBT PLEASE !!!
Re: How important is timing?
lowell,
I gave up on government stats and those from Wall St. some time ago. You can get a good idea of how gov. stats are skewed by reading the Census Bureau and Bureau of Labor Statistics websites. Also think of human nature — how many will jeopardize their jobs by contradicting the boss.
Who does CNBC interview most? CEOs. Could these guys possibly have a bias or conflict of interest in their outlook? Duh! Same goes for MSM reporting.
My own preference is what economists scoff at — anecdotal evidence — personal observation and hearing what others are experiencing. When my clients began sending manufacturing jobs off shore about 1985, I knew we were in for trouble. It took a lot longer to affect us and I was surprised by the lack of union protest, but here we are.
The tax increases which are just starting we easily anticipated. Look at Europe and Great Britain, they've been tax poor for several generations. In Britain it is called the DOLE ("free" money). Call it "stimulus", "Cash for Clunkers", "War on Poverty", or any other name — it is a way to make people more government dependent.
To see the Big Picture, listen less, and observe more. Obama is a good place to start. Never mind what he says, watch closely what he does.
Financial Spread Betting
Does anybody on the blog use Spread Betting , I was thinking maybe I could use it to help with risk control.Any comments about it from someone that uses it would be appreciated,thanks.
It's already been remarked, but worth mentioning again
From JL:
"I want to note something very important in the 2-year chart and it has to do with the volume pattern. For the first time, the volume is increasing on the up days. If you looked previously, the volume has always risen during the selloffs and declined during the rallies."
http://4.bp.blogspot.com/_NOVV_qpBVl4/Sn-W_Fo-HxI/...
HB&B are getting what they want. Sucking the punters back in, who are choosing to go long.
JMTCW
Re: S&P WHACK? / CP's touch and go
CP - I am happy to see we are in agreement! I wasn't sure what you meant by "already imported inflation" - I suppose I still don't, but when you start talking about waves crashing on the shores of the US, and manufacturing returning (assuming any spare capital exists for investment) then I'm definitely on board.
However, I don't get the sense that you feel it will be a big dislocating event. I do. My guess is, our standard of living will be cut in half by this event. It is probably best for the country in the long run, as we will start making more of what we use again, but as they say, people eat in the short run, not the long run.
In the past, what were minor burps in consumer demand resulted in big equity market swings. What I see coming up is NOT a minor burp - it's a massive reduction in consumption, and my guess is, that will result in an equally massive equity market move once the market figures out what is happening.
I think NONE of this is "priced into the market" right now. I believe what's priced into the market now is a return to business as usual, with a return to "mild growth" in perhaps the next six months, complete with a partial rebound in real estate prices - all in real dollars - basically a rerun of 1987 crash & recovery.
What will actually happen is, I believe, something quite different. The equity market does not like surprises, and my best guess is, it will react quite negatively when it figures it all out - just like in the last depression.
But as I said before, I feel we don't have long to wait to see how it ends up.
Re: S&P WHACK?
CP,
"Higher paying jobs will be coming back into the American theater as the recovery progresses and the $USD weakens,"
I expect this to happen, but believe it will take quite a long time. It took about 2 decades to dispose of US manufacturing and will take some time to train a new workforce. Even then I don't expect the pay will equal "the good old days", but it's better than most service jobs and most important will give us something to export and adjust the massive trade imbalances we've allowed to be created.
3 Wrong Notes
Having read the Postscript by Fullcircle asset management,who write a weekly summary now.
The 3 wrong notes in the markets they refer to are:
1/ The Baltic Dry index breaking its uptrend.
2/ Bank of England announcing expansion of QE program.(What do they know that we dont?).
3/ The resilience of Gilts.(“wrong note” because, if inflation is the risk that everyone says it is and if the bear market is over, they should fall significantly.)
Also they sold their Chinese stockmarket position for now,and sold their base metal ETF,obviously wary short term.
http://tinyurl.com/le7z8p
(To obtain weekly summary e-mail address required by them .)
Re: S&P WHACK?
Grym - I'm in complete agreement with you. The adjustment will happen, and it will take a serious amount of time. Those factories we lost were not built in a day - or a week.
Even if we don't export anything, the reduction in our imports should help a great deal. And as you say, jobs actually making things will pay better than the jobs greeting people at Wal-Mart.
Re: S&P WHACK?
Wouldn't it be a hoot if this week the FED announces the end of QE? Ponder that one for a moment, my head is hurting....
Chat
since 8:31am
http://caracommunity.com/content/caras-commentary-...
Re: The Royal Scam
"Would you consider the loss of 96% of your vision a "crisis"? Most people would say YES! Would you consider the loss of 96% of your homes value a "crisis"? Once again most people would say YES. Yet nobody considers the fact that a US Dollar purchases 96% less than it did in 1913 a "crisis"."
Kaimu,
I believe it has a lot to do with "boiled frog effect". Should this USD value drop occur in a year or two, citizenry would have screamed bloody murder. Being stretched over generations, drop goes largely unnoticed or rendered a normal course of events... until frog boils of course.