Cara's Commentary & Community Chat, Saturday, Oct. 31, 2009

Showdown in Chicago

Unions helped organize the protest. It's good to see them getting back to their founding purpose - organizing people who have been marginalized to fight against entrenched power.

Dick Durbin, the senior senator from Illinois (ironically, one of Obama's mentors) is one of the few fighting for reform in the Senate. He's swimming upstream and virtually alone.

And last night on Bill Moyers, James K. Galbraith.

Bill Moyers Transcript

Among other things, Galbraith calls for the restoration of Glass-Steagall. That this hasn't happened is a disgrace.

Yesterday afternoon gold moved up nicely despite equities crashing and the USD holding relatively steady. Thus, gold moved independently and the fact that it happened in the NYCOMEX snake pit is even more promising. This is exactly what is needed for gold to initiate its next upward leg. Over the next few weeks, we might just see the USD and equities fall together. Such a combination will provide major fuel for precious metals. Gold shares performed slightly better than other equities yesterday but the metals should lead them out of the extremely long dark tunnel over the coming days.

I just emailed my friend's + 33 twitter followers + posted on my blog + Peter Schiff + Mish Shedlock + Slopeofhope + Zerohedge + CPT.

I hope the community also spreads the word on the Matt T Goldman Sachs article.

http://bit.ly/PLv3M

Here's an Op-Ed in today's Boston Globe that supports Bill's long-standing call to reinvent the system.

http://tinyurl.com/y9nztqq

t11- Beautiful! I think Neal Gabler's got it.

We have all read John Perkins' Confessions of an Economic Hit Man.

A collective antisocial personality (lack of remorse, indifference to pain, and limitless greed) is exactly what is manifested by HB&B in the coordinated transfer of wealth that has occurred/continues to occur in the American financial system.

Those of us who went to business school can probably recall classmates with those valuable attributes.

Hit men and sociopaths, regardless of the weapon(s) they choose, are hostile con men at heart. They're quite good at it because they practice every day, not least toward themselves- it takes a great deal of self-hatred and self-delusion to become 'wholly devoid of conscience.'

On the crime syndicate - what we call "democracy" in reality depends on economy diversification. If economy is well diversified then "democratic" government institutions operate as an arbitrage mechanism between different economic powers and things are more or less in balance. When one specific industry (financials in the case of US) takes clear precedence over others, this arbitrage mechanism breaks down and you get full regulatory capture and other nasty things. Look at other countries with even less balanced economies - Middle East, Russia etc. Not a trace of an arbitrage (or "democracy" for that matter).

Damn how I screwed up my first year of investing. Shoulda, coulda, wished I been long PM's in March and handcuffed myself...

You don't need to do that, man. Next time you see a long-term setup, take it and then get yourself arrested. That way, you get three squares and an hour of exercise each day while you're waiting. You can while away the time studying Graifer and Gann.

Can't help you.

vb- Remember March through May, when we were relatively confident opening longs, only to sell quickly into strong spikes? Then June through September, when the market continued to climb a wall of worry, and at some point we knew it would end badly for bears?

Try meditating on the mirror image, as a reversal in psychology takes shape and we (hopefully) see the reverse scenario. Then try to position yourself ahead of the crowd.

Wanted to get this chart up today. I posted this about a week ago. Something to keep an eye on. I find it interesting.

3.3 yr view: http://tinyurl.com/y898nvx
3 mo close up view http://tinyurl.com/ya4m2dg

As I mentioned previously, I was going to do a least squares sine-cosine curve fit to $GOLD. I did a two frequency fit. The algorithm I use finds the best frequency fit as well as the best amplitude and phase fit. First, I took a 10 week moving average from Nov 07 to the present. That can be seen on the following chart:

ALOHA !!

Having attended the Hilo Tea Party, which I attributed not to Obama anger or Bush anger, but to pure "taxation without representation" I have to disagree with Taibbi's analysis.

First number2 you should have an "X rating" for Taibbi's choice of describing his contempt for females who he disagrees with, because if those comments were posted here Bill would have to ban him. He makes shark look like a toddler! I worked in prisons for ten years and I could swear he sounds like an ex-inmate! Is he out on good behavior? HA!!

Then he has some false assumptions that I am not sure where he got. One is that he claims people who make $30,000USD per year or less income pay no taxes. The brackets for taxable income start at $16,700, so I am not sure what that is about. Even if you make $600USD every employer is required to withhold income tax. You may get 100% of your withholding back at the end of the year, but you still have to go an entire year and wait and file a 1040A to get those withheld funds back. Obviously Taibbi knows nothing about taxation in America. That is embarrassing for a supposed world class journalist to make such ignorant comments.

Then he talks about how these Tea Parties are for GOP right wing ex-Reaganites to vent their anger at Obama DEM voters for winning majority power in DC. Really at the Tea Party I attended there was not one sign that mentioned Obama or Reagan or Pelosi or Bush. Most of the signs had cute slogans like PROUD SHAREHOLDER OF GM. There was no Nazi or Hitler stuff. There wasn't even any mention of healthcare issues at all. My sign was all about the US FED and DC ... Just good old basic American political corruption issues! We had no TV coverage in Hilo at all, only Honolulu got TV coverage. What Taibbi misses is that many of these protest took place in small towns around America, not just Hollywood and LA.

Consider this ... Maybe, just maybe, a lot of the so called "teabaggers" after seeing Obama's performance in office for three months(Tea Party was held on tax day April 15th)realized he was "business-as-usual" and that there was NO CHANGE. Do you think? I knew he was business-as-usual before the last vote was cast! I personally did not care who was in office as I was just happy to see Americans in the streets protesting anything remotely anti-government.

As far as Taibbi's claim that "teabaggers" have never even read a US Treasury financial report ... Hummmmmm?? WOW ... if only he really knew who attended these protests across the country. From where I stood I was right next to a CPA and an ex-HB&B broker and they were standing right next to the guy who publishes a weekly article on US TREASURY DAILY STATEMENTS. I doubt if Taibbi has ever even seen a US TREASURY DAILY STATEMENT. He probably reads the "canned" CBO Obama version. I guess if Taibbi looked past the hookers in Hollywood and LA and his own personal anger over Obama's failed leadership he might actually find there is some substance at these Tea Party protests.

My only other question to those who have so much scorn and hatred for the Tea Party is ... Have you ever been to one? Then again have you ever gotten off your sofa during American Idol long enough to protest anything in your life? Have you been to the streets at all?

Perhaps it is not the Tea Party you hate so much as your own self for voting into power yet another Goldman Sachs hooker, just like the same Goldman Sachs hooker who sat in the Oval Office prior to Obama who gave away $700BIL to the same people Obama appoints as US Tres Sec and the SEC. What can you believe in now?

Re: RSI ETF Scans newSubmitted by ez_money (39 comments) on Sat, 10/31/2009 - 15:06 #51252 (in reply to #51236)
RSI cannot be used in a vacuum.

>>If you note my post, I look at a number of technical indicators?

Don't you think that HB&B realizes that a lot of traders use RSI and therefore can set it up against them (us)?

>>Yep, that universe includes about all technical indicators. One has to use position size, stops, etc as well.

If you take out thursdays large reversal, the RSI's for the bears would not be in the 70 range.>>

If the dog were faster, he'd caught the rabbit. One cannot change the data to fit one's beliefs.

Take a look at the weekly and yearly, for this correction, that is where you need to be focussed.
>>

Depends on the time frames one wishes to trade in. I see many trades posted on this board I wouldn't even think of touching due to the very ST time frame (minutes/hours/intraday). It'd be interesting to see stuff run in a triple RSI scan for weeks/months/years but I would guess the turning points would be missed by a substantial time period and amount.

GL

Take a look at the 12-month USD chart:

http://quotes.ino.com/chart/?s=NYBOT_DX&v=d12

Notice that $USD rose slightly above the 50-day MA on Friday, and it has not stayed above the 50-day MA for any extended period of time since mid-March. As we also know, if one went fully long when $USD collapsed below its 50-day MA in early March, one would have done VERY well up until now. Similarly, if one stayed short between mid-January and early March, when $USD was above its 50-day MA, one would have also done VERY well. So, a simple trading strategy might be to go short now and stay short as long as $USD is above its 50-day MA. I closed my DGP position on Friday and also added some shorts (FAZ and short FCX), which tilted my portfolio to the short side. I am thinking of keeping some "core shorts" (FCX short + SRS) as long as $USD stays above its 50-day MA and in addition to increase my short exposure on up days and cover on down days.

Keeping a fixed position in FAZ for as long as $USD stays above its 50-day MA is not necessarily the best strategy, since FAZ loses much more during occasional sharp rallies in XLF than it gains when XLF retraces back such a rally. Therefore, I am planning to scale in and out of FAZ. I purchased 500 shares on Friday at $22.34, and I have just placed sell limit orders for 100 shares at $23.50, $24, $24.50, $25, and $25.50. If any one of those orders gets hit, then I'll replace it with a buy limit order $1 lower. SRS also suffers from sharp rallies in IYR (but not as much as FAZ), and so I placed a sell limit order at $11 for the 300 shares of SRS I picked up on Friday at $10.27.

Well said Kaimu . I have only attended one Tea Party, here on Long Island.There was no Nazi stuff,it was about the crippling deficit spending,the taking away our freedom of choice on heath care . Bob

Bill,

I obviously don't post frequently but I read this site everyday. I will deeply miss the CTA Trader Notes. Nowhere else on the web have I found concise, clear, timely information to help me make trading decisions. It's regrettable that a few spoil this valuable public resource for everyone else.

David.4141

(not answering for Bill)

The 89 DMA (approximately one full quarter of price activity) is tracked and respected by institutional investors/traders along with the 50/200. I’ll use the direction of price in relation to the 89 DMA for confirmation of a trend when position trading. For example, I might enter on a 10/25 EMA cross above the 89 DMA and exit on the first close of price below it. Continue to monitor price and set an alert for a 10/25 cross below the 89 DMA for a short sell.

89 is also a Fibonacci number which could potentially elevate its stature in some circles on Halloween. I jest.

http://stockcharts.com/h-sc/ui?s=IWM&p=D&yr=0&mn=4...

Aucourant, excellent work!

Re overlaying the charts on Stockcharts, there is no easy way to do it. Although I often use the PaintNet graphics editor to overlay charts from different sources. It is a layer based system so you can just put each chart into a different layer and then adjust the layer transparency properties so you see all the layers at once. The only problem is you need to stretch each layer to get the scalings to line up. It would help if I had some reference points on the curve fit charts, ie X-Y start and end points. In any case I have attached a quick sample image of the overlays using this method.

The other way would be to import the data for Gold closing prices from say Yahoo and put them into excel, along with the curve fitting data. Then generate the graph from within Excel with all the data in one place.

Let me know if you want to explore the PaintNet option, its quite handy and I can give you some pointers, you've got my email.

Oh come on: "...crippling deficit spending". We have had such spending for years and no protests. "...taking away our freedom of choice on heath(sp)care". We have had other freedoms erased for years, notably since the so called "War on Terror". These protests are all politically inspired and not too subtle at that.

Hmm, my general sense is the Tea Parties were not originally politically inspired, they really were grass roots unhappiness, but early on they were hijacked by the Fox News Crowd who wanted a vehicle to protest a particularly popular President. But that's all just stuff seen from afar.

I also realize it is difficult to make accurate statements about the broad swath of the people involved unless you have been to a significant number of these events in different areas. Since I didn't go, I have to defer to Kaimu's experience there - but I also realize his experience is only valid for that one group.

http://www2.debka.com/headline.php?hid=6350

Is anyone familiar with this "Debka" site's track record? (This is saying we are opening up our strategic petroleum reserves for Israeli or US war with Iran).

ALOHA !!

Look number2son, its about "representation" PERIOD!

I mention a CPA and ex-HB&B, but during that day I met a couple realtors, a few Vietnam vets, some kids in high school, many retired people, a couple guys from PUNA-KOA motorcycle gang, one tourist from Mt. Shasta, California, a school teacher, two tour bus drivers, but guess what? I met no bankers and no politicians and no union people or government workers. I also met no professional wrestlers, no inmates, no Home Depot workers, no blind people, no attorneys, no dance instructors, no crack addicts, no airline pilots, no software engineers, no housewives from new Jersey ... on and on and so no I did not meet a lot of people only the 300 or so who showed up. We felt like we stood up and did something, even if nobody heard us. GET UP, STAND UP ... STAND UP FOR YA RIGHTS! Nothing can be accomplished from a sofa!

I knew nobody among my friends and relatives and blog buddies, which is a sizable group both REPS and DEMS, bi-partisan, that was in favor of handing $700BIL to banks just because Bush and Hank Paulson says its an emergency! I even wrote to my Congressman and said that if they voted for the bailout that I would personally fly to Honolulu and help them pack all their crap into a U-HAUL! Congress voted for the bailout! Start packing!!

Americans are NOT being "represented" you yourself admit that Obama has been a disappointment and why? Because he did not keep his promises and he has not represented your interests, which are pretty much my interests, but he has bent over backwards to make sure the US FED and its member banks are thriving. You now know what kind of people attend a TEA PARTY. Its the same as you. Those who feel they have no representation in Washington. Its the same types who attended the original Boston Tea Party that these modern Tea Parties are modeled after. WE THE PEOPLE had no representation before the War Of Independence when we were ruled by the British and we have none today. A very sad epitaph for those who have laid down their lives over the past 235 years for our Freedom and Liberty and the ideas of the US Constitution and the Declaration of Independence and the Bill Of Rights.

My attendance at the first modern era TEA PARTY was to protest the lack of representation I have experienced at all governmental levels. The US government demands that I must pay my taxes or go to jail yet in return I get no voice in government as my representatives are owned by those with more elite moneyed means than I. My representatives hardly ever reply to my letters and e-mails. They do not want to.

As I read tonight I see that a Democrat from North Carolina, Mel Watt, where Bank America(a US FED member bank) is headquartered has gutted the AUDIT THE FED BILL of Ron Paul's.

"The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee, and communications between the board, the reserve banks, and staff, Paul said today.

Next time get in the streets and don't listen to those who would put you down or tell you its not cool. Don't wait for people like Oprah and Taibbi and Garrafallo to tell you what to do. To dictate your reality and your beliefs. Be your own man ... Think for yourself ... Do right ... Use ya rights ... GET UP, STAND UP! That's what's cool about America we have our rights, but only as long as we use them. Use 'em or lose 'em!

Check out what's going down in Mexico, where people are protesting because of high costs of corn and lost jobs due to government intervention. These people are taking to the streets to save their jobs and eat. What are you doing? Check out those photos of protesters carrying signs about their Constitution and how it is being abused and being violated. Those are Mexicans in Mexico City not the Home of the Free and the Brave in Washington DC. I doubt those Mexicans in the photos are being ridiculed and scorned by their fellow citizens for being some sort of right wing conspirators. Anything that does not toe the elitist party lines in America is labeled as "racist", "anti-environment" or "political", especially actions that are grassroots and not "sanctioned" by the elitists. What are Americans doing about their lost jobs? So far as I can see just sitting home collecting unemployment checks and watching Orange County Housewives! Oh wait honey, American Idol is on next. No wait I wanna see what happens on the Bachelor! Can we TIVO the Bachelor and watch Survivor instead?

NO A LA VIOLACION CONSTITUCIONAL!!

LINK: http://upsidedownworld.org/main/content/view/2180/1/

Mahalo ...

Hi Bill -- Good to hear from Mark M. I'm still here, reading and learning and trying to put your sage words to good use. Thanks as always for the hard work, dedication, insight and passion. And good luck and good trading wherever you are, Mark.

EJ

I read the comments on several other blogs. You do a huge task here to restrain excess and abuse, and do it well.

Regarding changes, you have said a lot in a short space. I suggest that you include a FAQ (Frequently Asked Questions) section with your sidebar link. I know that I am lost in trying to determine where I will fit in (or out).

Looking forward to your continuing progress.
spot

Bill,

Your contributions are much appreciated by the many who come here, but I fully understand your disappointment and frustration with the few.

About a year ago I quit a volunteer organization when it became clear to me they didn't really want the benefit of my experience — just my name (and my money).

Sometimes it is good to step back from the S&P Index, and all the garbage (news) that is placed for public consumption, in order to try to find a reference point or basis for reality.

Carl Swenlin has a site (copyrighted but free for now) on which he explains, states, and graphs S&P's p/e and earnings, current and projected in easy to understand terms.

I don't think I would try to trade on this information, but it certainly helps to keep it in mind whenever I feel the urge to cast all my marbles into the circle.

Take a glance at it:
http://decisionpoint.com/tac/swenlin.html
spot

Hi Bill,

Thanks for sharing your thought process on this. Your plan is well thought out and I realize this is not only about learning how to trade stocks, but how to take a business to the next level.

enjoy your G&T and keep making commercials - time is precious

vb

Hard to find any information on this latest development regarding the Fed Audit Bill on mainstream media.

The Fed and its puppets in Washington are hanging tough.

http://www.bloomberg.com/apps/news?pid=20601103&si...

Federal Reserve Policy Audit Legislation ‘Gutted,’ Paul Says

By Bob Ivry

Oct. 30 (Bloomberg) -- Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been “gutted” while moving toward a possible vote in the Democratic-controlled House.

The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today.

“There’s nothing left, it’s been gutted,” he said in a telephone interview. “This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that.”

The Fed, led by Chairman Ben S. Bernanke, has come under greater congressional scrutiny while attempting to end the financial crisis by bailing out financial firms and more than doubling its balance sheet to $2.16 trillion in the past year. The central bank is also buying $1.25 trillion of securities tied to home loans.

Paul, a member of the House Financial Services Committee, said Mel Watt, a Democrat from North Carolina, has eliminated “just about everything” while preparing the legislation for formal consideration. Watt is chairman of the panel’s domestic monetary policy and technology subcommittee.

Keith Kelly, a spokesman for Watt, declined to comment and said Watt wasn’t immediately available for an interview. Watt’s district includes Charlotte, headquarters of Bank of America Corp., the biggest U.S. lender.

Original Language

Paul said he intends to introduce an amendment to the bill when it comes to the House floor for a vote restoring the legislation’s original language.

Representative Barney Frank, a Democrat from Massachusetts and chairman of the committee, said in interview that he intends to ensure legislation would provide a time lag between FOMC actions and the reporting of them.

Such a provision would “lessen the market impact,” he said on Oct. 20. “The importance is to see that there are no abuses and to judge what they did.”

The legislation will probably be included in a broader Democratic package of financial-regulation changes in the House, Frank said.

To contact the reporter on this story: Bob Ivry in Washington at bivry@bloomberg.net.
Last Updated: October 30, 2009 17:48 EDT

Hope this is not too far off topic.

I got it from one of my Stanford friends

Thought it was especially cool:

Videos of an amazing flapping-wing "model airplane", actually funded by the military as a possible micro-drone. Video clip #3 is in slow motion.
http://www.youtube.com/watch?v=My-6LLXDaKM

ALOHA !!

That amendment you refer to is called the DECLARATION OF INDEPENDENCE! We already have the right to replace this government by any means WE THE PEOPLE deem, even another revolution.

Read the Declaration Of Independence when you have time. Its all in there!

Americans do not need any new laws we have them. What is sorely lacking is the backbone to enforce them.

I am very familiar with the US Constitution — too bad Congress and the recent Presidents seem not to be.

The amendments we need will never be added because it would require the cooperation of the very people we need to take back control from.

Voting them out is too slow and too unlikely. If we can't get people at this blog united we will never get enough to vote these guys out.

They will bury any such Constitution changes in committee.

As for voting them out — when in the history of the country has any massive change like we need ever happened? NEVER.

You have pointed out in detail today where the majority of people's attention is. I would give a few a pass due to immediate concerns like illness or extreme financial problems due to lack of ability to meet their family's needs, but too many are distracted by 24/7 propaganda, sports and silly TV shows.

Even in the formation of the country and the ratification of the Constitution there was a lot of disagreement, but with massive increase in population since it is like trying to get a few to paddle a canoe vs turning a battleship with the same paddles.

"As for voting them out — when in the history of the country has any massive change like we need ever happened? NEVER." - Grym

Ahhh, the American Revolution, the Civil War, Nixon's empeachment, two centuries of civil rights acts, women's suffrage, 1933 Glass-Steagell act (will make a comeback), Vietnam student uprisings, repeal of the 18th Amendment to the Constitution, Larry Flynt's testing of free speech, anti-trust acts (broke up Standard Oil trust, the American Tobacco Company, AT&T and will someday be used to successfully break up Mr. Softy and GS), the GI Bill(s) are a few that come to mind. Know your history, dude. "NEVER" may apply to your lifetime if you're under 30 and don't know any history ... SERIOUSLY.

Can anyone put down their playstation remote and name some more ...

"What is sorely lacking is the backbone to enforce them."

Asolutely agree! The backbone will come eventually because we can not sustain the USA guarantee of corporate debt, or wars, or dead soldiers. When the people lose their unemployment, taxes keep going up and services go down maybe people will go to the streets.
We live in a state where the criminals are in the government, not being prosecuted by the government. This phenomenon seems to be happening at the local, state, and federal levels of government. There is so much massive corruption I think people are just confused.

Grym, I know what you mean. Change will be very difficult due to the entrenchment and corruption of the legislators.

Meanwhile, here are some more examples where social movements played a role in change or at least had some effect:

The whole anti-war movement against the Viet Nam War.

The Nuclear Freeze movement in early to mid 80's.

The little known Dorr Rebellion (1841–1842)

http://en.wikipedia.org/wiki/Dorr_rebellion#Dorr.2...

The Populist Movement of 1880's which led to ballot initiatives in many states.

Grym -

I thought you were talking about "massive change" and not just incumbent congressmen so my examples were of massive change achieved By The People and For The People. All we need is a Depression to get these crooks off Capitol Hill. I see change coming thanks to the corrupt Chicago-style policies of our current administration. Looking forward to the upcoming mid-term election and the emergence of a third party with lines to the polls as long as those for unemployment.

"I would like to see limitations placed on their income and benefits (linked to their constituents or perhaps a national income average). Put an end to the automatic pay increases they now enjoy."

Most congressmen in office today are already multi-millionaires. Attempting to dissuade them from power with lower pay would be a hand slap at best.

"Prevent any elected official from becoming a lobbyist."

How about just abolishing lobbyists. Period. Isn't that the crux of all the current problems on Capitol Hill?

Grym, I agree with most of what you say but we all could use a little hope. Cheer up. I promise, no more dude.

Illini,

For the record, I'm in favor of citizen activism. I just can't see us ever being able to make the kind of changes to limit the of power Congress has gradually accumulated over the years. There is absolutely no benefit in it for them. They are a self-policing agency who, even when a member is chastised, generally lets them keep their benefits.

I see a great similarity between the way Hitler legitimized his assumption of power in the early 1930s and the way Paulson, Rubin, Greenspan, Frank and others in government positions changed the laws to allow them to get what they wanted.

Part of the current problem with the bank bailouts is due to Paulson simply giving the TARP money without strings. He gave away $Billions to his buddies! Congress went right along.

This is continuing with the push to give the Fed more power and being spun to look like they are getting tough on the banks. The same thing may be true of the $500,000 salary limit unless it includes bonuses. Either way they were already allowed huge bonuses post "crisis".

Dr. Strangelove,

Since I am in Illinois and one of my sons lives in Chicago, I am not at all surprised to see the current administration's political style. I love Chicago Style Hot Dogs, but their politics have always been disgusting if not outright crooked.

I am hopeful the midterm elections may at the very least minimize the overwhelming power imbalance. While I consider myself an independent at least if there is a closer balance between the two major parties they are less likely to be able to ram legislation down our throats.

Lobbyist are a big part of the problem, but there are so many things it's difficult to imagine ever restoring a genuine republic style of government as originally envisioned. Perhaps it never was.

Grym -

My father and grandfather were born and raised in Chicago. My father studied directly under Milton Friedman to earn his MBA from U/Chicago and led to his unbending lifelong belief in free markets. My U/Michigan education left me in the middle like you. Chicago style hotdogs are the best but its politics are corrupt. Live well and prosper, du..., I mean, man.

Today.... Dang.

.. http://www.forbes.com/2009/10/30/citigroup-aig-val...

All possible, but from a trading perspective, I think it is best not to overreact early in the week. Big economic data on Wednesday (ADP, FOMC) and Friday (Job report). In any event, expect another volatile week.

CC

www.chartsandcoffee.com

"Live well and prosper, du..., I mean, man."

LOL

You too!

Bill has been nothing but generous. The work he puts into this is herculean. I would hate it if he stopped but, drinking G&Ts on the beach after a hard day of trading seems appealing.

Just as I start getting into the "new" Cara green site and back into breathing the markets, Bill finds 12 reasons to stop blogging and CIT goes bankrupt. Some luck I have. :)

If you set the site to read-only from this day forward, there would still be more valuable and insightful information here since 2004 than any other financial web sites around. And much of it would probably still be relevant years from now.

http://www.billcara.com/archives/2004/12/

"I like noodling. Moreover, I like to find successful investment and trading opportunities and I like putting it all together " no strings attached " for you. So, be alerted to the fact I will be writing a fair bit about this market in future."

-- Bill Cara, December 31, 2004. The "old" blog.

Well that was an understatement Bill. You've written a "fair bit about this market" and most others. Keep it coming... read/write... ignore pessimism... As Charlie Munger says, "invert - always invert".

Max,

It really gets to me when I read comments on this blog from those who take and never give. You undoubtedly would just want reading that which is " strickly related to investing and trading" because you are a taker...... when it comes to you without cost or effort. Take a risk and offer some perspectives, or push off.

http://bit.ly/NKloK
Financial Times op-ed Roubini
Excerpt:
"Let us sum up: traders are borrowing at negative 20 per cent rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius – even if they are just riding a huge bubble financed by a large negative cost of borrowing – as the total returns have been in the 50-70 per cent range since March.

People’s sense of the value at risk (VAR) of their aggregate portfolios ought, instead, to have been increasing due to a rising correlation of the risks between different asset classes, all of which are driven by this common monetary policy and the carry trade. In effect, it has become one big common trade – you short the dollar to buy any global risky assets."

"But one day this bubble will burst, leading to the biggest co-ordinated asset bust ever: if factors lead the dollar to reverse and suddenly appreciate – as was seen in previous reversals, such as the yen-funded carry trade – the leveraged carry trade will have to be suddenly closed as investors cover their dollar shorts. A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggers a co-ordinated collapse of all those risky assets – equities, commodities, emerging market asset classes and credit instruments."

ALOHA !!

I see this all the time and I am perplexed by the rationale here ...

"A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggers a co-ordinated collapse of all those risky assets – equities, commodities, emerging market asset classes and credit instruments."

So if you borrow USD or YEN or whatever carry trade basis you play and then invest those funds into "riskier assets" and lose your funds either partially or totally or they become non-marketable how is it you will ever be able to repatriate anything? Would you not then default on your carry trade? If that occurs then there is no dollar stampede in such a case.

Then where is the data that supports that all carry trades are invested in "risky assets" and just what is the definition of "risky" these days? It seems you could say everything is risky! Prior to the Iceland currency collapse starting in 2008 S&P had it rated at A+ and AA.

I wish Roubini would publish the exact data on carry trades. Just exactly how large is the USD Carry Trade(USDCT) versus say the Yen Carry Trade(YCT) and then where are those trades distributed? In what assets? It seems nobody knows the answer. I have yet to see any data. I don't even know who keeps records on such transactions. Do I have to become a premium subscriber to RGE to get that info? I find it hard to believe that Japanese housewives will switch out of the $1TRIL YCT(a number I have seen) and into a USDCT when the BOJ has rates at 0.1%, lower than the US FED rate of 0.25%. Not to mention that being Japanese I would think they would favor their own currency YCT.

Then Roubini says this ...
"leading to the biggest co-ordinated asset bust ever." Who is it that is "co-ordinating" these asset busts? Can they really be "co-ordinated" or does Roubini just think so? Where is the data and the mechanics that show the last asset bust was "coordinated" and where and by who? If indeed Roubini knows that then perhaps the SEC needs to investigate the "co-ordinators" of these asset frauds. Maybe Roubini can be the "whistleblower" who puts some CEOs into jail cells.

I get tired of the "experts" whether they are at the US FED or past popular Presidential economists that spout off data and then never have any back-up. Either that or the back-up they quote is full of ambiguity and fraud based on flawed methodology. Lets face it if anybody really was an "expert" in finances and economics and monetary policy then the global financial meltdown would have never occurred and jobs would be plentiful by now. But instead we get self proclaimed experts and ivy league fakirs in high esteem pretending to know everything yet we're all broke! Good job "experts"!

Is anybody here involved in a carry trade of any sort? Maybe you are doing one and you don't even know it, either through a fund or hedge fund or even a pension plan or annuity. How would you know? Where is that made public? If you are then let us in on the mechanics.

Don't get me wrong as I believe there are carry trades out there but data on them is zero. I can find info on derivatives at the BIS, but I have never seen "carry trades" listed there. Maybe I blinked and missed that section.

I for one have had great success trading out of USDX and into AUD and the AUD denominated mining assets I have. So if Roubini calls a 50% to 70% return "genius" then what must a 400% to 700% return be? But then what I do is not a true "carry trade" as I am using my own funds and I have not borrowed at all(not one dime of margin) and I repatriate nothing.

SHOW ME THE MONEY ... ROUBINI!

Yeah, I apologize for being OT with my confetti money rant, too, but someday I think the cumulative effect of the lack of reasonable direction or even expected destination on our "Moral Compass" which I think allows the same for that "Financial Compass", which appears to me completely out of whack, and aimed more often than not at a point on the map named "MalInvestment", will eventually put us instead "On the rocks". Not just me. Not just you. Not just a few investors here or there, but everyone that counted on those paper dollars to be sufficiently safe value wise to retire comfortably on their savings.

Its almost Monday, and you'll find out there in the real world that some of us have both the depth and guts to look for "deep value", and when we find it, we lock on like a nasty old pit bull with his favorite bone.

Good luck all on the week....

Kaimu,

I totally agree about the "experts" without evidence. I put them in the "If you must predict — do it often and varied" class… they will always have a quotable bit of wisdom for posterity.

But I think you are giving them higher marks for ethics when you assume this,

"Lets face it if anybody really was an "expert" in finances and economics and monetary policy then the global financial meltdown would have never occurred and jobs would be plentiful by now."

I suspect they realized the risk of financial meltdown and knew they had the power to benefit going both directions. What is the point in stacking the deck (GS people in key places and congressmen in their pockets) if not to turn things to your advantage come what may?

They set the stage for the Greatest Scam in History over a couple of decades and had people in place to assure their own massive gains. You have pointed out the long term manipulation in the markets. The rally from March appears to be just an extension as the banks play the game with our money and government takes bows for "saving us from total disaster".