[8:04am ET] The topic du jour ought to be the precious metals rally and the implications this might be having for the USD in the important behind-the-scenes negotiating weeks ahead of the Sept 24-25 G-20 meetings in Pittsburgh.
The gold chart shows a triple top with possible upside break-out. It’s hard not to see it that way after the $GOLD futures soared +$23 yesterday.
The Silver chart, however, shows a steadier advance, perhaps ready to move to $17 from its price of about $15.72 this morning.
http://tinyurl.com/3839gy sil17
But, all along in these pages I have been saying that my accounts are over-weighted in precious metals, and that I believed we would see $1,000 gold soon, plus or minus $20. There have been a lot of dissenters. The spot price this morning was $987, so I suppose the opposition is ebbing quickly.
In any case, in yesterday morning’s conference call, I remarked that I wanted to increase the weighting from 7.27% to 9.0%, which we did (8.92%), and that I had made that decision right before the close the day before but pulled back from saying it because of my priority #1 being risk management. What I said was that I believed we were in the final rally of this intermediate term cycle for the precious metals, and that the prior day’s move in precious metals was not linked to higher goldminer prices because the broad market was getting hammered, which is when the babies get tossed with the bathwater. I opined that if the market was to be flat or moderately down during the session, I believed we would see a spike in the goldminers. That happened as $XAU soared +8.6% and my favorites Silver Wheaton, Goldcorp and Kinross were up 10 to 11 percent (SLW +11.2% GG +10.1% KGC +9.9%) on the day.
Market prices tend to move two steps in one direction and then pullback or recover one step. In the heat of the day to day action, it’s often hard to see that, so, at times, you need to step out of the trenches and back to where you can survey the whole battlefield. With respect to precious metals, here is what I observed. The palladium chart has been showing a continuous advance.
http://tinyurl.com/m4yd9a pal200
You need to weigh all the evidence, so as long as I saw palladium making that move, and none of the sisters (gold, silver and platinum) breaking down, I figured that their pull-backs would be deceptive and short-term moves only.
But, we are at a point now where the $USD could make a break from the lower end of a 78-81 trading range to maybe 74. In terms of the implications of future inflation in America, or the ability to sell Treasury debt to foreigners who would be worried about cashing that debt in on maturity for what I call wooden nickels, I cannot see the USD going further south than 73-74. If it did, the future of the US would be so bleak that major policies would be needed changing, like withdrawal of all troops in foreign countries, postponing indefinitely the healthcare reforms (which I believe will come in stages by the way), and eliminating much of what the workers have earned in the form of pensions.
Frankly, I don’t see that happening. There are too many vested interests that would fight it, so what I do see happening is tough love being forced upon the average American, and by that I mean the equity market is going to have to take a swan dive.
So, that’s where I stand today. I think the USD will be protected and the equity market Bulls are not going to be happy campers. Pensioners are going to be disgusted. Family estates will be eroded further, and so the heirs will be disappointed. It’s not a pretty scenario, but I think the odds of it happening are significant, much greater, I believe, than 70:30. That’s why I’m nervous.
That’s why my accounts had equity short positions of -13.2% gross, which after netting out the non-goldminer longs, still was -7.9% short. Yes, I am also short bonds (-3.2%), but those are almost all at the long end and are almost all dated December, by which time I do think that economic recovery and inflation will be topics of frequent discussion here.
Inflation is already being seen in many countries. Today it was reported that food prices in India have risen +14.5% Y/Y. That will happen in America too unless the level of the $USD can be held at current prices.
You have to see the big picture, and you have to step back at times to do it. I do it every day.
Have a great day.
Comments
I never would have though to look at palladium as part of a ...
determination of the movement of gold. Thanks for showing us another angle with which to view this important move.
UXG 2.87/94/ out @ 3.08
I started writing a trading diary showing wins and losses. I was so embarrassed to input the losses on that OTC stock that collapsed on me (and every other loss I can remember) that I'll take some green now.
Some gold selling happening. Hope it provides entry point later. Premarket is up - looking for a daytrade.
Re: UXG 2.87/94/ out @ 3.08
Hi Les
Take it slow. Perhaps focus on only a couple of stocks and try and specialize on just those. Most of my professional day trading friends do just that. A handful of stocks (2-3) they have become expert in following and their level 2 screens. Don't wish, hope, pray for anything. Study and slowly become an expert. Remember you have nothing to prove to anyone other than yourself and that person you see in the mirror knows the truth and BS when he sees it. I have made and lost in single days what many people make in a year or many years and it was just another day (a crappy one at that) which I tried to see where I made my mistakes and used it for the next time. I dodn't cry, get emotional or beat my wife. I just got back on the horse again and never felt sorry for myself or poor me.
Just my opinion but the thought of buying at 2.87/94 and getting out at 3.08 would have me prematurely balding. Just doesn't seem productive and forget this notion of a pick me up trade. Good traders are too disiplined for superficial things like that. This is a business.
I remember I met a guy who just had the knack. A natural. He started day trading futures at the ripe old age of 21 and was a multi-millionaire his first year and only got richer from there. Retired from trading at 26. Drove other guys crazy with his talent. The point is some have it and some don't. Find your niche. Study hard. Maybe try options or keep what you are doing. Just don't let yur emotions get the better of you.
China pushes silver and gold investment to the masses
A report suggests that the Chinese government is pushing the general public into buying gold and silver bullion, which could have a dramatic effect on the markets http://bit.ly/NQnUP
Re: China pushes silver and gold investment to the masses
shoosh Firefly, you'll get Dr. Cosa started up again ;)
Rare-earth minerals acquisition update
WSJ:
SYDNEY -- Australia has again delayed ruling on an investment by a Chinese company in miner Lynas Corp., which would strengthen China's hold on the world's supply of rare-earth minerals.
Rare-earth elements such as lanthanum, scandium and yttrium are used in the production of hybrid car batteries, LCD screens and superconductors, among other applications.
China already controls over 90% of supply of the elements and Lynas is building the biggest new rare-earth mine currently under construction in the world.
http://tinyurl.com/kjgm77
My mistake - ignore post
...
Symbolic, one small step
Ahead of the G-20, China makes symbolic purchase agreement.
WSJ Asian Markets update:
WASHINGTON -- China is on track to become the first purchaser of notes issued by the International Monetary Fund, a move that would diversify its foreign asset holdings and could give the IMF's quasi-currency more clout.
The IMF on Wednesday said China has signed an agreement to purchase approximately $50 billion in notes from the fund. The notes are denominated in Special Drawing Rights, a quasi-currency issued by the fund and promoted by China as a potential replacement for the dollar as the world's reserve currency.
http://tinyurl.com/lb79nk
Novartis swine flu vaccine progresses in U.K. test
Novartis health-care giant, reported that a pilot test of its vaccine against A(H1N1), or swine flu, showed the drug "elicited a strong immune response and was well tolerated." The pilot test was run by the UK's University of Leicester and University Hospitals of Leicester. The vaccine, which Novartis calls Celtura, was tested on 100 healthy volunteers ages 18 to 50. Novartis is conducting additional trials with larger numbers of subjects worldwide. "The study suggests that while two doses seem to provide better protection, one dose" of Celtura "may be sufficient to protect adults against the swine flu," said Andrin Oswald, chief executive of Novartis Vaccines & Diagnostics
http://bit.ly/10NP8b
Dainippon confirms plan to buy Sepracor for $2.6 billion
The bid for Sepracor marks Japan's third-largest outbound, cross-border deal on record in the drugs/pharmaceuticals sector -- behind Takeda Pharmaceutical's (JP:4502 3,730, -60.00, -1.58%) $8.4 billion acquisition of Millennium Pharmaceuticals in April 2008 and Daiichi Sankyo's (JP:4568 1,969, -26.00, -1.30%) $5.5 billion purchase of a 58.1% stake in Ranbaxy Laboratories in June last year, according to Dealogic.
Sepracor also confirmed the agreement with Dainippon, adding that the transaction was unanimously approved by the boards of both companies.
http://bit.ly/wR3SQ
headlines from tradethenews.com
*US INITIAL JOBLESS CLAIMS: 570K V 564KE; CONTINUING CLAIMS: 6.234M V 6.130ME - Prior jobless claims revised from 570K to 574K - Prior Continuing Claims revised from 6.133M to 6.142M - Four-week
Cara 100 Ratings Changes
Good morning. Not much so far :
CSCO - PT Raised from $25 to $27 @ RBC. Outperform
Nat Gas - repost from yesterday
Short this stuff (as I said 6 months ago). We need to know the highly leveraged producers who have hedges coming off in October-December. I believe we will have som eno bid days for Nat Gas come the end of October early November.
I work in the NG business, and the story about natgas is not pretty, in fact about 6 months ago I predicted that this would happen and I wrote it on this blog under a different name. Nat gas is not going to get any better in the near future (3-6 months or so).
The simple story is too much supply and not enough demand. Also, many of the large producers have drilled wells and not completed them, therefore supply can ramp up very quickly as soon as it needs to. Also, they have predicted a strong El Nino. This means two things. First, a weak Atlantic hurrican season. We are already seeing this with the hurricanes moveing to the Easter Pacific and the non so far in the gulf. Second, a strong El Nino means a weak winter. So we have a perfect storm for gas to get much worse. High supply, high storage, weak demand and a situation where in the winter the demand will not be as strong as usual due to a very moderate winter due to El nino. Take it to the bank. You need to short UNG, short large highly leveredged NG players who have hedges coming off in October (CHK, SD, if you know any more let me know) and figure out which banks loan them the money and short them too. IT IS GOING TO BE A BLOODBATH
today in econoday
Jobless claims (released premarket): steady at 570k
ISM non manufacturing Index at 1000 ET
EIA Natgas report at 1030 ET
Chain Store Sales (individual release by chain stores - monthly sales numbers)
Re: China pushes silver and gold investment to the masses
you got it les,
pure propaganda,
we talk endlessly of financial bubble-head TV pushing stocks on the american masses, and yet when the chineese do it, suddenly we are interested and neglect to consider it is as shady anytime a government tells it's people to invest in something.
if the Chineese government was so concerned with the fate of the US dollar they wouldnt be buying it as much as they do, they would actually divest out of it in a major way, not in some shifty application of stats or a few billion tick down being trumpeted in the media. if the chineese were so worried about the effects of QE on the US dollar they wouldnt be engaging in such reckless QE themnselves, likely at a faster rate than the US.
China is not an economic cassandra, doing something or knowing something the rest of the world doesnt, this is just plain old nonsense and xenephobia. if the US govt has an agenda to sell worthless stocks to the masses to bail themselves out, why would the chinese govt be any different?
this fantasy of sudden chinese buying of gold is nonsense, lets stop engaging in unobjective acceptance of what the media will have us believe. how many times have we been told we are at the precipie of some sort of wave of gold buying by the chinese. its not happening, and it likely never will. if you invest based on a fantasy you will loose your shirt. the Jim Willie's and Peter Schiff's of the world were wrong, people investing with them have lost money the past few years, and every month they say the same thing, if and when gold moves strongly over $1000 and stays there, people will forget how off the mark these hucksters are. stop patting these ass-hats on the back an accept that most of us dont invest in gold, instead we indulge in what Robert Firestone calls a "fantasy bond" relationship with it.
The Fantasy Bond: A substitute for a truly loving relationship
by Robert Firestone
Most people have fears of intimacy and are self-protective and at the same time are terrified of being alone. Their solution to their emotional dilemma is to form a fantasy bond. This illusion of connection and closeness allows them to maintain an imagination of love and loving while preserving emotional distance. Destructive fantasy bonds, which exist in a large majority of relationships, greatly reduce the possibility couples achieving intimacy.
The nature of a fantasy bond is the central concept of my theory as explained in my book THE FANTASY BOND. It explains people's compulsion to relive the past with new relationships i.e., to form illusory connections that invariably lead to a reenactment of defensive styles of interacting developed in childhood. This process of reverting to outmoded defense patterns interferes with the establishment of secure and satisfying adult relationships characterized by feelings of humanity, compassion, and equality. Once a fantasy bond is formed, individuals prefer to maintain a defensive posture rather than trusting and investing genuine feeing in others. Once having been hurt, they are reluctant to take a chance again and this defensive pattern has an insidious effect on couple and family relations.
Men and women are most likely to become romantically involved at a stage in their lives where they are breaking dependent emotional ties with their families and experiencing a sense of separateness and independence. As they reach out and risk more of themselves emotionally, they tend to attract others with their vitality and enthusiasm. In the first stages of the relationship, they tend to let down their defenses and are open and vulnerable.
While this state of being in love is volatile and exciting, at the same time it can be frightening. The fear of loss or abandonment as well as the poignant sadness often evoked by positive emotions may become difficult to tolerate, especially for those who have suffered from a lack of love in their early lives. At the point these individuals begin to feel anxious or frightened, they retreat from feeling close, gradually giving up the most valued aspects of their relationships, forming a fantasy bond.
By the time most people reach adulthood, they have solidified their defenses and exist in a psychological equilibrium that they do not wish to disturb. Although they may be relatively congenial with more casual acquaintances, there is a deterioration in friendly and respectful feelings as a relationship becomes more meaningful and intimate, because the new love object now threatens to disrupt this balance by penetrating their basic defenses.
A fantasy bond is the antithesis of a healthy personal relationship where individuals are free to express their real feelings and desires. This destructive tie functions to perpetuate feelings of distrust, self-hating thought processes, and the inward behavior patterns that each person brings to the relationship. In their destructive coupling, men and women surrender their unique points of view for an illusion of safety.
Perhaps the most significant sign that a fantasy bond has been formed is when one or both partners give up vital areas of personal interest, their unique points of view and opinions, their individuality, to become a unit, a whole. The attempt to find security in an illusion of merging with another leads to an insidious and progressive loss of identity in each person. The individuals involved learn to rely more and more on habitual contact, with less and less personal feeling. They find life increasingly hollow and empty as they give up more aspects of their personalities.
Positive change takes place only when the fantasy bond in the original family is investigated and its reestablishment is challenged in the current relationship. As fantasy bonds were understood and relinquished, the individuals in a relationship manifest new energy, self-possession, and vitality and are able to become loving companions and allies.
Re: Novartis swine flu vaccine progresses in U.K. test
Current polls in the UK (as reported in Nursing Times, Pulse Today, and GP), indicate that 1/3 of UK nurses will refuse the innoculation while another 1/3 are undecided. Over 50% of Physcians state they will not receive the shot. Expect a large push by the "authorities" to quell this dissension... It will be kind of fun to follow these policy makers public re-education efforts. My guess is that the talking heads will be beating the drums relentlessly to ensure that everyone ques up for their meds. We'll see what happens.
AIG +3 premarket
The excitement just never dies in this one.
Dollar vs. Markets
I know everyone firmly believes that the dollar is inversely related to the markets, but did you know that in 1992 when we were coming out of our recession the dollar rose and the markets rose? Just something to think about. Just because the dollar and markets have been inversely related the past 9 years doesn't mean it's going to stay that way.
Funny action in UXG in the Toronto Market
Last trade was at $2.76 @ 935am. 5000 shares changed hands.
Current bid/ask 3.31/3.35
Someone had a really good morning. :)
EDIT - current price is $3.40!
Republican v. democratic philosphy
Driving to work this morning, I heard two commentators being interviewed, Paul Hankie, and John Ryding, economists, I think. Did Ryding used to work for Bear Sterns? In response to a question, Hankie said, "The obama administration is only interested in a redistribution of wealth", "we have gone from a bad administration to a worse one." The commentators then went on to criticize the current administration for raising taxes. Does Hankie understand the massive redistribution of wealth that occurred under recent republican administrations- Reagan and Bush 2. What I’m talking about are the tax cuts for the wealthy coupled with massive deficit spending to fund current programs. Wealth was transferred from, or stolen from, our descendents and given to those living today in the form of programs and tax cuts. Nice deal for the rich guy living today. He buys another yacht, and our children become indentured servants to pay for it (his tax cut). Deficit spending redistributes wealth from our descendents to those presently living. It is abhorrent. I understand that it is being done by the current administration. They also have proposed reinstitution of ‘pay go’ which will unquestionably be opposed by republicans. I'm making this point because I see bias in the statements by public commentators like Hankie. The fact that democratic administrations spend money on programs and raise taxes is pointed out. The equal fact that republican administrations spend money and raise taxes on our children (through current tax cuts) is not pointed out. An understanding of this point is necessary if we are to obtain solutions to the economic and fiscal disaster that will fall to our descendents.
I would like to have been able to ask Hankie how what Obama is doing is different from what occurred under republican administrations and whether the philosophy of both major parties is at fault. I would like to have heard more than "we have gone from a bad administration to a worst one." Mr. Hankie, republicans also redistribute wealth- they give more to the wealthy, and they take from our descendents. Don't give us one side of the debate. What I've concluded over the past number of years is this: Democrats tax and spend, and republican’s tax cut and spend. Which is worse? Probably the republican way, since it steals from the future, it steals from our descendents who are not even born, who have no say in the poverty that they will endure while we enjoy a largess.
My solution would be to cut programs on a massive scale and limit government spending severely; save for what must be enforced by government, one item being science based environmental regulation. If there were no regulation of pollutants, industry would dump toxins into the environment in order to sell its products at the lowest price. This also burdens our children, and those of us that want clean water and air now, who don't want to have to worry about mercury in our tuna. In summary, I would like to see a broader understanding of the inequities in society, and the fact that neither major political party offers solutions to our fiscal problems.
KO
could be a good time to buy it on the dip after yesterday's rally
S&P 500
it has basically traded sideways for the past month. If I'm a bull (and I am) I think this is a great way to work off overbought conditions. Again, I think the next leg up comes from blue chips that are currently out of favor and undervalued.
HNU.to/HND.to
David- You made the right move yesterday, hedging with the trend ;)
Swan dive
I'm with Bill on the swan dive theory. We usually get to the breaking point and then the PPT supports $USD and gold/silver reverse and we hit the rinse cycle again. Maybe someday we hit the extremes of the gold bugs but we usually have it taken in the way that is least likely to look like it's purposeful/planned, which of course we know it is.
I think they call it plausible deniability.
Re: HNU.to/HND.to
So I'm still of the opinion the setup is good for a nasty reversal this morning from the natgas report. Given the number of shorts piled into the trade, it won't take much to cause a big rally. Witness what happened in AIG - and arguably that company is even more worthless than natural gas these days.
The 7 day RSI is 7.58!
an inside write up on hank paulson by an editor of vanity fair w
what do you think of this?
do you believe it?
quite different than perspective from outside.
http://www.vanityfair.com/politics/features/2009/1...
Re: KO
RSI-7 Daily is over 60... That does not indicate good entry at this time... Just my opinion.
I sold a big piece of my Goldcorp holding on Monday, so what do I know?! :)
Re: HNU.to/HND.to
We'll find out in 15 minutes.
Re: HNU.to/HND.to
NatGas trades on fundamentals. AIG trades on government largesse. There is a HUGE difference.
Cara 100 Update (Final)
CCL - target raised at Credit Suisse to $34. Company continues to deliver volume growth, despite a difficult market. Outperform rating.
Re: HNU.to/HND.to
I dunno. Remember what Goldman did to oil last year. How much of the news out there is real and truthful, and how much is released at the right time to line us all up on the side where Goldman wants you to be?
I'm not saying I know - I sure don't. And you guys are definitely on the right side of the trend. It will be interesting to see how it plays out.
One small Bio that is in the same park that INCY was
( at $ 2.50 ) is ANDS.... There will have to be a share sale or partnership, but their diabetes progress is solid... guess with a general market meltdown, all will fall, yet, as I've babbeled about forever, these little ones do offer the greatest risk/reward trade, depending which side of the fence you're on... VICL and INCY were good for me ( from 4 months ago ), EXEL is ok, CVM was decent... Watson Pharma. does offer some competition for AMAG, but is years away from FDA approval. I like ARNA...IMGN and ARRY are two I have on close watch.. CLDX ( Ted Kennedy's )is at that magic-margin line, although it bears attention for a positive move.. AVII may be the suprise this time around.... still kicking my own ass for selling HGSI at $ 3ish, and not rebuying at $ 10.00 ( same thing happened with ACOR, as I THOUGHT there was no way in hell it would go above $ 13.00... VNDA was a nice suprise, but as ALTH shows today, the awaited news release may not kick it upward ( still long with akrx ).... good trading to all...
Re: HNU.to/HND.to
Ha well so much for my idea. I guess no rally for me today! :)
Re: HNU.to/HND.to
Incredible. NGas isn't worth crap. Whereas ads about 'don't squeeze the AIG' has them bidding it up 7%. What happened to waiting for toilet paper to go on sale?
Re: S&P 500
"Again, I think the next leg up comes from blue chips that are currently out of favor and undervalued."
Fall where they may, I'm happy as long as somebody else isn't stacking my chips. When RIMM is up, the chips are in. I saw MOT's 3G phone advertised on TV last night, T-Mobile promotion (I don't watch much TV, especially financial TV, but nobody's mentioned T-mobiles TV ads here).
Re: KO
i firmly believe a sector rotation from financials to blue chips is under way so maybe i'm biased...
Re: HNU.to/HND.to
"What happened to waiting for toilet paper to go on sale?"
When ya gotta go, ya gotta go! Apparently the fanatics gots to go right now...
Reread the VMC conference call....
This is a tough one... The Highway Bill will absolutely help, and they have raised prices... certain areas are slack, but they apparently are being priced in the futures.. Vulcan has located in the areas that, when growth returns, will definitely benefit.. Seems they now have the cash necessary ( via recent offering )to upfit ( as they are now doing )and trim the fat... Tax benefits are very good... just have to wait and see....
Re: HNU.to/HND.to
What does $2.59 NG say about the economy? This thing is in the toilet and energy use and costs are a key fundamental.
I filled my propane tank yesterday. $1.28 a gallon. This is the first thing I've purchased lately that actually went down YOY.....a lot.
The Fat Lady is off the stage and testing the spring of the diving board.
I think the initial warning was the low yields on treasuries Bill warned about a while back. Supply/demand....no demand=low yield or if you wish, desperation=low yield by a pumping Fed as everyone knows we don't have free capital markets to set yields. We have a quasi government dictatorship that steals our money outside the CONgress and they then loan OUR money at a loss, essentially trading against us.
Re: KO
it does show signs of quiet accumulation TOF, but scarily enough so do the crap financials that have been the talk of the town. I'd love to be in on the action come tommorrow's employment report, which may be what we're waiting for, but I have no faith in holding these scum overnight.
Re: HNU.to/HND.to
Hi All - Not a big trader of the commodity but thought this clip from Pritchard might be enlightening:
The US Natural Gas Fund ETF (UNG-$9.45) currently trades at ~15% premium to the front month contract it is supposed to track. One rationale for the premium is that equity investors are pushing UNG in order to gain exposure to natural gas. One other theory for the weakness that would explain the premium UNG has to natural gas is that due to pressure from the CFTC the fund managers of UNG are unwinding/scaling down the size of the fund. To do so they have to buyback UNG shares in the market and sell the NYMEX front month natural gas contract or unwind swaps they entered on the Intercontinental Exchange. If this is case, would explain UNG’s premium, and if there is an unwind underway, knowing when its over would be useful information. EIA releases the change in natural gas storage at 10:30 a.m. EDT, and the forecast is for a +67 Bcf injection. A positive surprise or lower injection combined with the low RSI could set natural gas up for a trading bounce. Happy Trading
Re: HNU.to/HND.to
"We have a quasi government dictatorship that steals our money outside the CONgress and they then loan OUR money at a loss, essentially trading against us."
So let's play their game.
Monroe writes me that...
Obama's health care plan will be written by a committee whose head says he doesn't understand it, passed by a Congress that hasn't read it, and whose members are exempt from it, signed by a president who smokes in secret, funded by a treasury chief who did not pay his taxes, overseen by a surgeon general who is obese, and financed by a country that is broke.
Another reason...
to potentially invest in gold for the long term - http://www.goldalert.com . The Fed has already printed a ton of money and cannot pull the plug anytime soon, as that would devastate the economy that has come to depend on it for survival. The gold price should benefit as a result of the currency debasement by our governemtn
Vical gets new patent for flu vaccine, shares jump
Vical Inc (VICL.O) said it received a new U.S. patent covering its Vaxfectin-formulated DNA vaccines for any seasonal and pandemic influenza viruses, sending its shares to a new two-year high.
The company is developing vaccines for the H5N1 avian flu strain and the new H1N1 flu, known as swine flu, using its Vaxfectin adjuvant, which has immune-enhancing ability, Vical said in a statement.
Shares of the company have more than tripled in the past six months since the onset of the swine flu pandemic in April.
"Flu is on everyone's mind right now. It's unclear how much of an issue H1N1 flu is going to be this fall," Needham and Co analyst Alan Carr said. "So that certainly has brought a lot of attention to biotech companies that are working on flu vaccines."
Carr has a "buy" rating and $8 price target on the stock.
Vaxfectin-formulated H5N1 influenza DNA vaccines completed early-stage human testing in 2008, it said.
Shares of the company were up 93 cents, or 21 percent, at $5.34 Thursday morning on Nasdaq. They touched a high of $5.43 earlier in the session.
http://bit.ly/46Qf3b
Re: Monroe writes me that...
Perfect set of circumstances, it's called progress at any cost! And if China wants to finance it, what could possibly go wrong?
Re: S&P 500
I'll take the under on that. Cyclical Bull coming to end, continuation of Bear resumes. Highest 12 month trailing earnings by quarter since 1988 occurred in June of 07 coming in around $84.00. Slap a 15 multiple and you get 1275 - there is your "high." The average earnings per year from 1988 to present is $38.00. Slap a 15 multiple and you get 570 - there is your "low." The 15 is a rough multiple from average since 1936. Everything above is overvalued and everything below is undervalued. Cheap is 10'ish, expensive is 20'ish. We sit presently - very expensive at 120...
Until easy money Greenspan pulled forward demand and gave the boomers some extra cash - quarterly earnings for S&P averaged around 6 bucks from 88-95. From 95 to present, 11 bucks. Roughly double... Sorry to burst any bubbles, but those days are over - permanently... Friviolity gave way to frugality. Companies just will not make as much money and this will be reflected in earnings and thereby the market.
Free forecast - we will paint 500 +/- 50 within the next year. Once we hit 666 and start below - all those that recently got in will give up and get out after getting beat twice. That will be the true capitulation and time to buy for the long haul... I hope I am wrong because this will be most unpleasant for a great majority - but I am prepared for this eventuality.
gold +13.50 to 993
Now that's what I call a breakout!
Silver +0.52 to 15.90 too!
Believe It, Or Not
- No matter what we "believe" SPY is still below the open
- The "stupid stocks" possible trend resumption microcaps are not getting a bid for the most part (e.g. CERS, CLZR, SOMX, ISR, ICAD, ANIK, UQM, DVAX, GRRF, MOVE, ORS (okay, I'm embarrassed)
- If breadth is better (it is somewhat), what does price lag mean?
- The US dollar is flat
- Two of the smartest analysts I know believe that the US dollar will explode (to the upside)... I have no idea
The Gang of Five (C, AIG, FNM, FRE, BAC) get bids. Hmm.
Doctors are telling me their brokers are telling them to get out of NASDAQ stocks...I doubt the docs are in "the Huddle"...
dr cosa
Your post about fantasy bond signifies the most important character trait of a successful trader..know yourself.
Re: Monroe writes me that...
kinda like asking Jack Welch to keep his own golf score....
doing some bio research while watching paint dry
Looking at NVAX, which appears to be wielding seriously improved technology for flu vaccine manufacturing. Reflecting upon Bill's comments this morning. Could be big $$ in following "pig flu fever" this winter.
http://seekingalpha.com/article/159622-novavax-s-v...
Excerpt:
Make no mistake, NVAX’s ability to produce more powerful vaccines in a little under two weeks and the study’s numerous other results have changed the game. Some on Wall Street now feel that the company has painted a clear "take-over bulls-eye" on their back.
Downgraded today by Oppenheimer. Worth watching.
FWIW
Re: S&P 500
sounds as plausible as any bear theory i've heard. out of curiosity, why do you use average earnings over a 20 year period when applying a low range multiple? do you do this with individual stocks? if so, have you ever had a stock with a cheap valuation using this model?
Stealing dreamtime
Craig said:> Amen to this Kaimu! They stole the whole of the Dreamtime and thought they were so high and mighty until they got a grasp that they (Aboriginals) were more sophisticated and intelligent than they thought.
Stealing was the least of White Australia's crimes mate. Government policy was - and you can quote the UN report on this issue - Genocide with a capital G. Assimilate all the aboriginal children they could lay their hands on into white Australian families in anticipation of the race and its culture dying out.
Some limited efforts are being made to share prospectives, royalties and even offer jobs on the land the locals continue to habitat, but there's a long way to go.
Re: doing some bio research while watching paint dry/NVAX
Don't overlook this:
01 Sep 2009 16:48 NVAX CEO: to apply in Q4 2009 for FDA approval to start human clinical trials for pandemic H1N1 vaccine
Doesn't sound to me like anything bound to happen anytime soon, and certainly not soon enough for this fall supposed outbreak.
Re: doing some bio research while watching paint dry/NVAX
Saw that Vad thanks. Might turn into a swing trader through Autumn, waiting to see if ARNA breaks out of its symmetrical triangle positively on the obesity medicine phase 3, followed by NVAX for winter. Get that laser account open for daytrading practice on anything and everything else.
DNN
Hi All - Three uranium mines may have a new lease on life. The Arizona Department of Environmental Quality issued permits Tuesday to three existing uranium mines surrounding the Grand Canyon owned by Denison Mines (USA) Corp. Dennison said it could initiate mining in one year. Happy Trading
Korvus
I have an update on that software I asked you to look at:
Please have a look before buying SUNW, as they offer a product called snapshots which nominally solves the backup problem, but for how long? Iceweb's Inline subsidiary offers a real solution with x to the 48 power replication while SUNW only goes to 220 approximately...thats power baby! You will have to also go to the Inline.com website to see the specifics. Nicely laid out intuitive website however.
Have a look please...thanks
http://www.murphyanalytics.com/uploads/IWEB_Profile
http://www.inlinecorp.com/
Re: Symbolic, one small step
ALOHA !!
HA!!!
So now CHINA is doing their stand-up act over at the IMF IMPROV!!!
$50BIL of SDR DEBT = $22BIL US DEBT
So China is still buying US Debt ... LESS ... but its still tied to the US Dollar(44%). On top of that China is not diversifying as they are buying DEBT of some of the most debt ridden countries in the World, mainly G8 types like the UK, Japan and the Euro. Its all the DEBTOR countries ... The DOA Balance Sheets. What about an IMF SDR for emerging markets and resource producers tied to countries like Brazil, Australia, Canada?
Now that would be diversification not the current IMF SDR ...
God, what else would you expect from an entity that is mainly funded by the USA?
IMF SDR LINK: http://en.wikipedia.org/wiki/Special_Drawing_Rights
Okay China the Farraley Bros wants to hire you for their next movie about a Communist country who got into too much DEBT but didn't even get the thrill of running up all that debt themselves! Like paying for other people to get high on Opium(OPM)... HA!! Oh you're killing me China!! It'll be called "There's Something About China"! HA!! The IMF IMPROV is getting as much laughs as the BEIJING IMPROV!
Where's the BEIJING IMPROV's star comedian Tim Geithner these days? I guess he's busy working on new STRONG DOLLAR jokes for the G20 meeting!
HA!!!!
Mahalo ...
long MY mama?
Long Yomama...mana.
from chatter...
unit of akrx overseas gets nod on h1 production...... I STRESS... this is only chatter... key an eye on.. dropped 10% on very quick, large volume... could be covering... could be B.S. ... does have large short interest.
Re: Stealing dreamtime
ALOHA !!
Hey they were taught by the Masters Of Genocide ... The BRITISH EMPIRE.
When Great Britain landed in Australia and started its usual "colonizing" the British offered a bounty for every Aboriginal ear you brought in. So imagine settlers with necklaces made of Aboriginal ears ... I learned that from the Australian textbook by James Moorehead, entitled THE FATAL IMPACT, on the History of the South Pacific back in the 1970s.
If it weren't for the British and the Catholic Church nobody would know how to torture "properly"!
I didn't expect the SPANISH INQUISITION either mate! HA!!
Re: Symbolic, one small step
Kaimu, sounds like they're already in the process of stitching up the new world order.
it was a question - not inquisition :)
Re: Monroe writes me that...
ALOHA !!
Bill that's too funny ... Maybe China can use that material at their IMF IMPROV gig ... does it have a copyright? HA!! Wait ... hey ... its the CHINESE, who needs that stinkin' copyright???? HA!!
S&P and Moody's
Not sure if anyone caught this, but a federal judge is forcing the rating agencies and Morgan Stanley to defend themselves against fraud charges.
I think this was unexpected and it leaves the companies up to many more potential suits if this case ends up poorly for the agencies.
MHP and MCO plummeting today.
UPDATE 2-M. Stanley, Moody's, S&P must defend fraud claims
http://tinyurl.com/nq7zmr
NEW YORK, Sept 2 (Reuters) - A U.S. federal judge ruled that Morgan Stanley (MS.N) and two credit rating agencies must defend fraud charges in a class-action lawsuit accusing them of masking the risks of an investment linked to subprime mortgages, and which eventually collapsed.
U.S. District Judge Shira Scheindlin on Wednesday rejected efforts by Morgan Stanley, Moody's Corp's (MCO.N) Moody's Investors Service and McGraw-Hill Cos' (MHP.N) Standard & Poor's to dismiss fraud claims brought by the plaintiffs, Abu Dhabi Commercial Bank and King County in Washington state.
Re: Symbolic, one small step
ALOHA !!
Les, Right, but you can't have NEW WORLD ORDER when its the same old DEBTOR governments of the OLD WORLD ORDER! HA!! That's like believing in OBAMA CHANGE! The next Presidential Election I think all the candidates should debate at various IMPROVs around the USA!
Ever since I got onto this IMPROV kick ... visualizing World leaders like comedians I can't stop laughing! Seriously ... I don't have a TV but next time you see them on TV just think of them as comedians like Rodney Dangerfield or Kinison or Seinfeld ... HA!!
Truly that is what the global governments have become and their globalization is on track to become one of the funniest jokes ever!
I never understood "globalization", I mean there has been World Trade going since Cleopatra. So as we have seen globalization is really just a new label for a really old concept called DEBT!
When you have monetary systems based on DEBT that's all you ever "globalize"!
I never see any "principal repayment" globalization happening ... How about just some "fiscal restraint" or some massive "spending cut" globalization? Or how about get rid of all INCOME TAXES globalization and then my favorite ELIMINATE CENTRAL BANK globalization ...
Its always about the DEBT being shuffled and stacked!
WOW ... what a recipe for disaster!
Re: Korvus
Korvus, any chance that you can put a "TOP" tab at the bottom of the page for when one wants to switch from chat to daily report etc. TIA and thanks for all you do.
Re: S&P 500
BTW - not a bull or bear per se as net option seller - I like to play both sides... in fact - can't wait to get long the market in my 401K (which has been parked in bonds for 3 years now). But for now - I will play the short side (with some hedges) until I am convinced I am wrong...
For individual stocks - I just follow Bill's RSI... Currently own long dated in the money puts on several that have been on his list for sell or distributions (like WFMI). Otherwise - trying to predict a stock is a crapshoot if you ask me.
Regarding timelines for valuations - I have Shiller's data from 1870 to present and he uses a trailing PE of 10 years VS 1 year trailing. I just stepped back and looked at the macro environment and believe that company earnings from 95 to present are similar to the cash for clunkers but on a much grander scale. I think Shiller's data that shows a PE10 of 17 (somewhat overvalued) takes the "best" or most earnings over the last century - but when I calculate the PE on a 20 year trailing, it is 20... Which again, supports that smoothing out the easy money and debt shows the market is still highly overvalued (15.8 trailing earnings P/E since 1936). Can we go higher - sure, I just won't buy it...
We have pulled forward alot of demand from a large amount of debt. The warning signs were a negative savings rate which coincided with the market peak... That is over in my book - regardless of the "reflation" attempts by the government, individuals and companies have to pay the debt. That repayment cycle will take years - which is why I don't "buy" into this bear market rally (cyclical bull within secular bear). I just don't think we are headed for $80.00 in earnings anytime soon... 50 t0 60 will be lucky and at cheap valuation of 10 - you get 500 to 600 on S&P. Simple math, simple macroeconomic theory. Yes we hit 666, but, we never retested. This takes 6-8 months normally - which is ironically in this time period to the end of the year.
Just my take though - a lot smarter people exist here on Cara's site...
Re: S&P and Moody's
ALOHA !!
BillySundance ... Yes, excellent ... talking about DEBT being shuffled and stacked. The credit ratings companies are pathetic, just like the SEC.
I read that this morning but was disappointed that only one of the eleven charges were remaining. BUT ... a BIG BUT ... is "discovery"! How to get that public is even a BIGGER challenge as I guarantee you that any victory will be accompanied by the usual classified discovery settlement!
As I saw in the BLANCHARD VS JP MORGAN & BARRICK GOLD lawsuit the discovery was squashed by JP MORGAN and BARRICK as they were deemed "agents" of the US FEDERAL RESERVE BANK and that info was not to see the light of day since it would effect National Security.
Ahhhhh ... the old NATIONAL SECURITY ploy! Just as popular by political and monetary monopoly thugs as the "EMERGENCY" ploy! HA!!! More IMPROV!!!
Re: Nat Gas - repost from yesterday
Thanks for the post, ez_money.
"Short this stuff (as I said 6 months ago)." Yes, we have had some very explicit warnings from people within the industry.
I am reminded of Paul Simon's song, "The Boxer"; I substituted the words in brackets below:
"Still a man hears what he wants to hear and disregards the rest."
. . . . . . . . .
"In the clearing stands a [trader] and a fighter by his trade,
And he carries the reminders of every [trade] that laid him down,
Or cut him 'til he cried out in his anger and his shame,
'I am leaving, I am leaving.'
But the [trader] still remains."
Strong volume on UNG this morning, but still not capitulation. There is still more buying pressure than selling pressure, evidenced by the premium on the fund. With the front month (Oct) futures at $2.55 UNG's NAV should be $7.86. UNG is at $9.18, a 16.8% premium, indicating unwarranted optimism IMHO. Nov futures are at $3.75, a 47% premium to Oct futures. Spot price was $2.25 yesterday, probably lower today. [Edit: spot dropped to $2.06 today (ICE data).]
Trading is about probabilities, not possibilities, so today I shorted more UNG.
Re: Novartis swine flu vaccine progresses in U.K. test
Pure PR backed by a university dependent upon big pharma to pay for its research grants and hospital wings. The last opinion to trust is the CEO of the company that stands to profit large.
Cup and handle forming on UXG?
volume pattern needs to confirm and needs to break out of $3.06-3.07, but am i seeing things? take a look at the 5 min chart.
Edit: 10 min chart
Re: S&P and Moody's
Kaimu
Between the Bloomberg Vs. the Federal Reserve FOIA case and now the S&P/Moody/Morgan Stanley V. Abu Dhabi developments, it ALMOST seems like the judicial system is growing a bit of a backbone. We'll see if they are willing to show some tough love or if this is all just another bunch of staged wrist slaps to keep up taxpayer morale....
Re: Symbolic, one small step
Kaimu,
You are making more and more sense every day.
I see an advanced stage in grieving process. Somewhere off in a deep blue sea of reverie and delirium comes acceptance that death is inevitable, and with it one lets go of all delusion that life has purpose. Purpose is a cosmic joke/delusion. Grief turns to laughter and mockery. The "wild man" is loose, howling out on the fringe. Gardez!
http://ub-counseling.buffalo.edu/process.shtml
Hope is all that is left. The last men standing are the judiciary. Let's see if they decide to turn the tide.
Banking System's Credibility in Jeopardy : http://www.minyanville.com/articles/index.php?a=24363
"How we handle the truth remains to be seen. "
Positions: Long AAPL, VMW and SRS
PME.TO (hard asset proxy), TCP.TO (Macro Hedge), HOD.TO (Can't get this right)
GDX
Finishing the cup from the June 1, 2009 high of $45.10. Could explode upwards from there.
PMs going parabolic.
Cost of Living?
Has anybody here seen their COL bottom line decreasing? Assuming no, and if cost to manufacture and run a business is falling yet retail goods and services prices are steady or rising, corporate profit should rise as well...
Re: Cup and handle forming on UXG?
looks like ascending triangle to me NYUGrad - today's movement on 5 min chart.
I'm watching it. If gold plays ball and hits 1000 or more thanks to HK overnight...
Re: S&P 500
I'd prefer to look at my long term buy/sell signal, which is what I have talked about for a while now. That is, if the S&P 500 is at least 3% above the 200 DMA we should be buying stocks and vice versa. This move above the 200 DMA was no head fake according to this signal and it says we have moved from bear to bull. Using this method you get far greater returns than the market average over the past 100 years (assuming buy above and move to cash when below).
I think there are far too many factors other than 10 year or 20 year average earnings that go into the price of the markets and using this model alone doesn't produce outsized returns. Also, I think it's a litte crazy to incorporate earnings from 1989 as part of the valuation model for our current markets.
silver breakout
And now we have a silver breakout. Boy Bill was not kidding around about how silver moves.
SLV just broke above 15.75, the June high. Do we buy this breakout?
FD: I got some SLW and GG this morning. So far so good. Better than my UNG in any event :)
accepting congratulations, receiving applause
for calling this move in metals on Sunday night.
Re: Cup and handle forming on UXG?
UXG - double hanging man on daily with no increase in volume today.
I'm not biting.
http://www.candlesticker.com/Cs26.asp
DZZ
Bid @$18.35 This is just slightly more fun than EBAY...
oil, base metals, gold
Ok, so Bill said long ago, that gold was the last one off the dance floor. It looks like gold is dancing pretty seriously right now, yet the rest of the market is in a big state of ho-hum. Oil tanked last week, and copper is looking toppy, it's daily MACD rolled over last week.
So is this it? The last dance by the last dancer?
I'm sure that the gold shorts are not particularly happy with these last few days. Should we credit Goldman, or the big hedge funds all rested up from their summer in the Hamptons?
The one thing I'm certain it wasn't - the Chinese government telling its people to buy gold. That's like the US government telling its citizens they should continue breathing.
Re: oil, base metals, gold
Or the hedge funds can play up a new tune, and the dance begins again with financials soon enough...
GS has respected resistance twice just short of 170. Why not 3rd time lucky, with some go go juice provided by whatever fantasy is spun out of the next round of reports?
Re: Cup and handle forming on UXG?
UXG - MACDh says "short me", but potential momo play from the POG overnight makes it a risky play either way IMO.
Re: S&P and Moody's
MHP and MCO pummeling continues. Either this is just a grandiose shakeout/overreaction or the market is taking this ruling very seriously...
Re: oil, base metals, gold
ALOHA !!
So while POG and POS run up the USDX is still in the green, but most all currencies are up and gold is up in most all other currencies as well. So long as the AUD and the POG in AUD moves up it is a win-win for investors who got our of the USD and got into AUD based PM stocks. The XGD like the GDX has broken out up over 7%.
Silver Lakes Resources-SLR(ASX) is my largest holding on the ASX and my largest gold share holding. Even though the name says "silver" this is a 100% gold play. It was up nearly 14% on the ASX yesterday on strong volume closing at $0.865AUD. This is an all time high and over a 500% gain based on my buy-in price. I see no reason it should not perform well as the POG moves up and to be honest it has performed very well even when the POG was doing nothing.
LINK: http://www.asx.com.au/asx/research/companyInfo.do?...
If you are serious in researching and owning 100% gold plays in Australia then I would suggest GOLDNERDS. It is a subscription but my experience is that I have not found better research and data reporting. They just recently started their North America version of GOLDNERDS, which covers all 100% gold plays in the USA and Canada. It's an option.
GOLDNERDS LINK: http://goldnerds.com.au/
Disclosure: I own SLR and I know the guys at GOLDNERDS and am a rep, but not a paid one.
currencies
So I took a look at the four currencies today: FXA, FXC, FXE, FXB.
The weekly charts have one thing in common: the MACD is close to roll over on each one, with FXB being closest. And the weekly for $USD shows signs of a bottom.
Note that on the weekly chart, SPX doesn't look nearly as ready to roll over.
I did this because of Bill's morning commentary. I was looking for evidence that the buck was at a turning point, and that technically speaking, it could rally. It definitely feels like it.
Bear Thesis
Another part of the bear thesis is that cash for clunkers was pulling demand forward and that the cash spent on cars would be pulled away from other retail stuff. Retail same store sales today, however, told a different story, with the majority of stores beating estimates. Back to school sales were weak though, say the bears. But given that Labor Day is late this year, kids don't go back to school until next week in general. So there is still one more weekend of back to school sales.
I think people are easy to dismiss lots of things that are positive. We had solid ISM reports, solid construction spending, solid pending home sales and retail sales, job cuts are still going down, and companies have pared back their cost structure so that they can have leaner operations going forward when sales do grow, thus resulting in higher profits than people are anticipating.
Everything I hear in the media and on blogs dismisses all of this. They talk about how everyone has too much debt and won't spend. They talk about demand being pulled forward by these stimulus plans which obviously remove any demand going forward. They talk about how the dollar is going to rise and the markets will fall as a result.
I say it's time to look at a bigger picture. Bears say companies are beating earnings but its only because they cut costs. Ummm, in what recession have sales risen? Isn't that part of the business cycle? Companies cut costs, raise profits, use those profits to invest in their business, and then sales rise. That's the cycle, right? If we take a look at the dollar over a period of greater than the past 9 years we will see that the markets can actually rise while the dollar rises.
Maybe I'm crazy, but I do actually see the potential for sales and profits to rise...
Re: currencies
ALOHA !!
Davidfairtex-I agree, the USDX is holding strong in face of POG and POS "mini" rally over the past couple days, so it has yet to capitulate.
found a solid chinese company for a swing trade - CFSG
Was waltzing thru my Motley Fool CAPS account. Found this stock which has risen over 100% since I picked it. sigh. If only I'd take my own medecine.
Admittedly, I don't know how Shanghai will impact upon this stock. It's been a while since I've bought a Chinese ADR but the chart looks good and a stop limit is clearly defined to me. Let's see if HB&B intend to goose this rally again.
Nice numbers in its last quarterly as well. Plenty of Chinese industrial sites requiring modern fire control systems, or so it seems.
Just a little help please from someone in filling out a stop limit order ticket for this stock. I wanna be able to leave the computer. See attached.
What do I fill out there? Limit price is what? Stop price I understand and will fill accordingly. I know IB has tutorials but they move too fast for a dimwit like me.
Or do I want a stop only, or a trailing limit?
TIA.
Re: Bear Thesis
ALOHA !!
Teamonfuego-None of what you say is confirmed on US TREASURY DAILY STATEMENTS. If anything the US government is spending a lot more on Unemployment, not less.
Here is my angle. As a contractor I would sit around at lunch breaks and shoot the BS with subcontractors and other general contractors and I would always hear these guys throw out their earnings. Like one guy might say, well we made $12mil this year. SO WHAT ... what did you net? I could always tell the BSers because as soon as I asked about their NET things got uneasy or less "spirited"! HA!!! Even friends or relatives will mention they made $150,000, well so what ... What did you net?
In a World where Arthur Anderson is the "generally accepted accounting principles" I can never get overly excited about what is real profits and what are real losses. The line is too blurred! Mark-to-Whatever is the rule now!
Since the Fortune 500 would be the Fortune 5 without the US government spending I will continue to focus on the "under the radar" US TREASURY DAILY STATEMENTS. If you follow that then you will know all is not well and hasn't been for a long time. We're very close to another DEBT CEILING at $12.1TRIL USD. That means the US government will be out of money again ... HA!! More Geithner at the DC IMPROV!!
TAX REVENUES ... Remember what I said about NET in the above paragraph? Well TAX REVENUES are what workers NET and TAX REVENUES are at historical lows and going lower daily. If I ever see a reversal in that I will have CLUE#1 on "real and verifiable" greenshoots! Not the CNBC variety ...
CNBC needs to change its format to the COMEDY CHANNEL!
That's my take on REALITY!
That's my spin on the too much DEBT issue. Like Mises said, "No government need worry about not having enough money ..." This is a fiat standard not gold. Zimbabwe has yet to run out of paper money and it takes a billion dollars to buy a roll of toilet paper!
Re: oil, base metals, gold--Central/S. Am gold plays
On the theme of researching gold plays in other parts of the World I have a suggestion that may be of some help to the community here. (I haven't had many so here goes :))
I have been on the IKN email list for almost a year now (http://incakolanews.blogspot.com/). (I am very skeptical and cynical when ti comes to recommending anything these days so waited for time to tell the story.)
It is written by a person living in and investing his own money in Central and South America mining plays... mostly gold. The author (otto) takes a fundamental approach to all recommendations and does so in a ruthless, hard-headed, undiplomatic, often crass way. Bottom line -- he has been lots more right than wrong. I appreciate his honesty; forthrightness; and desire to point out the gross distortions of the western press as well as the deep social injustices of the political regimes of the countries the companies he's reporting on.
I have asked and obtained permission to mention his newsletter here, as well as his favs--FVI.to and DMM.to.
FD - I have no relationship with IKN or otto whatsoever except as a reader.
I do own DMM.to
Ideas to go long natural gas?
The natural gas price seems to be low enough to take a medium term (6 month?) long position. Does anyone have suggestions for long natural gas positions?
Higher or lower?
It all depends on your POV.
This from Ritholtz' Big Picture
Blaming the Wrong Group
By Michael Panzner - September 2nd, 2009, 2:48PM
Dan Gross is one of America’s best financial journalists, but that doesn’t mean he always gets it right (He did, after all, publish a book in the spring of 2007, just before the financial world fell apart, which claimed that “bubbles are great for the economy”).
In his latest column for Newsweek, “The Failure Caucus,” Gross maintains that those who are skeptical about the near term prospects for a sustainable recovery have a vested interest in a different kind of outcome — they want to see the U.S. economy fail.
Most Americans have a lot riding on the success of the government’s efforts to pull the U.S. economy out of its ditch: individual investors, bankers, Federal Reserve Chairman Ben Bernanke, Democratic politicians, and taxpayers. A somewhat smaller group has a lot riding on the failure of these efforts. I’m not simply talking about investors who are betting against the markets and who believe the recent stock-market rally is overdone. I’m talking about the Failure Caucus, a group spanning the political spectrum that has invested reputations, egos, and, in some instances, their political futures on the notion that we’re in for several more years of economic trauma.
Unfortunately, Gross relies on the old propagandist’s trick of lumping fools and crazies together with rational observers who have legitimate cause for concern, in a way that discredits them all.
Worse, he fails to see the irony of his position: it’s actually the permabull posse of policymakers and financial leaders — not to mention the cheerleaders in the media – who failed to see the disaster coming, and who now argue that a debt-and-speculation-fueled overdose can only be cured with more of the same, who are the ones betting on failure.
In fact, the real risk right now, to paraphrase Michael Darda, an optimistic economist cited by Gross, is in being too positive.
Source:
The Failure Caucus
Daniel Gross
RE: Bear Thesis
More from Ritholtz' Big Picture
Data Points to Ongoing Economic Woes
By Barry Ritholtz - September 2nd, 2009, 9:00AM
Despite the cheerleaders best efforts, the latest set of data to come out is filled with signs that the recovery — when it finally arrives — will be unimpressive. The best word for it is probably “sluggish.”
My belief has been the government stimulus, cash for clunkers, and first time buyers tax credit has partly obscured the ongoing weakness, making it appear better than it really is. As these programs sunset, what is left behind is a wounded economy, healing very slowly.
Employment: I am not a huge fan of the ADP Report — its useful for trend only, but its precision and accuracy is somewhat wanting. However, the downside surprise this morning lends evidence that we will not see a notable improvement in NFP on Friday.
Bloomberg:
“Companies eliminated more jobs than forecast in August, a private survey indicated today, signaling that employers have yet to gain confidence about a recovery from the deepest recession since the 1930s.
The 298,000 drop followed a revised 360,000 decline the prior month that was smaller than previously estimated, according to figures from ADP Employer Services.”
Retail Sales: No money, no sales. With hiring soft, wage gains flat, and various costs of living like health care and education seemingly immune to deflation, the consumer is pinched. (Don’t blame me, I am doing my part).
WSJ:
“Shoppers are focusing on deals and limiting buying mainly to necessities, based on August sales estimates that herald another tough holiday season for beleaguered retailers.
Despite sales tax holidays in several states designed to spur sales, back-to-school spending remains lackluster, according to industry experts. Retailers’ recent efforts to shake customers from deep discounts and spur buying by tightly controlling inventories are fizzling.”
Housing: I have long argued that against reading seasonality as an improvement in real estate, yet that was exactly what we got in the recent string of NAR data.
The”annualization of seasonality,” as Mark Hanson calls it, completely misstates the reality of the housing market. Hansin notes that on a “real” — not-seasonally adjusted basis — the national pending sales fell out of bed: It was down 7.4% m-o-m.
Hanson Advisors:
The Northeast plunged 20.9%, Midwest 15.2% and South 5.6%. The West was up 7.9%, which was likely due to end of the $10k New Home tax credit I highlighted over the weekend. In addition, the West had been lagging other regions so part of the jump could be end of the season buyers just ‘going for it’. The drop in the Northeast was startling — perhaps this will result in fewer condo sales in the region in the next existing sales report.”
And that’s before we even get to the issue of commercial real estate, as detailed in this mornings NYT:
“Even though industry lobbyists were able to persuade Congress to extend a loan program aimed at prodding the stalled securitization market back to life, several analysts said it was unlikely to head off a spate of defaults, foreclosures and bankruptcies that could surpass the devastating real estate crash of the early 1990s. “It will prop up a few deals, but you can’t stop the wave that’s coming,” said Peter Hauspurg, the chief executive of Eastern Consolidated, a New York brokerage firm.
The distress is still in its early stages, analysts said. “We are between the first and second inning,” said Richard Parkus, who directs research on commercial mortgage-backed securities for Deutsche Bank. “We’re going to have to get through a very difficult period.”
Finally, the ISM was a more positive datapoint, but it is essentially a survey (diffusion index) and not an actual measure of production, sales or hiring.
~~~
The bottom line is that this not a healthy situation, and it is not likely one that is on the verge of snapping back anytime soon.
Regardless of the “message of the market” — a 50% rally from deeply oversold conditions is not the same as an improvement in Hiring, Sales, Income, Industrial Production or Housing.
Beware those who tell you it is . . .
Re: Bear Thesis
Kaimu - Wow you threw a lot of random things out there. In regards to the construction discussion, you're backing up my opinion that net is important. Bears say net income beat, but only because of cost cutting. I say, yeah and your point is??? Shouldn't we be happy companies are making more? Don't those extra profits eventually spill back into the economy? In what recession has there been growing revenues across the board?
Regarding Arthur Andersen...the only companies marking to market (or not) are banks. Banks make up a small part of the overall S&P 500 and it's clear those have been back stopped...
Regarding the Debt Ceiling...haven't people been saying this for 80 years if not more? Debt to GDP was at its peak in the 1930's when it was time to buy the market.
Regarding CNBC...I agree. I only use them to determine sentiment.
Regarding Zimbabwe - you don't really think the U.S is like Zimbabwe do you?
RE: Bear Thesis
So Ritholz is allowed to ignore data like ISM when its good but point to it when it's bad:
http://bigpicture.typepad.com/comments/2008/02/ism...
Re: HNU.to/HND.to
"David- You made the right move yesterday, hedging with the trend ;)"
Too bad I didn't keep my HND.TO position until today. But at least I bought some October $9 UNG puts yesterday at $0.8 and sold some naked UNG October $11 calls a few days ago, which are already down by 50%. And most importantly, yesterday I closed all my long positions in Nat Gas. So now I am squarely "dark side" and I should say things look much brighter on the "dark side" :)
Gold Stock at close today
Any predictions for close today. Any mad rush to buy or does the sell off start now?
Thanks in advance
Re: Bear Thesis
YES!
From wikipedia...
"The buildup and involvement in World War II plus other social programs during the F.D. Roosevelt and Truman presidencies in the 1930's and 40's caused a sixteen-fold increase in the debt from $16 billion in 1930 to $260 billion in 1950. After this period, the debt's growth closely matched the rate of inflation where it tripled in size from $260 billion in 1950 to around $909 billion in 1980. Nominal debt in dollars quadrupled during the Reagan and Bush presidencies from 1980 to 1992, and remained at about the same level by the end of the Clinton presidency in 2000. More recently the debt increased from $5,629 billion to $9,926 billion during the George W. Bush presidency from 2000 to 2008. The debt is now projected to double under the Obama presidency to a level close to 97% of GDP."
Projected to be 100% of GDP by 2012.
Zimbabwe has debt of 219% of GDP in 2009.
We haven't stopped spending though and our tax collections, as Kaimu notes are still falling. I'm sure he will be happy to give you the figures....
If we added up our total debt we wouldn't be far off, Zimbabweans owe $600 per person in debt. YOU owe over $30,000 in government debt alone, not counting personal debt.
RE: Bear Thesis
So interestingly enough, the MARKET ignored the ISM data during the big move down Monday. :)
Still, TOF does have a point - not about things ACTUALLY getting better, but about the rally being able to continue on the "Less Worse is the New Better" theme. Witness: JWN rallied today on a same store sales loss of 7%. Of course, HB&B estimates said loss of 9% and so they handily beat the low ball estimate. It helped that the RSI of JWN was 36 at the time of the news release, and it had spent 6 of the last 7 days going down.
TOF, I don't think things are getting better. They're getting less worse. Think we can go back to 2007 earnings, prices, and so on by spending a whole lot of money we don't have? I don't. People just don't have the jobs, the savings, or the earnings to do that. Credit is contracting too, 1 in 8 mortgages are nonperforming - etc, etc. We see some slight movement up in case shiller, but Mr. Mortgage suggests that's only because higher end homeowners are starting to capitulate and so they're a bigger chunk of the market than before, which raises the case shiller averages.
But none of this stops the market from rallying, and if it continues to rally on "beat low-ball estimates" tactics, maybe a good bet is to keep buying those dips.
womped on some ford when cnbc
mentioned it for a quick one...not bad for a tv trade.
Ford
that was cool....
this name is still good for a long investment from here.
Re: Bear Thesis
Wow, in Westchester County NY, I see stores with fewer customers than one year ago, restaurants universally telling me that business is off a lot, homes not selling, closing businesses, and a lot of people taking pay cuts or being put out of work. Add to that contracting consumer credit.
Re: Bear Thesis
I am very bearish housing and the consumer economy. I am very bullish this glass of Appletons:)
Ford was very very good to me:)
Would you guys please acknowledge my bullish gold and silver call this past Sunday night? I think that's pretty smooth stuff myself:)
Remarks on solar from the mad hedge fund manager
3) The solar industry is suffering some 19th century Darwinian style competition, with Chinese manufacturers Suntech (STP) and Yingli Green Energy Holding (YGE) clearly dumping panels below cost to gain market share. You may laugh, but I watched the Japanese pursue the same strategy in the seventies and eighties to devastating success. They now control half the US automobile market, and the most profitable half at that.
As a solar consumer I shouldn’t care, as the 50% price drop has, with Obama’s generous tax subsidies, made new installations cheaper than obtaining electricity from my local power company (PGE) at 12 cents a kilowatt. It’s just a matter of booking the profit in China instead of Phoenix. But the predatory pricing has also kicked my beloved First Solar (FSLR) in the shins, which has dropped from 44% from $205 to $115 since May.
Use the move to pick up FSLR on the cheap. The company is using advanced cadmium telluride based thin film semiconductor technology, which has enabled it to match the Chinese price cuts dollar for dollar, and the engineering will allow them to continue to do so. The Chinese, wedded to an older polysilicon product, can’t keep playing this game, unless they want to hemorrhage cash, or face US anti-dumping enforcement. To see more on the current fundamentals of solar
http://blog.madhedgefundtrader.com/
Where do they come up with these kooky people?
“The total breakdown of the system is ahead of us. It may come in four, five, or ten years, and it will devastate the world economy. By bailing out the issuers of derivatives, the Fed actions have only postponed the day of reckoning,” said Marc Faber, publisher of the Gloom, Doom & Boom Report.
night all.
CEF @ 12.84
Giving it a shot. Glad I cut my losses short on UNG yesterday. What a PITA that thing is becoming. Play with fire and you get burnt.
Re: Bear Thesis
Zimbabwe...just wondering what the difference is between their economy and ours...
What do they produce? Do they have a democracy or dictatorship? What countries do they do a lot of business with? What is their school system like? Do they have unemployment insurance? How are their hospitals? How is their legal system?
Just wondering...
Re: Bear Thesis
Geez Shark, I was following you, but for crying out loud, it's called 'self' esteem for a reason. Give *yourself* a pat on the back and call it good! If you made money, and I'm sure you did, then that should be all you need.
Be happy!
Besides, I think I mentioned a few days ago (RE: ETFC) how I sometimes don't think you are right, but you usually prove me wrong.
Re: Bear Thesis
Where I am in San Diego a lot of my friends are actually buying homes because prices have fallen so much that it is just as affordable to own a home as it is to rent. And whenever I go to the malls the traffic is the same as it was in the past from what I can tell. We've also experienced a pretty nice pickup in sales in my furniture retail business.
My point is I think it's hard to get an idea of how the entire $13 Trillion economy is doing by looking at how things are doing in Westchester County or any other single location for that matter.
Re: Bear Thesis
1. I'm not going to defend Ritholtz. He uses the data he uses and he used more than ISM and more then his own analysis in the story. For example, NAR is notoriously biased. We'll see what employment (a trusted U.S. Government statistic?) is soon enough. I wonder how the birth/death adjustment is going....? Do you suppose they like it when it serves them and don't when it doesn't? Is the government more trustworthy then Barry? Flip a coin?
2. There is a ton of information on Zimbabwe online. They owe most of their debt to European nations you are familiar with and their economy is largely service industries, manufacturing, farming and mining like ours. Not as modern of course, but some of the other things you mention, like unemployment insurance, are simply more debt to our ledger. Not exactly a positive when it adds to debt and for a lot of people is the only "income" right now.
Some of their trouble does come from trade sanctions.
3. Debt as a percentage of GDP is debt. Either you can pay or you can't.
With ours scheduled to be 100% of GDP in 2012, are you suggesting we can pay it?
Would you loan me $$$ if my debt took all of my income? I bet not.
Re: Bear Thesis
San Diego, for the most part, is VERY affluent. I travel a lot and it is one of the nicer areas I work in, if not the nicest. It is not representative of most of the country, not by a long shot. I know quite a few people there and in talking to them recently they recognize it. Over 300 days of sunshine and a lot of government income RE: Military, helps.
Re: Bear Thesis
Look, I don't know enough about Zimbabwe nor do I know enough about Ritholtz. Personally, I could care less. What I do know is that there are far more skeptical/bearish people out there than bullish which makes me more bullish. I'm going to stick with my handy dandy long term indicator which is telling me to buy and let the government data that everyone is pointing to be what it is...just noise that fluctuates markets in the short term.
Re: DZZ
DZZ - I did not buy-in at the low of the day of $18.35 but did buy some. As of 4:25pm EST, it can be had for $18.55.
This is for a short-term contrarian trade - it has been bid up too suddenly, too fast...
Re: Bear Thesis
ALOHA !!
teamonfuego- You miss my point in a few areas.
NET - Unemployment goes up, more people unemployed, more cost to the US Treasury. NOT GOOD! The real story lies in US TAX REVENUES from US workers. They are at historical lows and going lower so that tells me if less taxes are rolling in either less people are reporting taxable income or they are making less and "netting" less. After all your tax liability(the check you write to Uncle Sam) is based on NET not gross. If you have a profit you owe taxes if you have a loss you don't owe. So obviously those who have profits are much less and the profits are also less otherwise we would have booming tax revenues like the Clinton years! Again NOT GOOD based n the data I follow.
Beating "lowered" expectations on profits derived from "cost cutting" or "one off" asset selling does not translate to "real profits". Further it becomes a death spiral as a CONSUMER BASED economy with less revenue and higher unemployment does not bode well for any corporation, except those that bypass the "consumer" factor like LMT. Consumers do not buy F-24s, governments do and LMT profits are subsidized by government spending and as the US TREASURY DAILY STATEMENT shows government spending is about the only thing going up exponentially in America right now. In fact, you could say it is a BUBBLE! Like any other bubble built on malinvestment via easy money!
AA- Wrong, there is NON-GAAP reporting ... and FASB rules apply to more than just "banks".
DEBT - When a government takes itself off the gold standard then yes there is DEBT, because the natural propensity of humans with unlimited money is to SPEND! Is not the US Congress made up 100% of human beings? Last I looked OBAMA was human, Geithner wasn't but then he's just a JOKE MACHINE! So whats missing from your 1930s observation is that America was not a DEBTOR NATION back then and in fact we were the largest oil exporter and the USA was coming off massive surpluses from 1920(one year after WW1)all the way up to 1930 we ran surpluses. That is not the case today. In fact if your recall FDR had this thing going called LEND LEASE which was driving our DEBT even before we enetered WW2. Here ...
Lend-Lease (Public Law 77-11)[1] was the name of the program under which the United States of America supplied the United Kingdom, the Soviet Union, China, France and other Allied nations with vast amounts of war material between 1941 and 1945 in return for, in the case of Britain, military bases in Newfoundland, Bermuda, and the British West Indies. It began in March 1941, over 18 months after the outbreak of the war in September 1939. It was called An Act Further to Promote the Defense of the United States. This act also ended the pretense of the neutrality of the United States. Hitler recognized this and consequently had his submarines attack US ships such as the SS Robin Moor, an unarmed merchant steamship destroyed by a German U-boat on 21 May, 1941 outside of the war zone.
So FDR was doing all he could to get a reluctant US Congress into WW2. He finally got us in with Pearl Harbor, but from a CREDITOR standpoint we were already in WW2 by 1941. We were already financing our allies military and Hitler saw that!
The height of WW2 the USA committed 86% of its receipts to the DOD. Are we doing that now for the WAR ON TERROR? We couldn't afford a Defense of that magnitude and still have our current living standards in place. At the height of WW2(1945)the USA had 52% of outlays covered by receipts. Right now we barely have 25% covered and if you add the costs of US DEBT and IOUs then we only have 17% covered. See how the diminished capacity due to DEBT ATTRITION is causing this "recovery" to be non-existent?
Your views are based on TOO BIG TO FAIL and GDP percentages and the idea that like Japan we can do the same and debt will go on forever. Japan is very close to a debt using QUADRILLION instead of TRILLION Yen. I come from the aspect that it WORKS UNTIL IT DOESN'T ... so its not a matter of if, but when. I don't know about you but I am taxed out. I am not Warren Buffet who seems to be okay with paying more and more taxes and is begging the IRS to come take more of his money. There comes a time when more and more DEBT buys no growth ... ZERO. Then what? Once the negation of entitlements begin the riots will start in earnest in America. What I mean by "negation" is that there need not be an "official announcement" that the US government will no longer pay Social Security or Medicare or Unemployment, that will never happen. What will happen is that the payments(benefits) will not be enough to sustain daily life and that is an "unofficial" negation. Just like China buying IMF SDRs and canceling derivatives contracts is an "unofficial" US Sovereign Credit rating downgrade, because S&P and Moodys(US corps) will only seriously downgrade US DEBT when the collapse is over.
ZIM-Obviously interest rates are not running 5000% percent here. Yet, there's only a 4% separation, as 96% of our US Dollar purchasing power has disappeared over a 96 year period, while 100% of Zimbabewe's dollar purchasing power is gone. So at 1% per year we have four years left until 100% of our Dollar's purchasing power is gone. While we are not the same there are similarities ... look what the last 4% looks like! If only you and I could go back in time to the 1700s and meet people then and tell them what we pay for gas and food and houses now they would think we were Zimbabwe! They would never imagine in their wildest dreams we are the World's Reserve Currency. Its all relative and I do not think the masses want to look in the mirror just yet, but I do think they have an uneasy feeling about the future and with good reason, because the money system and the political system we have now is clearly not working or we would not be HERE!
At this point WE THE PEOPLE can only learn from a collapse and nothing less.
I suggest you go read over at MISES.ORG the two part series by the 2008 Presidential Candidate Ron Paul about the US FED. They have had 96 years to get it right! Would you call this RIGHT? HA!! More IMPROV!!
I'm all for CHANGE! BRING IT ON!
-ELIMINATE US INCOME TAX
-ELIMINATE THE US FED
Re: Bear Thesis
It's great to see it from both angles. For those who don't regularly visit Minyanville, there is no consensus here. Kostohoryz has been prescient in calling this bull market rally for some time now. He's worth reading: the latest
Two Warnings For the Bears
http://www.minyanville.com/articles/consumer-deman...
the next short entry
I am glad that S&P closed above the psychologically important 1000 level today. Now, if S&P closes below 1000 tomorrow (or better yet below 995, which was the intra-day floor for the past couple of days), that would be a pretty clear "lower high" and also a pretty clear indication that there is more interest in keeping S&P below (possibly WAY below) the 1000 level.
Re: Bear Thesis
TOF I think its awesome for you to stick to what you believe in. We need more people here that state the bull case.
And, not to put too fine a point on it, the bull case has been the right choice for the past 6 months. :)
Re: Bear Thesis
ALOHA !!
"My point is I think it's hard to get an idea of how the entire $13 Trillion economy is doing by looking at how things are doing in Westchester County or any other single location for that matter."
The US Treasury is spending $10.6TRIL in DEBT and TAXES to keep the $13TRIL economy going.
You look at hedonistic GDP ... I'll look at actual numbers!
The contrarian trade would be to bet on more collapse since the masses in California are still spending as if it was NIRVANA! Do stores in San Diego take Terminator IOUs? I bet against the masses and so far I have made a lot of money! Nobody in America is expecting collapse. TOO BIG TO FAIL is what they all buy!
Re: Bear Thesis
Men's underwear sales are down 2%, taking us one step closer to Zimbabwe...
Re: Bear Thesis
ALOHA !!
I posted-"The US Treasury is spending $10.6TRIL in DEBT and TAXES to keep the $13TRIL economy going."
Oops its been a couple days since I looked at the US TREASURY DAILY STATEMENT, but the US Treasury just went over the $11TRIL USD in spending and we have 27 days left in FY 2009. So $11TRIL in outlays financed by DEBT and TAXES to keep the $13TRIL US economy going.
Another milestone was hit on the same day, Sept 1, the US DEBT comprised of Treasuries(marketable) and Government Account Series(non-marketable)just went over the $50TRIL USD mark ... I am only reporting ... So $41.8TRIL of that DEBT is in "non-marketable" securities.
Bill, spoke of the healthcare getting passed in increments, but one feature of that healthcare would be yet another PUBLIC TRUST FUND to "borrow" from. Some new blood for the US Treasury to tap into. More taxes for the new TRUST FUND that will be immediately spent to leverage the US EMPIRE and buy more time while all future Americans will be left with is a huge "unfunded liability" for entitlements that not even China will want to touch!
EMPIRE is always built on the foundation of TOO BIG TO FAIL ... So where are all the other past Empires?
Re: Bear Thesis
ALOHA !!
CP posted-"Men's underwear sales are down 2%, taking us one step closer to Zimbabwe..."
That's some kink ... How is it you know that dudes in Zimbabwe wear underwear?
Re: Bear Thesis
sorry i don't have enough time to read this post in its entirety but one thing that i noticed:
"If only you and I could go back in time to the 1700s and meet people then and tell them what we pay for gas and food and houses now they would think we were Zimbabwe"
i wonder what they would say if they saw what we make...
You bears are lost in the woods........
Here's one for your watchlist.....Most of the action in FRE/FNM has been after-hours...inexplicable in the absence of news.
Did someone issue a memo?
Re: Bear Thesis
I still think it is funny (and kind of sad) that after the Beijing Olympics, Zimbabwe president Robert Mugabe honored Gold Medal swimmer Kirsty Coventry with a prize - a briefcase filled with $100,000 USD. Wonder how much that is in Zimbabwean currency?
http://news.bbc.co.uk/2/hi/africa/7589297.stm
Re: Bear Thesis
kaimu - "How is it you know that dudes in Zimbabwe wear underwear?"
Search me, you'll have to check the statistics on that one for yourself:
http://www.economist.com/blogs/freeexchange/2009/0...
I'm not recommending a personal survey however, because that would only provide local data. The stats are probably available somewhere on-line...
Re: Bear Thesis
Very well said by this guy. I think he's correct. Psychology changes everything when it comes to the consumer. While the total jobs picture (in terms of number of people working) is worse now than it was back in February, I can guarantee you that retail sales are much better right now. I'm seeing it in my own retail business.
FRE FNM C rally
Just watch these and currencies + vol for clues. Mkt can't crash or rally without financials. And is it even a rally when prices are going up from purchases made with debt? It's all usd denominate pumping.
I am sticking with my gold positions and will watch for weakness. I think you will be able to successfully anticipate when the music stops by watching when the gold rally putters out, C no longer trades 1b+ shares per day, and usd is fiercly defended.
Re: You bears are lost in the woods........
This just adds credence to Kaimu's thesis. What fundamental value do these collections of underwater financial detritus have?
Re: Bear Thesis
All we can do as participants of this casino is look at clues and trade prices. Bull bear is a tool the street use to con us. I am trying to kick it out of my vocabulary. Here is my advice; anytime you hear the words "bull mkt or bear mkt" think of Jim cramer and cringe. Those words are tools from the sell side.
As forthe real economy, I dare anyone here to quit your job without the next one lined up. 2 yrs ago I could have had my pick where I want to work. I can name too many friends unemployed.
True you cant base your judgement of the country or the world by 1 metro market. And true the economy, earnings, jobs and housing all will come back. But I think those exits on the highway are much further down the road.
And the same crooks are still running the joint so until that changes, any recovery is just a loan to us normal folks by the hb&b cartel.
Sorry for any typos, on iPhone
Oracle/Sun Micro
Big Brother Brussels steps in:
Sep 3rd 2009
From The Economist print edition
The European Commission takes a good look at a big technology merger
FOLLOWERS of competition policy had expected the next big antitrust news to come out of Washington. After all, the administration of Barack Obama has let it be known that it would be more vigilant, particularly with regard to information technology. But on September 3rd it was the European Commission that grabbed the limelight.
Its trustbusters announced that they will take a closer look at the proposed $7.4 billion acquisition of Sun Microsystems, a troubled hardware-maker, by Oracle, the world’s second-biggest software firm. Is the world heading for another transatlantic row about antitrust akin to that of 2001, when a planned union between General Electric (GE) and Honeywell caused a stink?
There are certainly parallels. The two firms are both based in America. And just as in 2001, the Department of Justice had already cleared the deal—on August 20th. But Brussels has a mind of its own. It worries in particular that the merger will reduce competition in the market for corporate databases. Oracle is the world’s biggest vendor of “proprietary” (essentially meaning “paid for”) software to run such databases, with a market share of nearly 50%. Sun is the owner of MySQL, the most widely used “open-source” database software, which already competes with Oracle’s products and could become more of a threat in the future. Neelie Kroes, the competition commissioner, said that she had “serious concerns” that the deal would reduce choice and lead to higher prices."
http://www.economist.com/businessfinance/displaySt...
Economic and financial
Economic and financial indicators
Sep 3rd 2009
"American manufacturing expanded in August for the first time in 19 months, according to the Institute for Supply Management. Its main indicator rose by four points, to 52.9, the first time since January 2008 it has been above the reading of 50 that separates rising from falling activity. New orders for factory goods rose by 1.3% in July. The National Association of Realtors’ index of pending home sales rose by 3.2% in July and was 12% higher than a year earlier. Americans’ personal incomes were flat in July, but their consumption rose by 0.2%.
Australia’s GDP rose by 0.6% in the three months to the end of June, thanks to strong exports and resilient consumption at home. The increase left GDP 0.6% higher than in the second quarter of 2008.
Consumer prices in the euro area fell by 0.2% in the year to August, according to a provisional estimate. The euro zone’s GDP rose by 0.1% in the second quarter, unrevised from an initial estimate. The unemployment rate edged up in July by 0.1 percentage points to 9.5%.
Industrial production in Japan rose by 1.9% in July. Although this was the fifth straight monthly increase, output was still almost 23% lower than a year earlier.
Britain’s GDP fell by 0.7% in the second quarter, revised up from an earlier estimate of a 0.8% decline.
India’s GDP grew by 6.1% in the 12 months to the end of the second quarter."
http://www.economist.com/markets/indicators/
What is REALLY important
Is to take care of yourselves and your families. Go give them a hug right now and take care of them and yourselves.
As you may remember, my wife's best friend since she was 2 years old is Kathy Brown-Babylon. Her husband played keyboards for Elton John since 1988.
Last night he died of a heart attack while swimming in the pool. He was in great shape, a competitive swimmer. He was 52 years old.
Please, everyone, enjoy life and take the best of care. Life is short, keep it in perspective.
http://web.eltonjohn.com/news/article.jsp?ymd=2009...
http://www.ethiopianreview.com/articles/28698
Re: Bear Thesis
I think it's been a healthy discussion, now as you say back to prices. (Which are defying gravity?)
The truth is, government is only 20% of the US economy, they can feed on the body of the rest of us for a long time before we roll over. We will continue to buy beer, bottles of wine, gas, pay our cable and tel bill, food and clothing for our family. Moving along as tho' there's nothing wrong here. Disintegration takes a lot of time. How many centuries did it take for Rome?
"This slow decline occurred over an estimated period of 320 years which many historians believe finally culminated on September 4, 476 when Romulus Augustus, the last Emperor of the Western Roman Empire was deposed by Odoacer, the Visigoth king."
"From the eighteenth century onward," Glen W. Bowersock has remarked,[1] "we have been obsessed with the fall: it has been valued as an archetype for every perceived decline, and, hence, as a symbol for our own fears."
http://en.wikipedia.org/wiki/Decline_of_the_Roman_...
Tunes
BTW, I enjoyed the YOutube tunes posted last night. A fine touch
Re: Bear Thesis
ALOHA !!
"i wonder what they would say if they saw what we make..."
They would bow and say, "Your Grace, KING GEORGE, I am at your Grace's service. Shall I summon the Royal food tester ... Perhaps the court jester? Alas, Sire thy jester hasth escaped to Washington and he doesth reside at the Treasury building. My apologies Sire!" HA!!
I wonder what they would say about the DEBT we own?
You did what? Signed a contract for 30 years paying twice as much as the house cost? And you get how much back in tax deductions?
What are tax deductions?
And you can't even grow food or have cows and chickens? And you have to pay how much insurance and property tax?
What's insurance and property tax?
MORE IMPROV!
Karl Denninger on the DEBT collapse ...
LINK: http://tinyurl.com/m4br6l
Okay ... so TRILLIONS OF SPENDING AND DEBT piled on top of more TRILLIONS in FY 2010 is meaningless and we can go on forever until we obtain "YEN STATUS" and start reading QUADRILLIONS? Does anyone here think OBAMA won't spend as much as he spent during FY 2009 in FY 2010? I believe he will tax and spend more but that will all be overshadowed by the overall US DEBT.
Okay ... WOW ... now that's powerful confirmation that TOO BIG TO FAIL is way into "overbought" territory!
Sounds like an Empire trade ...
Re: Bear Thesis
ALOHA !!
Okay CP ... I'll go along with the NO SKIDDIES survey!
Re: Bear Thesis
:-S
What on earth are you blathering on about now Kaimu? ;-) And that Math! Geesh!
http://www.1728.com/percent.htm
Driving the wrong way? Never too late to make a U-turn.
Going back to one of my favorite Graifer analogies.
When David finally gave up on HNU.to, it was under CDN $2. And he still made money. Had he held it longer than a day, he would have made serious money. That's after the fund has already dropped over 96% from it's 52-week high!
If your destination is San Francisco, it doesn't matter how many hours (or days) you've been driving east on I80. You have to turn around. And you'll still eventually make it to the Pacific Ocean.
Re: Driving the wrong way? Never too late to make a U-turn.
"When David finally gave up on HNU.to, it was under CDN $2. And he still made money. Had he held it longer than a day, he would have made serious money."
2nd_ave, you probably meant to say that "When David finally gave up on HNU.to AND SWITCHED TO HND.to..." Had I held HND.to between yesterday and today, I would have made more money. But I am not that upset, as I loaded up on UNG puts yesterday, and even though UNG did not drop that much today, it will drop A LOT when its premium finally disappears. So my puts should do very well... It does feel good to go with the trend. And if the trend unexpectedly changes and the spot price doubles over the next month, then my maximum loss will be limited to the small price I paid for the UNG puts.
I wanted to buy a little of HND.to today and hold it for a month while treating it as puts that do not expire (rather than day trade a LARGE HND.to position as I did yesterday), but Etrade said that the funds were still not settled from my yesterday's trade of HND.to and so I couldn't buy any more today. Usually the fate protects me from myself, so HND.to might have a good drop tomorrow. :)
bond spreads
Yesterday I posted the following excerpt from David Rosenberg:
"Baa spreads have stopped tightening and have widened back to levels seen a month ago. High-yield spreads have widened roughly 50bps from their recent tightest levels of just three weeks ago and are back to where they were at the end of July — when the S&P 500 was at 987. Keep your eyes on the credit market — it tends to “lead” equities."
Today, I found a way to track the bond spreads: markit.com. This is the page of interest: http://tinyurl.com/merz64
Click on "Markit CDX Prices" on the left and then click on the CDX.NA.HY series to see the spreads for the North America High Yield Corporate bonds and on CDX.NA.IG to see the spreads for the North America Investment Grade Corporate bonds. The spreads for both of them rose today, so the EOD rally in the stock market might be a bull trap based on this info.
Incidentally, the CMBX prices, which are also available from markit.com at http://tinyurl.com/l5fmbh, also went down today, putting under suspicion the late day rally in IYR today.
Re: You bears are lost in the woods/ The Sharp Shark
You make a good point, shark.
Who, exactly, says there must be another spike down? Is there a Market Transit Authority that has scheduled a return trip to 666? No, the last time we checked it was just the Horrorscope Authority. Which, according to Craig: "Your anus (I mean Uranus) is your natural ruler, so with Saturn standing in the doorway, blocking Uranus' right of way, the wilder side of Uranus will be tempered and tamed."
What if the next stop is DJIA 10000-11000? How many bears will survive those kinds of elevations?
Seriously, why must we revisit the lows? What if those lows were panic-driven baby-out-with-the-bathwater sell-offs that in retrospect will have created the buying opportunity of our lifetime (along the lines of Doug Kass' generational lows)? We can't spend the rest of our lives looking for it, can we? Pity the poor bears who died in 1999 still expecting a return to the 1974 low of 600?
Re: Driving the wrong way? Never too late to make a U-turn.
David- Yes. Thanks for the clarification.
Re: bond spreads
David - The charts of the CMBX spreads say to me that we're still in an uptrend...higher lows and higher highs is what I see.
Tomorrow's headlines: DJIA rallies 630 pts on jobs report
It briefly touches 9995, followed by minor profit-taking to close at 9974.
Re: bond spreads
teamonfuego, at this point the long-term trend has not been convincingly broken, either for S&P for for bond spreads. However, we will only know in retrospect (i.e. after a month or so) whether the long-term trend was indeed broken in early August. The series CDX.NA.IG did put in a higher low last week relative to the low in early August, and today it broke above the recent high of mid-August. So if tomorrow this series turns down, it will still look like a higher high and a higher low since early August.
Re: Tomorrow's headlines: DJIA rallies 630 pts on jobs report
2nd...err..Oracle- Could you please post your prognostications before 5pm pdt, so the non-clairvoyant can sleep in?
Report on 3:30pm rally on JPY-EUR trade
http://tinyurl.com/mas73l
Re: Tomorrow's headlines: DJIA rallies 630 pts on jobs report
I posted DJIA 9974 by the end of September last night.
Seriously, it's all in fun. I post these numbers with the same nonchalance I have when throwing out two reds on hi-lo in craps. It's a casino and my guess is as good as yours. Right now I'm leaning towards one of Vad's scenarios- too many people are expecting a sell-off, and really the only way to put a stop to that is to take it up several hundred points in one day and shut them up for good ;) The slow roast on a skewer is getting old.
Let me also make clear that I have NO MONEY riding on my take. (In fact, I have no positions at all.) It's an armchair quarterback call.
Bill's commentary and topic du jour
"But, we are at a point now where the $USD could make a break from the lower end of a 78-81 trading range to maybe 74. In terms of the implications of future inflation in America, or the ability to sell Treasury debt to foreigners who would be worried about cashing that debt in on maturity for what I call wooden nickels, I cannot see the USD going further south than 73-74. If it did, the future of the US would be so bleak that major policies would be needed changing, like withdrawal of all troops in foreign countries, postponing indefinitely the healthcare reforms (which I believe will come in stages by the way), and eliminating much of what the workers have earned in the form of pensions.
Frankly, I don’t see that happening. There are too many vested interests that would fight it, so what I do see happening is tough love being forced upon the average American, and by that I mean the equity market is going to have to take a swan dive."
I am a little suprised that there were no discussions about this today. I watched all day long looking for it. My question is concerning how the time frame is going to work. I presume that the last paragraph meens that when interest rates start going up, equities will "dive". In Canada, interest rate increases are about a year away, supposedly. Are US interest rate increases any closer? I guess the implication is that the market will smell one coming half a year away and anticipate it. Can you clarify this for me Bill?
Re: Tomorrow's headlines: DJIA rallies 630 pts on jobs report
2nd_ave, are you trying to scare off all the bears into finally capitulating and having the ultra-shorts all to yourself? :)
Re: Tomorrow's headlines: DJIA rallies 630 pts on jobs report
Well, no. If that was the object, I WOULD have posted it before 5 pm PDT.
Re: accepting congratulations, receiving applause
Cut it out sharkie. Nobody cares.
Re: For the fast shooters here
Submitted by shark_attack (1379 comments) on Sun, 08/30/2009 - 22:53 #43948 (in reply to #43943)
Charts of gold and silver look bullish to me.
delete edit reply prune Contact the author Bookmark
Re: Bill's commentary and topic du jour
passmm,
If you asked politely for me to explain something for everybody, I might give it a second thought.
Re: Tomorrow's headlines: DJIA rallies 630 pts on jobs report
Besides, FAZ will have to get a lot better-looking before I'd want to be seen with her in public, let alone have her all to myself.
Re: Bill's commentary and topic du jour
Sorry about the impolite appearance. That's not what I intended. I guess I presumed that I am the only one that didn't get it.
WSJ on FHA loans...
Very interesting, but read the whole article. The headline seems ominous, but my take is...OK, that seems about right. What say you??
http://tinyurl.com/n833xm
Re: Bear Thesis
ALOHA !!
THE MATH
US FED created 1913. It is now 2009. Current loss of purchasing power since 1913 is 96%, which translates to 1% per year, so that leaves 4 years before purchasing power is 100% destroyed. As long as I have been alive prices have NOT been going up but what a US Dollar buys has been going down.
I bought my first car in 1968, a VW Bug for $3000. How much car can I buy in America right now for $3000?
I bought gas in the 1970s for $0.50 a gallon, how much gas can I buy in America for that now?
Its always a lesser quantity in the long term.
We did not make it this far on deflation. Banks did not get this BIG because they loaned out less. Government did not get this BIG by being fiscally responsible and spending less. The US FED did not last this long by shrinking money supply.
That's the math ...
Re: Bear Thesis
But, but, Kaimu... You talk often about how PRICES have risen inexorably since 1913 but you don't discuss how wages have also, correspondingly, increased. Sure, if you only had a typical 1913 salary today, you'd be pooched, but you don't. You have a, similarly, inflated 2009 salary.
The same logic applies to your concerns regarding Debt. You correctly point out how the gross US Debt has grown considerably but you don't, so much, talk about how GDP has, similarly, grown. Fact is, with the world's best $14 Trillion Annual GDP, US Debt/GDP is still under 100% which compares very favorably against MOST advanced economies.
I won't argue that debt is bad and increasing debt is even worse but, really ... It's only when you consider the US economy's potential that you can truly get your head around the logic of these massive multi-billion/trillion $ stimuluses we're seeing these days. It's calculated. Not just wanton craziness.
Re: Bill's commentary and topic du jour
Bill, would you please be so kind as to explain your swan dive comment and the circumstances and timing you think might be involved?
Thank You,
Craig
Off the cuff, but if China elects to sell US treasuries,
I would think it would buy US companies... The one that keeps coming to mind is CLF... China needs the metallurgical grade that Cliffs has... the price is cheap, and the coal is abundant... then again, several US based steel companies need the same... since the Alpha deal was nixed last year, it seems CLF has been held in escrow, so to speak.. I could be paranoid, but attention may be diverted to MOS, POT, ect.. buyout rumors for a reason..
More on deleveraging
http://tiny.cc/j9JGk
AMED
Might be worth watching tomorrow. Drops 20% on news CEO/CFO resigning.
Re: Bill's commentary and topic du jour
Hmmmm... was going ask this on a new thread, but might tack it onto this one instead.
Bill - Hi hope your are well. Firstly massive thumbs up for all you do - That includes leading by example. I have a quick question that I was wondering (time permitting) would you mind answering? You have often said in reference to a final PM dance, "a good time, but not a long time". In your experience is 'not a long time' closer to a timeframe of a few days or a few weeks.
Just curious for future reference...
p.s. I also want to add my thanks for your continuing comments on risk management. It finally clicked about 2 months ago and has enabled me to make a significant step forward. It just may turn out to be the most significant trading step I have taken up to this point.
Short Squeeze
Les - Have you found any short squeezes to play tomorrow?
Mckesson Corp. ( MCK ) was mentioned on bubblevision
by Cramer awhile back for its ' play ' on flu outbreaks... However, I have been reading about STE ( Steris ), and it is interesting... Solid quarter to quarter growth... was written about at ' The Street ' in June, and has moved 2 points since then... Similar to IART in revenue growth... just a toss-out, but is solid...
Re: You bears are lost in the woods/ The Sharp Shark
Here's my "bearish scenarios".
1: "the fulness of time" scenario
Consumer spending cannot go back to 2007. MEWs are gone, and credit is cut back. Bubble lending is no more. Thus, spending must drop. Thus, GDP must drop. Thus, equities must price in a level of lower growth (with less debt). That has not happened yet. People are still expecting things to go back to the way it was. "Just a little stimulus and we'll get that party started right back up again."
We've put all this off by the stimulus package spending, but once that is done, we must face lower incomes, no MEWs, and less credit. Namely, living within our means. We haven't done that in a while, and we're not doing it now. At some point, the alcoholic must go cold turkey, and stop this "hair of the dog" approach to curing the debt problem.
Once the market realizes stimulus won't bring back the good times, it will correct. In the fulness of time.
2: Any of the following white swan scenarios:
* a foreign central bank walks away from treasury purchases; US auctions fail
* a major country defaults triggering a banking crisis - spain, ireland, greece, italy; pick one, or more
* housing prices start accelerating downwards again
* a bad christmas, bad retail sales, etc - unemployed consumers just stop spending, again
* a major terrorist attack on US city
* israel attacks iran - iran closes the gulf of hormuz - oil spikes to $200/barrel
* hurricane in the gulf takes out oil platforms, and/or a major city
* earthquake devastates a major city
* a run on a major bank by corporate depositors & hedge funds (bear sterns II)
3: The black swans scenario - those things we didn't take into account
Our market right now is held together with baling wire, chewing gum, and a whole lot of hope. In a normal, robust environment, many of these things would be taken more or less in stride. In this environment, the market would just tip over and sink.
At least that's my story, and I"m sticking to it. :)
Re: Bear Thesis
Mackinaw, wages have gone up along with inflation, but its the SAVINGS that have been crushed. Is it any wonder US citizens don't save? They are not stupid - they know deep inside if they save, they will lose.
A dollar saved in 1800 retained its purchasing power through 1900.
A dollar saved in 1900 retained only 4% of its purchasing power through today.
The Fed has declared war on savers, plain and simple.
People wanting to save money now have to take risk - and pay taxes to boot - to retain their purchasing power.
Re: Bear Thesis
100% agreed. "Use it, let us bruise it, or lose it" should be their moto.
Funny how it mirrors nature: A crazed squirell that mindlessly stashed-away every nut they could find would find most of its hoard rotten and uneatable years from now, but one that stashed away just enough for the next winter would be amply fed and rewarded for their effort.
Re: Bear Thesis
Exactly Daveft,
See this for even more good news: http://www.marketoracle.co.uk/Article12759.html
Ignore the commercials....the charts and text say it all.
Re: You bears are lost in the woods/ The Sharp Shark
Right on Dave!
Continued theme on deleveraging. It all fits into the big picture. And then China is telling its citizens to buy gold. At this stage there is probably no point in singling out individual institutions/companies. The cracks appeared a couple of years ago. The CON began many years ago. Day-to-day trading however obviously benefits from who cracks first. Or in more bullish trading days...who gets the good news out first.
The New York Times had an article about four or five days ago. The Commercial mortgage meltdown is only in its 2nd inning. How do these already beaten institutions hold on with these additional stresses? When it becomes apparent the "hair on the dog" thing hasn't worked that is when equity markets take a dive. IMHO there will be dollar buying and the Chinese will have yet another chance to get out. I don't think the dollar will dive right away because of international interests. The U.S. needs to reassure as long as possible. This may be the easiest way to go. As Bill said, if the dollar goes into the tank then a lot of things will have to be addressed that haven't been dealt with.
GOLD.asx - Gold Bullion Securities
Just thought this may be of interest to some.
GOLD.asx is the Aussie ETF for Gold. It entitles the holder to 1/10th of an oz of gold priced in $A. It is also a different kettle of fish to GLD.
After a lengthy retrace from the peaks of last year, a bullish wedge had been in formation for a number of months before morphing into a fairly tight trading range of about A$2.50 (~2%). The support of this trading range coincided with previous resistance, this being the closing price of the day of the peak back in March 08. (see 2 year chart)
Price brokeout on heavy volume three days ago.
One thing that may be of note is that the $A gold price seems to have been far more a function of the AUD than Gold over the past year or two. This therefore may be an indication that the AUD is topping and hence, by extension, the move away from 'risk' assets (that makes me laugh every time) has begun. Just a thought
The charts are a 2 year, YTD and a close up of the pattern/s
Cheers
Ad
Nobody cares
But I still think it's pretty cool.
Re: Nobody cares
Awww shark you're always saying stuff. Just this time, it came true.
Even a stopped clock is right twice a day you know. :)
Re: Bear Thesis
The Math:
Strangelove:
Well let's see now ah, I would think that uh... possibly uh... one hundred years. On finishing his calculations, he pulls the slide rule roughly from his gloved hand, and returns it to within his jacket.
Muffley:
You mean, people could actually stay down there for a hundred years?
Strangelove:
It would not be difficult mein Fuhrer! Nuclear reactors could, heh... I'm sorry. Mr. President. Nuclear reactors could provide power almost indefinitely. Greenhouses could maintain plantlife. Animals could be bred and slaughtered. A quick survey would have to be made of all the available mine sites in the country. But I would guess... that ah, dwelling space for several hundred thousands of our people could easily be provided.
Muffley:
Well I... I would hate to have to decide.. who stays up and.. who goes down.
Strangelove:
Well, that would not be necessary Mr. President. It could easily be accomplished with a computer. And a computer could be set and programmed to accept factors from youth, health, sexual fertility, intelligence, and a cross section of necessary skills. Of course it would be absolutely vital that our top government and military men be included to foster and impart the required principles of leadership and tradition. Slams down left fist. Right arm rises in stiff Nazi salute. Arrrrr! Restrains right arm with left. Naturally, they would breed prodigiously, eh? There would be much time, and little to do. But ah with the proper breeding techniques and a ratio of say, ten females to each male, I would guess that they could then work their way back to the present gross national product within say, twenty years.
Re: Nobody cares
For the past month or so I have been only looking for shorts on over bought situation. Might not the miners be there now? +/- 15% in two days. Everything else has rotated. Gold - $6 now. I believe Bill said another run to $1000, +/- $20. Might we be there?
Re: Nobody cares
daveft - That was harsh dude, sharkie was just sharing his analysis, which I hope we continue to encourage...
Okay, so if we're not allowed to go long, can we at least trade the short squeezes?
Dr. Ron
Dr. Ron is asking all the right questions as usual.
Notably: "Have the bulls wrested control from the bears or is the close below the Gann number of 1007 still mean caution? Or is nothing meaningful until Labor Day has passed?"
http://www.ronsen.blogspot.com/
We shall see, huh?
We are still in the 1000 support area and still above 980. Call me at 911 if we break 980. Otherwise I'm still a day trader in a range bound market.
Bull/Bear, schmear....I'm moving to Missouri...SHOW ME.
Or, as Vad says, trade what you see. That works and it's low(er) risk.
I'll take 2nd's 1100 or I'll take 500, makes no real difference to me as long as it moves one way or the other.
Re: Nobody cares
Sharkie consider this a manly pat on your dorsal fin...
Re: Dr. Ron
Absolutely, we can make money either way. And around the corner comes Sept 11th...
Re: Nobody cares
CP - was it really harsh? I was totally just kidding. I figured the smiley face would give away my attempt at humor. If I went too far I apologize...
You know, I'm long some things, but I'm short on balance.
Re: Bear Thesis
ALOHA !!
Mac posted -"It's calculated. Not just wanton craziness."
ITS BOTH! For the guys at the top insulated from risk because they own the MONEY MONOPOLY its calculated, but those of us at the bottom its "wanton craziness".
In Socialism the money flows from the top down. Ask Vad, who lived like Kings in the USSR days, it wasn't workers.
Okay let me challenge you ... I hear people throw around stats like GDP/DEBT. Because Japan does it and Bernanke or Krugman says it all works well, that's okay for people who want to rationalize so they can feel safe in a World where common sense and truth is just relegated to conspiracy theories and tin hats. The "experts" are purported to be the ones who now are leading us in politics and economic agendas. Yet look where we are ... Is it better now where two or more workers per family are needed to make ends meet or was it better when I was a kid in the 1960s, when only my Father worked? If wages are keeping up then why do you need to trade?
So okay, give me the nuts and bolts of how the GDP number is derived. If you do not know the ins and outs of deflators and inflators then you have no clue. Do you? Have you even heard of deflator terminology in relation to GDP? If so, then can you tell me when a deflator is actually an inflator? I assume most people that post here cannot answer that. My point is nobody has time to delve into complicated mathematical hedonic models. We all have lives where we work 7-7. But the government who sponsors the economists and the data they produce have all the time in the World, 25/8 ... 366 to "adjust numbers". That's the "calculated" part yet markets move either up or down based on these hedonics and people lose or win a lot of money on those moves.
I know Caristas trade what is in front of us and we trade prices. But a lot of people in America do not and that is the vast majority. In the meantime there is the government and the monetary system and they dictate a lot about where your profits go and just how much profits you are "allowed" to keep. Starting in 2011 they want more of your profits in some cases 50% to 100% more than they are getting now. They plan on being very brutal on short term capital gains, where the new brackets will take 39.6% of your profits. How long before its 50%?
Its because the US government has so much DEBT to service that taxes must go up. There is a link between US government DEBT and your living standard.
In terms of wages rising ... that's a symptom not a cure!
Everyone has their money on TOO BIG TO FAIL ...
I don't!
Strange dichotomy.......
The Baltic Index and US Rail Car Use charts are lockstep on a downward slope since July, almost identical. Yet, stock prices for the railers have steadily risen, while shippers have dropped.. Now, estimates for the railers ( CSX, BNI, etc..) have risen, and shippers remain flat... Something does not add up here.. Either the rail estimates are dead wrong, or the shippers will be the next to rise, and do so dramatically..
Re: Bear Thesis
"The contrarian trade would be to bet on more collapse since the masses in California are still spending as if it was NIRVANA! Do stores in San Diego take Terminator IOUs? I bet against the masses and so far I have made a lot of money! Nobody in America is expecting collapse. TOO BIG TO FAIL is what they all buy!"
Agreed. I hope they can kick the can a few years down the road so I can navigate some changes with my family - land, energy independence - but I think that preparing for monetary collapse in the next ten years is looking like the contrarian move and a safe play.
Re: Short Squeeze
CP - the usual suspects remain the most heavily shorted from what I recall reading a few days ago.
As we saw yesterday, it's a case of wait and watch. Something is in the offing, and I'm not convinced it's bearish. JMO
Try Sharkie, he was all over F at closing.
TOF - U can see money flowing into blue chips
http://online.wsj.com/mdc/public/page/2_3022-mfgpp...
note right down the bottom: block trades showing net outflow from UNG
edit: Note outflow of block trades from GLD and JPM and GS. What's with that? rotation? The bear is a comin?
http://online.wsj.com/mdc/public/page/2_3022-mflpp...
Re: Short Squeeze
CP has raised a pertinent question. Any website tracking shorts? Something that allows me to home in quickly on potential squeezes?
TIA
Re: Short Squeeze
Or - a stock that has no shorts at all, an excellent candidate for shorting! :)
Commentary on Hedge Fund behaviour
1) The hedge fund industry is emergingfrom the ashes of 2008, and will inevitably grab a larger share of theinvesting public’s assets. Low interest rates and hero status made itway too easy for inexperienced, untested, and sometimes unscrupulousmanagers to raise new funds that charged management fees as high as 3%with a 50% performance bonus. Behind every “liar loan” was a bondmanager happy to soak it up through securitized Fannie Mae (FNM),Freddie Mac (FRE), or bank debt, shorting Treasuries against them, andthen leveraging the 40 basis point spread by 50 times to generate ahighly marketable 20% gross return. Never minds the risks.
It was easymoney, as long as there were lots of liars, which mortgage brokersherded in by droves, and as long as spreads narrowed, which they didfor most of the 21st century. By the beginning of 2008, assets undermanagement soared to $2 trillion. The melt down that followed wiped outlarge numbers of funds, and raised gates for the survivors, makinginvestors wonder if they would ever get their money back. Total assetsplunged to $1 trillion in the blink of an eye through a combination ofredemptions and market losses. The new era that is emerging will bepopulated with humbled and chastened managers offering more disclosure,lower fees, no gates, and thanks to Madoff, oodles of third partyoversight.
Their portfolios will have less leverage, be invested inmore liquid securities, and bring in lower returns. But the newgeneration will also offer investors battle tested strategies thatsurvived the 100 year flood. Bridgewater, with $37 billion in assets,is now the largest hedge fund, followed by JP Morgan with $36 billion,Paulson & Co. at $27 billion, DE Shaw showing $26 billion, andSoros still at a hefty $24 billion. Long track records and a Guccicachet will assure that these will prosper. Fees settling down to the1%/20% range. ***For the rest of us this means more capital bunching up in the most successful trades, as we have already seen this year infinancials, China, oil, and copper.*** It is also going to be much harderto get new funds off the ground.
http://blog.madhedgefundtrader.com/
Teaching old dog a new trick?
From WSJ: Bank of China Seeks Investors for Swiss Funds (cut n paste)
"Bank of China Ltd. is seeking money from international and domestic investors for 24 funds that will be run by a private bank it established in Switzerland...
According to a statement, the Bank of China is one of few Chinese companies to enter the Western fund-management business. Switzerland was chosen as the base for fund distribution because the country's financial center offers "stability, neutrality and expertise."
New blood for Swiss banking?
preparing to sell KGC
"Just in case," I placed a sell stop limit order under my shares of KGC, with a stop at $20.99 and limit at 20.9. Just to make sure that I don't let a handsome profit turn into a small profit (or even a loss).
Re: Strange dichotomy.......
ALOHA !!
baz22 - Last I looked shipping was suffering a two fold constraint. One is the global economy slowdown and the other is the over supply of ships, with container ships suffering the most. Then again the container ships on the smaller end below 2000tau are seeing more of a resurgence in coverage going into 2010. I think its due to the same fundamentals with MICRO MINING, where smaller is more efficient. I think it is also imperative that shippers cover into 2010 on time charter and FFA contracts, so drybulk shippers need to cover as close to 100% as possible. I would be worried if I held a shipper who was only covered 30% or less into 2010 for drybulk operators. Then again debt really plays havoc with shippers. If the shippers you hold own too much debt in the form of direct loans or leases then I personally would look for shippers with less debt exposure.
Perhaps there is no glut of rail cars. I am not sure as I do not follow railers. Maybe that would explain the divergence between the two transports.
Re: Teaching old dog a new trick?
ALOHA !!
Les posted - "stability, neutrality and expertise."
HA!! So are they saying that American banks lack those three qualities?
You know, honestly ... as America spends its last dime on policing the World I am always seeing China buying up anything and everything. My review of the ASX listed companies tonight saw many more instances where China was buying up shares or putting up financing. If you want to term Swiss banks as a "resource" then I guess you could say China is buying up Swiss resources as well. China has built a huge global network of "real wealth" connections. If you are a CREDITOR NATION you can afford to do that. Empires are always mired in constant policing and debt service.
New blood indeed ... and just in time as revenues going to the Swiss government from the Swiss bank sector have fallen off a cliff, down 80%. Too bad the Swiss government can't go over to America and demand transparency!
Mahalo ...
Re: Bill's commentary and topic du jour
I would like to thank Paasmmm for asking the same question that was on my mind, but failed to ask.
Bill, I believe that your commentary was one of your best. If you blog to make us think, today you accomplished it. I spent the better part of today trying to plan a course of action based on your premise. Unfortunately I see no way to avoid it.
I would be interest in hearing yours and others views on what is the best way to prepare for this, not just as traders but as investors.
Thanks.
Re: Strange dichotomy.......
Listening to an analyst suggest shorting massively over leveraged companies like GE and BA a go in the event of any geo-political event that shocks the markets in near future (think Swine flu). Like shippers, debt could be a real killer moving into 2010.
http://tinyurl.com/pccbzd
ASX STUFF
ALOHA !!
The ASX closed up about 10 points ... Right off the bat it spiked to 4480 and then worked its way back down slowly to close at 4442.
For PM ASX traders here's some new ETCs:
The codes for the new AQUA-quoted ETCs are: Platinum - ETPMPT; Palladium – ETPMPD; Silver – ETPMAG; and Basket – ETPMPM. The last two letters of the Platinum, Palladium and Silver products are their respective symbols in the periodic table. The code for the existing Gold product remains the original
four letter ASX code – GOLD.
I have no idea of details, but this was provided showing a LME connection possibly. I doubt it is much more trustworthy than the COMEX.
"The four new products have been developed by ETF Securities Ltd, a UK-based business with Australian origins, which launched an exchange traded gold product on ASX in 2003 and is now the global leader in exchange traded commodity products."
I did not know that! I wonder what the "Australian origins" are and does it have anything to do with amber fluid and pointing percy? HA!!
Silver Lakes Resources(SLR:ASX)put in another 52 week high up some 7% on good volume, but I noticed more selling into this spike. Intraday it spiked to nearly $1.00AUD, to $0.98 and closed at $0.93 on 3.6mil volume. A two day spike over 20%, looking to correct.
Perilya(PEM:ASX)was added to the ASX S&P 300 along with two other Aussie miners being followed here TROY(TRY) and CONQUEST(CQT). I visited Perilya and their Broken Hill mine back in Jan 2008 and it is massive. In their latest financials they have really turned around the company and made it much more efficient from a number of aspects in terms of cash cost(dropped from $1.08USD per pound of zinc down to $0.58USD) and the one I like, buying back the silver contracts from Coeur d'Alene Australia(CDE:ASX) just in time before the POS spike. So now PEM is back to being a profitable operation now with an after tax profit of $2.1MIL AUD. Closed up about 7% on 3.3mil volume, but also sold down into the intraday spike. To boot I believe their long term Chinese partners are happy with the turnaround as well.
Straits Resources(SRL:ASX)-Saw some buying at the first half then sold off towards the end down 2%, but over the past three days, starting with the last day of the dividend it has corrected 17%, closing at $1.81AUD.
Disclosure I own shares of all companies except the ETC stuff.
Re: ASX STUFF
Thanks Kaimu. These plays are becoming a serious consideration following the next downleg. You close to selling yet?
From JL
"We’re still in a range, meaning, don’t go crazy trying to predict direction and more importantly, betting heavily on what you believe will be the future direction of the market. I have no idea what will happen which is why I take things day-by-day.
In the 1-month chart, make note of the orange ovals. This is where major breakouts and breakdowns have been occurring. Everything else is a waste of time.
Also, today is the last day before a 3-day weekend. There will be low volume making it not worth trading".
http://ibankcoin.com/chart_addict/2009/09/04/have-...
Note distance to b/o areas from where we are now.
Sucking the punters into the casino
"Hong Kong shares on Friday got a late boost after mainland China's foreign exchange regulator issued a draft proposal to raise the investment quota for foreign investors in local securities.
The jump came after China's State Administration of Foreign Exchange said around the close of trading in Shanghai for the weekend that it planned to raise the maximum investment allowed by foreigners to $1 billion from $800 million in a bid to attract medium and long-term investments."
http://online.wsj.com/article/SB125202785214285493...
Come on Shanghai - fuel that rally one more time!
Re: ASX STUFF
ALOHA!!
Define "close" ...
SLR-is just ramping up production heading to 170,000 au ounces per year, so ... NO!
PEM-Just turned around and now has deep Chinese pockets so ... NO!
SRL-I have some other plays tied to SRL so ... NO!
Plus I just got a $18,000AUD($15,300USD)bonus from SRL that will keep me going for another year. No mortgage means low overhead, besides I prefer to hang out here at the farm. Everything I like is here, so why go anywhere or do anything? Most of my activities require no funding! Let me tell you, you'd see some major deflation in America if every American lived the way I do now. I spend ZERO on any entertainment, no TV, tshirt and shorts everyday and even those are from Wal-Mart or Costco, no booze, no smoking, no drugs, no furniture except patio furniture and two futons, no kitchen, no HBO, no restaurants, no ... no frills! The smallest place I have ever lived in my life. I have lived in apartments bigger than this! Mostly I ride a scooter around so virtually no gas. I am a Madison Ave nightmare! I am contemplating buying some new handtowels though at Macy's. I have had the same ones for eight years now ... Just for CP, I don't like to wait that long to buy mens underwear! HA!! The nicest part is the land and the orchids and the proximity to a secluded beach and of course the Hawaii thing.
Re: Nobody cares
CP,
Shark made an inane comment about charts looking bullish. Then he embellished its importance. So I commented, meaning that his remark totally lacked substance, so nobody cared, and he had no reason to ask anybody here to think highly of him. We need to set a higher standard here than that. And CP, now once again you are getting your nose into it by being critical when I try to set a standard. I asked you to email me because my patience is running out about some of your comments about me and I'm about to suggest you get your own blog.
I think some people here, before they show me attitude, ought to appreciate the time and cost I incur and the results we are getting. Last evening somebody making his or her 2nd comment put out a query for me to explain myself and admonished the community for not asking me about my comment earlier in the day. If this was that person's 2,000th comment, I'd accept it, but not the 2nd. People have to earn the right to ask questions and make statements like that. Yes, CP there are freeloaders, and if my saying it bothers you, then leave. For the others, what I mean by that is not those who are here to learn and absorb what they can, but people who make demands and don't contribute much substance at all.
Let's get out of the playground and back into the classroom or else this is going to become a private school.
Re: ASX STUFF
I think the world economy would go into meltdown if we lived like that Kaimu ;)
Water, electricity - you've got that haven't you?
So Kaimu, I am guessing that you don't see commodity deflation as a big issue - ie. China's finished stockpiling - if you're happy to let these stocks ride for another year? If the market crashes, these crash too don't they? Or will hard assets be bought up on the next leg down?
Nobody Cares
I am certainly a new poster here and I would have to say based on my relatively few months coming to this blog that Bill might want to consider pulling in the reins on the many peoples (and a couple in particular) or perhaps setting new standards for posting. I am in no way trying to undermine the site or Bill but I think that from my end I would like to see as it will help me:
1. I think Bill without question gives the best and clearest commentaries of anyone in the business. I act on many of his suggestions but I am more of a LT position trader and hold positions for months and generally trade the charts. In any event, in my opinion there is just too much nonsensical talk from others who it sounds like have nothing better to do than to hear the sound of their own voice. They keep pulling articles and other peoples quotes and placing them on the board. Please explain how this helps me trade. If I need news I can get a newspaper as they say.
2. Instead I would like to see more talk about what people are actually trading, their positions, when they put them on and why. Did an actual article help you to make a decision or was it the RSI of a particular stock. Everyone seems to have plenty of time to give in my opinion ridiculous rants and dissertations on just about anything under the sun. Again how does this help me trade. Perhaps better to suggest an option strategy around what you are posting about maybe????
I too need and want to learn better "HOW TO PLAY THE GAME"
"Swine flu fever" - hotels to short this winter
Thinking how swine flu is possibly going to affect the economy next six months. Maybe the "black swan" event we've been not wanting but nevertheless must prepare for.
http://seekingalpha.com/article/159794-hotel-stock...
The above analyst notes the virulent strain of the virus at present (in that significant mortality rates may occur) - haven't heard that anywhere else.
Nevertheless, along with airlines, hotels are likely to take a beating. Marriott (MAR) has clearly found overhead resistance which it continues to respect.
Combine consumer deleveraging with media induced panic over swine flu and MAR could be lucky to hold at $12 on the next down leg.
Becoming more thoughtful of the possibility that Swine flu could knock this market for a huge drop at any moment. I don't feel comfortable in a swing trade with such thoughts - daytrading is a desirable risk management tool.