Cara's Commentary & Community Chat, Wednesday, Aug. 5, 2009

Went from being basically a national joke 20 years ago to one of the most powerful people in the country. Really it's an amazing story of a gay guy going all the way to the top of his field. Shows you what you can accomplish when you don't have a wife hectoring you to mow the lawn all the time:)

So what exactly is the catalyst for this selloff?

rxii..

Shark,

Actually, it shows that "a gay guy" is no more likely to be moral or ethical when it comes to wielding power than anyone else. Barney's former live-in lover, a Fanny Mae exec, got a great deal when Barney allowed him and others to change their pay method to a percentage of loans issued. The limit for a loan went to $400,000 and then it became a "right" for anyone to own a home whether he was a good risk or not,

Barney dodged criticism on this issue by responding if he had had the power he would have gotten us out of Iraq — not to slick, but it works these days. He has gotten a pass on his conflict of love interest.

The question is if he had been straight would he have been nailed like most others in Congress?

Either way — he's a liability to taxpayers and as crooked as any of these bastards in D.C.

It will keep boiling, but slowly evaporate...NEVER go long on ' if '....To me, the past 3 weeks have been just that...

contrarian to the contrarians,

i agree wholeheartedly with bill this morning, people have been calling for a crash in the USD for years, it hasnt happened, and clearly wont be happening anytime soon.

people point to some arbitrary low for the past few months as if it means anything.

they cite budget and gdp numbers, and tax revenues as if it means anything, when forget that the value of the USD is in comparison to other nations who are struggling just as much, who are printing and running deficits just as high.

the difference being that the USD remains the reserve currency, while say russia or brazil, former 3rd world nations who have defaulted in their debt the past 20 years do not enjoy such privilige understandably. so remember that all the talk of how dire things are in the US which would hurt the dollar are propaganda and lies. the very nations who repeat such nonsense continue to purchase billions in US debt. yes they have slowed somewhat, but it doesnt seem to have hurt the dollar as it hasnt fallen below the lows of 2007/2008, despite all the QE...

think about it next time we hear another story about a chinese official expressing "concern" about US debt.

gold is as i have opined before giving us one giant head fake as the newsletter writers line up to shout "get on board before its too late", i have no worries that we will have plenty time to buy at much lower prices, and at best sell some should we kiss the $990-1010 region before the crunch down. especially in the miners which will get hit harder on the way down.

volume on the miners, the canary on the mine is still lacking force to suggest an explosion. be careful.

5 Reasons the Market Could Crash ths Fall-"13Mill Americans Exhaust Unemployment by 12/09" http://bit.ly/1rM2Zq

a few.... CDC has reverted to a ' weekly update ' instead of when receiving reports.... I would suspect the 'weekly ' will be Saturdays or Mondays... I do know this.. In Greensboro, NC, the wife( an R.N. ) of a friend, was called back from vacation this past weekend, to help with a ' situation ' ( my choice of wording )that has developed at a daycare....

Wednesday, August 05, 2009

New South loses $55.4 million

Birmingham's New South Federal Savings Bank reported a second-quarter loss of $55.4 million as it beefed up reserves to cover bad loans and values of foreclosed properties dropped.

New South, which is operating under agreements with regulators to improve performance, said it disposed of a "significant amount" of bad loans in the quarter and sold half of its auto-loan portfolio

"We have been very aggressive in addressing non-performing assets, meaning we get them off our books as rapidly as possible," Chairman Will Ratliff said in a statement.

New South has hired Birmingham investment banking firm Sterne, Agee & Leach to help raise additional capital and indentify other options.

Vulcan Materials profit drops

Vulcan Materials Co., a major producer of crushed stone used in construction projects, said second-quarter profit fell 84 percent as the housing recession reduced demand for its products.

Net income dropped to $22.2 million, or 20 cents per share, from $140.8 million, or $1.27 per share, a year earlier, Birmingham-based Vulcan said.

Sales in the period declined 29 percent to $721.9 million.

"We remain focused on managing costs and generating cash, which will enhance our ability to increase earnings as the economy recovers and construction activity improves," CEO Don James said in a statement.

Protective Life adds director

Protective Life Corp. named Hans Miller to join the Birmingham-based insurer's board of directors.

Miller formerly was managing director and senior adviser with the investment bank of Bank of America Corp. He also was president and CEO of Hartford International Financial Services Group.

HealthSouth posts loss

HealthSouth Corp. had a second-quarter loss, after taking a non-cash charge to account for changes in the value of company stock held for distribution to shareholders who are part of a class-action settlement.

The Birmingham-based company said the net loss was 14 cents a share, or $12 million, down from net income of $37.6 million, or 47 cents a share, a year earlier. Revenue rose 6 percent to $483.7 million.

The non-cash charge of $48.6 million reflected the increased value of company shares that eventually will be distributed to shareholders who settled their litigation with the company over its accounting fraud.

Excluding the charge, earnings per share were 39 cents.

Alabama Aircraft reports profit

Alabama Aircraft Industries, employer of about 600 people in Birmingham, said Tuesday it had a profit in the second quarter.

Net income was $800,000, or 19 cents a share, compared to a loss of $2.4 million, or 59 cents a share, a year earlier. Sales at the military aircraft maintenance company rose 38 percent to $17.3 million.

CEO Ron Aramini said the company is competing for contracts to maintain C-130 transport planes. He said profit has been solid on KC-135 tanker and P-3 maritime patrol plane contracts.

ProAssurance boosts profit

Birmingham-based ProAssurance Corp. said Tuesday second-quarter profit rose 24 percent. The malpractice insurer said net income was $53.8 million, or $1.62 a share, compared to $43.3 million, or $1.27 a share, a year earlier.

Operating income, which excludes gains and losses from investments, rose 8 percent to $50.3 million, or $1.52 a share.

CTSH - Upgraded at Goldman to Buy from Neutral. The co. is poised for growth after enduring the economic downturn with a potential catalyst being improvements in application development spending. This signals that packaged application declines are likely bottoming, with some signs showing that we could see YOY growth in the 4Q of 2009. Estimates raised for FY09 to $1.67 from $1.53. Increased target price to $39 from $24

FSLR - numbers reduced at Merrill/BofA through 2010. Rebate will have a temporary pressure ion margins. Buy rating and $180 price target.

INTC - FY09 estimates raised at Goldman to $0.96 from $0.93 as gross margins could hit 60%. Key takeaways from the company include diminishing volatility in orders, inventories are low, and that fundamentals in the PC supply chain are improving. Maintained Neutral rating.

WFMI - Upgraded at Morgan Stanley. Rating raised to Equal-weight from Underweight. Eliminates $15 price target. 2009 EPS estimates raised to $0.92 from $0.80.

WFMI - target raised at Goldman to $25 from $19. The co. has seen a bottom in its comps sales and is driving surprising margin expansion via intense cost control. Estimates raised for FY09 to $0.89 from $0.77. Maintained Neutral rating.

This is just an opinion: buyer be ware!

1. The HB&B have raised sufficient capital or are close to this goal.

2. We are climbing a wall of worry.

3. Bill has remarked in the past that at times prices do what prices do regardless of the fundamentals or there abouts.

Any discussion, angst, or other elucidation welcome.

sold 2/3 of my OTM options at $.90 that I bought at $.15.

[see attached chart]
".....I however took the liberty to highlight and mark each day a POMO operation was held. Quoting the article:

[Permanent Open Market Operations] are conducted from about 10:30am to 11:00am on pre-announced days. In such auctions, the FRNY permanently purchases Treasury securities from selected dealers, with the total purchase amount for a day ranging from about $1.5 B to $7.5B. These days are highly correlated with paint-the-tape closes, with the theory being that the large institutions that receive capital injections are able to leverage this money by 100 to 500 times and then use it to ramp equities.

.....there was a POMO auction this morning and roughly $7.3 Billion were accepted. If you leverage that 100 x you’ve got some real cash to move either treasuries or equities with."

[From "molecool" options trader]

~~~~~~
So if this theory holds up we could see a nice move to the upside either late today or tomorrow.

...

Rocking again today. Still long but sold some Dec 7 calls on a portion of the positon.

Jesse - looks like you may be able to get that ski pass for this season instead of next!

Bev:

Got to love it...climbing that wall...prices have a story to tell. This fits with my opinion on capital raising; how banks will raise more capital into the fall. What do you think about the capital raising regarding Banks and others, this has been a mainstay recently?

sold out of all of my calls except a few out of the money calls ($20 strike expires August) in case earnings are crazy on friday.

WOW what a move today.

It's merciless. Anyone who's held unhedged positions for the past three weeks- I'd hate to have to try breaking him down in an interrogation room.

Another great chart from Bev, thanks! Let's see if they'll waste more money pumping the same market they abandoned earlier this year and last....

Bev - Didn't they do the same POMO-pump thing back in early March?

I keep hoping, it's got to happen by 9/30 to get the early bird special.:) This trade has been educational. Selling the 2011 put when the price was about $3.50 (for $1.25) now has the put worth about $1.10, so I am up $150. If instead I had bought $1250 worth of the common I would probably be up about $700 (close to the season pass price) and would definitely be looking good for this winter. It is an interesting example to me of how risk is related to reward when trading the market. Looking back, I wish I had used the $1250 from the sale of the puts to buy some shares of common, then I would be covered for 2 ski seasons. I have used that strategy before with stocks I was more bullish on (GG) and that worked out well. The education continues, but I'm making progress, thanks to Bill and so many others here.

Glad to hear your kicking ass on this trade, very well done on your part!

And I was hoping the NYC Wall Street flyover was a military warning to HB&B, similar to gunships showing up in the gulf of some middle eastern country. Instead it appears to have been a welcoming flyover?

ALOHA !!

So while POMO is pumping and dumping the equities the SUPER TALF is going to inflate up $1TRIL USD to revive the various credit markets. How do you get $1TRIL USD of loans? Here ...

"The Consumer & Business Lending Initiative (Super TALF) will support the purchase of loans by providing the financing to private investors to help unfreeze and lower interest rates for auto, small business, credit card and other consumer and business credit. Previously, Treasury was to use $20 billion to leverage $200 billion of lending from the Federal Reserve. The Financial Stability Plan will dramatically increase the size by using $100 billion to leverage up to $1 trillion and kick start lending by focusing on new loans."

So if you thought $7.5BIL was a lot wait until you see what $100BIL will do for equities.

So this part of the FINSOB is yet another backdoor BAILOUT for banks. The front door BAILOUT was the FASB accounting rules that turned losses into profits and ran the bank stocks share price up so they could fund their way to bonus freedom. SUPER TALF is designed to pick up where the FASB left off!

How is it that banks get away with murder? WE ALLOW IT because we voted for it!

I might add that none of the above is STRONG DOLLAR POLICY ...

TN_blogger

That is amazing the banks can do that and succeed. Looks like you and Mr Cara have like minds. To me it make sense and it's ashamed they will get away with it. I have no financial stocks holdings and refuse to play that sector.

http://tinyurl.com/kudyuf

Extracted from this recent post at Evil Speculator

http://tinyurl.com/nqfprp

You are right, Bush was the greatest, if we politely ignore his refusal to heed the warnings that "Bin Ladin Determined to Strike in the United States", or the fantasy WMDs that got us into the Iraq war on credit.
Haliburton? Fisa wiretap violations, torture, "disappearing" of persons around the globe, all the standard third world military dictator stuff.
Oh yeah, the near total destruction of the U. S. economy. Jury is still out on that one....
But offending the queen, and going to New York....why that is too much!

Keep up the good work.

If George W. Bush had made a joke at the expense of the Special Olympics, would you have shrugged it off?

He was IN the special olympics.

Had George W. Bush given English Prime Minister Gordon Brown a set of inexpensive and incorrectly formatted DVDs in exchange for a thoughtful and historic gift from Mr. Brown, would you have approved?

He gave us yellow cake.

If George W. Bush had gifted the Queen of England with an iPod containing videos of his own speeches, would you not have thought this embarrassingly narcissistic and tacky?

You mean like declaring for the world, "I'm the decider?"

If George W. Bush had bowed to the King of Saudi Arabia, would you have been incensed?

No. He sent Dick Cheney to kiss his ass. A bow and a kiss.

Were George W. Bush to have visited Austria and made an inane reference to the non-existent "Austrian language," would you have brushed it off as an insignificant slip?

did Bush know there was a country named Austria? He had never been to Europe before his Presidency.

If George W. Bush had staffed his cabinet and circle of top advisers with persons who cannot or do not keep current on their income taxes (TAX CHEATS) would you have been OK with that?

You don't know he didn't. He staffed it with right wing Christian whackos who ran the government. What's the dif?

If George W. Bush had been so unbelievably ignorant of Mexican history and the Spanish language as to clumsily and nonsensically refer to "Cinco de Mayo" (Fifth of May) as “cinco de quatro” (fifth of four) in the presence of the Mexican Ambassador, and continue to flub it when trying to recover from the gaffe, would you have merely winced in embarrassment and shrugged it off?

Gotta give it to George, he speaks spanish. Can't speak a word of Creole though.

Had George W. Bush misspelled the word "advice", would you have hammered him incessantly as was Dan Quayle for spelling "potato" "potatoe", and cite this as proof he's a dunce?

I'm gonna have to ask my strategeryist.

Had George W. Bush burned 9,000 gallons of jet fuel (major carbon footprint here) to go on a Midwestern photo-op and plant a single tree on “Earth Day”, would you have thought this as hypocritical? If the Bush administration had OK'd Air Force One with fighter escort flying low and unannounced over millions of people in downtown Manhattan creating widespread panic, would you have wondered whether they were clueless over the disaster of 9-11?

Nah, he blew way more than that flying OVER New Orleans on his window tour.

Had George W. Bush been the first President to need a teleprompter to get through a press conference, would you have seen this as proof of what a complete idiot he is? And would you also suspect his words were "ingenuine" and were actually those of someone behind the scenes?

I WISH he had used a teleprompter and used speeches written by someone with a command of his native tongue.

If George W. Bush had failed to send relief to flood victims in the Midwest where more people were killed or made homeless than in New Orleans, would you have fashioned it into an ongoing political issue with claims of racism and incompetence?

I thought I saw sandbagging, helicopters, evacuations, FEMA on the ground, but I might have been watching BBC.

If George W. Bush, in an unprecedented government intrusion into the private sector and completely without the constitutional authority to do so, dared to "fire" the CEO of a corporation, would you have ac quiesced?

Please see "Patriot Act".

Had George W. Bush in his first year proposed to double a national debt which had taken more than two centuries--200 years to accumulate--would you have agreed of this absurd legislation?

See this: http://costofwar.com/ Bush is still spending.

And if George W. Bush then proposed to double the debt again in a few years, would you have questioned the wisdom of such a course of action?

See link above.

If George W. Bush had degraded your own retirement plan by 90% as in the holdings in GM stock, and at the same time given the UAW a majority stake in GM, effectively giving ownership over to the Union, would you have accepted that?

What was the $USD worth when Bush left office? WHEN did we hit 666? You need a calendar. Edit: I correct myself here. We only hit 741 in November.
We hit 666 in March, two months into Obama's admin. Boy he had to be one powerful dude to make that happen in two months though. If you get us in a death spiral and I take the wheel, don't blame me for the death spiral.
And if we run to S&P 1005, does Obama get the credit?

If George W. Bush, after telling Americans "it is time to sacrifice," and then spent hundreds of thousands of dollars to fly First Lady Laura Bush to New York City for dinner and a Broadway play on the taxpayers' dime, would you have called this behavior hypocritical?

No. He spent WAY more vacationing and cutting brush in Crawford.

So, tell me again, what actions have set President Obama above other leaders and do you consider the above as evidence of his brilliance, competence, diplomacy, and leadership?

None really, but I'm not being selective in my memory.

ZedII - Oh but wasn't the concept of obliterating entire cities in Iraq from overhead with our priceless bombers but one of the very best ideas to have come from a presidency in eons? We made so damn many friends with that stunt it's impossible to conceive...

!dehsilpmoccA noissiM

Bev - "Are you playing the oil sector these days?"

Yepper, I SCOoped up some 2x short crude a couple days ago while waiting to reload gold... We'll see.

Heck of a day for financials.

CIT +46%.
Freddie, Fannie, Ambac, Triad, Guaranty F.G., all up +25% or more.

What does it all mean?

MAYBE they ought to charge a little more for all that junk mail they keep sending me.

TN_blogger

"I reasoned I would take the summer off. However, I tend to think plenty about the market...more than I should at this time." <---- Looking back now I wish I would of done that!

Wednesday, August 05, 2009 2:06:29 PM

(US) SEC's Schapiro confirms evaluation of 'flash trading' and the surrounding inequity associated with the trading - CNBC interview
- Notes that the SEC is moving 'quite decidely' toward banning flash trading, but still must move through regulatory process, so can not be done instantaneously.

teamonfuego

That is true. The end of June 2008 I noticed that a lot of the big oil stocks were going no where and oil was $145 and climbing. But these small and no name independent producers were the only ones moving. So I shorted oil big time. The only mistake I made was I cashed out the day before the July 4th holiday, was afraid to hold over the 3 day weekend. The following week and months oil tanked as the story goes.

Hmmm...I thought Gold was the last to go up? But yah, I've heard that too. Anyway, so all Asia was red last night and all that money flowed into US banks today. I understand the profit-taking in Asia, and I understand it moving West but to the banks? Is this a bullish rotation?

2nd - that's very true. In the past year I've learned how to tune out 90% of the talking heads and it has worked tremendously for me. A lot of what Bill has written about helps in gauging when to buy/sell stocks because as we all know its all about timing.

Excellent Questions Grym... I am still learning and will have to do more homework as of right off the top of my head I am not sure of the up trend...

"In the past year I've learned how to tune out 90% of the talking heads and it has worked tremendously for me."

Yeah. How many TV talkers were saying for the past 2 months that we HAVE to have a correction, or even a move to new lows. Wait for those jerks to get bullish and there's your sell signal.

There are NO experts in this business, not any who ever say anything to folks like us.

SRS is now at 12.70, FAZ at 28.05. Basically all-time lows. What do those numbers tell you? I held both positions for a period of time today, so I think I know. It's baccarat players running out of chips and pulling their last few twenties out. Or sending their worried spouses to the ATM for another hundred. The SRS bet is over. The FAZ bet is over. The moment SRS/FAZ finally take off, they will gap up hard, and the die-hard players will be on the freeway half way home.

got in early today at 12.88 then got knocked out at 12.70 about 5 minutes ago. I think the only smart move I have done all summer is get in and out of SPNG at the right moments. Also glad I took almost everything off the table last month...I may have lost out on some action but at least I could sleep at night. Marriage 1 month away, with so much to do for that, no time for SRS shenanigans... wish me luck!

Without naming any, I'm following blogs that even today continue to (at least tacitly) encourage standing pat on short positions and/or adding new ones! I just think it would be more responsible for them to (a) admit they've been wrong up to this point, and (b) at least caution others against taking the same stance.

What's the point in being the last bear standing?

Not sure if I fall into this group... but for the record, I was short FXI from 43 which was covered today 41.66. I am still holding DTO [underwater..but expect oil to start to come down]. And QQQQ I covered yesterday for a small $35 loss. Tried to re short FXI earlier today but as always Scottrade had none. Woooo what a surprise that was.

2nd you bring up great points and the hardest part of understanding the market is grappling with ourselves. Pundits aside if the market is illogically bullish when you think otherwise either join the party and trade the direction OR be bearish and sit it out. The world is littered w/folks who were 'right' but ended up losing their hard earned cash.

A few folks were asking about Gold & PM where to buy...
Check out this site and there are 2 Auctions up coming..
http://bit.ly/EPozf

Bev- Interesting read.

The personality differences between the writer and me are huge. I would never have been able to turn 350k into 4m simply because I would never have entrusted my account to someone who bet that way. And were I to end up with 3.6m windfall, I already know I wouldn't be trading it.

What if OPEC were to open their taps a little further, that would assist the recovery somewhat... I wonder - We haven't heard much about this from the talking heads up their arse lately have we? That would make them wrong on their calls for no recovery and it would take some downward pressure off the $USD.

I see nothing wrong with a polite gesture (bow) on the behalf of our president, it's customary in many cases and I've done it myself many times when greeting foreigners. Funny though, ducks often make an identical gesture, I guess that's where the term "duck" came from. GWB is familiar with this gesture from a defensive perspective.

"This is not trading folks. People are gaming the market."

It's not easy for me to identify the games and as a result I'm unable to take advantage. I'm being taken advantage of instead...

CP- Stick to the real estate decision. We've found (online browsing) some very nice homes in the Sacramento 'burbs and brand new condos in the Irvine/San Diego area that seem like good investments. No one knows when the market will bottom- but then, that gives us plenty of time to research neighborhoods and prepare.

2nd - "Without naming any, I'm following blogs that even today continue to (at least tacitly) encourage standing pat on short positions"

It appears to me they will eventually be correct, it's just a matter of when this GS sponsored rally gets the maximum momentum to hurt the most traders.

Remember, HB&B were way out on a limb and blame the shorts for their problems. So wouldn't it be natural for HB&B to burn the shorts and but good; while using the opportunity to burn longs as well? It seems the approach is more friendly to the long side but some bad days will be coming and they're looking like a return of the dark ages (slight over exaggeration).

Concentrate on that one...

Arrow points up, it is what it is...
CHS has a strong trending chart.
GOL on a breakout.

Do your own TA/DD

Vadym,

So with your extensive background and knowledge of the markets...do you think the markets are being manipulated at the current time? What is your viewpoint, because in the past, it seems you have generally dismissed the inherent advantages of the of the HB&B over the little players?

Please correct me if I am mistaken.

I took a small initial position in AK Steel....they are a big supplier to auto sector...play on auto plants up and running again and the C.A.R.S program lifting sales at least temporarily.

bought at $21.21 and sold at $21.70. as with SPNG I think I'm pressing my luck here.

i'm surprised that with all of the other junk stocks doing so well that ETFC is not participating.

about how mean the stock market can be. He repeatedly observed the similarity between the current bounce in the stock market and in the economy to what was observed at the end of 2001. Here is an excerpt from his today's writing:

"Consensus forecasts are now clustered around a 3% annual rate for 3Q2009 real GDP. This is exactly what the economy did in the first quarter of 2002 under similar circumstances — a post-shock fiscal stimulus plan that was coupled with an auto sector sales gimmick and inventory rebuilding in the manufacturing sector. The hurdle, as we saw then, was a lagging consumer coming off an asset shock; the recent asset shock was three times as severe and was coupled with a collapse in credit. After that bounce to 3%+ growth in the first quarter of 2002, the economy slowed down substantially thereafter and by the end of the year, growth had vanished completely, the equity market was heading to new lows, bonds were rallying and Fed rate-hike expectations were being unwound. Note that as ISM was breaking above 50 in February of that year and hitting its peak that June, there was nary a market-sayer forecasting what was about to take hold — the mantra of sustainable recovery and a full-fledged bull market made the headlines and so what happened came as a huge surprise to the masses. [S&P rallied 20% since its low on September 20, made a double top in January and March 2002, then made a new low in October 2002 and then re-tested that low in March 2003].

In February 2002 when the ISM index pierced 50 amid visions of a sustained inventory cycle, it was right at that time that the S&P 500 began to sputter. That's the problem when all the good news — and then some — gets discounted so quickly. We still think disappointment will inevitably set in over the sustainability of an inventory re-stocking that fails to be backed up by a revival in consumer demand."

The market will most likely be just as mean this time around: the final high for this bear market rally will be made when the economic news will look MOST promising and all newspapers will be touting the fact that the recession has ended and a sustained recovery has begun (which I think is already happening now). So beware...

2nd - "GS? I'm going to take the high road on that one."

Maybe this explains your inability (for lack of a better term) to gain confidence in the ballgame.

I'm in the same boat though, I'm pretty sure it's because I can't interpret the language of HB&B's ballgame and there aren't enough around me who I can learn from.

Okay, so maybe I'm wrong, so how'd you like those WFMI earnings that just happened to beat by a "mile"? Do those numbers really deserve all the hoopla?

It's the details we get burned on time and again.

Well, it's what Bill's been saying. Pretty soon they will have driven everyone off the field, and they'll be playing with themselves. Oh, sorry- high road.

Hammer,

I just don't think in these terms at all. I view markets in terms of readability. Either I can read the movement and exploit it, or I don't. What causes the movement is irrelevant to me. If it's manipulation - fine, my question still is: can I read it?

Theoretically, the question of what manipulation is and how it's done, whether it's possible for us retail traders to use to our advantage is interesting one. It could also be very useful in practice, as such discussion could lead to realistic ways to discover and exploit manipulation. I, however, find that it difficult to discuss in a constructive fashion because this topic tends to cause a lot of emotional flares... so I for the most part am trying to stay away from this kind of discussion. Call me pragmatic.

The phrase deserves multiple "?"'s on the end to signify questionability. Look where gold, oil(supply is variable) and the $USD are, examine how jobless are going to keep their homes, consider the real reasons for why equities are higher now than two months ago and consider what the treasury market is telling you (Treasuries are the market where the smart money lives) Once Treasury rates lift (convincingly), the real trend begins, anything else is speculation IMO.

This is why I read Bill's words carefully, but not literally.

saw this charted posted a few minutes ago ...

http://tinyurl.com/lmstzn

speaking of men...what happened to Fred C?

Also, if accurate, it looks like the institutions are distributing (selling) at record low levels, i.e. sellers/bears becoming scarce. Lows at end of last August and at end of December preceded significant sell offs...

kaimu - We're truly blessed to have your help in keeping the variables in perspective, thank you! We've got a long way to go before we'll really know where the charade leads but I agree, it doesn't look pretty... Some problems just go away if they're ignored long enough, this problem isn't one of them and we must prepare accordingly.

I worked for a company that laid off the second shift whenever the sales got to a certain low point. They did this for about 10 years. Then they closed the plant, no more production, no more product, and no more good wages. This recession has lasted so long that the unemployed are falling off the unemployment rolls. I read that they only count 6 months of unemployment for unemploymented data. Even if your collecting your unemployment extension your not considered unemployed after six months. Most people figure the true unemployment is around 19%.

Speaking of unemployment, I remember well living in the Bay Area during the Dot.Gone bubble explosion when area unemployment hit 10%, I bought real estate on margin and did extremely well while some folks unfortunately lost upwards of $100K on their homes trying to sell, this was back when the homes were only $250-$350K. Those homes are(as of a couple years ago) now easily worth $900k-$1M. Considering that turnover in the Bay Area is rather high as well, no telling how many of those homes were recently refinanced at extreme prices. A big OUCH!

But that was nothing like what we're mixed up in today, our current situation is considerably worse and nationwide/global!

2nd, David- Both of your last posts were very helpful reads for me.

My question...Will I ever have the confidence to be fully invested again? I suspect so, but right now I can't envision the scenario. My goal the past few months have been to take profits quickly. I've left a lot on the table, and have been spared some give-backs. So I would say it's been about even. I know this isn't the best way to play the market over a long period of time, but my portfolio is inching higher.

My last 2 trades, QID and ERY are now both above my exit price. If this is the start of a pull back, will I be able to re-enter at a higher price? Humm...

CP- Can I have a beer now?

"CP- Can I have a beer now?"

Mark, I thought you were too young to drink!

Mark - You can tell the bartender you obtained my permission. ;)

You've got to set the bartender in the mood first. Play this on the jukebox, it should help calm his/her nerves:

http://www.youtube.com/watch?v=cdMEx609X_8

Or this one depending on your assessment:

http://www.youtube.com/watch?v=odcJ-vS22rI&feature...

A week or two ago I made a watch list for myself:

Long:
WEN
IMMR
AIG
SPNG
BA

Short:
FRME

The list has worked tremendously well with one exception: I put about half of my long positions in IMMR, which hasn't done anything really. AIG is the standout.

Tomorrow, I'm going to be watching WEN's earnings closely. If it reports somewhat poor earnings, I have told myself that this will be my chance to enter for what I hope to be a longer term trade. If earnings meet or exceed I'm going to have to see how the reaction is. Estimates are for $0.06/share. I personally really like this one.

I spent some time today looking through regional banks and man I have to say they are feeling a whole lotta pain. Take a look at some in this link:

http://biz.yahoo.com/p/4conameu.html

the one I listed above as a short (FRME) is one in a long list of companies whose earnings are getting pounded as the economic malaise marches on. Many of them are trading below March lows and seem to have no bottom. Is this a sign of things to come for the market in general? I actually am neutral on this. Reason being the large banks were able to raise so much capital that their downside risk is no longer near what it used to be.

Did I miss something? Some of you guys know him, right? Everything OK?

He really should have been wearing some safety goggles during the making of that video.

Still waiting for TOG to come in to me a bit to add back to it. 98% cash and just 1 lunch money scalp trade today. Cant find the trigger yet.

SRS SOLD 250@$12.50
SRS BOUGHT 250@12.2895

PZ- I trust Bill on the PM side of the TOG, and the short bonds I totally understand and have traded. Perhaps today we saw the first signs of divergence of TBT from a down market. But look at the tape for TBT today, man, how do you trade THAT?

Remember that one? If I had moved my entire portfolio back in on the long side the day after I read about that strategy (and recall how uncomfortable that would have been emotionally), I'd still be long. And doing quite nicely.

Here's a famous drinking song to play once you've softened up that bartender:

http://www.youtube.com/watch?v=MWY4_GyLufI&feature...

Pz- I'll take boring. In fact, I am very much into living the simple life. My idea of the perfect 'day off' is a few hours in a La-Z-Boy reading a book. Lunch. Walk down to San Andreas Lake. An hour improvising on the piano. A few more hours in the La-Z-Boy with the same book. Dinner. A few more hours in the La-Z-Boy with the same book, and/or a DVD. Bed.

Reading, music, writing. 'Doing time' wouldn't be much of a problem for me.

And once you're on the dance floor...

http://www.youtube.com/watch?v=NBF67r1LnhE

"Reading, music, writing. 'Doing time' wouldn't be much of a problem for me."

Any particular larceny in mind, 2nd?

The perfect crime for someone like me would have to be the bank robbery. You know, the one where I rob the institution that robbed me.

That reminds me of a great crime film from the seventies: Charley Varrick, starring Walter Matthau. If you haven't seen it, you're in for a treat. Joe Don Baker is unforgettable as a Mob heavy.

While I believe we could go up to 1200 on SPX (or even higher) before this bout of inflation runs out of steam, the current point is unsustainable. The Rydex total Bull/bear ratio is 2.73, the highest I can see since 2002. So far the record was in the end 2004. A recent peak was in June 2009 before SPX went down 5%. I think this is a short term trade set up before another leg up. This would confirm Bill's scenario for pullback to 950.

FD: long gold and accumulating TZA FAZ and SRS since yesterday.

2nd- I guess I'm just always thinking the worst. Too many years as a paramedic and seen so much death and pain. Believe me, it drives my family nuts.

On the crime theme, all though a little gritty, I really liked Liam Neeson in "Taken". Not for the kids.

"Any particular larceny in mind, 2nd?"

Make it count, make it Grand Larceny. Anything worth doing is worth doing right!

http://www.lyricsmode.com/lyrics/i/ice_t/grand_lar...

cheapy- Unless you are including a decimal point...GOOD for you!!

RE:> no power, no conviction to this move, and with gold tracking sideways today gold miners did very little.

Credit deserved there Doc in remarks on the traps of trading the small caps. I have ECU.TO on the books and it hasn't moved a damn compared to SLW. I see trading SLW with written options as a major focus of my PM trading strategy once everything comes crashing back to earth.

1)Welcome to the new bubble. In four months we have gone from 35% below the 200 day moving average to 15% above. It turns out that 1,000 in the S&P 500 is 38.2% recovery of the fall from the2007 peak, a great Fibonacci number. DeMark indicators are showing that buying power is getting exhausted. Daily sentiment indicators are 88%bullish. RSI’s and oscillators are over extended.

Every day the buyers show up, marching in lockstep with military precision, to give us our needed spike up at the close to keep the rally alive on the charts one more day. Worst of all, I am getting deluged with emails from subscribers who, having stayed out all year, are asking if they should start buying now, and buying everything. All of this, and we still have the second half of the “W” to discount. If the American stock market was the only issue, I wouldn’t really care, since most of my longs are overseas.

But if the US rolls over like the Bismarck, emerging markets,foreign currencies, commodities, the energies, and junk bonds will be dragged down with it, because everything is so interlinked these days.There will be no place to hide. I think the glass half full crowd is coming to the end of their run, so I would urge investors to pare down some risk. If your friends stay in, and they make a ton of money,that’s fine. Just let them buy the next round of drinks.

http://blog.madhedgefundtrader.com/

Quote of the day from his site:

“I can calculate the motions of heavenly bodies, but never the madness of crowds,” said Sir Isaac Newton, the inventor of calculus and discoverer of Newton’s Laws, who lost his entire fortune in a 17thcentury investment scam called “the south Sea Bubble.

2) When things slow down and there is nothing to do, like now, I do deep research for the unfound investment opportunity. Feel like investing in a state sponsor of terrorism? How about a country whose leaders have stolen $400 billion in the last decade and have seen 300 foreign workers kidnapped? Another country lost four wars in the last 40 years. Still interested?

How about a country that suffers one of the world’s highest AIDs rates, endures regular insurrections where all of the westerners are massacred, and racked up 5 million dead in a continuous civil war? Then Africa is the place for you, the world’s largest source of gold, diamonds, chocolate, and cobalt! The countries above are Libya, Nigeria, Egypt, and the Congo. Below the radar of the investment community since the colonial days, the Dark Continent has recently been attracting the attention of large hedge funds and private equity firms. Goldman Sachs has set up Emerging Capital Partners, which has invested $1.6 billion there. China sees the writing on the wall, and has launched a latter day colonization, taking a 20% equity stake in South Africa’s Standard Bank, the largest on the continent. In fact, foreign direct investment has jumped from $53 billion to $61 billion, while cross border M & A leapt from $10.2 billion to $26.3 billion.

The angle here is that all of the headlines above are in the price, that price is very low, and the perceived risk is much greater than actual risk. Price earnings multiples are low single digits, cash flows are huge, and returns of capital within two years are not unheard of. The reality is that Africa’s 900 million have unlimited demand for almost everything, and there is scant supply, with many firms enjoying local monopolies. The big plays are your classic early emerging market targets, like banking, telecommunications, electric power, and other infrastructure.

For example, in the last decade, the number of telephones has soared from 350,000 to 10 million. It reminds me of the early days of investing in China in the seventies, when the adventurous only played when they could double their money in two years because the stakes were so high. This is definitely not for day traders. If you are willing to give up a lot of short term liquidity for a high long term return, then look at the Market Vectors Africa Index ETF (AFK), which has risen 59% since March, and the SPDR S&P Emerging Middle east & Africa ETF (GAF).

http://www.madhedgefundtrader.com/May_22__2009.html

http://ibankcoin.com/chart_addict/2009/08/06/the-a...

Was it TOF who successfully played AIG as well?

Have a look at how he read the chart through the day.

He played C as well and is an overnight hold.

What a pleasure listening to this man talk. It is somewhat dated.
At the very least listen from 4-9 minutes in.

http://paul.kedrosky.com/archives/2009/08/michael_...

Thanks Bobbyo. Noted this film in the wiki bio of Leone. Will give it a look. With Deniro to boot? Great!

MarkW,

Sure, Its good for it to have gotten to bigger numbers, but as I see it, its measured in what more and more resembles "digital confetti" where its just OWED to someone and we PRETEND its going to be repaid with interest.

I was thinking about it, and trying to determine if my fears are justified or not. In all honesty, I could make a good case that the Fed has added 3 zeros to the money. In the early 1900's being a MILLIONAIRE really MEANT something. I bet there weren't but hundreds of them in the nation back then. Who had 50,000 one ounce gold pieces, or its equivalent? Let's face it. Today you'd wonder if you can safely retire with only one million dollars, especially if you'd been forced by the economy to retire early like I have.

But wait... 3 zeros? The inflation numbers only say 2, so how can that be? To which I'd reply "Look who's doing the figuring...". Its the same folks that are printing the digital confetti. Today there are a hundred BILLIONAIREs. How can that many be that rich if the money supply hasn't increased dramatically?

So I really do worry that the WORTH of those 7 digits could just evaporate on me some stormy Monday morning. That's what happened to the other Bernie's ponzi scheme victims, and to be honest, I don't see all that much difference between the two schemes, other than who are the perps and victims, and the size of the fraud.

Goldman Sachs $100 Million Trading Days Reach Record

By Christine Harper
Aug. 5 (Bloomberg) -- Goldman Sachs Group Inc. made more
than $100 million in trading revenue on a record 46 separate
days during the second quarter, or 71 percent of the time,
breaking the previous high of 34 days in the prior three months.
Trading losses occurred on two days during the months of
April, May and June, down from eight in the first quarter, the
New York-based bank said today in a filing with the U.S.
Securities and Exchange Commission. The company made at least
$50 million on 58 of the 65 trading days during the quarter, or
89 percent of the time.
Goldman Sachs, which was the biggest U.S. securities firm
before converting to a bank last year, posted the biggest profit
in its history during the second quarter as revenue from trading
and equity underwriting reached all-time highs. The company,
which has returned $10 billion to the U.S. Treasury and paid
$1.42 billion in dividends and to cancel warrants, also made its
largest market bets during the period.
“It’s very counterintuitive to think that they’d be able to
generate this much profit and this much revenue in the middle of
an ongoing recession,” said William Cohan, a former banker at
JPMorgan Chase & Co. and Lazard Ltd. and author of “House of
Cards” about the collapse of Bear Stearns Cos. “But the fact
that so many of their competitors are out of business or
severely wounded has put them in a very strong position.”

Trading Days

In fiscal year 2008, the firm had 90 days in which traders
made more than $100 million, compared with 88 in 2007. In fiscal
2006, the figure was 49 days, up from 18 in 2005 and 14 in 2004.
Goldman Sachs changed its fiscal year in 2009 to end in December
instead of November.
Goldman Sachs’s trading results reflected the firm’s
willingness to take on more risk during the period. Value-at-
risk, an estimate of how much the firm could lose in any given
day, rose to an average of $245 million in the second quarter
from $240 million in the first quarter and $184 million in the
second quarter of 2008. Most of the increase in the second
quarter came from bets on equities, the company said.
“They take risks for their clients and for themselves and
they’ve figured out a way in this market, with less competition
bidding for these things, to make money,” Cohan said.
Trading and principal investments accounted for 78 percent
of the bank’s revenue in the second quarter of 2009, up from 59
percent in the second quarter of 2008. Net interest income, the
difference between the interest the firm pays and what it
charges, climbed 60 percent from the second quarter of 2008 as
the company’s interest expense dropped 83 percent.

FDIC Backing

Banks such as Goldman Sachs are benefiting from lower
borrowing costs after the Federal Deposit Insurance Corp. in
October started guaranteeing bank debt issues that mature within
three years. Goldman Sachs said in today’s filing it had $25.1
billion of debt guaranteed by the FDIC under the agency’s
Temporary Liquidity Guarantee Program. The bank sold about $30
billion of the FDIC-backed securities between November and
March, according to company filings.
Today’s filing showed the weighted average interest rate
paid by Goldman Sachs on its unsecured short-term borrowings
dropped to 1.70 percent in June from 2.14 percent in March and
from 3.37 percent in November.